A lot of bloggers think that it is a worthless metric, and it possibly is. But for those of us that really find or gain benefit from it, it can be a valuable piece in the financial toolbox.
LendingClub states it pretty basic as:
“…basically just the sum of your assets minus your liabilities. Would you like to see how your net worth stacks up compared to other people your age and at your income level? There’s a tool that will let you do just that here…”
Personally I think one question can sum up how I think net worth is defined:
If you sold everything you have, and paid all your debts RIGHT NOW, how much money would you have (or not have)?
The number that you come up with there is very similar to how the above folks described it, but for us laymen, I think that definition spells it out pretty nicely.
Yes, you could even get as granular as selling your sneakers and your Top Ramen packages, but that might be taking it too far. But honestly it’s a fairly loose definition that can be defined by your means. The number doesn’t really matter to anyone but yourself, so knock yourself and come up with your own definition if you want, it’s up for debate. Do you have another definition? What is it?
Think about it, what would you have left if you sold EVERYTHING you owned right now? Care to share?