Net Worth = Assets - Liabilities
Your net worth provides a snapshot of your financial situation at this point in time. If you calculate your net worth today, you will see the end result of everything you've earned and everything you've spent up until right now. It can provide a wake-up call if you are completely off track, or a "job-well-done" confirmation,
How to determine target minimum net worth
Below is a simple formula to help you determine a minimum "target" net worth:
Target Net Worth = [Your Age−25] ∗ [1/5∗Gross Annual Income]
Why track net worth over time
When you see financial trends in black and white on your net worth statements, you are forced to confront the realities of where you stand financially. Reviewing your net worth statements over time can help you determine
1) where you are, and
2) how to get where you want to be.
This can give you encouragement when you are heading in the right direction (i.e., reducing debt while increasing assets) and provide a wake-up call if you are not on track.