When we hear the term “net worth,” it’s most often associated with CEOs of large companies and heirs to large fortunes. But everyone has a net worth. And it’s not a bad idea to know what yours is.

Net worth has nothing to do with one’s worth as a human being. But it is a good indicator of how a person is doing financially. It’s an excellent yardstick for tracking financial progress, and it can help with activities such as estate planning.

Here’s how to calculate your net worth, step by step.

1. Make a list of your real and personal property. This includes your home, vehicles, boats and such. Next to each item, write down an estimate of its worth. You can find values for vehicles and many other assets online.

2. Take a look at the latest statements from your checking account, any savings accounts, certificates of deposit, retirement fund, and other liquid assets. Write down the amount that is in each account, and the amount of cash you have.

3. Take inventory of your valuables. These may include such things as jewelry, collectibles, musical instruments and firearms. List any item that is worth at least $500, along with an estimate of its worth.

4. Add up all of the figures you’ve written down so far. The result is your total assets.

5. Now take a look at your debts. These may include a mortgage, credit card balances, car loans and personal loans. List them and write down the amounts owed, and add them all together to determine your total liabilities.

6. Subtract your total liabilities from your total assets. This number is your net worth.

If you have more assets than liabilities, your net worth will be a positive number. But it’s quite common to have a net worth of zero, or even a negative net worth. Many people have more debts than assets. But after they’ve paid on their debts for a while, their net worth becomes a positive number.

It’s important to note that different people figure net worth in different ways. Some include the cash value of life insurance policies they own, intellectual property and other items. For this reason, it doesn’t do much good to compare your net worth to someone else’s. Instead, use it to gauge how you are doing from year to year.

Knowing your net worth isn’t mandatory, but it is a good thing to know. And once you’ve gotten the numbers together, it’s very easy to calculate. Figure up your net worth today, then do it again in a year. This will tell you whether or not you’re moving in the right financial direction.