Ideally, you will get richer over the course of your life. This means you will grow your net worth, which is a calculation that shows how much you actually own. You can find out what your net worth is by subtracting the value of your liabilities from the value of your assets.
For most people, increasing their net worth takes time — unless, of course, they happen to be lucky enough to be born with millions in the bank. Since younger people typically have lower checking account balances than their older counterparts, it can be hard to know if you’re on track for financial success when you look at the value of the average person’s assets.
What can be helpful, though, is comparing your net worth to others in your age range so you can see if you’re behind your peers, ahead of schedule, or right on track to amass a good nest egg that can protect you later.
Here’s what others in your age range are worth
The table below shows mean and median net worth by age, according to the Federal Reserve.
| Age | Median net worth | Mean net worth |
|---|---|---|
| Under 35 | $39,000 | $183,500 |
| 35 to 44 | $135,600 | $549,600 |
| 45 to 54 | $247,200 | $975,800 |
| 55 to 64 | $365,500 | $1,566,900 |
| 65 to 74 | $409,900 | $1,794,600 |
| 75 and over | $335,600 | $1,624,100 |
Data source: federalreserve.gov
The numbers are pretty clear: The older you get, the more your wealth should grow — until you reach retirement and start spending down all you acquired.
Understanding this is important because you shouldn’t get discouraged if your money isn’t growing as quickly as you think it should.
Be patient but focused when you grow your net worth
The reality is that when it comes to your net worth, you’re probably starting out at $0 or, worse, you have credit card debt or other debt when you begin your adult life. This is normal, though, and is why so many younger people have a lower net worth than older Americans do.
Still, while it may be common not to own much early on, you do want to start working on changing that. Getting serious about debt paydown and starting to acquire assets by opening a brokerage account and investing can help. Once you’re in a financial position to do so (and are interested in homeownership), buying a house can also help you start to grow your wealth, as each payment will build equity.
If your net worth is growing and on pace with others in your demographic group, then you’re ideally well on your way to financial security. If it’s below those of a similar age, though, then you may want to take a close look at why — and what you can do to improve it.
Here’s how to increase your net worth
Shifting your priorities to cut spending on assets that don’t increase in value in favor of those that do could help. For example, maybe you’re currently spending a lot of money on an expensive car. Since vehicles go down in value every day, you may want to opt for a cheaper used car next time so you can devote more money to savings.
You can also look into canceling unused memberships and subscriptions and redirecting the money to savings, or cutting your dining-out budget to send more of your money into investment accounts. The right move for you is going to depend on where your money is going now, as looking into your splurges can help you find extra funds to buy stocks or other assets that will grow.
It will absolutely take time to start amassing real wealth — and if you’re behind your peers, it may take a little extra effort. But if you get serious about building financial security, you should be able to improve your numbers over time.
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