net worth statement
A personal financial document listing all assets and liabilities to calculate net worth, providing a snapshot of financial health at a point in time.
Example
“Her annual net worth statement showed assets of $850,000 and liabilities of $320,000 for a net worth of $530,000.”
Memory Tip
NET WORTH STATEMENT = your personal balance sheet. Assets minus debts = net worth.
Why It Matters
A net worth statement helps you understand your true financial position by showing what you actually own minus what you owe. This information is essential for setting financial goals, making investment decisions, and tracking your progress toward long-term financial security over time.
Common Misconception
Many people think net worth only includes their income or salary, but it actually measures total assets minus total liabilities regardless of how much money you earn. Someone with a high income could have a negative net worth if they have more debt than assets, while someone with moderate income could have substantial net worth through smart saving and investing.
In Practice
Consider someone who owns a home worth 300,000 dollars with a mortgage of 200,000 dollars, has 50,000 dollars in savings, 25,000 dollars in retirement accounts, owes 5,000 dollars on a car loan, and has 8,000 dollars in credit card debt. Their net worth would be calculated as 375,000 dollars in total assets minus 213,000 dollars in total liabilities, resulting in a net worth of 162,000 dollars at that moment in time.
Etymology
NET WORTH (assets minus liabilities) STATEMENT (formal financial document). A STATEMENT showing NET WORTH.
Common Misspellings
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Related Terms
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See Also
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