Net worth vs income vs financial wealth In personal finance, the key distinction is that net worth is the standard, comprehensive measure of an individual's overall financial position, whereas financial wealth typically refers to a more specific subset of assets that are readily investable or easily converted into cash. Net Worth vs. Financial Wealth Feature Net WorthFinancial WealthDefinitionTotal assets minus total liabilities.Assets that are financial in nature and often liquid or investable (e.g., cash, stocks).Includes AssetsIncludes all assets, both financial (stocks, cash) and non-financial (real estate, cars, art, jewelry).Generally excludes non-financial, physical, or illiquid assets like a primary residence, vehicles, or personal property.Includes LiabilitiesYes, all debts are subtracted (mortgages, loans, credit cards).Usually implies only financial liabilities or short-term debts are subtracted from financial assets to determine "investable net worth".PurposeProvides a complete picture of an individual's overall financial health and long-term security.Focuses on the portion of wealth that is flexible, available for immediate use, or can be allocated to investments. Summary of Differences - Scope: Net worth is a broader term encompassing everything you own of value, while financial wealth is a narrower, more specific classification focusing on assets used for investment and immediate financial flexibility. - Liquidity: Financial wealth emphasizes liquid assets that can be easily and quickly turned into cash without significant loss of value (e.g., public stocks, cash in bank accounts). Net worth includes both liquid and illiquid assets, such as the equity in your house or a private business, which may take time to sell. - Primary Residence: The value of a primary residence (minus the mortgage) is typically counted towards one's net worth, but it is generally excluded when calculating "pure" financial wealth because you need to live somewhere and cannot easily convert the full value to cash without selling the home.