Knowing how average American income is changing over time isn't going to solve your financial worries, but it can help inform your choices. If you want to know how your income stacks up so that you can lobby your boss for a raise or you're just curious if your income is growing faster or slower than your neighbor's, read on.

Survey says...

The latest figures from the Federal Reserve's triennial consumer-finance survey show that between 2013 to 2016, median family income increased 10% and average family income increased 14%.

A businessman in a dress shirt and tie sitting behind his desk in front of a row of glass windows.

IMAGE SOURCE: GETTY IMAGES.

Overall, median family income was $52,700 last year, up from $48,100 in 2013, while average income improved to $102,700 from $89,900.

While families saw income growth across all income ranges, average income is significantly above median income because it's being skewed higher by the top 1% of wage earners. Over the past three years, the share of income going to the top 1% of families increased to 23.8% from 20.3%, while the share of income going to the bottom 90% of families fell to 49.7%.

Because high-income earners are inflating average income, it may be more useful to focus on median income growth. As a refresher, the median marks the exact midpoint of data, so there's an equal likelihood of falling above it or below it. Median family income increased by a compound annual pace of 3.09% over the past three years, so if your income hasn't increased at a similar pace, it may be time to sit down with your employer and see where you stand.

Digging into the details

There's still a strong relationship between income and education, so if you're angling for a big pay raise next year, now could be the perfect time to sign up for night school or a certification program.

The median family income among families with a college degree was $92,100 in 2016. Families with at least some college education are earned $47,700, while families with a high school diploma brought in a median $40,500. 

It may also be useful to know what percentage of families earn above or below specific income levels. In the next table, detailing family income in 2016 by percentile, you'll see that 90% of families have a median income at or below $135,300 and 40% of families have a median income at or below $33,100.

The largest percentage change in median income between 2013 to 2016 was seen by families in the 40% to 59.9% percentile and above.

Decile Median Income % Change 2013-2016
<20% $16,200 3%
20% to 39.9% $33,100 5%
40% to 59.9% $54,100 8%
60% to 79.9% $86,100 7%
80% to 89.9% $135,300 8%
90% to 100% $251,500 9%

Data source: New York Federal Reserve. 

Also, since income tends to be lower when you're younger, peak when you're in middle age, and then lower again in retirement, this next table may also be helpful. It shows median income by age and income growth since 2013 by age.

Age Median income % Change 2013-2016
<35 years $40,500 11%
35-44 $65,800 5%
45-54 $69,500 11%
55-64 $61,000 7%
65-74 $50,100 6%
75+ $40,000 36%

Data source: New York Federal Reserve. 

It's not how much you earn; it's what you do with it

Fellow Fool Christy Bieber's excellent article "5 Financial Rules to Live By" highlights rules you can use to improve your financial life. In a nutshell, she reminds us to spend less money than we earn, consider big buys carefully, talk about money with our spouse, boost our emergency savings, and prioritize retirement savings.

Those are great rules. However, many workers aren't following them. If you're one of them, don't worry -- even small changes today can have a big positive impact on your financial future.

Start by using your pay raises to get out of debt. Pay a fixed amount more than your minimum payment every month and make sure you focus on high-interest credit cards first. Then rethink how you save. Most people save what's left over at the end of each month. That's a mistake. Instead, save first, not last. If you save first, you'll have less discretionary money every month that can be spent on impulse purchases. It can also net you a much bigger payday later on because of compound interest

How much money should you be saving? Aim for 10% to 15% of your monthly income. If that's too much to save all at once, contribute a little more every year until you get to that rate. Many 401(k) plans offer a feature that allows you to automatically increase your contribution annually, so see if that's available to you. If it is, take advantage of it.

Overall, managing money can be stressful, but even small changes in how you spend and save can boost your financial security, and that's true for everyone, regardless of your income.

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