Define the term net worth.

Net worth is defined as the difference between what you own (your assets) and what you owe (your debts). This concept provides a snapshot of an individual's financial health at a specific point in time. To understand net worth, consider the following:

When you calculate your net worth, you start by identifying all your assets, which include cash, investments, real estate, and personal property. From this total, you subtract your liabilities, such as loans, mortgages, and any other debts. The resulting figure gives you a clear picture of your financial standing: if your assets exceed your liabilities, you have a positive net worth, indicating financial stability.

The other options mentioned provide definitions that do not accurately capture the essence of net worth. While total income minus expenses can indicate cash flow, it does not account for the overall value of assets and debts. Similarly, investments plus liabilities does not relate to net worth, as it combines elements that should be treated differently. Finally, cash flow minus expenses gives information about immediate financial management rather than long-term wealth assessment. Thus, the focus on assets versus debts in defining net worth provides the clearest understanding of personal financial status.