Net Worth

Think of net worth as your financial scoreboard—one number that captures the whole picture. On the plus side: cash, investments, retirement accounts, real estate, vehicles, crypto, and other valuables. On the minus side: mortgages, student loans, car loans, credit card balances, and any other debts.

Tracking net worth over time tells you more than looking at income or savings alone. A high earner drowning in debt might have a lower net worth than someone earning half as much who saves consistently. Net worth captures both sides—what you've built and what you still owe.

The formula is refreshingly simple: Assets - Liabilities = Net Worth. Someone with $200,000 in investments, a $300,000 home, $50,000 in retirement accounts, $250,000 left on the mortgage, and $20,000 in student loans has a net worth of $280,000.

If your net worth is negative, don't panic—that's completely normal for younger adults carrying student loans who haven't had time to accumulate much yet. It's not a failure; it's a starting line. What matters is the trend: is the number going up month over month and year over year?

Checking in on your net worth monthly or quarterly is a surprisingly powerful motivator. Watching the number climb reinforces good habits. And if it stalls despite solid income, you know spending is eating your earnings—a wake-up call you might otherwise miss.