As soon as I landed my first job, I started monitoring my net income. However, I didn't start measuring my net worth until years later, which is the actual number you'll need to know to see how your finances are faring.
Net worth typically takes a backseat to net income when you're younger, but if you want to see if you're making progress toward your goals, you have to keep tabs on your net worth. This number is a big deal because it can show you how close you are to becoming a millionaire, if that's your goal.
It can sometimes be confusing to know where to start and how to think about your net worth. To help you out, we've broken down how to calculate net worth and taken a look under the hood to see how your peers might be doing.
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Get a better idea of your net worth
The median net worth for American families was $192,700 in 2022, while the average was $1.06 million, according to the Federal Reserve's latest Survey of Consumer Finances. As a recap, the median net worth represents the middle number in a data set, while the average is the sum of all values in a data set divided by the number of values.
You'll notice that the average is drastically higher than the median, indicating that the top percentage of wealthy individuals, such as Warren Buffett, have net worth so large that they skew the average upwards. Therefore, looking at the median gives a better idea of what is more common.
But before you dig into the net worth figures for your peers, it's a good idea to see where you stand on your journey. To calculate your net worth, you want to jot down all your assets (what you own) and subtract your liabilities (what you owe). Here's a general idea of what type of assets and liabilities you want to add to your net worth calculation.
| Assets | Liabilities |
|---|---|
| Checking accounts | Car loan |
| Savings account | Credit card balances |
| Certificate of deposit | Student loan debt |
| Employer-sponsored retirement plans | Home mortgage principal |
| Individual retirement accounts (IRAs) | Personal loans |
| Investments | Medical debt |
Comparing net worth by age
When you look at net worth by age group, you'll notice that overall net worth tends to increase as people settle into their 40s, 50s, and 60s, which is not too surprising. At this point, people may have lowered their debt balances, such as student loans, or increased their earning potential, allowing them to save and invest more.
So if you're in your 20s or 30s, it's probably not ideal to compare your net worth to someone in their 50s. You're better off comparing your net worth to someone in your age cohort who is on a similar financial journey to get a more accurate picture of how you stack up. We've broken down net worth by age to give you a better idea of how your age cohort is doing in comparison to other age groups.
|
Age |
Average Net Worth |
Median Net Worth |
|---|---|---|
|
18-34 |
$183,380 |
$39,040 |
|
35-44 |
$548,070 |
$135,300 |
|
45-54 |
$971,270 |
$246,700 |
|
55-64 |
$1.56 million |
$364,270 |
|
65-74 |
$1.78 million |
$410,000 |
|
75+ |
$1.62 million |
$334,700 |
|
All Households |
$1.06 million |
$192,700 |
Data source: Federal Reserve 2022 Survey of Consumer Finances.
Comparing median net worth by ethnicity
Net worth numbers become even more revealing when broken down by ethnicity. For the first time ever, the Federal Reserve provided net worth data for Asian families, showing that they have the highest median net worth of any racial or ethnic group. Take a look below at the median net worth figures for all groups.
| Race/ethnicity | Median Net Worth (2022) |
|---|---|
| Asian | $535,400 |
| White, non-Hispanic | $284,310 |
| Hispanic | $62,120 |
| Black, non-Hispanic | $44,100 |
| Other | $62,800 |
Data source: Federal Reserve (2023). All values are in 2022 dollars.
Tracking your net worth might not be exciting when you're starting out, especially when the numbers are small or even negative. But over time, seeing that number grow can be incredibly rewarding. If you're not where you want to be right now, consider using the net worth data from your peers to motivate you. Keep in mind that financial success is personal and unique, but staying informed can help you make better decisions. With consistency and a solid financial plan, you'll give your net worth a chance to shoot up and help you get closer to your financial goals.
