Net worth meaning: Net worth is the

Net worth is the difference between the value of your assets and liabilities. Learn how to calculate your net worth , why it matters, and how it can change over time. Net worth is the excess of assets over liabilities. The assets that contribute to net worth can include homes, vehicles, various types of bank accounts, money market accounts, stocks and bonds. [3] The liabilities are financial obligations such as loans, mortgages, and accounts payable (AP) that deplete resources. Net worth is a key indicator of financial stability, calculated by subtracting total liabilities from total assets. It reflects the true value of an individual’s or organisation’s financial position. A positive net worth signals strong financial health, while a negative net worth indicates excess liabilities over assets. Net worth provides a clear picture of overall financial health and serves as a key metric for evaluating wealth accumulation over time. For individuals, net worth encompasses all personal assets (such as homes, vehicles, investments, and cash) minus all debts (including mortgages, student loans, credit card balances, and other liabilities).