How Much Money Do You Need to Be Wealthy?

Loud budgeting may be trending lately, but for the most part, people keep their finances private. Some discuss their salaries and broad financial goals. There aren't many who share the details of their banking and retirement accounts.

So it's understandable to be curious about what it takes to be wealthy. You may want to know if you're in that group and, if not, how much money you need to get there. While there's no perfect definition of wealth, we do have enough recent data for a reasonable idea.

The average level of wealth in the United States

Americans had a median net worth of $192,700 in 2022, according to net worth data gathered by The Motley Fool. Net worth, to clarify, is the value of all your assets minus your liabilities (debts). If you're above that number, then you're above average in terms of wealth.

But most people see their net worth grow as they get older. Young adults have the lowest average net worth, because they're starting out in their careers and haven't had time to build wealth yet. If you're 30, it wouldn't make much sense to compare your net worth to that of people in their 40s and 50s.

Here's the median net worth broken down by age group:

• Younger than 35: $39,040
• 35-44: $135,300
• 45-54: $246,700
• 55-64: $364,270
• 65-74: $410,000
• 75 or older: $334,700

Net worth isn't everything. Even if you have an above-average net worth, it doesn't necessarily mean you'll feel wealthy. And if your net worth is below average, it's not something to feel bad about. It's one financial metric, and it can change quite a bit if much of your wealth is in stocks or your home.

What you can do to build wealth

While there's no need to obsess about your net worth, building wealth is important. It's how you can reach your financial goals and save enough money to retire when you want.

It all starts with spending less than you earn. If you're able to save money every month, you'll build wealth. Make sure your monthly expenses aren't eating up too much of your income. Ideally, your regular bills should take up no more than about 60% of what you earn. If so, you'll have plenty of money left over to save, invest, and spend on yourself.

When you have your spending dialed in, here are a few more steps you can take to build wealth faster:

• Invest in stocks. The stock market has been one of the biggest wealth creators, with an average return of about 10% per year over the long run. You can buy individual stocks if you want to set up a portfolio yourself or index funds that invest in the stock market for you.
• Contribute to retirement accounts. While you can invest through a regular brokerage account, it's better to start with retirement accounts, because they offer tax advantages. Individual retirement accounts (IRAs) are an option that just about anyone can use, and you can also contribute to a 401(k) if your employer offers one.
• Make saving and investing automatic. Decide how much you want to add to your savings account and investment accounts every month and automate it. You'll save time, and there's no risk of forgetting to do it.
• Avoid high-interest debt. Some types of debt can be a good decision, such as getting a mortgage to buy a home. But credit card debt and any other high-interest debt is going to hold you back for as long as you're paying it off.

Improving your finances isn't an especially complicated process, but it takes time. If you follow those steps and make them habits, you'll be amazed at the results.