Beginner · Managing personal finance
What Is Your Net Worth?
Net worth is the simplest way to check where you stand: what you have minus what you owe.
A conversation between Mira and Pip, actuary4 min readMiraI keep seeing net worth on every finance checklist. I have some savings, a mortgage, and a car loan, and honestly no idea what my number actually is.
PipThen let's settle it first, because it's the ground every plan stands on. Net worth is one subtraction: everything you own, minus everything you owe.
MiraThat's it? Just one subtraction?
PipThat's it. We only have to be honest about both sides of it.
Key term
Net worth — What you own (assets: cash, investments, your home) minus what you owe (liabilities: loans, credit cards, your mortgage). A snapshot of where you stand today.
MiraSo my mortgage counts against me, even though the house is mine?
PipThe house is an asset; the mortgage is a separate liability. Both belong on the sheet. List them side by side and the number falls out on its own.
Add up your own
MiraSeeing it laid out makes it feel less scary. It's just a list.
PipOne honest rule: count what you could actually sell or spend. Money you can't touch yet, or a car you'll keep driving, shouldn't pad the number.
Quick check
Sam has $300,000 in assets and $220,000 in debts. What is Sam's net worth?
Lesson complete
You can now read a net-worth statement, the starting point of every plan. Next we turn that snapshot into a savings target.
Up nextHow Much Do You Need to Save?Mark this lesson complete
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