Your net worth is basically the total amount that would be left if you sold all your assets and paid back all your debt today:
- assets = 720’000
- debt = 420’000
- net worth = 300’000
The number is usually defined in US-dollar and used to compare the success or power of grown ups. I personally don’t see much value in it beside to use it as a performance indicator to check how your wealth is developing.
I want to be a millionaire!
Being a millionaire means theoretically to have a net worth of 1’000’000 USD. The term originated in the 1970s in the US and is still today in use as a synonym for the “super rich”.
Interesting is that in the 1970s having a million USD was really a lot and meant that you would be financially free (with a decent lifestyle). If you take inflation into account, it would be around 7’000’000 USD today.
Depending where you live today, 1’000’000 USD might not be enough to be financially free.