When it comes to personal finance, most people focus on their income. But if there’s one number that offers a more complete picture of your financial health, it’s your net worth.
So, what exactly is net worth—and why should you care?
💰 What Is Net Worth?
Your net worth is the difference between what you own and what you owe.
Here’s the simple formula:
Net Worth = Assets – Liabilities
Assets are things you own that have value, like:
- 💵 Cash and savings
- 📈 Investments (stocks, bonds, retirement accounts)
- 🏠 Real estate
- 🚗 Vehicles
- 💍 Personal property (jewelry, collectibles, etc.)
Liabilities are debts or obligations you owe, such as:
- 💳 Credit card balances
- 🎓 Student loans
- 🏡 Mortgages
- 🚘 Car loans
- 🧾 Personal loans
Subtract your liabilities from your assets, and what’s left is your net worth.
Why Net Worth Is So Important
1. It’s Your Financial Scorecard 🧾
Your income tells part of the story, but net worth gives you the full picture. Someone earning six figures could still have a low—or negative—net worth if they carry a lot of debt. On the flip side, someone with a modest income could have a strong net worth by living below their means and investing consistently.
2. It Helps You Track Progress 📈
Whether your goal is to pay off debt, buy a home, or retire early, your net worth helps you measure progress. Watching your number grow over time is motivating—and catching it dip can be a helpful red flag to adjust your spending or saving.
3. It Highlights Financial Priorities 🎯
Knowing your net worth helps you focus. Is too much of your net worth tied up in your house? Are your liabilities growing faster than your assets? The answers can help you make smarter financial decisions.
4. It Supports Long-Term Planning 🗺️
When you know your net worth, you can plan with purpose—whether that’s achieving financial independence, starting a business, or just sleeping better at night knowing you’re on solid footing.
How to Calculate (and Track) Your Net Worth
The first time you calculate your net worth might feel a little intimidating—but it’s very much worth it (pun intended). You can use a spreadsheet, a personal finance tracking app, or just a pen and paper.
What matters most is that you:
- 📝 List all your assets and estimate their current value.
- 📉 List all your liabilities (every debt you owe).
- ➖ Subtract liabilities from assets to get your net worth.
Then update it regularly—monthly, quarterly, or even once a year.
Bottom Line
Your net worth is the single number that tells you how you’re really doing financially. It cuts through the noise and shows you where you stand—and where you’re headed.
If you don’t know your number yet, now’s the time to find out. At Your Money Mark, we believe clarity is power—and knowing your net worth is the first step to taking control of your money and your future. 🚀
Need help calculating or improving your net worth? Let’s chat.
Your Money Mark 