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Net Worth: Do You Know Yours?

Net worth. We all have one but do you know yours?

During your younger years, it’s easy to write off as yet another irrelevant personal finance term. But this couldn’t be further from the truth.

In fact, when tracked over time, knowing your net worth is a great way to gauge your overall financial health.

✨ P.S. Check out this post to learn more about the importance of tracking your money: Want Your Money to Grow? Start Tracking It

Okay Cool. But What is Net Worth?

Your net worth is the total value of your ASSETS minus your LIABILITIES.

I know. I know. More money lingo but stick with me!

ASSETS include the things you OWN that have monetary value. For example:

  • 💰 Checking and savings balances
  • 📈 Investments
  • 🏡 The value of your home
  • 🚗 The value of your car
  • 💍 Other valuables

LIABILITIES include anything you OWE such as:

  • 💳 Credit card debt
  • 🚙 Car loans
  • 👩🏾‍🎓 Student loans
  • 🏥 Medical bills
  • 🏘 Mortgages
Assets vs Liabilities

Calculating Your Net Worth

Now that you have a better understanding of assets and liabilities, determining your net worth will be a breeze. Just remember this simple formula:

Assets – Liabilities = Net Worth

Then follow these steps:

1️⃣ Total your assets

2️⃣ Total your liabilities

3️⃣ Subtract your total liabilities from your total assets

And boom. Net worth = calculated 🎉

Net worth calculation example

Parting Wisdom

Although a positive net worth is the ultimate goal, remember that whether positive or negative, your NET WORTH does not define your SELF WORTH.

It is simply information that can be used as you track and compare over time, set financial goals, and work toward improvement.