Your Financial Scoreboard —What is Net Worth?

Most people measure their financial health by one question: Do I have money in my account right now? That's not the right question.

The right question is: What is my net worth?

Net worth is the most honest, comprehensive snapshot of your financial health. It is simply: what you own minus what you owe.

Assets (what you own):

• Cash and savings accounts

• Investment accounts (401k, IRA, brokerage)

• Real estate equity

• Business interests

• Personal property of significant value (vehicles, etc.)

Liabilities (what you owe):

• Mortgage balance

• Auto loans

• Student loans

• Credit card balances

• Any other outstanding debt

Assets − Liabilities = Net Worth

If you have $350,000 in assets and $200,000 in liabilities, your net worth is $150,000. If your liabilities exceed your assets, you have a negative net worth, which is common in early adulthood, but important to move away from deliberately.

Why does this matter?

Net worth tells you whether you're building wealth or just circulating money. A person with a $200,000 salary who spends it all and carries significant debt may have a lower net worth than a teacher who consistently saves and invests on a modest income. Earning a lot and keeping a lot are entirely different disciplines.

Tracking net worth over time — quarterly or annually — is one of the most motivating things you can do financially. You'll see it grow with investment gains, debt paydown, and savings deposits. You'll also see it drop occasionally, and that's okay — markets fluctuate, life happens. The trend over years is what matters.

How to track it:

Use a simple spreadsheet, a notebook, or a tool like Empower (formerly Personal Capital) or Mint. Enter all your accounts and debts. Calculate the total. Set a calendar reminder to update it every three months.

This number will become one of the most useful numbers in your life. It is your financial scoreboard — not your income, not your lifestyle, not the car in the driveway.

Track it. Grow it intentionally. Make it move in the right direction.