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Net Worth
Net worth equals everything you own minus everything you owe. One number that summarises a financial position.
Example
Mara owns $400 in savings and a $200 bike (assets total $600). She owes her brother $50 (liability of $50). Her net worth is $600 minus $50, which is $550. Tracking that one number over time tells her whether she is moving forward.
How it fits in
The number itself is less useful than its trend. Tracking net worth once a quarter shows whether decisions over the past three months made the position stronger or weaker. Most lasting wealth is built by consistently nudging this number upward, not by single big wins. Net worth also includes things you might forget, like investments and pension contributions for adults.
Where this is taught
Related terms
When the money you earn from saving starts earning its own money on top.
Interest paid only on the original amount, never on the interest you have already earned.
Needs are the things that keep you safe and well. Wants make life nicer. Mixing them up is what empties most budgets.