Growing wealth early in your income-earning years is the surest way to a solid financial future. Do you want to know how you stack up? Here is a snapshot of the average net worth of Americans under the age of 35 and how to find your net worth.
According to the Fed, the median net worth for people under 35 is $13,900. The average net worth is $76,300. Extremely high net worth Americans skew the average numbers higher. So, it’s helpful to look at the median for a better sense of where most Americans fall on the spectrum.
How do you find your net worth?
Of course, age isn’t the only factor in determining net worth, which is calculated by subtracting how much debt you owe from the total value of your assets (cash, investments, property, etc.). It varies widely depending on a person’s income, employment status, life stage, cost of living, inheritances, and more. But this number can be helpful to know where you stand financially and where you want to go.
What Younger Earners Can and Should be Doing Now
Your net worth is fluid and constantly changing as you borrow, save, invest and pay back money that you owe. In your later years, after life’s biggest (and most expensive) milestones are paid for, your net worth has the potential to keep growing thanks to the stock market and the value of your assets appreciating.
To grow your wealth, make saving and investing a priority at an early age. Think about how much you want to have saved in the future. Then break it down into smaller payments you can afford today. Thanks to compound interest, saving 15% of your paychecks every month starting when you get your first job could help you earn up to 10 times your income by retirement age.
Beyond savings, real estate is a common way that people build their net worth. While renting affords you flexibility and could save you on home repair and maintenance costs, putting equity into a home helps your net worth grow as property values increase. It’s not completely without risk, but the real estate market does tend to give back if you’re patient.
Saving up for a home starts with a down payment: Putting 20% down may earn you better rates on your mortgage, but some first-time homeowner programs require as little as 3.5% down for financing.