Is Your Net Worth Above or Below Average?
Net worth is a fairly quick, easy way to check your financial health. To find it, you add up the value of all your assets, and then subtract any debt you have. For example, if you have $100,000 in retirement accounts and a $400,000 home, but also $300,000 in debt, then your net worth is $200,000.
While net worth isn’t everything, it can give you an idea of where you’re at compared to your peers. Below, you’ll find the average net worth in the United States.
The average American’s net worth
The median net worth is $192,700, according to the Federal Reserve’s 2022 Survey of Consumer Finances. But that doesn’t account for age, which plays a large role in a person’s net worth. It wouldn’t be fair to compare a 30 year old to a 50 year old, as the latter has had an extra 20 years to build wealth.
Here’s the median net worth for each age range:
- Under 35: $39,040
- 35 to 44: $135,300
- 45 to 54: $246,700
- 55 to 64: $364,270
- 65 to 74: $410,000
- 75 and older: $334,700
If you’re 40 with a $175,000 net worth, you have an above-average net worth for your age. If you’re that age with $100,000, your net worth is below average. Now, let’s look at how to increase net worth.
How to grow your net worth
Most people’s net worth goes up and down, since it’s largely based on the value of their retirement accounts and homes. This is normal, but over the long term, your net worth should trend upward. You can make this happen by following a few key financial habits.
Pay yourself first
The best way to save money is to be proactive about it. Instead of saving what’s left over at the end of the month, transfer money to your savings account right after you get paid. You could even automate this to make it easier.
To get the most out of your savings, ensure you have it in a high-yield savings account. These earn rates far above the national average, and one of the top options is the Western Alliance Bank High-Yield Savings Premier account. Click here to learn more and open an account today.
Invest regularly
Investing is the most reliable way to build long-term wealth. You can invest through a 401(k) plan at work, by opening an individual retirement account (IRA), or through a brokerage account. Or, you could do all three. These types of accounts allow you to invest your money in assets that can grow, such as stocks and bonds.
If you’re interested in opening a traditional brokerage account or an IRA, consider Robinhood. It’s a user-friendly stock broker with $0 commissions on stocks and ETFs. Find out more about it and open an account here.
Avoid credit card debt
Increasing your net worth also depends on avoiding unnecessary debt, and especially high-interest debt. One of the most common examples is credit card debt. The Federal Reserve recently reported that the average rate on credit card accounts that are assessed interest is all the way up to 23.37%.
It’s fine to use credit cards. In fact, top credit cards like these can be a great way to earn points or cash back on your spending. But make it a point to pay your credit card bill in full every month to avoid interest charges. If you’re currently in credit card debt, do what you can to pay it off as quickly as possible.
A useful measure of your financial health
It can be interesting to see if your net worth is above or below average. But it’s how your net worth changes over time that’s truly important. If it generally grows from year to year, that’s a good sign. If it’s declining, look into why to see if there’s anything you need to fix.
You can keep track of your net worth yourself, or there are personal finance apps that will do it for you. Whichever you choose, don’t obsess too much over it. Checking your net worth every three to six months is more than enough.