The phrase “net worth” gets bandied around in conversations about billionaires. For instance, Jeff Bezos’s net worth in 2021 was estimated by Forbes to be $180.5 billion, Elon Musk’s $168.3 billion, Bill Gates’ $126.3 billion, while Jay-Z’s was $1.4 billion.
But it’s important for people who aren’t billionaires to know their net worth as well. A person’s net worth can be an important reference point in understanding one’s financial position. Net worth can be negative, especially early on in one’s careers. But net worth can help an individual figure out how much they need to save, how much spending they need to cut back on, or how much they’ve saved for retirement.
Let’s investigate how to calculate one’s net worth, U.S. national figures for net worth, and how to use this figure.
How to Calculate Net Worth
Finding out one’s net worth is actually a simple formula:
Assets – Liabilities = Net Worth
The hard part is determining how much one’s assets are and how much one’s liabilities are. A person’s assets can go beyond what they have in their checking account. Here’s a closer look.
Assets
Assets basically boil down to how much money you have, as well as the value of things you own. In order to know one’s net worth, estimate the value of each asset below:
• Money in savings accounts
• Money in checking accounts
• Money in investing or retirement accounts. Brokerage accounts or 401ks are in this bucket.
• Physical cash
• Value from insurance policies
• Value from business ownership or stakes
• Value of cars
• Valuable personal goods, like jewelry or art
• Value of real estate, including home
Calculating the value of a home can be a task in itself. It’s important to research the value of the homes around you, the size of your home, any deferred maintenance on the home, additional benefits like parking spots, backyard space, room count, etc. There are a number of home value calculators online, like the House Price Index Calculator , which is approved by the Federal Housing Finance Agency.
Recommended: Understanding Property Valuations
There are other ways to think about assets:
• Liquid Assets: Items like stocks, bonds, mutual funds, or ETFs that are easy to sell quickly and whose sale will not greatly affect their price.
• Fixed Assets: These are items that would take a longer time to convert to cash. These assets are often deposited for extended periods of time in exchange for high interest accrual and thus cannot be cashed before their agreed-upon time frame is up.
• Equity Assets: Equity assets include your shares in a company, either private or public.
Intangible Assets, such as brand recognition for a company or any other intellectual property like patents, trademarks or even goodwill, are trickier to factor into your net worth due to the complexity of measuring their value.
Liabilities
AKA your debts. The following categories are what most often make up liabilities:
• Auto loans
• Student loans
• Personal loans
• Business loans (personally guaranteed)
• Credit card balances
• Mortgages
While liabilities are on the negative side of the net worth equation, it doesn’t necessarily have to symbolize something negative about your finances. For example, student loans or mortgage loans are typically seen as necessary loans that individuals take on as they reach milestones in life, like going to college, graduate school or buying a home.
Meanwhile, knowing one’s total liabilities can help with figuring out a plan to start paying off debt that has higher interest rates, like from credit card balances.
Survey results by the consumer-credit reporting company Experian released in 2021 found that the average debt balance held by Americans in 2020 was $92,727.
Here’s a closer look at the average loan balances held divided into categories:
| Loan Type | Balance |
|---|---|
| Personal Loan | $16,458 |
| Mortgage | $208,185 | Credit Card | $5,313 | Student Loan | $38,792 | Auto Loan | $19,703 |
Source: Experian
Recommended: Credit Card Loans FAQ
Median and Average Net Worth in U.S.
According to a Federal Reserve report published in 2020 that looked at U.S. family finances, the average net worth of households in the United States increased by 2% from 2016 to 2019 to $748,800. Meanwhile, the median household net worth closer climbed 18% to $121,700.
These increases continued a pattern of growth that U.S. families also experienced in the 2013-to-2016 period, according to the Fed report. Median and mean net worth were stagnant in the 2010-to-2013 period however, after large declines from 2007 to 2010 as the financial crisis caused a severe recession.
Your net worth is, of course, never set in stone, rather it’s a snapshot of where you currently stand financially. Here’s a breakdown of median and mean net worth by age groups in 2019:
| Age | Median Net Worth | Mean Net Worth |
|---|---|---|
| Less than 35 | $13,900 | $76,300 |
| 35-44 | $91,300 | $436,200 |
| 45-54 | $168,600 | $833,200 | 55-64 | $212,500 | $1,175,900 | 65-74 | $266,400 | $1,217,700 | 75 or more | $254,800 | $977,600 |
Source: Federal Reserve
Here’s another snapshot of median and mean net worth by education in 2019:
| Education | Median Net Worth | Mean Net Worth |
|---|---|---|
| No high school diploma | $20,500 | $137,800 |
| High school diploma | $74,000 | $305,200 |
| Some college | $88,800 | $376,400 | College degree | $308,200 | $1,519,900 |
Source: Federal Reserve
Here’s the table for median and mean net worth by race in 2019:
| Race | Median Net Worth | Mean Net Worth |
|---|---|---|
| White non-Hispanic | $188,200 | $983,400 |
| Black or African American non-Hispanic | $24,100 | $142,500 |
| Hispanic or Latino | $36,200 | $165,500 | Other or multiple race | $74,500 | $657,200 |
Source: Federal Reserve
It’s important to keep abreast of your net worth because this number may fluctuate depending on factors such as stock values, interest rates, real estate trends, and other tides of the financial world. It’s important to have an idea of overall trends so you can generally understand your financial health and have an idea of your true wealth.
Growing Your Net Worth
True wealth can be an important factor in knowing when you might expect to retire. It’s a good idea to focus on your gains year over year, rather than the number you get at the end of the equation. If you’re concerned about your net worth or are hoping to increase it, especially for future retirement goals, then it might be helpful to consider investing.
Regardless of whether an investor is well-versed or a complete newbie, the SoFi Invest® online brokerage account may be a good option. On the Active Investing platform, users can create their own portfolio with ETFs, stocks, fractional shares, and a cryptocurrency account. Investors can also sign up for the Automated Investing service and let SoFi build and rebalance a portfolio for them.
SoFi Invest®
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Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
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