What is Net Worth? Net Worth is the total value of everything you own minus everything you owe, assets minus liabilities, the single number FIRE practitioners track to measure progress toward a FI Number. It includes cash, investments, retirement accounts, and real estate equity, minus mortgages, loans, and credit card balances.
Worked example:
| Assets | Value |
|---|---|
| Brokerage account | $180,000 |
| 401(k)/IRA | $220,000 |
| Home value | $350,000 |
| Cash | $20,000 |
| Total assets | $770,000 |
| Liabilities | Value |
|---|---|
| Mortgage balance | $220,000 |
| Car loan | $10,000 |
| Total liabilities | $230,000 |
Net Worth = $770,000 - $230,000 = $540,000.
Not all net worth counts toward FI progress equally: a primary home’s equity typically does not generate income to fund living expenses (unless you downsize or rent it), so most FIRE calculators use “investable net worth” or “FI net worth”, excluding the primary residence, to compare against a FI Number. Tracking both total and investable net worth monthly or quarterly reveals whether you are actually closing the gap or just watching home prices rise.