1. What is Net Worth?

Net worth is the value of all assets owned minus all liabilities owed. It's a key financial metric that provides a snapshot of an individual's or company's financial health at a specific point in time.

2. How Net Worth is Calculated

The net worth calculation uses a simple formula:

Where:

• Assets — Everything you own that has monetary value (cash, investments, property, vehicles, etc.)
• Liabilities — All debts and financial obligations (mortgages, loans, credit card balances, etc.)

Explanation: A positive net worth means assets exceed liabilities, while a negative net worth means debts exceed assets.

3. Importance of Net Worth

Details: Tracking net worth over time helps measure financial progress, assess financial health, and make informed decisions about saving, investing, and debt management.

4. Using the Calculator

Tips: Enter the total value of all assets and all liabilities in dollars. The calculator will instantly compute your net worth.

5. Frequently Asked Questions (FAQ)

Q1: What counts as an asset?
A: Assets include cash, bank accounts, investments, real estate, vehicles, valuable personal property, and business interests.

Q2: What counts as a liability?
A: Liabilities include mortgages, car loans, student loans, credit card debt, personal loans, and any other outstanding debts.

Q3: How often should I calculate my net worth?
A: Many financial experts recommend calculating net worth quarterly or at least annually to track financial progress.

Q4: What's a good net worth by age?
A: While benchmarks vary, a general guideline is to have 1x your annual salary by age 30, 3x by 40, and 6x by 50.

Q5: Can net worth be negative?
A: Yes, when liabilities exceed assets. This is common early in life with student loans or after major purchases like a home.