The Coffee Shop Conversation
Imagine you’re at a coffee shop with a friend. He says proudly, “I earn ₹1.2 lakh a month, I’m doing really well.” But a few minutes later, he admits he has a car loan, a personal loan, credit card dues, and no real savings.
On the other side of the table, another friend earns ₹60,000 a month, but she’s debt-free, owns a small apartment, has investments in mutual funds, and keeps an emergency fund ready.
Who’s actually better off?
If you guessed the second friend – you’re right. And the reason is one simple concept: net worth.
So, What Exactly Is Net Worth?
In plain English, net worth = everything you own – everything you owe.
- Assets (what you own): savings in your bank account, fixed deposits, mutual funds, gold, property, even your scooter or laptop (if you could sell it for cash).
- Liabilities (what you owe): loans, credit card dues, EMIs, money borrowed from friends or family.
Net worth is simply the difference between the two.
👉 Example:
- You have ₹5 lakh in savings and investments.
- You owe ₹3 lakh in a car loan.
- Your net worth = ₹2 lakh.
That’s your real financial position, regardless of how much you earn every month.
Why Net Worth Matters More Than Just Income
A high income doesn’t always mean financial security. Many people earn well but spend recklessly or pile up loans. Net worth gives you the big picture:
- It shows if you’re actually growing wealth or just running in circles.
- It helps you spot when debt is eating away at your finances.
- It lets you plan for the future-like buying a home, starting a business, or retiring comfortably.
That’s why tracking net worth is like checking your health with a full-body scan, not just your weight.
Real-Life Example (Indian Context)
Take Ravi, a 28-year-old software engineer in Bengaluru. He earns ₹90,000 a month and has:
- Savings & investments: ₹3 lakh
- Loans (bike loan + credit card): ₹2.5 lakh
His net worth is just ₹50,000.
Now meet Neha, a 30-year-old teacher in Pune. She earns ₹45,000 a month and has:
- Savings & investments: ₹4 lakh
- Loans: ₹0
Her net worth is ₹4 lakh – much stronger than Ravi’s, even though she earns less.
Common Myths About Net Worth
- “I earn well, so I must be financially healthy.”
Not true. High income means nothing if debt outweighs assets. - “Net worth is only for the rich.”
Wrong. Everyone-from students to retirees-can (and should) track it. - “I’ll calculate it once when I’m older.”
Mistake. Net worth changes as your income, expenses, and loans change. It should be tracked regularly.
How to Start Tracking Your Net Worth Today
- List your assets: Note your savings, FDs, investments, property, even gold jewelry.
- List your liabilities: Add up all loans, EMIs, credit card dues.
- Subtract liabilities from assets. That’s your net worth.
- Update it monthly or quarterly to see if you’re moving in the right direction.
Of course, doing this manually in Excel can be time-consuming. That’s where tools like Fintellect make life easier. With Fintellect, you can:
- Upload your bank statements and get your transactions automatically categorized.
- See your net worth calculated instantly.
- Get insights to plan better for the future.
Final Thoughts
Net worth is more than just a number-it’s a clear snapshot of your financial health. Instead of only chasing a higher salary, focus on building assets, reducing debt, and watching your net worth grow.
Remember: even small, steady steps-like paying off a loan or investing a bit more every month – make a big difference over time.
Why not start today? Use Fintellect to calculate your net worth and get clarity on your finances in minutes.