The value of home, the job title you have, a car model that you own, your balance of savings account. These things simply indicate how much wealth you have. But have you ever thought that how your net worth is compared to your aristocrats?
How is net worth calculated?
Net worth totally means “what you own minus what you owe”. You can calculate your net worth just by deducting the value of all your assets like car, home or bank balances etc from the value of all your liabilities which includes all your debts. By doing this you are able to know your actual net worth.
What is the average net worth?
The Federal Reserve Board issues the Federal Reserve’s Survey of Consumer Finances in every three years which reflects the information about family incomes, net worth and many more.
According to its most recent data a household in the U.S. has an average net worth of $692100 and the median net worth of households in the U.S. is $97,300. Median is the middle point where half of the households have more net worth and half have less net worth.
Average net worth by age and education-
Total net worth differs by age, education and many other factors. The median and average net worth by different age groups:
Age
Median net worth
Average net worth
Less than 35
$11,100
$76,200
35-44
$59,800
$288,700
45-54
$124,200
$727,500
55-64
$187,300
$1,167,400
65-74
$224,100
$1,066,000
75+
$264,800
$1,067,000
The median and average net worth by different education groups:
Educational Qualification
Median net worth
Average net worth
No high school diploma
$22,800
$157,200
High school diploma
$67,100
$249,600
Some college
$66,100
$340,600
College degree
$292,100
$1,511,10
Is net worth important?
Net worth is a method to check your financial position and shows the strengths and weaknesses. Although, it doesn’t reflect a perfect image of your financial position. Net worth matteres a alot if you want to get bad credit small business loans, medical loans, wedding loans, car loans or any other loan. As it is rightly said that If you have a high net worth then it doesn’t mean that you also have a high standard of living. For example, any person’s home may plug their net worth figure, but there are chances that they are not having enough cash if they don’t sell their home and may not have any savings.
How to increase your net worth?
Increasing your net worth is not a bad thing. There are many techniques you can use to increase your net worth.
Choose a strategy to pay off the debt:
Create a plan for paying heavy liabilities. First try to pay down the debts which are having the highest interest rates. Another option you can prefer is debt consolidation by paying multiple debts in a single payment.
Try to grow your money:
For this you can set up automatic savings plans, you can also take advantage of interest rates in competitive accounts.
Be patient
Most people think that net worth increases with their age as they grow older. Give your best to become on the right track and allow the time for your efforts to pay off all the debts.
Net worth can motivate you to establish and follow financial goals. Sometimes it can also make you feel mediocre unnecessarily. Always remember that the number of net worth is not fixed. It can change positively or negatively with respect to the time.
