Net worth is simply what you own minus what you owe – total assets minus total liabilities. It’s a more complete financial snapshot than checking your bank balance alone.
Assets include cash, investments, retirement accounts, real estate, and other valuable property. Liabilities include mortgages, loans, and credit card balances.
To calculate yours, list every asset with its current value, list every debt with its current balance, then subtract the total debts from the total assets.
A negative net worth – common for people early in their careers with student loans – isn’t necessarily a red flag on its own. What matters more is the trend over time.
Tracking net worth every few months, rather than obsessing over daily account balances, gives a clearer picture of whether your overall financial position is improving.