Net Worth
Your salary is what you’re paid. Your net worth is what you’d actually have left if you sold everything and paid off every debt today — a very different number.
What Is It
Net worth is total assets — cash, investments, retirement accounts, real estate, vehicles — minus total liabilities — mortgage, loans, credit card balances. It’s a single number that summarizes your overall financial position far better than income alone, since it captures everything you own and everything you owe in one figure, rather than just what shows up on a pay stub.
Why It Matters
Income measures cash flow, not wealth. A high earner carrying heavy debt can easily have a lower net worth than a modest earner who’s paid things off — two very different financial positions that a salary comparison alone would completely miss. Two people earning identical salaries can be on entirely different financial trajectories depending on what they’ve saved, invested, and paid down, and net worth is the number that actually captures that difference. Tracking it over time, rather than checking it once, is also what actually shows whether your financial position is improving or just holding steady from year to year.
It’s worth distinguishing liquid net worth from total net worth. Liquid net worth counts only cash and investments you could access relatively quickly — a brokerage account, a savings account — while total net worth also includes illiquid assets like home equity or a retirement account with early-withdrawal penalties, which are real value but not spendable without selling the asset or accepting a real cost to access them. For most near-term financial decisions, the liquid figure is the more useful one to actually watch, even though total net worth is the more complete long-term picture.
Quick Example
$450,000 in assets — home equity, retirement accounts, savings — minus $280,000 in liabilities — mortgage balance, remaining loans — comes out to $170,000 in total net worth. But if $60,000 of those assets is illiquid home equity, liquid net worth is closer to $110,000 — the number that actually reflects what’s available if you needed it.
Try It Yourself
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📋Net Worth Calculator
See your total and liquid net worth, your age percentile vs. Federal Reserve data, and how far you are from financial independence.