What does a positive net worth indicate about a person’s financial situation?

A positive net worth indicates that a person's assets exceed their liabilities. This means that when you subtract total debts (liabilities) from total assets, the result is a positive number. This situation implies financial stability and security, as the individual possesses more valuable possessions than what they owe. It can be an encouraging sign of good financial health, reflecting effective management of finances, savings, and investments.

While having no debt at all can also contribute to a positive net worth, it is not a requirement—people can still have debt but possess assets that outweigh these liabilities. Similarly, the presence of a positive net worth does not inherently guarantee a comfortable retirement or sufficient savings for future expenses, as those situations depend on various other factors such as income, expenses, and lifestyle choices. Therefore, the most accurate representation of what a positive net worth indicates is that the individual has more assets than liabilities.