Net Worth
Definition
Everything you own (assets) minus everything you owe (liabilities). Includes your home value, investments, savings, car value, minus your mortgage, loans, and credit card debt. It's a snapshot of your financial position at one point in time.
Why It Matters
Net worth is the big-picture number that matters for long-term financial health. You can have high income but low net worth (high spender), or lower income but high net worth (good saver). Track it quarterly or annually to see if you're on the right trajectory.
Example
You own a house worth $400k (owe $300k mortgage), have $100k invested, $20k in savings, but owe $5k on a car. Net worth: ($400k + $100k + $20k + $15k) - ($300k + $5k) = $230,000.