I often find myself wondering what the benchmark is for someone my age, in terms of net worth. I’m always curious about stuff like that – how much people are saving, how much they’re making at their jobs, and how much debt they have. Call me nosy, maybe. :)
Of course, net worth is a hard thing to measure, since everybody is different and nobody is really on the same level. For example, if somebody has been working full-time since high school, they will have a much better chance of having savings and a higher net worth than somebody who spent the majority of their 20′s in post-secondary school. However, look at those same people 20 years later, and maybe the outcome is reversed.
According to CNN Money, the median net worth for someone under 25 is $1,475, and just $8,525 for those 25-34. However, if you go by income, the median net worth for people in my income bracket is over $300,000. Gulp. The numbers are from the USA, but I imagine they’d be quite similar here in Canada.
Here is a quick run down of the CNN Money chart:
Net worth by age:
< 25 $1,475
> 65 $232,000
When I was 24, I remember talking to a co-worker who said she wanted to have a $100,000 salary by the time she turned 30, or a $100,000 net worth. Although I was able to increase my net worth by almost $100,000 over that time period (I started with over $20,000 worth of debt), I’m still $25,000 away from that goal. The same goes for a conservative estimate of my salary this year.
I haven’t made a net worth goal in a really long time, and I didn’t make one this year either. However, I do hope to crack that $100,000 mark by the end of 2013. :) That’ll still leave me far behind the median net worth income for someone with my salary, but I’ll get there soon enough.
While I don’t think it’s super useful to compare ourselves to our peers, it’s in our nature to do it anyway. And I do think that looking at our net worth compared to the national averages can be helpful in seeing where we are – and where we need to be in the future.
For me personally, I think by the time we reach age 30, instead of focusing on our net worth, maybe we should focus on creating financial stability, as well as these three goals instead:
- Setting aside at least 10% of our income towards retirement. Preferably more.
- 3 to 6 months worth of living expenses saved in an easily accessible emergency fund.
- No debt – other than a mortgage or student loan.
Your net worth isn’t just a measure of your wealth, it also represents the degree of flexibility you have to respond to unexpected events, opportunities, and needs that arise. This can be anything from dealing with a job loss, sickness, starting a business, going back to school, or even taking time off to go traveling. Having money in the bank keeps more doors open.
By keeping an eye on your net worth on a monthly or annual basis, you can keep track of your growth, and use those numbers to monitor your overall financial health. I use this blog to track my monthly progress, as well as NetWorthIQ.