Assets: what you own

An asset is anything of value you own: cash, savings, fixed deposits, fund units, shares, a house, a vehicle. Assets can appreciate (grow in value) or depreciate (lose value) over time, but they belong to you and can typically be sold or drawn upon.

Liabilities: what you owe

A liability is money you owe to someone else: a loan balance, a mortgage, a credit card balance, unpaid bills. Liabilities typically carry an interest cost until repaid.

The distinction that trips people up

A car or a large home can feel like a marker of wealth, but if it was financed with a loan, the loan balance is a liability that offsets the asset's value. What matters for net worth is the asset's value minus any debt tied to it.

Good debt vs. costly debt

Not all liabilities are equally harmful — a mortgage on a property that's appreciating, or a business loan funding income-generating activity, can be reasonable. High-interest consumer debt with no offsetting asset or income benefit is generally the most damaging to net worth over time.

Keeping track

This app's Assets and Liabilities trackers let you record both sides clearly, so your Net Worth figure reflects the full picture rather than just what feels true.