To calculate net worth, what must you subtract from your total assets?

To calculate net worth, you need to subtract total liabilities from your total assets. This formula is essential because net worth provides a clear picture of an individual's financial health. Total assets represent everything you own that has value, such as cash, real estate, vehicles, and investments. Total liabilities, on the other hand, include all your debts and obligations, such as mortgages, loans, and credit card debt.

By subtracting total liabilities from total assets, you can determine what you truly own after accounting for what you owe. A positive net worth indicates that your assets exceed your liabilities, while a negative net worth suggests the opposite. This distinction is crucial for personal financial planning, as it helps individuals understand their financial standing and make informed decisions about saving, investing, and managing debt.

The other options do not pertain to the calculation of net worth. Monthly expenses and annual income are operational figures that relate more to budgeting and cash flow management rather than net worth. Similarly, investment returns are performance metrics that reflect the growth or reduction of investments, not a direct component of the net worth calculation.