Your net worth is simply everything you own minus everything you owe. It's a single number that captures your overall financial position at a point in time — and tracking it over the years is widely considered the best way to measure your real financial progress.
Add up your assets (what you own) — savings, investments, pensions, the value of your home and any other property, your car, and so on. Then add up your liabilities (what you owe) — mortgage, loans, credit card balances, overdrafts and other debts. Subtract the liabilities from the assets, and the result is your net worth. It can be negative (especially early on, with student loans or a new mortgage), and that's completely normal.
Net worth matters because it looks at the whole picture, not just one part. You can earn a high income but have a low or negative net worth if you spend and borrow heavily; equally, a modest earner who saves steadily and clears debt can build real wealth. Because it nets off debt against assets, it shows your true financial position and, tracked over time, reveals whether you're genuinely moving forward.
The real value is in the trend: calculate it once a year (a perfect part of an annual review) and watch it grow over time. Don't compare yours to others' — circumstances and life stages differ hugely. Our free net worth tracker and annual financial review help you measure and track it. This is general information, not financial advice.