Determining one’s net worth involves tabulating both assets and liabilities. Assets, typically including property, investments, and cash, signify what one owns, while liabilities represent debts such as mortgages and loans.
Understanding net worth is crucial for evaluating financial well-being, assessing borrowing capacity, and planning for the future. By calculating this metric, individuals gain a holistic view of their financial standing. Historically, the concept of net worth can be traced back to 13th-century Italy, where merchants used it to assess their financial solvency.