1. What is Net Worth?

Net Worth is a fundamental financial metric that represents the difference between what you own (assets) and what you owe (liabilities). It provides a snapshot of your financial health and is applicable to both personal and business finances.

2. How Does the Calculator Work?

The calculator uses the simple net worth formula:

Where:

• \( \text{Assets} \) — Everything you own that has monetary value (cash, investments, property, vehicles, etc.)
• \( \text{Liabilities} \) — Everything you owe (loans, mortgages, credit card debt, etc.)

Explanation: A positive net worth indicates you own more than you owe, while a negative net worth means you owe more than you own.

3. Importance of Net Worth Calculation

Details: Regularly calculating net worth helps track financial progress, set financial goals, make informed decisions about investments and debt management, and assess overall financial stability.

4. Using the Calculator

Tips: Enter total assets and total liabilities in USD. Both values must be non-negative numbers. The calculator will automatically compute your net worth.

5. Frequently Asked Questions (FAQ)

Q1: What counts as assets?
A: Assets include cash, bank accounts, investments, real estate, vehicles, retirement accounts, business interests, and valuable personal property.

Q2: What counts as liabilities?
A: Liabilities include mortgages, car loans, student loans, credit card balances, personal loans, and any other outstanding debts.

Q3: How often should I calculate my net worth?
A: Most financial experts recommend calculating net worth at least quarterly to track your financial progress over time.

Q4: What is a good net worth?
A: A good net worth varies by age, income, and life circumstances. Generally, a positive and growing net worth indicates good financial health.

Q5: Can net worth be negative?
A: Yes, net worth can be negative when liabilities exceed assets. This is common for recent graduates with student loans or people who have experienced financial setbacks.