Net worth is one of those terms that gets tossed around a lot, but is often misunderstood. While many people assume that a big house, a nice car, and designer clothes are signs of wealth, they aren’t always signs of signs of net worth. This is because the net worth equation has two sides: one is assets, and the other is debt. The fact that many of us are so out of touch with this number is a shame, because unlike the external indicators of affluence that we tend to notice, net worth is probably the best indicator of how well we’re doing financially and the best way to track our progress over time.
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