Assets vs. Liabilities: Net Worth Basics

Q: What is net worth? A: Assets minus liabilities. Assets are things you own that have value—cash, savings, investments, a car you own outright. Liabilities are debts you owe—student loans, credit card balances, money borrowed from family. Net worth is the snapshot of your financial position at a moment in time. Q: Does net worth matter if I am only 17? A: Yes, as a mindset. Teens with $400 in savings and no debt have positive net worth. Someone with a flashy phone on a payment plan and $200 owed to friends might look like they have more—but their net worth could be lower. Building wealth starts with owning more than you owe. Q: What counts as an asset for teens? A: Cash, checking and savings balances, investments, valuable items you could sell (electronics, collectibles—be realistic about value). A car can be an asset if it is worth more than any loan on it. Your education is an investment in future earning power, even if it is not a line item on a balance sheet. Q: What are common teen liabilities? A: Credit card debt, personal loans, BNPL balances, money owed to parents or friends, car loans. Even small debts count. The goal over time is to shrink liabilities while growing assets. Q: How is this different from income? A: Income is what you earn. Net worth is what you keep and own. High earners can have low net worth if they spend everything and carry debt. Modest earners can build strong net worth by saving and avoiding debt. Wealth is a marathon, not a paycheck. Q: How do I start tracking net worth? A: Once a month, list what you own and what you owe. Subtract. Track the trend over time—not daily swings. Celebrate increases, even small ones. The habit of knowing your number beats guessing. It is one of the most adult financial skills you can learn early.