Why measure
Budgets manage a month. These four numbers describe your overall position, and how it changes over years. Calculate them twice a year and watch the direction.
1. Net worth
Net worth = assets − liabilities.
| Assets | Liabilities | ||
|---|---|---|---|
| Current account | $1,500 | Credit card | $1,800 |
| Savings | $6,500 | Car loan | $9,200 |
| Retirement savings | $22,000 | Student loan | $20,000 |
| Car (estimated value) | $18,000 | ||
| Total | $48,000 | Total | $31,000 |
Net worth = $17,000.
Net worth can be negative, especially early in a career with student loans. That is common. What matters is the direction: is it rising year after year?