What term is used to describe a situation where a person has more assets than liabilities?

Net worth is the term used to describe a situation where a person has more assets than liabilities. This is a fundamental concept in personal finance that reflects an individual's financial health. Net worth is calculated by subtracting total liabilities from total assets. When assets exceed liabilities, it generally indicates a positive financial position, suggesting that the individual owns more than they owe. This measure is essential for assessing overall financial stability and making informed decisions about investments, savings, and future financial planning.

Understanding net worth is crucial for evaluating one’s financial standing, planning for retirement, and determining eligibility for loans or other financial products. Monitoring net worth over time can help individuals track their financial progress and make necessary adjustments to their financial strategies. Other terms like cash flow, asset allocation, and income stability focus on different aspects of personal finance, such as income management, investment strategies, and the reliability of income streams, respectively, but do not directly indicate a comparison between assets and liabilities like net worth does.