Many people focus on income.
But income alone does not show financial health.
That is where net worth comes in.
Net worth shows where you truly stand financially.
It is one of the most important personal finance numbers to understand.
This guide explains what net worth is, how to calculate it in Canada, and why it matters.
What Is Net Worth?
Net worth is the difference between what you own and what you owe.
Simple formula:
Net Worth = Assets − Liabilities
It is a snapshot of your financial position today.
What Counts as Assets in Canada?
Assets are things you own that have value.
Common Assets
- Cash and savings
- Chequing and savings accounts
- TFSAs and RRSPs
- Investments
- Property or home value
- Vehicles (current market value)
What Counts as Liabilities?
Liabilities are debts and obligations.
Common Liabilities
- Credit card balances
- Student loans
- Car loans
- Personal loans
- Mortgage balance
📌 Common household debts in Canada
How to Calculate Your Net Worth (Step-by-Step)
Step 1: List All Assets
Add up the current value of everything you own.
Step 2: List All Liabilities
Add up all outstanding debts.
Step 3: Subtract Liabilities from Assets
The result is your net worth.
Example
- Total assets: $120,000
- Total liabilities: $80,000
👉 Net worth = $40,000
Is a Negative Net Worth Bad?
Not always.
Many Canadians start with a negative net worth due to:
- Student loans
- Early career stages
- New mortgages
What matters is direction, not perfection.
Improving net worth over time is the goal.
Why Net Worth Matters More Than Income
Income shows how much you earn.
Net worth shows how much you keep.
Tracking net worth helps you:
- Measure real progress
- Make better financial decisions
- Set realistic goals
- Stay motivated
📌 How to Create a Simple Budget in Canada
How Often Should You Track Net Worth?
A good rule:
- Every 6 months
- Or once a year
Too often creates noise.
Too rarely slows awareness.
Final Thoughts
Net worth is not about comparison.
It is about clarity.
Knowing your number gives you control and direction.
👉 Want help understanding your financial position and next steps?
Book a free financial clarity session with Terces Finance today.
