What is net worth and How to calculate net worth?

Net worth is the value of all assets minus the value of all liabilities. Assets include cash, investments, and home equity while liabilities include loans and mortgages. If you want to calculate your net worth, gather together a list of your assets (including real estate) and subtract from that list any debts or other obligations (such as credit card debt). The resulting number is your net worth. This can be an eye-opening exercise for many people because they may not realize how much their lifestyle choices have affected their finances; this number will give you an accurate picture of where you stand financially.

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