Your net worth is essentially a snapshot of your overall financial health. While it's not necessarily the most important factor when it comes to your finances, it can give you an idea of areas to improve.
To calculate your net worth, first add up the value of assets you own -- such as cash, investments, and equity in your home. Then, subtract any debts and other liabilities, like credit card debt or student loans. If you own more than you owe, you'll have a positive net worth. However, if you have a lot of debt, your net worth could be in the negative.
Everyone goes through life at a different pace, so your net worth could vary significantly from that of others your age. That's OK. While it's best to only compare yourself to your own progress over time, it can sometimes be helpful to see how you stack up to the average.
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The average net worth by age group
As part of the comprehensive 2022 Survey of Consumer Finances, the Federal Reserve measured both the median and average net worth of U.S. adults across all age groups.
The average net worth among those age 45 to 54 is around $971,000, while the median sits at around $247,000.
The vast difference is likely due to extremely wealthy outliers, which can skew the average much higher. The median is often a more accurate representation of the typical household, as it's the point at which half of adults have a higher net worth and half have a lower net worth.
| Age Group | Average Net Worth | Median Net Worth |
|---|
| Under 35 | $183,000 | $39,000 |
| 35 to 44 | $548,000 | $135,000 |
| 45 to 54 | $971,000 | $247,000 |
| 55 to 64 | $1,564,000 | $364,000 |
Source: Federal Reserve. Table by author.
For a broader look at net worth outside of age, it can be interesting to see where your figure lands on the overall spectrum.
Those in the top 10%, for example, have a staggering $7.8 million average net worth, while the mid- to upper-range net worth falls between $300,000 and $400,000.
| Percentile | Average Net Worth | Median Net Worth |
|---|
| 90-100 | $7,771,000 | $3,795,000 |
| 75-89.9 | $1,103,000 | $1,036,000 |
| 50-74.9 | $374,000 | $357,000 |
| 25-49.9 | $99,000 | $93,000 |
| Below 25 | -$6,000 | $3,000 |
Source: Federal Reserve. Table by author.
Again, if your net worth isn't aligned with others in your age group, that's not necessarily a bad thing. It's more important to track your progress over time to increase your assets while decreasing your debt and other liabilities.
One simple way to boost your net worth
Investing in the stock market is one of the most effective ways to increase your assets, giving your net worth a boost.
For example, say you're investing $300 per month in an index fund earning a modest 8% average annual return -- which is just below the market's historic average . At that rate, here's approximately how much you could accumulate over time:
| Number of Years | Total Portfolio Value |
|---|
| 20 | $165,000 |
| 25 | $263,000 |
| 30 | $408,000 |
| 35 | $620,000 |
Data source: Author's calculations via investor.gov.
If you have a portfolio of individual stocks, you could potentially earn much higher-than-average returns over time. However, it's still important to balance risk and reward.
Stocks from companies with the potential for long-term growth are the most likely to perform well over time while minimizing risk. By researching a company's foundations -- such as its financial health and how it stacks up to its competition -- you can ensure you're only investing in quality stocks.
Keep in mind, too, that investing in the stock market in any form can help build net worth. That could mean buying individual stocks or investing in index funds, but it could also mean contributing to your workplace 401(k) or an IRA . All of these forms of investing can increase your wealth over time, sometimes by hundreds of thousands of dollars or more.
There's no single figure that determines your financial health, but estimating your net worth can be a quick way to assess where you stand. And if you're eager to grow your net worth, investing in the stock market is one of the most effective strategies out there.
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