Net worth is the single best measure of overall financial health. It counts everything you own (cash, investments, home equity, valuable possessions) minus everything you owe (credit cards, loans, mortgage).
Tracking net worth monthly or quarterly shows real progress that a monthly budget can miss. It's fine — even normal — to have negative net worth early in a career or after a home purchase.
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What is a good net worth for my age?
Common guidelines exist but vary widely. A rough US benchmark: net worth = age × pretax annual income / 10. It's a starting point, not a scorecard.
Related terms
Cash flow
The difference between money coming in and money going out over a given period.
Compound interest
Interest earned on both your original investment and the interest it has already generated.
Saving rate
The percentage of take-home pay you keep rather than spend.
Asset allocation
How you split your portfolio across broad asset classes — stocks, bonds, cash, and alternatives.
Assets
Anything of financial value you own.