Net Worth
Net worth is a snapshot of your financial health. It tells you what you own after subtracting what you owe.
Start the lessonIntroduction
Your financial balance sheet
Net worth is calculated like this:
Net worth = Assets − Liabilities
Assets include savings, investments, property, and valuables. Liabilities include loans, credit card balances, and other debts.
Why it matters
Why net worth matters
Measure progress
It helps you see whether your finances are improving over time.
Spot problems early
A falling net worth may signal rising debt or weak savings habits.
Net worth is not a perfect measure of happiness or success, but it is a useful measure of financial health.
Simple example
A quick scenario
Use the sliders to see how net worth changes with assets and debts.
Net worth
₹11,50,000
This person owns ₹18,00,000 and owes ₹6,50,000, so their net worth is ₹11,50,000.
Common mistakes
Mistakes people often make
- Only looking at income: A high salary does not necessarily mean positive net worth if debts are also high.
- Ignoring liabilities: Loans and credit card balances reduce your financial position.
- Not tracking assets: Investments, savings, and home equity contribute to long-term wealth.
Key points
What to remember
1
Net worth is a single number that summarizes your financial position.
2
Assets increase net worth; liabilities reduce it.
3
Positive net worth is generally better than negative net worth.
4
The goal is to improve net worth over time through saving, investing, and debt reduction.
Quiz
Test yourself
Answer these 5 quick questions to check your understanding.