Own Minus Owe: Your Starting Line

The story: Ana’s starting line

Ana sits at a kitchen table with two lists, things owned and money owed, and a chart that slowly rises.

1. Narrator: Ana works as a dental assistant. Tonight Ana makes two lists: things owned that are worth money, and money owed.
2. Ana: I own $3,100: savings and an old car. I owe $11,500 in loans. So I’m at minus $8,400?
3. Narrator: That’s Ana’s net worth: own minus owe. A negative number is common early on, especially with student loans.
4. Ana: Each month $3,600 comes in and $3,250 goes out.
5. Narrator: That’s positive cash flow. The extra $350 can pay down loans or build savings, so net worth climbs month by month.
6. Ana: So net worth is where I am. Cash flow is where I’m going.

What you’ll learn

1. Net worth = own minus owe

   Add up what you own that’s worth money: cash, savings, retirement accounts, and what a car or tools would sell for. Subtract everything you owe: loans, card balances, money owed to family. The result is your net worth on that day.

   Example: $3,100 owned − $11,500 owed = −$8,400 net worth.

2. Negative is a starting line, not a grade

   Many people start adult life with a negative net worth, often from student or car loans. It doesn’t mean anyone failed. Which way the number moves over the next months matters more than where it starts.

3. Cash flow shows the direction

   Cash flow is money in minus money out each month. Positive cash flow is what pays for saving and paying down debt. Negative cash flow means savings shrink or debt grows, even if net worth looks fine today.

   Example: $3,600 in − $3,250 out = +$350 a month to work with.

4. Check both about once a month

   Checking every day makes normal ups and downs feel scary. A monthly check shows the trend. Two tips: a bill isn’t a debt until it’s late, and a car counts at what it would sell for today, which usually drops each year.

Key words

asset

something you own that’s worth money

debt

money you owe

net worth

what you own minus what you owe

cash flow

money in minus money out over a month

Common questions

Does my car count as an asset?

Yes, at what it would sell for today, not what you paid. Most cars lose value every year, and any loan on it counts as a debt.

Remember this

Own minus owe is where you are. In minus out is where you’re going.

Try it: Find your starting line

1. List what you own that’s worth money, and everything you owe.
2. Subtract to get your net worth for today.
3. Note whether more comes in than goes out each month.

Net Worth Calculator.