Net Worth Is the One Number That Shows Where You Actually Stand
Bottom line
Most people track their paycheck but have no idea if they're actually getting ahead financially.
In this guide
What it is
Net worth is everything you own minus everything you owe. It's the single number that tells you whether you're building wealth or falling behind.
By the numbers
If you have $4,200 in a savings account, a car worth $8,000, and $3,500 in a retirement account. but you owe $6,000 on a car loan and $3,200 on a credit card. your net worth is $500. That's it.
How it works
Add up every asset (something you own that has value: savings, investments, car, property). Then add up every liability (something you owe: loans, credit card balances, student debt). Subtract the liabilities from the assets. What's left is your net worth.
The catch
Your income has almost nothing to do with your net worth. Someone earning $90,000 a year can have a negative net worth if their debt exceeds what they own. A high salary just means you have more opportunity to build net worth. it doesn't mean you already have.
What to check next
Write down every account balance you own and every debt you owe, then subtract. Do it in a notes app right now.
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