Net Worth
Total assets minus total liabilities.
What is Net Worth?
The balance sheet snapshot of a household. Tracked over time it is a better progress measure than income, since it captures whether earnings are actually being converted into wealth.
Net Worth: a worked example
$650,000 of assets against $310,000 of debt is $340,000 of net worth.
More terms in Planning, Insurance & Estate
Emergency Fund
Liquid reserves covering several months of essential expenses.
Term Life Insurance
Pure death benefit for a fixed period, no cash value.
Whole Life Insurance
Permanent coverage with a guaranteed cash value component.
Disability Insurance
Income replacement if illness or injury prevents you from working.
Long-Term Care Insurance
Covers extended custodial care that health insurance and Medicare do not.
Will vs. Revocable Trust
Directs assets through probate versus holding them outside probate.
Beneficiary Designation
Account-level instructions that override the will.
Probate
The court process validating a will and distributing an estate.