Net worth is the difference between the assets you have and your obligations or liabilities against those assets. If you\’ve written down your assets and liabilities, how can you determine whether the picture you see is good, bad, or neutral?
First, total all the listed assets, write down the number and then do the same for liabilities. Once you have totals for each category, you will subtract your liabilities from the assets to get your net worth. Your net worth might be a negative number. What does this mean?
According to the Federal Reserve\’s Triennial Consumer Finance Survey, \”The average net worth of all U.S. families is $692,100.\”
Here are the averages for net worth across a range of age groups:
Under 35: $76,200
35-44: $288,700
45-54: $727,500
55-64: $1,167,400
65-74: $1,066,000
75+: $1,067,000
The average net worth for the “above-average” person by age is as follows:
$250,000 by 30
$429,000 by 35
$660,000 by 40
$914,000 by 45
$1,240,250 by 50
$1,684,000 by 55
$2,180,250 by 60
Maybe you were pleasantly surprised by your net worth. On the other hand, you might be discouraged after seeing the average individual totals.
If your net worth is closer to zero than you thought, or even in the negatives, consider what liabilities you have that have caused this. With the outstanding balances in student loans, auto loans, credit cards, and medical debt, there is no surprise that so many Americans are in a place where their obligations outweigh their assets.
After seeing your net worth, you may be wondering how you can actively work to increase it. Maximize your income streams and minimize your costs. This will provide you with margin to pay down or pay off debt and limit debt in the future by paying for items as you go.
If you want to track your net worth in real-time without the legwork, consider signing up for a resource like Personal Capital.
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Calculate your net worth, and then sign up for a resource to help you track your net worth in real-time on an ongoing basis.
Sources:
“Changes in U.S. Family Finances from 2013 to 2016: Evidence from the Survey of Consumer Finances.” The Federal Reserve, Board of Governors of the Federal Reserve System, Sept 2017, https://www.federalreserve.gov/publications/files/scf17.pdf.
