Net worth is a financial calculation that measures the value of an individual’s or organization’s assets minus its liabilities. For example, if one has $100,000 in assets and $50,000 in liabilities, their net worth would be $50,000.
Calculating net worth is essential for understanding one’s financial health and making informed decisions about saving, investing, and spending. Historically, net worth has been used by banks and other financial institutions to assess an individual’s or organization’s creditworthiness.