Calculating net worth and liquid net worth provides a clear picture of your financial health. Net worth is the value of your assets minus your liabilities, while liquid net worth includes only assets that can be easily converted to cash.
For instance, if you own a home worth $200,000 and have a mortgage of $100,000, your net worth is $100,000. If you also have $50,000 in cash, your liquid net worth is $150,000. Tracking your net worth is crucial for financial planning, setting financial goals, and making informed investment decisions.