This term refers to the total accumulated value of an individual’s assets, minus their liabilities. Assets can include real estate, investments, and personal property. Liabilities encompass debts such as mortgages, loans, and outstanding credit card balances. Calculating this figure provides a snapshot of a person’s financial standing at a specific point in time.
For example, if someone owns a house worth $500,000, a car worth $20,000, and has $50,000 in investments, their total assets are $570,000. If they have a mortgage of $300,000 and $10,000 in student loan debt, their total liabilities are $310,000. Therefore, their net worth would be $260,000.