What Is Net Worth

What Is Net Worth

To calculate your net worth, add up all of the assets you own and subtract all of the liabilities or debts you owe. Net worth includes tangible assets such as your home and cars, investments, and money you have in savings, as well as certain other items of value.

Are assets net worth?

Assets are possessions that could be sold or converted into cash easily. The valuation of assets should be realistic in order to reach precise net worth estimates.

How much should my net worth be?

There is no way to answer that, but the bottom line is that your net worth should increase over time.  As your assets increases and your decrease debts, net worth should increase consistently.

Are income and net worth the same?

Income is all the taxable income and wages earned from working and is most often the primary source of wealth creation but not equal to income. Generating income does not always lead to wealth creation so it is not the main determinant of net worth. Wealth is the net worth of a household versus income which is what is reported on a tax return.

Building net worth is not about how money income you make, or about how much money you spend, but how much you can keep.

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