Which term refers to the financial position of an individual based on their assets and liabilities?

Net worth is a key financial concept that represents the difference between an individual's total assets and total liabilities. Essentially, it gives a snapshot of an individual's financial position at a specific point in time. To determine net worth, you would sum up all assets—such as cash, investments, property, and personal belongings—then subtract all liabilities, which typically include debts like mortgages, loans, and credit card balances. The resulting figure is an indicator of an individual's overall wealth or financial health.

Cash flow refers to the movement of money into and out of a person's finances, focusing on income versus expenses over a specific period. While important for understanding ongoing financial health, it does not directly measure net worth.

Financial health is a broader term that could encompass various aspects of financial well-being, including net worth, cash flow, savings habits, and debt management. However, it does not specifically define the relationship between assets and liabilities.

A budget is a tool used to plan and manage income and expenses, helping individuals to allocate funds responsibly over time. A budget does not reflect the total financial position in terms of assets and liabilities, making it distinct from the definition of net worth.