Is Your Net Worth Lower Than Your Peers'? Here Are 3 Tips to Boost It.

You've probably looked at your income in comparison to those around you, but have you ever wondered where your net worth stands? Net worth often flies under the radar, but it's the number that will tell you how close you are to being a millionaire. Think of it as your personal balance sheet, reflecting the total of all your assets, such as cash savings, certificates of deposit, and retirement accounts, minus your liabilities, such as credit card debt and student loans.

It's easy to confuse net income and net worth, but they aren't the same. A person can earn $200,000 a year and have a net worth of only $20,000 because debt is weighing the person down. To get a better idea of how your peers are really doing, we've gathered the net-worth numbers so you can see where you stand.

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Here's the average net worth of Americans by age group

The average net worth for American households is $1.06 million in 2022, while the median is only $192,700, according to the Federal Reserve's Survey of Consumer Finances published in October 2023. While the seven-figure average net worth might sound impressive, the net worth of wealthy individuals like Warren Buffett can inflate these numbers. The median figure, on the other hand, represents the middle value in a data set, which removes the impact of outliers and provides a more realistic picture of what's more common.

With that said, take a look at the average and median net worth numbers of people in your age group to get a better idea of where you stand in relation to your peers.

Data source: Federal Reserve 2022 Survey of Consumer Finances.

Tips to boost your net worth

Even if your net worth doesn't measure up to your peers, give yourself credit for getting started on this journey. What matters most is that you can live a quality life and make the most of where you are.

If you're wondering how to boost your net worth and get closer to your goals, starting with a healthy emergency fund and monitoring your spending habits can take you far. Here are three other moves that can significantly affect your net worth:

• Increase your income. The more income you have, the more money you can allocate toward savings and investing, as long as you don't let lifestyle creep get the best of you. If you're currently working, see if you can get a raise based on high performance. If your skills are in high demand, you might want to switch jobs if you've hit an income ceiling where you are. Also, consider using your skills to start a side hustle and create more streams of income.
• Watch out for debt. Keep tabs on your income and expenses to ensure you're not spending more than you earn each month, which could force you to rely on credit cards. Be cautious with credit cards because the interest can be astronomical. Pay off high-interest-rate debts as quickly as possible to free up money for savings and investments.
• Explore different investment options. One of the easiest ways to start your investment journey is to enroll in your employer-sponsored retirement plan if there's one on offer. Your employer might even provide a company match to help boost your retirement savings. Your job may also offer an employee stock purchase plan (ESPP), allowing you to invest in company shares at a discount. Setting up an individual retirement account (IRA) is a good way to increase your retirement savings beyond the workplace. Also, consider setting up regular contributions, even in small amounts, to a brokerage account to ensure you have investments beyond your retirement accounts.

If you haven't paid attention to your net worth, looking at the median and average numbers might provide the motivation you need to change your habits. The more you track your net worth, the better your chances of making moves that will bring you closer to a millionaire retirement.