Do know your own net worth? Do you know the average net worth of Americans? The answers may surprise and disappoint you. Now is the time to prepare for the future.
As the Simple Dollar defines it, net worth measures your financial health. Because it basically says what you would have left over if you sold all of your assets to pay all of your debts. Every financial move you make should aim to increase your net worth. This means either increasing assets or decreasing liabilities.
Before digging into net worth, read these related posts:
Mean and Median Amounts: The Average Net Worth of Americans
Remember the difference between the mean and the median? Let us give an example in the case of net worth. To be straightforward, we assume 11 people’s net worth as: one person, $25 million; ten persons, $100,000 each. The mean = ($25 million + [$100,000 x 10]/11) = $2.36 million per person. The median = (net worth of sixth person of eleven) = $100,000 per person. The mean is skewed high by one affluent person.
“On average, Americans say it takes a net worth of $2.27 million to be considered ‘wealthy,’ according to a 2019 survey from Charles Schwab. Net worth means assets minus liabilities. Therefore, this is a picture of your total savings, including the value of your home, 401(k), and any other assets you may have, minus any debt.”
“Yet, how does that compare to the net worth of the typical American family? The MEAN net worth of all U.S. families is $692,100, according to the Federal Reserve’s Survey of Consumer Finances. If you look at the median, the amount is much lower: $97,300. And that may be a better gauge, since the super rich can pull up the average.”
“The Federal Reserve also looked at the mean and median net worth of U.S. families at different ages. Finding that ‘median and mean family net worth generally increase with age. With a plateau or modest decreases for the oldest age groups relative to the near-retirement age groups.’”