Net Worth

Net worth is everything you own minus everything you owe. Add up deposits, investments, and property, subtract loans and card balances, and what remains is genuinely yours.

It matters because neither salary nor total assets reveals your financial position. A $500,000 house with $450,000 of mortgage leaves a net worth of $50,000. Someone with no property but $80,000 in savings and no debt has $80,000. Appearances and reality diverge here constantly.

Calculating it changes behavior, because there are exactly two ways to raise it: grow assets or shrink debt. That means paying off a card charging 15% is identical to an investment guaranteed to return 15%. No investment is that certain, yet it is easy to miss while focusing only on accumulating assets.

The practice is simple: once a quarter, on the same date, list your assets and debts and record the net figure. Month to month it wobbles with markets, but strung across several quarters it shows your direction. The measure of whether your finances are working is not this month's return but whether that line keeps sloping up.