1. What is Net Worth?

Net worth is the value of all assets owned minus all liabilities owed. It's a key measure of financial health that provides a snapshot of an individual's or entity's current financial position.

2. How Does the Calculator Work?

The calculator uses the simple net worth formula:

Where:

• \( \text{Assets} \) — Everything you own that has monetary value (cash, investments, property, etc.)
• \( \text{Liabilities} \) — All your debts and financial obligations (loans, mortgages, credit card debt, etc.)

Explanation: The calculation provides a comprehensive view of your financial standing by considering both what you own and what you owe.

3. Importance of Net Worth Calculation

Details: Tracking net worth over time helps measure financial progress, make informed decisions about investments and debt repayment, and plan for long-term financial goals.

4. Using the Calculator

Tips: Enter all your assets and liabilities in dollars. Be thorough and include all significant items for an accurate calculation.

5. Frequently Asked Questions (FAQ)

Q1: What counts as an asset?
A: Assets include cash, bank accounts, investments, real estate, vehicles, valuable personal property, and business interests.

Q2: What counts as a liability?
A: Liabilities include mortgages, car loans, student loans, credit card balances, personal loans, and any other debts.

Q3: How often should I calculate my net worth?
A: Many financial experts recommend calculating net worth quarterly or at least annually to track progress.

Q4: Can net worth be negative?
A: Yes, if your liabilities exceed your assets, your net worth will be negative. This is common for recent graduates or those with significant debt.

Q5: How can I improve my net worth?
A: Focus on increasing assets (through savings and investments) and reducing liabilities (by paying down debt).