3. Grading Your Current Net Worth

The natural first question that I asked myself after calculating my net worth was how am I doing? Do I need to save, invest or pay down my debts faster? In short, do I need to make a change to my behavior to realize a better outcome? In order to understand my standing I collected the following numbers:
First of all as of 2019 data the average US household had $747K in household net worth according to the US Federal Reserve. Generally, the government uses families or households to define wealth or spending in the US, so consider this the pooled resources of married couples/families as well. (Visual 1)


One thing that bears noting, especially in the US economy is the incredible disparity in wealth and as is the case with averages this number includes the very richest (Jeff Bezos, Elon etc.) In 2016 the Census Bureau pulled the following numbers on the US Population. (Visual 2)


As you can see when we split up the US population in terms of wealth into 5 buckets and then find their median net worth there is considerably greater net worth concentrated in the wealthy bucket. This is relevant because it tells us that the average net worth of $747k is considerably higher than what most households, even the wealthy households have on hand. In fact, this can be attributed to the outlandish sums of money controlled by the top 1%,  further information here.  As you can tell, this is a much better means by which you can benchmark your own net worth. However, controlling for obscene wealth still leaves an unacknowledged  contributing factor here and its age/time.
As we will talk about in future blogs, time is an incredibly powerful tool in building net worth due to interest and compounding returns. In the visual above, there is no acknowledgement that a 50 year old has had more time to accumulate and build their net worth than somebody who is 25.  This gives us a good sense of where you are in absolute US family terms but not necessarily how you are doing today relative to your age. Below is US median net worth by age. (Visual 3)

It is here that we can start establishing a baseline for your own net worth performance over time. Certainly this shouldn’t constitute your financial goals but this gives us an idea of where you stand relative to the US population and if you are below these numbers for your age group there is significant area to improve. 
In order to turn this post into action, which we will because in more detail in a separate post, please use this one to answer the important questions of: 

1. Visual 3: Am I on track? and how am I doing relative to my age group?
2. Visual 2: How am I doing relative to the average household?
3. Visual 1: How am I doing in absolute terms? 

Hopefully in this post, we have established what net worth is and how to evaluate your own at this stage in your financial journey.
Successful outcomes in personal finance are dictated solely by an individual's ability to accumulate money and intelligently allocate capital, in an attempt to build meaningful net worth.