Your net worth is the amount by which your assets exceed your liabilities. In simple terms, net worth is the difference between what you own and what you owe. If your assets exceed your liabilities, you have a positive net worth. Conversely, if your liabilities are greater than your assets, you have a negative net worth.

Your net worth provides a snapshot of your financial situation now. If you calculate your net worth today, you will see the result of everything you've earned and everything you've spent up until right now. While this figure is helpful—for example, it can provide a wake-up call if you are completely off track, or a "job-well-done" confirmation, if you are doing well—tracking your net worth over time, offers a more meaningful view of your finances.



When calculated periodically, your net worth can be viewed as a financial report card that allows you to evaluate your current financial status and can help you figure out what you need to do in order to reach your financial goals.

Your assets are anything of value that you own that can be converted into cash. Examples include investments, bank and brokerage accounts, retirement funds, real estate and personal property (vehicles, jewelry, and collectibles)—and, of course, cash itself. Intangibles such as your personal network are sometimes considered assets as well. Your liabilities, on the other hand, represent your debts, such as loans, mortgages, credit card debt, medical bills, and student loans. The difference between the total value of your assets and liabilities is your net worth.

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