Average Net Worth By Age (Not What You'd Think)

Most of us don't have an astonishing net

worth

like famous investor Warren Buffett or Tesla CEO Elon Musk. Just because you're not that rich doesn't mean there's no point in knowing your personal net

worth

, in fact, it can be a pretty useful tool that many people don't use. Knowing how much money you have is beneficial because you can track your progress and see improvements over time. It's also good to know how yours compares to your peers, not for the sake of competition. But just to see how you're doing compared to the

average

person, here are the

average

net worths by age from the Federal Reserve Board's Survey of Consumer Finances so you can see how yours compares.

Watch until the end to see the best ways to increase your net worth so you can easily surpass the average person. My name is Chris and I help teach people about money, personal finance, and investing. If you are interested in improving your financial future, be sure to subscribe to the channel and hit the Like button if this video appears. It is useful, first of all, it is important to know how net worth is calculated. Some people mistakenly assume that net worth is determined by your annual income, but that is not the case. Simply put, net worth is

what

you own minus

what

you owe.

The assets you own would mainly be your cars from home and anything else that has any value such as bank accounts, investments, your gold watch and diamond jewelry, if your house is worth five hundred thousand dollars, your cars are worth fifty thousand dollars in others small assets, a total of ten thousand dollars, the total would be five. one hundred and sixty thousand dollars, however, this does not equal net worth since debts have not been considered if you have a mortgage balance of three hundred thousand dollars, forty thousand dollars in car loans, and three thousand dollars in credit card debt, which gives a total of three hundred thousand dollars. and forty-three thousand dollars in debt that must be subtracted from the total number subtracting the debts from the total value of all assets would leave a total net worth of two hundred and seventeen thousand dollars as you can see this calculation has nothing to do with how much a person earns The Federal Reserve Board conducts a survey of consumer finances every three years to collect information on household income and net worth.

The most recent report was conducted in September 2019 and published in 2020, although the study is not completely up to date. Considering recent high inflation rates, it should still be a relatively accurate representation. The study found that the median or average net worth of American households was surprisingly high: seven hundred and forty-eight thousand, eight hundred and eight hundred. It seems like the average person wouldn't have that. a lot of money, but the ultra-wealthy households of billionaires and billionaires drive the average extremely high. Looking at the median or average worth gives a better picture of the average person you see on the street, probably someone more comparable to you, the overall median net worth. of American households is one hundred and twenty-one thousand and seven hundred dollars, which is a more reasonable number that can be easy to overcome with a little effort.

For someone who is under 35 and the head of a household, the median household net worth is only thirteen thousand nine. hundred dollars, this could be due to a variety of factors: People this age are at the beginning of their careers and have not begun to earn a stable, healthy income. They may have student loans that make it difficult to increase that net worth. They probably just bought it. a home or have not yet done so and this can have a large impact on your net worth according to the federal reserve, homeowners have a median net worth of two hundred and fifty-five thousand dollars, while renters have a median net worth of only six thousand three hundred dollars plus, they may not have started investing for retirement due to persistent debt or too low income, even if they do, investments can take a long time to grow and start earning an appreciable amount of money , people in the age group of People between the ages of 35 and 44 have an average net worth of 91,300 at this point in their lives.

Financial progress improves a little. Generally a career has been established and income has increased, but new responsibilities also arise with growing families. Purchasing a home has likely helped This growth in net worth as they pay off their mortgage and own an appreciating asset rather than renting or living on family retirement accounts has hopefully been established and is being added to. regularly, but many people have not yet begun to

think

about retirement. If they do, the 45-54 age group sees steady growth to 168,600, although there aren't always as many life changes from the previous age group, some households are starting to see children move out, which may or not helping with the Family budget: These older families often live in homes priced similarly to those before, aside from occasional upgrades to accommodate a growing family, many of them do not begin to plan for their future due to the lack of understanding of investments or the inability to make the The need to invest debts sometimes increases and more luxuries are common because people feel they deserve it because they work hard.

People aged 55 to 64 see a small jump to 212,500, adding to the circumstances of the previous age group, the housing situation has probably not improved. Not much has changed, maybe some families decide to downsize their house and their kids move out and less space is needed. Income usually plateaus at this point and begins to decline due to fewer hours worked and less productivity. The lucky ones see an improving situation due to increasing investments in mortgages. that are being paid and the ability to pay cash for other items instead of financing Households ages 65 to 74 have a net worth of $266 slightly higher than the younger group with a traditional retirement that begins around age 65.

Net worth is no longer going to grow. As it did before, some people are dipping into their investments if they have them and working less if they need them, healthcare needs are increasing and can have a big impact on the finances of those who are not healthy with minimal coverage health care, since these families are not very old, a declining net worth at this time could jeopardize their retirement. Lastly, the 75 and older group sees a decrease in median net worth to 254,800. This is the first age group where net worth actually declines, but it's not always a problem.

The downside is that spending the money you have left can be fun, as long as you're unlikely to run out. None of us know how long we'll live, but why not enjoy a vacation every now and then, as long as you're not? If you're going to deplete your retirement, most people this age aren't working, and if they do, their income probably won't be particularly high. Net worth is a measure of your financial situation and can help you track your financial progress. It may be helpful to keep track of your net worth, but it doesn't really tell you when you will be financially independent.

Someone could have a net worth of 10 million dollars but still need to work to pay their bills, for example they could have an 8 million dollar house. and $2 million in exotic cars and no income-producing assets; On the other hand, someone could have a net worth of 200,000 but be retired. A better way to measure your financial health would be to know your annual passive income and your growing annual expenses. your investments to provide more income is more important than obsessing over the total value of your home. There are some important ways to increase your net worth that can ultimately help you become financially independent if you are not already paying off your student loans.

Cards and other debts that reduce your net worth should be a priority, this means you won't have to pay interest to lenders and your income will be freed up for other things. Second, invest money in assets that appreciate, such as real estate businesses or stocks and other investments. They provide compound returns this way your investments accelerate and grow like a snowball over time, finding ways to decrease your expenses is another powerful way to get richer and there are many huge ways to save that you may not have thought of In addition to increasing your income, not only your 9 to 5 or main job create other sources of income from side jobs that can be directed towards becoming richer.

Lastly, be patient and know that it takes time to get ahead, but if you follow these steps, building wealth is inevitable.