Question 1

What is net worth?

Accepted Answer

Net worth is the total value of everything you own (assets) minus everything you owe (liabilities). A positive net worth means your assets exceed your debts, while a negative net worth means you owe more than you own.

Question 2

What should I include in my assets?

Accepted Answer

Include liquid assets (cash, savings, investments, retirement accounts), and property assets (real estate market value, vehicle values, valuable personal property). Use current market values, not what you paid.

Question 3

What should I include in my liabilities?

Accepted Answer

Include all debts: mortgage balance, auto loans, student loans, credit card balances, personal loans, medical debt, and any other money you owe. Use current balances, not original loan amounts.

Question 4

What is a good debt-to-asset ratio?

Accepted Answer

A debt-to-asset ratio below 0.4 (40%) is generally considered healthy. Below 0.2 (20%) is excellent. Higher ratios indicate more leverage and financial risk. This varies by age and financial goals.

Question 5

How often should I calculate my net worth?

Accepted Answer

Calculate your net worth at least quarterly to track progress toward financial goals. Monthly tracking can help you stay motivated and catch issues early. Major life events (home purchase, job change) warrant immediate recalculation.