In an age of comparisons, you might wonder at some point if your net worth is below or above average. This is an important question to ask and one that everyone should think about carefully.

Considering your net worth is crucial since it represents your financial performance and habits – your financial score.

Your net worth is essential from a retirement perspective, but it also tells you how capable you’ll be of leaving a sizeable estate behind for your family.

Read on to discover how much the average net worth is and how you fare regarding this benchmark.

Median Net Worth

According to census data, the median net worth of average households stands at about $118,000. The average household net worth figure falls to about $41,000 for renters.

Net Worth Definition

At this point, it may be worthwhile to clarify the exact definition of net worth. The most intuitive definition of net worth is that it’s the aggregate value of everything you own.

Also, pay attention to the word “net” since this effectively reduces the total value of your assets. Net is the amount you owe others (your standing debt).

The simplest way to calculate your net worth is to add up the cost of everything you own and deduct your mortgages, loans, credit card balances, and other debts.

During school, academic performance is expressed in grades, which are then summarized into a GPA. Although some students can get a high GPA even with little effort, this number represents your discipline, effort, and dedication to your studies.

Your net worth can be considered in more or less the same way. A high net worth often implies you’ve performed diligently and made the right financial decisions.

For instance, say you earn $65,000 a year but have a net worth of just $10,000 over a decade. This would create a lot of questions and be a significant cause of concern. Just where did the remaining $640,000 go?

If this amount went towards a medical emergency, then perhaps the low net worth is justified. But if it went towards designer clothes, gambling, cars, and shopping sprees, then it’s indicative of poor financial habits.

Learn More: How and Why to Track Your Net Worth

What Is an Acceptable Net Worth Number?

It’s advisable to establish a benchmark to compare and evaluate your performance. To discover whether your net worth is acceptable, you need to review your net worth in comparison to your financial goals.

For instance, you may have plans to send your kids to college. Here, you need to have a high net worth to pay the astronomical costs of college.

For the most straightforward rule of thumb, count the number of years after you’ve graduated from college and multiply it by your average salary. Multiply the resultant number by 0.25.

Here is the formula in simple words:

Target net worth = (current age graduation age) x average gross earnings x 0.25

Here’s an example to help you use the formula:

If you graduated college at 22, are 30 years old, have an average annual income of $55,000, then the formula looks like this:

Target net worth = (30 22) x 55,000 x 0.25 = $110,000

This means that for the conditions described in the example, the average net worth should be around $110,000.

If your actual net worth deviates too far below this amount, then you need to think of a way to bring it up to par. You may have to pay off your debts, save more money, or earn more. One of the best ways of increasing your savings is to create a monthly budget.

Calculating Your Actual Net Worth

You can calculate your net worth by hand just by using a simple spreadsheet:

  • Have four columns of cells
  • Draw a thick border between the second and third column to separate them
  • In the first column, you will note down all the things you own and enter their amounts in the second column
  • In the 3rd column, you will list all your debts
  • Note down their values in the 4th column
  • The 2nd column will give the sum of your assets, and the 4th column will provide the number of your liabilities
  • Your net worth is the sum of the assets minus liabilities

The entire point of this exercise is to make a clear and concise presentation of your net worth so you can refer to it regularly and motivate yourself to increase it further.

Consider the following classes of items while making the spreadsheet:


  • Cash, savings and checking accounts
  • Retirement savings accounts (Roth IRAs, 401ks and others)
  • Miscellaneous investment accounts (529 plans, mutual funds, stocks, and others)
  • Real estate market value if you possess any
  • Business equity


  • Mortgages
  • Other outstanding loans (car, home equity, personal, student and others)
  • Credit card liabilities
  • Medical bills
  • Miscellaneous exceptional amounts such as taxes

If you own a home, it may have the highest value among all your assets. Therefore, it’s imperative to get the most accurate and precise estimate of its actual market value. Otherwise, you may end up with a misleading figure for your net worth.

Discerning the most reasonable value for your property is both an art and a science.

Your property is ultimately worth the amount that prospective buyers will pay for it. There are other methods you can use to figure out the value of your property rather than putting it on the market, though.

For instance, you can collaborate with local property brokers and real estate agents to determine the value of your property by using the sales value of similar properties.

If you want the value for a loan, you can apply for it based on your home equity. The lender will then appraise your property to discover its true worth.

