1. What is Net Worth?

Net worth represents the financial health of an individual or business by calculating the difference between total assets and total liabilities. It provides a snapshot of financial position at a specific point in time.

2. How Does the Calculator Work?

The calculator uses the fundamental net worth equation:

Where:

• \( Assets \) — Everything you own that has monetary value
• \( Liabilities \) — Everything you owe to others
• \( Net\ Worth \) — The resulting financial position

Explanation: A positive net worth indicates more assets than liabilities, while a negative net worth indicates more liabilities than assets.

3. Importance of Net Worth Calculation

Details: Regular net worth calculation helps track financial progress, set financial goals, measure wealth accumulation, and make informed financial decisions for both personal and business purposes.

4. Using the Calculator

Tips: Enter total assets and total liabilities in your preferred currency. Both values must be non-negative numbers. The calculator will automatically compute your net worth.

5. Frequently Asked Questions (FAQ)

Q1: What counts as assets?
A: Assets include cash, bank accounts, investments, real estate, vehicles, retirement accounts, and any other valuable property you own.

Q2: What counts as liabilities?
A: Liabilities include mortgages, car loans, credit card debt, student loans, personal loans, and any other money you owe.

Q3: How often should I calculate my net worth?
A: It's recommended to calculate net worth at least quarterly to track your financial progress and make timely adjustments to your financial strategy.

Q4: Is a negative net worth bad?
A: A negative net worth indicates you owe more than you own, which is common for students and young professionals. The key is having a plan to improve it over time.

Q5: Can net worth be used for business purposes?
A: Yes, businesses use net worth (often called owner's equity or shareholder's equity) to assess financial health and make strategic decisions.