Net worth is the simplest and most useful measure of your financial health. It’s a single number that reflects exactly where you stand. Over time, it tells you if you’re improving your finances, or setting yourself up for failure. But how do you calculate net worth? The simplest way to understand net worth is the following equation: Net Worth = Assets – Liabilities When you take everything you have, and subtract everything you owe, you’re left with your net worth. However, you should declare assets and liabilities within reason. Your assets are not everything you’ve ever bought — items like clothing or home decor might have been expensive when you made the purchase (maybe you even called it an “investment piece”) but these generally don’t count as assets. Likewise, you might have a really big cellphone bill this month, but because you’ll be paying it off within a month, it’s not really a […]
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