Why Are Cars and Items Like Furniture Not Included in Net Worth?

Most people pay a lot for items like furniture and cars, but they cannot be included in your net worth evaluation for one simple reason: they depreciate quickly.

They will be worth considerably less the next year; hence, it is not advisable to include their amount in your net worth.

Can Inheritances and Life Insurance Be Included?

You can include the cash value of the policy if you are a cash value life insurance policyholder. In all other cases, you should not include your insurance policy.

Inheritances should not be included even if you’re sure about receiving them in the future. They are not yours until you receive them.

If you’re lagging behind your net worth target, you have to think about where you’ve gone wrong. Is it because of low savings, excessive spending, high liabilities, or low income?

Depending upon the problem, you’ll need to devise a plan to increase it to an acceptable value.

Evaluating Net Worth Important Considerations

Remember that with money and net worth, everything is relative. This means that even if we are all millionaires, none of us can be considered wealthy since all living costs will be priced accordingly, thus canceling out the value of our millions.

What Is the Average Net Worth for Different Age Groups?

The formula given above describes how to calculate a reasonable value for net worth.

However, it also makes sense to compare your actual net worth with current data to rate your financial success.

The Federal Reserve has listed the following average net worth according to age.

  • Below 35: $76,200
  • 35 – 44: $288,700
  • 45 – 54: $727,500
  • 55 – 64: $1,167,400
  • 65 – 74: $1,066,00
  • Above 75: $1,067,000

You can compare yourself to the value of the relevant age group to find where your net worth stands.

These figures might surprise you, in particular, the million-plus net worth figures for those above 55 years of age. You might think that everyone is saving up super large retirement funds, but that’s not the case.

These average figures have been distorted by the super-wealthy who have gained the most from the boom that followed the last financial crisis.

A much better estimate is the median figure. This is much more conservative at $97,300 compared to the average value, which stands at $692,100.

The Winning Strategy of Above Average Net Worth People

Whether you have good net worth or not, you might be wondering what the characteristics of people with above-average net worth are.

It’s worthwhile to follow the habits and beliefs of above-average net worth individuals so you, too, can be one of them. By learning their winning strategies and belief systems, you also can work your way to financial success and independence.

If I had to distill down the habits, beliefs, and behaviors of people with a substantial net worth, here’s what I would say about these people:

  • They go to college and believe that academic performance can have a substantial impact on your future financial performance
  • Despite their reliance on expensive college education, they have little-to-no student debt since they take help from their parents, work part-time, and gain scholarships.
  • They do not spend more than they earn
  • Such people save plenty of money for the future knowing they cannot work regularly
  • When things do not work according to plan, they accept responsibility, learn from their mistakes, and adapt
  • They leverage free calculators and tools available online to compute their budget, reduce investment fees, monitor net worth, and maintain control over their finances. Once you know the facts, figures, and metrics, managing and improving your finances is much easier and more objective
  • They keep an open mind and accept critical opinion to keep growing continuously
  • They have great self-belief and self-esteem – this allows them to achieve whatever they want
  • They constantly augment and update their financial knowledge through education, seminars, magazines, personal finance blogs, books, and other mediums

Above-average net worth, individuals give due regard to savings. They realize that saving over $15,000 per year in after-tax salary is possible for most people, including themselves. They often go well above this amount with savings.

Above-average net worth individuals realize the value of consistency. If you want to be above average financially, then you must aim to save at least 20% of your annual income after making the full 401k contribution. The more you save, the better.

These individuals also realize that real estate is one key to financial success. According to the Federal Reserve survey mentioned above, homeowners have a net worth 11-times higher than renters.

Most financially successful individuals in America have reached their target by investing in real estate. 97% of millionaires own property and have sizeable real estate investments in their portfolios.

To become an above-average net-worth person, you should avoid renting since you gain no asset even after you pay rent for several decades. Renting is a long-term financial loss.

Bottom Line

Your net worth is simply the grade that reflects your financial performance. Are you passing with flying colors? Use the advice above to start keeping track of this number and developing financial goals to improve it over time.

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  • Chris Muller

    Chris has an MBA with a focus in advanced investments and has been writing about all things personal finance since 2015. He's also built and run a digital marketing agency, focusing on content marketing, copywriting, and SEO, since 2016. You can connect with Chris on Twitter @moneymozartblog.