A measure of total assets owned minus liabilities represents an individual’s overall financial standing. This calculation considers all forms of owned property, including real estate, investments, and personal belongings, subtracting any outstanding debts like mortgages or loans. Understanding this figure provides insight into an individual’s financial health and potential for future investments or expenditures. It’s a snapshot of their financial position at a specific point in time.
For example, if someone owns a house worth $500,000, a car worth $20,000, and has $10,000 in savings, their total assets are $530,000. If they have a mortgage of $200,000 and a car loan of $5,000, their total liabilities are $205,000. Subtracting the liabilities from the assets results in a net worth of $325,000. This calculation provides a clear picture of their financial strength.