The difference between your assets and liabilities is known as your equity, or net worth. Do you owe more than you own? If so, you are technically insolvent!

What is a good level of net worth? The word good is relative when it comes to net worth. Your optimal level of net worth will depend on your age, your goals, and where you are in the stages of your financial life. These stages include the wealth accumulation stage, the approaching retirement stage, and the retirement stage of your life. As a general rule, having a good level of net worth means that your assets are greater than your liabilities. As you age, the difference between your assets and liabilities should increase, with your assets always being the greater value.

The question of where you are now versus where you should be is a personal question that you must answer for yourself. As you try to answer this, ask yourself the following questions:

            What does my balance sheet show? Is my net worth growing?

The answers to these questions often depend on the stage you are at in life. For example, if you just graduated from high school or college, you are most likely in the accumulation stage of your life; therefore, your net worth should be growing. If you are retired, then you are probably using your savings for retirement expenses. In this case, your net worth is likely decreasing. Ask yourself these important questions:

• Am I reaching my personal goals?
• Am I planning for emergencies?
• Do I have adequate liquid assets?
• Am I out of credit card and consumer debt (other than using my credit card for convenience and paying off the balance each month)?
• Am I saving sufficiently for retirement and for my other financial goals?

If you can answer each of these questions affirmatively, you are likely financially “healthy.” However, remember that we all can—and should—improve!