The measurement you use to monitor your financial health is your net worth. Net worth is the value of all the assets you own, minus all of your liabilities.

For example, consider a couple with the following assets:

• Primary residence valued at $250,000
• An investment portfolio with a market value of $100,000
• Automobiles and other personal assets valued at $25,000

Their liabilities include:

• An outstanding mortgage balance of $100,000
• A car loan of $10,000

The couple’s current net worth is calculated as:

Assets - Liabilities = Net worth
($250,000 + $100,000 + $25,000) – ($100,000 + $10,000) = $265,000

Your net worth will change over time. Ideally, the value of your assets will increase while your liabilities decrease. You keep track of how your finances are changing by updating your net worth. How often you update your net worth depends on how quickly your finances change.

The Net Worth page in a budget space is where you build and save your net worth balance sheet. The Net Worth page, which is optional, is there for your convenience should you choose to use it.