Net worth is the single most useful snapshot of your financial health. It tells you where you stand financially at a given moment and — when tracked over time — shows whether you're moving in the right direction. The calculation is simple: Assets minus Liabilities.
What Counts as an Asset?
- Cash and savings accounts
- Checking account balances
- Investment accounts (brokerage, 401k, IRA, Roth IRA)
- Real estate market value
- Vehicle resale value
- Business ownership value
- Valuable personal property (jewelry, collectibles)
What Counts as a Liability?
- Mortgage balance outstanding
- Car loans
- Student loans
- Credit card balances
- Personal loans
- Medical debt
- Any money owed to family or friends
Net Worth = Assets − Liabilities
If your assets total $250,000 and your liabilities total $180,000, your net worth is $70,000. A negative net worth (liabilities exceed assets) is common for young adults with student loans and is not inherently alarming — the trajectory matters more than the current number.
How to Grow Your Net Worth
- Increase income through raises, promotions, or side work
- Reduce high-interest debt aggressively
- Save and invest consistently — even small amounts compound
- Avoid depreciating liabilities (car loans for luxury vehicles)
- Build equity in appreciating assets (home, diversified investments)
Track your net worth quarterly. Use a simple spreadsheet or an app like Personal Capital. Watching the number grow is one of the most motivating things you can do for your financial life.
