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Net worth equals total assets minus total liabilities.
Formula
Net Worth = Total Assets − Total Liabilities
Assets include cash, investments, property, and valuables. Liabilities include mortgages, loans, and credit card debt.
Regular tracking reveals spending patterns and progress.
Focus on credit card and high-interest debt first.
Keep 3-6 months expenses in liquid savings.
Understand your complete financial picture.
Lenders assess net worth for major loans.
Track progress toward retirement goals.
Cash, savings, investments, retirement accounts, real estate, vehicles, and valuable personal property.
Assets easily converted to cash: savings, stocks, bonds. Real estate and vehicles are illiquid.
Below 0.5 (50%) is healthy. Above 0.7 (70%) may indicate financial stress.
Monthly or quarterly tracking helps identify trends and progress toward goals.