Net worth

Net worth is calculated by subtracting the total amount of debt owed from the total value of owned assets. This figure can be less than zero in cases where there is more debt than assets.

Both bankruptcy and losses due to theft or natural disaster are included when calculating net worth, but any lost income (because of disability, layoff, etc.) is not considered. Net worth works well for people who have steady incomes over their careers like doctors and lawyers;

it also doesn’t do much work for public figures who may experience wild swings in their net worth over time because they make money with investments or through public speaking engagements (which come and go). If you suspect your understanding of someone’s finances isn’t very good, their net worth is a good way to guesstimate.

Net Worth = Total Assets – Total Debts

The total value of personal assets can include cash in checking and savings accounts, stocks, retirement funds, etc.; the full list varies from country to country. The total value of personal debts will include mortgages, student loans, credit card bills, etc.

Net worth is an important number to know for the average person because it reveals a lot about their financial state of health. If net worth is high, there’s a good chance the person has saved enough money over the years to support themselves for quite some time should they lose their current job.