The basic calculation
List assets such as cash, retirement accounts, investments, and property. Then list debts such as credit-card balances, student loans, auto loans, and a mortgage. Subtract the second list from the first.
What the number can show
Tracking net worth over time can reveal whether debt is shrinking, savings are growing, or a major purchase changed the picture. It can help you see progress that a monthly bank balance misses.
What it cannot show
Net worth does not measure security, generosity, health, housing quality, or the work it took to get through a difficult year. Use it as information for a decision, not as a judgment about a person.