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Your net worth is the single most important number in personal finance. It equals everything you own (assets) minus everything you owe (liabilities). A positive net worth means your assets exceed your debts; a growing net worth over time is the clearest sign that you're building wealth — regardless of your income level.
Net Worth = Total Assets − Total Liabilities. Add up all your assets: chequing accounts, savings, investment accounts, retirement funds (RRSP, TFSA, 401k, IRA), real estate market value, and vehicle resale value. Then subtract all liabilities: mortgage balance, car loans, student loans, credit card balances, and personal loans. Use current market values, not purchase prices.
A widely used rule of thumb (from The Millionaire Next Door): multiply your age by your gross annual income, then divide by 10 — that's your "expected" net worth. For example, a 35-year-old earning $80,000 would aim for a net worth of $280,000. The median U.S. net worth by age group (Federal Reserve 2022): under 35: ~$39,000 · ages 35–44: ~$135,000 · ages 45–54: ~$247,000 · ages 55–64: ~$364,000.
There are only three levers: increase assets, decrease liabilities, or both. The most effective strategies: maximize tax-advantaged accounts (RRSP, TFSA, 401k) to compound wealth tax-free or tax-deferred; invest consistently in low-cost index funds; pay down high-interest debt aggressively; build an emergency fund so unexpected expenses don't push you into more debt; and avoid depreciating assets like new vehicles bought on credit.
Monthly net worth tracking gives you a clear feedback loop on financial decisions. You can see the impact of debt payoff, investment contributions, and spending habits in real numbers. It motivates consistent action, helps you catch problems early (credit card balances creeping up, investments stagnating), and gives you a roadmap toward your FIRE number or retirement goal.