Net Worth

Net worth is your financial scorecard — a single number that captures your entire financial picture. Assets include cash, investments, retirement accounts, real estate, vehicles, crypto, and other valuables. Liabilities include mortgages, student loans, car loans, credit card balances, and any other debts.

Tracking net worth over time is more meaningful than tracking income or savings alone. A high-income earner with massive debt might have a lower net worth than a moderate earner who saves consistently. Net worth captures the complete picture including both the accumulation and liability sides.

The formula is straightforward: Assets - Liabilities = Net Worth. A person with $200,000 in investments, a $300,000 home, $50,000 in retirement accounts, $250,000 remaining on their mortgage, and $20,000 in student loans has a net worth of $280,000.

Negative net worth is common and normal for young adults who have student loans and haven't yet accumulated significant assets. It's not a failure — it's a starting point. What matters is the trajectory: is your net worth increasing month over month and year over year?

Regular net worth tracking (monthly or quarterly) provides motivation and accountability. Watching the number climb creates positive reinforcement for good financial habits. It also reveals when something is off — if your net worth stagnates despite a good income, you know spending is consuming your earnings.