Your net worth is everything you own minus everything you owe.
Why it sounds harder than it is
It has the word worth in it, and it is not about your worth.
It is subtraction. Two columns, one number at the bottom.
The phrase turns up mostly in articles about billionaires, which makes it sound like a thing you have to qualify for. Everyone has one. It can be small, and it can be negative for years, and a mortgage or a degree is the usual reason.
The number describes an arrangement of money at a moment. It is not a report card and there is no passing grade.
A concrete Australian example
One list of what you own: what is in your accounts, your super balance, the car, the house if you own one.
One list of what you owe: the mortgage, the car loan, the credit card, HECS.
Subtract the second from the first.
Illustrative figures. A house valued at $600,000, a mortgage of $550,000, and $40,000 of super gives a net worth of $90,000. The largest part of it sits in super, which has its own rules about when it can be reached. The number tells you the size. It tells you nothing about the shape, and the shape is usually the more interesting half.
What it is not
- Not your income. Income is what arrives. Net worth is what has accumulated, and the two move independently. A high income with high liabilities can produce a small number
- Not a score. No institution assigns it, checks it or grades it
- Not fixed. It moves every month, and it moves on things outside your control, like what a house is valued at this year
- Not the same as available money. Most of the number is usually somewhere you cannot spend from
Related
Both lists already exist, spread across apps, statements and a super account you may not have logged into. Seeing them on one page is the only new part.