Wednesday, May 7, 2014

Comparing your net worth to others

While it’s interesting to calculate your own net worth to see how your financial situation is progressing, you’ll likely be curious to see how your net worth compares to others.  How does your net worth compare to others with similar age, education, or region of the country?

For example, what’s the net worth of your friend who earns close to what you earn but is constantly buying new clothing, eating out, and living large.  Is your friend simply maxing out all of their credit cards or do they have a trust fund that they’re relying on?

A few sites have started to tackle this question.  The web site allows you to track, share, and compare your net worth with others.  You can look at age, income, occupation, education, and other categories.  Users of the site put their financial situation up on full display by entering their cash balance, investments, debts, etc.  Some users perform extremely well and are worth well into the millions, while others are simply trying to move from negative territory to positive territory.  The goal of the site is to motivate users to build their own net worth by introducing some friendly competition.

On a macro level, the Federal Reserve in 2010 released a survey of consumer finances that gives some insight into how your net worth compares:

As you age and advance in your career, your net worth increases.  However, once you retire and withdraw from your retirement account, your net worth begins to decrease.

Having a college degree is still one of the best ways to ensure higher lifetime earnings.  With more education, the mean and median net worth increases substantially.

The Northeast and the West have the highest net worth in the United States.

Is your net worth above or below the averages?  Look at our money saving tips to learn ways to increase your net worth.