Determining net worth is the process of calculating the total value of an individual’s or organization’s assets, including property, investments, and cash, minus liabilities such as debt. For example, if an individual owns a home worth $200,000, has $50,000 in investments, and owes $50,000 on their mortgage, their net worth would be $200,000.
Knowing your net worth is important for a number of reasons. It can help you make informed financial decisions, set financial goals, and track your progress over time. Historically, the concept of net worth has been used by accountants and financial advisors to assess an individual’s or organization’s financial health.