Legal Definitions - net worth

Definition: Net worth is a measure of one's wealth, usually calculated as the excess of total assets over total liabilities.

Examples:

• If you own a house worth $500,000 and have $200,000 in savings, but also have a mortgage of $300,000 and credit card debt of $10,000, your net worth would be $390,000 ($500,000 + $200,000 - $300,000 - $10,000).
• A company's net worth is calculated by subtracting its total liabilities (such as loans and debts) from its total assets (such as property, equipment, and cash).

These examples illustrate how net worth is calculated by subtracting what you owe (liabilities) from what you own (assets). The resulting number represents your overall financial worth or wealth.