What Net Worth Does It Take to Be Wealthy? Here's What Americans Say

You may find the number surprising.

Many people have the goal of becoming wealthy. But what exactly does that mean?

To you, it might mean having a net worth of $500,000. For someone else, it might mean having $1 million to your name.

But if you're curious as to what the public thinks, Schwab has some answers. In its recent Modern Wealth Survey, Americans said it takes an average net worth of $2.2 million to be considered wealthy. That's up from $1.9 million last year, but down from the $2.6 million Americans thought it took to be wealthy before the pandemic began.

Now at first glance, $2.2 million might seem like an unattainable sum. But you may be surprised at how possible it is to attain that level of wealth.

What's net worth, anyway?

If you're not familiar with the concept of net worth, it's basically the sum of your assets minus your debts. So, if you have $30,000 in your savings account, a $100,000 IRA, and you own a home worth $500,000, the sum of your assets is $630,000. However, if you owe $300,000 on your mortgage and have no other debt, that leaves you with a net worth of $330,000.

How to grow your net worth

There are a number of steps you can take to grow your net worth. And perhaps the most important one is setting a budget and living below your means.

To grow wealth, you need to spend less than what you earn. It's that simple. Once you get into that habit, you'll have options. You can put money into savings, and just as importantly, you can invest your money so it grows into a larger sum over time.

Buying a home is another good way to boost your net worth. Homes have a tendency to appreciate in value over time, so if you buy one today and stay there for many years, you could end up adding a lot to your net worth.

Now you may be thinking, "That's all fine, but is $2.2 million really attainable?" Here's how it is.

Imagine you're an average earner, but you make a point to save and invest $500 a month starting at age 25 and continuing through age 65. Let's also assume your investments deliver an average yearly 8% return, which is a bit below the stock market's average. That alone will leave you with a little over $1.5 million.

Let's also assume that you buy a home for $300,000 and hang onto it for several decades. After 30 years, that home's value could increase to $700,000. Meanwhile, after 30 years, you might own it outright after paying off your mortgage. So if you add $700,000 to $1.5 million, you get $2.2 million.

Now to be clear, there's no need to fixate on that $2.2 million figure. Just because Americans seem to agree that's what it takes to be considered wealthy doesn't mean you won't be content with a smaller number. Or, you may want to aim higher.

The point is that achieving a high net worth is doable with the right strategy. And the earlier in life you commit to that goal, the more likely you'll be to achieve it.