Glossary
Net worth
Everything you own minus everything you owe.
Net worth: what it means in practice
Assets - cash, investments, property, business equity - minus liabilities - mortgages, loans, credit card balances. It is the number that "millionaire" actually refers to, and it is not the same as income.
Two people earning $300,000 can have net worths of $2m and negative $80,000. Income is the input; net worth is the score. Tracking it quarterly is the single most useful habit in personal finance.
A worked example, because the number is often misread. A $600,000 house with a $450,000 mortgage, $80,000 in index funds, $20,000 of cash, a $15,000 car loan and $5,000 on a credit card is a net worth of $230,000 - of which only $100,000 can be spent without selling the place you live. Liquid net worth, the part not tied up in your own house, is the more useful figure most weeks.
Be strict about what counts as an asset: things that could be sold for something close to the number you wrote down. Cars, furniture and a business that cannot run without you rarely qualify. Track it once a quarter, in one currency, using the same method every time - the value of the habit comes from the trend, and adjusting the method to improve the line destroys the only thing it was for.