What does it actually mean to calculate "net worth"? In this episode, we break down the fundamental formula of financial health: measuring total assets against outstanding liabilities. While often associated with personal finance, we explore how this concept applies to four distinct categories:

• The Calculation: We explain how net worth is derived by subtracting financial obligations (like loans and mortgages) from assets (such as homes, vehicles, and stocks).
• For Individuals: Learn why net worth is a snapshot of your net economic position. We discuss why tangible assets like retirement accounts are included, while intangible assets—such as educational degrees—are generally excluded from the calculation.
• For Companies: Discover why business net worth is often called "equity." We discuss the "carrying value" of assets on a balance sheet and why a company’s net worth might not reflect its actual market value if it were sold.
• For Governments: We look at how nations use accrual-based accounting to determine financial strength, calculating a country’s total worth by summing the net worth of its government, companies, and residents.

Tune in to understand why tracking this number is vital for creating budgets, managing debt, and planning for retirement.