Your net worth is one of the most important numbers in personal finance—but it’s often overlooked in favor of income, credit scores, or debt. While those numbers matter, your **net worth** gives you a big-picture view of your financial health.

In this article, we’ll explain what net worth is, how to calculate it, and most importantly, how to grow it over time.

**What Is Net Worth?**
Your net worth is the total value of what you **own** (assets) minus what you **owe** (liabilities). It shows whether you’re building wealth or falling behind.

**Net Worth = Total Assets - Total Liabilities**

If you have more assets than liabilities, your net worth is positive. If you owe more than you own, it’s negative.

**Examples of Assets:**
- Cash and checking/savings account balances
- Retirement accounts (401(k), IRA)
- Investments (stocks, mutual funds, crypto)
- Home or other property (current market value)
- Vehicles (current market value)
- Personal valuables (jewelry, collectibles)

**Examples of Liabilities:**
- Credit card debt
- Student loans
- Mortgage balances
- Auto loans
- Personal loans
- Medical or legal debts

**How to Calculate Your Net Worth**
1. List all your assets and estimate their current value.
2. List all your liabilities and the current balances.
3. Subtract total liabilities from total assets.

Example:
- Assets: $200,000 (home), $15,000 (car), $25,000 (401(k)), $5,000 (cash) = **$245,000**
- Liabilities: $150,000 (mortgage), $5,000 (credit card) = **$155,000**
- **Net Worth = $245,000 - $155,000 = $90,000**

**Why Net Worth Matters**
- It shows your true financial position—not just income or savings.
- It helps track progress over time.
- It highlights areas that need attention (e.g., too much debt or not enough savings).

**How to Increase Your Net Worth**
1. **Spend Less Than You Earn**: This frees up money to pay down debt and invest.
2. **Pay Off Debt**: Reducing liabilities increases your net worth instantly.
3. **Save and Invest Consistently**: Contribute to retirement accounts, brokerage accounts, or real estate.
4. **Avoid Depreciating Assets**: Limit large purchases that lose value quickly (e.g., luxury cars).
5. **Increase Income**: Raises, side hustles, or career changes can boost your earning potential.
6. **Track It Regularly**: Review your net worth quarterly or annually to measure growth and make adjustments.

**What If My Net Worth Is Negative?**
Don’t panic. Many people start out with negative net worth due to student loans or early debt. Focus on:
- Cutting unnecessary expenses
- Creating a debt repayment plan
- Building an emergency fund
- Growing assets gradually through consistent saving

**Tools to Track Net Worth**
- Spreadsheets (Google Sheets, Excel)
- Apps like Personal Capital, Mint, or YNAB

**Final Thoughts**
Your net worth is your financial scorecard—and the best measure of how you’re doing overall. It helps you stay focused on building wealth and making informed decisions. Start tracking it today, and use it as a guide to reach your long-term financial goals. No matter where you’re starting from, you can move forward by being intentional, consistent, and committed to financial growth.