Understanding Net Worth and Wealth Distribution

What is Net Worth?

Net worth is the value of all your assets (what you own) minus your liabilities (what you owe). It’s a comprehensive measure of your financial health and provides a snapshot of your overall financial position at a specific point in time.

How to Calculate Your Net Worth

To calculate your net worth, follow these steps:

• List all your assets: Include cash, savings, investments, real estate, vehicles, and valuable personal property.
• List all your liabilities: Include mortgages, car loans, student loans, credit card debt, and any other outstanding debts.
• Subtract liabilities from assets: The result is your net worth.

Understanding Wealth Percentiles

Wealth percentiles show how your net worth compares to others in your country or globally. For example:

• If you’re in the 50th percentile, you have more wealth than 50% of the population.
• If you’re in the 90th percentile, you have more wealth than 90% of the population.
• The top 1% represents the wealthiest segment of the population.

Wealth Inequality Facts

Wealth inequality varies significantly between countries:

• In many developed countries, the top 10% of households hold 60-75% of total wealth.
• In emerging economies, wealth inequality can be even more pronounced.
• Global wealth inequality means that the top 1% of adults own nearly half of all household wealth worldwide.

Improving Your Net Worth

Regardless of your current position, you can take steps to improve your net worth over time:

• Increase your assets: Save consistently, invest wisely, and consider income-generating assets.
• Reduce your liabilities: Pay down high-interest debt and avoid unnecessary borrowing.
• Track your progress: Regularly calculate your net worth to monitor your financial health.