What net worth tells you
Net worth is the clearest single measure of financial health: everything you own minus everything you owe. Assets include cash, savings, investments, property and vehicles. Liabilities include mortgages, loans and credit card balances. Subtract one from the other and you have a snapshot of where you actually stand, stripped of income and lifestyle noise.
Two examples
If your assets total 250,000 and your liabilities total 120,000, your net worth is 130,000. You own more than you owe, which is the position most people are working toward.
A recent graduate might own 8,000 in savings and a car worth 6,000, but owe 30,000 in student loans. That is a net worth of minus 16,000. Negative, but completely normal at that stage, and the number climbs as the loans shrink and savings grow.
Tracking it over time
The figure itself matters less than its direction. Calculating your net worth every few months shows whether you are genuinely building wealth or just moving money around. A steadily rising line is the goal, even if it starts below zero. Watching the trend beats obsessing over any single month.
Frequently asked questions
Should I include my home?
Yes, at its market value, and include the mortgage as a liability. The two together show your real equity in the property.
What counts as an asset?
Anything of value you own: cash, savings, investments, property, vehicles and valuables.
Can net worth be negative?
Yes, if you owe more than you own, common early on with student loans or a new mortgage. The aim is to trend upward.
How often should I check?
Every three to six months is enough to see the trend without obsessing over short-term swings.