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 comprehensive snapshot of your financial health and overall wealth position at a specific point in time.

2. How Does the Calculator Work?

The calculator uses the basic net worth formula:

Where:

• \( Assets \) — Everything you own that has monetary value (cash, investments, property, vehicles, etc.)
• \( Liabilities \) — All your debts and financial obligations (mortgages, loans, credit card debt, etc.)

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

3. Importance of Net Worth Calculation

Details: Regularly calculating your net worth helps track financial progress, make informed decisions about investments and debt management, and provides clarity for long-term financial planning and retirement preparation.

4. Using the Calculator

Tips: Enter your total assets and liabilities in USD. Use current market values for assets and outstanding balances for liabilities. Update these figures regularly to monitor your financial trajectory.

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 are considered liabilities?
A: Liabilities include mortgages, car loans, student loans, credit card balances, personal loans, medical debt, and any other outstanding debts.

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

Q4: What is a good net worth by age?
A: Net worth benchmarks vary by age, but generally should increase over time. A common guideline is having 1x your annual salary by age 30, 3x by 40, and 6x by 50.

Q5: Can net worth be negative?
A: Yes, particularly for young adults with student loans or people who have recently purchased major assets with debt. The goal is to work toward a positive and growing net worth over time.