Net worth is one of the most important indicators of an individualís or companyís financial health. It represents the total value of all owned assets minus the total liabilities. In simple terms, it shows what would remain if all debts were paid off using existing assets. Understanding your net worth helps assess where you stand financially and guides better decision-making for savings, investments, and long-term goals.

To calculate net worth, add up all assets such as cash, bank balances, investments, real estate, and valuables, then subtract liabilities like loans, credit card dues, or outstanding EMIs. The formula is: Net Worth = Total Assets ñ Total Liabilities. A positive net worth indicates that assets exceed liabilities, reflecting financial stability. Conversely, a negative net worth suggests higher debts than assets and may require reviewing oneís financial strategy.

Tracking your net worth over time helps monitor financial progress. Regularly updating it allows you to see whether your wealth is growing, stagnating, or declining. It also aids in setting realistic financial goals, planning for retirement, and evaluating investment performance. For businesses, net worthóoften referred to as shareholdersí equityóreveals the companyís underlying value and strength of its balance sheet.

Improving net worth involves increasing income, reducing unnecessary expenses, repaying high-interest debts, and investing wisely in appreciating assets like mutual funds, equities, or real estate. Maintaining an emergency fund and avoiding over-leveraging are also crucial. However, while building wealth, investors should ensure all actions comply with SEBI regulations and align with their risk tolerance and financial objectives.

In essence, regularly reviewing your net worth is a simple yet powerful financial habit. It not only reflects your current position but also acts as a roadmap for achieving long-term financial independence and security.