In short: Net worth is everything you own (assets) minus everything you owe (liabilities) — the most honest "thermometer" of personal finances.
Simply put: Assets are recorded at today's market value, not the purchase price; liabilities at the amount still owed, not the monthly payment. Measure at the same time each period — for example at the start of every quarter — and watch the direction: is your net worth growing over the years? A negative net worth is not a verdict but a starting point; then the first goal is to reduce the most expensive debt.
Example: Assets €1,200, liabilities €300 — net worth is €900. If liabilities are €1,500, net worth is −€300.
Watch out: Myth: "Rich is whoever earns a lot." Someone with a high income and big debts can have a lower net worth than someone with a small income and no debts.
Source: IFRS, Conceptual Framework — https://www.ifrs.org/issued-standards/list-of-standards/conceptual-framework/