When you hear the term “net worth,” you probably think of billionaires, celebrities, or business moguls. But the truth is — everyone has a net worth. Whether you’re just starting your first job, paying off student debt, or planning for retirement, knowing your net worth gives you a snapshot of your current financial health.
Think of it as your financial report card. It shows where you stand today, helps you make smarter money decisions, and guides you toward building lasting wealth.
What Is Net Worth?
Simply put, net worth is the difference between what you own and what you owe.
Net Worth = Assets – Liabilities
- Assets are the things you own that have value — like your savings, car, house, or investments.
- Liabilities are what you owe — like credit card debt, loans, or money you still have to pay off.
Examples of Assets
- Savings or investment accounts
- Retirement funds (like a pension or provident fund)
- Property you own (even partially)
- Paid-off vehicles
- Valuables such as art, jewellery, or collectibles
Examples of Liabilities
- Home or car loans
- Student loans or personal loans
- Credit card debt
- Retail store accounts or any money you owe
Your net worth is positive if your assets are worth more than your debts — meaning you’re financially moving forward. A negative net worth means you owe more than you own — but that’s not the end of the story; it’s a starting point to plan your way up.
Why It’s Important to Know Your Net Worth
A big salary doesn’t always mean financial success. You could earn R40,000 a month but still have a negative net worth if your debts are piling up. On the other hand, someone earning R15,000 could have a positive net worth because they save, invest, and manage their spending wisely.
Here’s why tracking your net worth matters:
- It helps you see where your money is going and where to improve.
- It influences your financial goals and timelines.
- It gives you clarity on whether you’re moving forward or backward financially.
- It helps with family and future planning — for example, knowing what your loved ones would inherit if something happened to you.
- It keeps you motivated to build wealth intentionally.
How to Calculate Your Net Worth
You can calculate your net worth in a few simple steps:
Step 1: List all your assets
Include everything valuable you own — savings, investments, retirement funds, property, cars, and valuables.
Step 2: List your liabilities
Write down everything you owe — loans, credit cards, student debt, store accounts, and unpaid bills.
Step 3: Subtract liabilities from assets
If you own more than you owe — great! You have a positive net worth. If not, that’s okay. You now have a clear picture of where to start improving.
How to Improve Your Net Worth
There’s no “perfect” net worth amount. It depends on your income, goals, lifestyle, and responsibilities. What matters is progress — not perfection. Here are some practical ways to improve it:
- Spend intentionally.
Avoid buying things just to impress others. Differentiate between wants and needs. - Pay off your debts.
The faster you reduce debt (especially high-interest ones like credit cards), the less interest you pay — and the more money stays in your pocket. - Grow your savings and investments.
Even small, consistent contributions add up over time. Explore options like unit trusts, tax-free savings accounts, or property. - Avoid taking on unnecessary debt.
Not every loan is bad, but every loan comes at a cost. Think before you swipe. - Track your progress.
Your net worth changes over time — especially as you buy assets, pay off debt, or invest. Review it at least once a year to see how far you’ve come.
Bottom Line
Knowing your net worth isn’t about comparing yourself to others — it’s about taking charge of your financial story. It gives you a clear starting point, helps you make smarter choices, and puts you in control of your financial future.
Even if your number is negative right now, remember: what matters most is that you’ve started paying attention. From this point, every smart financial decision you make — saving, budgeting, investing, paying off debt — moves your net worth in the right direction.
