Net Worth as a Gauge of Financial Health

Net Worth is by definition everything you own (assets) minus everything you owe (liabilities). It’s a single, precise number that is extremely easy to calculate and track over time. A positive net worth means that you have own more than owe which is great. A negative net worth means that you have work to do, but it can be due to an early investment in yourself and your financial future (student loans, etc).
I find Net Worth very useful to track over time to ensure that you are progressing towards a successful financial future: one in which you can fund your financial independence (retirement). Paying attention to your net worth also allows you understand how various saving, investing and spending is affecting your financial future. Make a habit of tracking your net worth to positively impact your future.
You can grow your net worth by adding to your asset values or reducing your loans. Pay attention to both sides of that equation!
Mike Morton is a fee-only financial advisor based in Harvard, MA. Find out more: www.mortonfina...