What does "net worth" define?

Net worth is a financial metric that provides a snapshot of an individual's or entity's financial health at a specific point in time. It is defined as the total value of all assets owned, such as property, investments, and cash, minus any liabilities, which include debts and obligations like loans, mortgages, or credit card debt. This calculation gives a clearer picture of what an individual actually owns after accounting for what they owe.

Understanding net worth is important because it helps individuals assess their financial position and plan for future financial goals. It can also indicate wealth accumulation over time and serves as an important indicator for lenders and financial advisors when making assessments about creditworthiness and investment opportunities.

The other options represent different financial concepts: total income over a lifetime refers to earnings, total spending over a year pertains to expenditures, and the value of property owned addresses asset valuation without considering liabilities. However, none of these encapsulate the comprehensive definition of net worth.