Let's say, having worked for many years, that your salary is now $2 million.

You might be tempted to call yourself a millionaire, but technically, you would only be correct if the sum of your income, less your debts, remained above $1 million when bills were paid.

In other words, it is your 'net worth' which determines your wealth status.

Net worth is effectively a grand total of all your assets minus your liabilities. It is a measure of your wealth at a particular point in time.

Knowing your net worth, says Amoy Virgo, a wealth adviser of NCB Capital Markets Limited, is a useful tool to measure financial progress from year to year, or as often as you prefer.

Keeping tabs on what you own versus what you owe also helps you develop a comprehensible indicator of your overall financial health, and is the basis on which to set goals for your children, their education and your own, and retirement.

Here is Virgo's eight-point guide to tracking your wealth.

Establishing your net worth

Calculating your net worth is easy. It only requires some basic financial information regarding the assets you own, for example home, car, jewellery and investments, as well as the debt that you owe, such as your mortgage and credit-card bills.

First, add up your assets, and then add up your debts. Your net worth is derived from subtracting your debts from your assets. The formula is:

Assets - Liabilities = Net Worth

The calculations can be done in a few easy steps.

Step One: Start by listing your largest assets and their value. This would normally include your home and motor vehicles. Make sure you use accurate estimates in current dollars.

Be conservative, and also remember to subtract the cost of selling your possessions. You should, for example, cut the value of your house by the amount you would pay a broker to sell it, as well as other closing and legal fees.

Step two: List your more liquid assets and their value. This includes checking and savings accounts, cash, certificates of deposits, repurchase agreements, or other investments, such as retirement accounts.

Step three: List personal items that may be of value. This could include jewellery, coin collections, musical instruments, furniture and antiques. You don't need to itemise everything.

Step four: Take all of the assets you have listed in the first three steps and add their value. This number represents your total assets.

Step five: Start listing your liabilities and the amounts owed. Again, start by listing the major outstanding liabilities, such as the balance on your mortgage, or car loans.

Step six: List all of your personal liabilities, such as credit cards, student loans, or any other debt, and the amounts owed.

Step seven: Add up all of your liabilities.

Step eight: Subtract the total liabilities from the total assets and you will have your net worth.

Remember that it does not matter how big or how small the net figure is. Even if it is negative, this is just a starting point to have something to compare against in the future.

You should repeat this process at least once a year and compare it with the previous year's number.

You can then determine if you are making progress or getting further behind. This is what is truly important and not just the actual number.

Email Amoy: virgoan@jncb.com.