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Answer How are assets and liabilities connected to net worth

Question:

How are assets and liabilities connected to net worth?

Answer:

Assets are the valuables you own, whereas liabilities are the debt you owe others. When your assets exceed your liabilities, you have a positive net worth. This is an ideal status that most people yearn for. A person who has a positive net worth enjoys substantial financial freedom and independence.

On the other hand, if you have more liabilities than assets, you are in a negative network. You are not financially independent, as you depend on others to finance different aspects of your day-to-day livelihood.

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