Definition
What you own minus what you owe: your assets, such as savings, a home and retirement accounts, less your debts.
What it means
Net worth is a snapshot of your financial position at one moment. Add up assets, such as bank balances, retirement and investment accounts, the market value of your home and vehicles, then subtract liabilities, such as a mortgage, car loans, student loans and credit card balances. The result can be negative, which is common for young adults with student loans or new homeowners. Tracking net worth once or twice a year shows whether your overall situation is improving, even when monthly cash flow is tight. The Federal Reserve's Survey of Consumer Finances, published every three years, measures household net worth across the United States and is a common source for national figures. Home and car values are estimates, so it is usual to use conservative numbers.
Example
Assets of $15,000 savings + $40,000 in a 401(k) + a $300,000 home = $355,000. Debts of a $240,000 mortgage + $12,000 car loan = $252,000. Net worth = $103,000.
Illustrative numbers only. Your situation will differ.