Have you ever wondered how your finances are doing? You’re not alone. We often think about where we stand financially compared to others – although few of us like to admit it. Getting a sense of your financial health can be motivating, especially if it’s not about competition but about setting realistic goals for yourself.
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What exactly is net worth?
Before we dive into the numbers, it’s important to clarify what “net worth” means. Simply put, it’s what you own (assets) minus what you owe (liabilities). Assets include things such as your house, car, investments and savings. Liabilities include things like mortgages, credit card debt, and student loans. Think of net worth as a quick snapshot of your financial health. It’s a bigger picture than just income and shows how much you’ve kept.
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Net worth by income level
According to the latest data from the Federal Reserve, net worth varies across different income groups as follows:
Less than $34,600: Average net worth of $14,000, average $129,700
$34,600-$59,499: Median of $71,000, average $218,700
$59,500-$91,899: median of $159,300, average of $385,400
$91,900-$153,099: Median of $307,200, average $636,800
$153,100-$245,399: Median of $747,000, average $1,264,700
$245,400 and above: median of $2,556,200, average of $6,629,600
According to Pew Research, the wealth of a higher-income household is 33 times greater than that of a lower-income household. These figures show that a higher income often goes hand in hand with a higher net worth, but this is not a guarantee. How you handle money plays a major role in this.
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What you can learn from the data
There are a few notable takeaways:
Median vs. Average: The average American household net worth is $192,700, while the average is around $1.06 million. The gap shows how wealthy individuals distort the overall average.
Age matters: Net worth tends to peak among people between the ages of 65 and 74, with an average of around $1.78 million. Years of saving and investing are piling up.
The impact of education: A college degree matters here – college graduates have more than eleven times the net worth of those without a high school diploma.
Location, location, location: City dwellers tend to have higher net worth than residents of rural areas, largely due to property values.
Wealth Gap: Unfortunately, the racial wealth gap remains wide, with white households having significantly more net worth on average than Black and Latino households.
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Steps to Increase Your Net Worth
Regardless of where you currently fall, there are practical ways to improve your financial position:
Comparing your finances to others can motivate you, but remember that everyone’s journey is different. Focus on realistic, personal goals that fit your life. Building wealth takes time; it’s a marathon, not a sprint. With stable, smart choices, you will see growth in your wealth over time. No matter where you are now, there is always room to move toward a more secure financial future.
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This article Are you richer or poorer than your peers? Here’s a look at the average net worth of your income. Originally appeared on Benzinga.com
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