Net worth

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Net worth is a measure of a person’s financial condition at a given time, equal to what that person owns (assets) minus what that person owes (liabilities).

Your net worth is by far the most powerful and most important financial number that provides a snapshot of your wealth and financial health.

How to Calculate Net Worth

Net worth is the value of your assets, minus the total of your liabilities. Basically, net worth is what you own minus what you owe. Your net worth does fluctuate base on increases in your savings rate, asset accumulation, and debt obligation.

Calculate your net worth by:

Net Worth = Assets (what you own of value) – Liabilities (what you owe)

If your net worth is positive, it means you have enough assets to cover your liabilities. Having a negative net worth means you may not have enough assets (savings, investments, or items of value) to cover your liabilities. Negative net worth can increase the likelihood of experience future financial stress.

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