A spending plan is the perfect way to track your income and expenses. But to monitor the big picture of your finances, you need to know your net worth. Your net worth can be summed up in this simple equation:

net worth = assets − liabilities

Assets are items you own that have real value, such as cash in the bank, vehicles, investments, real estate, personal belongings, and money owed to you. Liabilities are your debts and financial obligations to others, such as a car loan, credit card debt, or money you borrowed from a friend.

If you have more assets than you owe in liabilities, your net worth will be a positive number. But if you owe more than you own, your net worth will be a negative number. The goal is to raise your net worth over time by increasing your assets or decreasing your liabilities, so you build wealth.