Total assets minus total liabilities; the clearest snapshot of financial health.
Net worth is your total assets minus total liabilities—the value you'd have left if you sold everything and paid all debts. It's the best single measure of financial health and wealth. For example, if you own a home worth $300,000 with a $200,000 mortgage, $50,000 in investments, $15,000 in car value, and have $5,000 in credit card debt, your net worth is ($300,000 + $50,000 + $15,000) – ($200,000 + $5,000) = $160,000. Tracking net worth over time reveals financial progress. Increasing net worth requires either increasing assets or decreasing liabilities (or both). Financial independence typically targets a net worth high enough that investment returns cover living expenses. Net worth can be negative if liabilities exceed assets; this is common for recent college graduates with student loans.