How Does Your Current Net Worth Compare to the U.S. Average? 3 Ways to Accelerate Growth

You probably don’t think about your net worth as often as you do about the amount in your checking account or the balance you owe on your credit cards — but it’s a good measure of your financial progress.

Net worth is calculated by taking the value of assets and subtracting the value of liabilities. Assets can include real estate, vehicles, investments, and cash holdings. Liabilities can include any student loans, mortgages, car loans, and credit card debt.

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Basically, the more you own and the less you owe, the greater your net worth.

According to the Federal Reserve, the median net worth of U.S. households in 2022 was $1,063,700. If your net worth isn’t anywhere near that number, don’t panic: According to the Fed, median net worth that year was $192,900.

If you have a median that is significantly lower than the average, that should indicate that the average is probably skewed upward (or downward, in some cases) by a small percentage of people. The median is a better indicator of the average American.

If you’re still worried that your net worth isn’t where it needs to be, don’t worry. As personal finance expert and co-host of The Ramsey Show Rachel Cruze says, “No matter what your numbers are, you can always make different decisions with your money.”

In fact, you can try these strategies to increase your net worth and put yourself in a better financial situation.

Reduce your debts

The average American consumer in 2023 had total debt of $104,215, according to Experian.

The average credit card debt per consumer was $6,501, while the average auto loan debt was $23,792.

High levels of debt can lower your net worth. So, if you can get rid of your credit card balance or pay off your car faster, increase your income with a side job, or cut your expenses by sticking to a strict budget, it can help increase your overall net worth.

Paying only the minimum amount on your credit card will keep you in debt for years while paying thousands of dollars in interest.

Consider the snowball method, a repayment strategy in which you pay off the smallest debt first and then gradually increase it.

You can also reverse this by using the avalanche method, which focuses on paying off the debt with the highest interest rate, regardless of how much you actually owe. While you’re doing that, you’re still making the minimum monthly payments on other debts.

In addition, Cruze advised consumers to be especially careful with car loans, since cars depreciate over time, rather than appreciate. “If you can’t pay off your car in 18 to 24 months, I want you to get rid of it,” she said in a video uploaded to her YouTube channel.

Read more: Wealthy, Young Americans Are Shutting Out of a Turbulent Stock Market — Here Are the Alternative Assets They’re Counting on Instead

Buy a house instead of renting

We all need a roof over our heads — but when you rent, your monthly payments don’t increase your net worth.

When you own a home, every mortgage payment you make gets you closer to owning that property, debt-free. Since many homes appreciate in value over time, buying one is a great way to increase your net worth.

In the second quarter of 1994, the median home price in the U.S. was $130,000, according to the Federal Reserve. In the second quarter of 2024, the median home sale price in the U.S. was $412,300.

In total, the value of the average U.S. home has increased by $282,300 over the past 30 years.

Invest your money wisely

Keeping money you don’t need immediately for regular monthly expenses or to pay off obligations in a savings account or certificate of deposit (CD) should help increase its value to some extent.

But to really see your net worth grow, you might want to consider investing your money in the stock market. The broad market’s average historical return is just over 10%, which accounts for years of strong performance as well as declines.

If you invest in an exchange-traded fund (ETF) based on the stock market, your portfolio returns could be similar. And if you hand-pick a portfolio of market-beating stocks, your returns could be even higher.

But let’s play it safe and assume you’ll generate a 7% annual rate of return on your portfolio. If you invest $10,000 today, it’ll be worth about $76,000 in 30 years, give or take.

At 8%, you have about $100,000. And at 12%, which is above the market, you’re in the neighborhood of $300,000.

The less money you spend on debt repayment, the more you will have to invest. So resist the temptation to overspend on your next car purchase and keep your credit card balances low or nonexistent, as they are notorious for charging high interest rates.

Don’t overspend on a home. Even though owning a property can help you increase your net worth, you don’t want to commit to such high expenses and mortgage payments that you don’t have money left over to invest in the future.

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This article is for informational purposes only and should not be construed as advice. It is provided without warranty of any kind.