Net Worth
The total value of all assets minus all liabilities, representing overall financial health.
Definition
Net worth is the difference between what you own (assets) and what you owe (liabilities). Assets include cash, investments, real estate, retirement accounts, vehicles, and personal property. Liabilities include mortgages, student loans, credit card debt, car loans, and any other debts. A positive net worth means assets exceed liabilities, while a negative net worth means you owe more than you own. Tracking net worth over time is one of the best measures of financial progress. The median net worth of US households is approximately $193,000, though this varies dramatically by age, education, and income. Building net worth requires increasing assets (saving and investing) and reducing liabilities (paying off debt).
Related Terms
Asset Allocation
The strategy of dividing investments among different asset categories like stocks, bonds, and cash.
InvestingPortfolio
A collection of financial investments like stocks, bonds, cash, and other assets held by an individual or institution.
Real EstateMortgage
A loan used to purchase real estate, where the property serves as collateral.
Personal FinanceCredit Score
A numerical rating representing a person's creditworthiness, typically ranging from 300 to 850.