Calculating net worth balance is a process of determining the numerical value of your financial status, expressed as the difference between your total assets and total liabilities. For example, if you have $1,000 in assets and $500 in liabilities, your net worth would be $500.
Calculating your net worth is important because it provides a comprehensive snapshot of your financial health. It can help you track your progress over time and identify areas where you can improve your financial situation. Historically, the concept of net worth has been used by businesses and individuals to assess their financial strength and solvency.