Definition
Net Worth Statement
A net worth statement is a snapshot of your finances that lists everything you own (assets) minus everything you owe (liabilities), giving a single number for your wealth.
Assets include cash, bank balances, mutual funds, stocks, EPF/PPF, gold and real estate; liabilities include home loans, car loans, personal loans and credit-card dues. Net worth = assets − liabilities. Tracking it once or twice a year shows whether you are genuinely building wealth, regardless of how income or spending fluctuate month to month.
A rising net worth signals progress; a stagnant or falling one is a warning even if income is high. It is wise to value real estate conservatively and to separate liquid net worth (easily sellable) from illiquid assets like property, since the former is what you can actually deploy in an emergency.
Related terms
- Goal-Based PlanningGoal-based planning is an approach that ties every investment to a specific life goal — a home, a child's education, retirement — with its own timeline, target amount and strategy.
- Financial Ratios for IndividualsFinancial ratios for individuals are simple yardsticks — like savings, debt and liquidity ratios — that summarise the health of your personal finances at a glance.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.