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Does Your Net Worth Put You in the Upper, Middle, or Lower Class?

A person holding a bunch of dollar bills in front of their face

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Net worth is a common way to measure wealth. Add up the value of all your assets, subtract all your outstanding debt, and voila. For example, if you have $100,000 in retirement accounts, $25,000 in savings, and $10,000 in debt, then your net worth would be $115,000. This gives you an idea of how you’re doing financially.

Once you know your net worth, you may be interested in seeing how it compares to the upper, middle, and lower classes. Thanks to research from the Federal Reserve, we have data on just that.

Here’s the net worth of the upper, middle, and lower class

Class is often based on income, at least in financial discussions. The highest 20% of earners are considered upper class. The bottom 20% make up the lower class. Everyone else makes up the middle class, specifically the lower-middle, middle, and upper-middle class.

The Federal Reserve provides the median net worth for these groups in its 2022 Survey of Consumer Finances. Here’s the much each group has:

  • The upper class starts with an average net worth of $793,120. That’s for the top 80% to 90% of earners. The top 10% has much more — an average net worth of $2.65 million.
  • The upper-middle class has an average net worth of $300,800.
  • The middle class has an average net worth of $169,420.
  • The lower-middle class has an average net worth of $58,550.
  • The lower class has an average net worth of $16,900.

Keep in mind that net worth isn’t the only important factor. That alone doesn’t signify that you’re doing well financially.

If you’re a young adult, it’s normal to have a lower net worth. You haven’t had time to build wealth yet. And while a high net worth is generally a good sign, it’s not the only thing that’s important. If you have millions of dollars, but you’re worried about spending any money on yourself, that’s not healthy, either.

How to increase your net worth

There’s no need to obsess over your net worth, but it is important to build wealth as you get older. You’ll have more financial security, and by setting aside enough money, you’ll be able to retire when you want.

Here are a few smart financial habits to follow that will help you do this:

Commit to saving and investing a portion of your monthly income

A popular recommendation is to save 10% and invest 10%, but you can use whatever numbers work for you. For example, if you make $5,000 per month, you could transfer $500 to your savings account and another $500 to an investment account.

Invest heavily in the stock market to grow your money

The stock market is one of the most proven investments historically, with an average annual growth rate of about 10%. If you aren’t planning to retire within the next 10 years, most of your portfolio should probably be in stock investments.

Build an emergency fund to be ready for unexpected expenses

Emergencies will happen, and if you’re not prepared for them, you may need to go into debt to pay for unplanned bills. Put some of your savings toward an emergency fund — when fully funded, this should have three to six months of living expenses.

Be very selective about taking on debt, and avoid high-interest debt

Some types of debt can work out well, with mortgages being the best example. But high-interest debt, such as credit card debt, makes it much harder to build wealth.

If you follow those habits, your net worth will grow over time. Now, it will go through ups and downs. You might need to dip into your savings at some point, or the value of your investment portfolio could temporarily drop.

For that reason, you shouldn’t get too wrapped up in tracking your net worth from month to month. No matter what class you’re in now, and where you end up, building wealth is a long-term process. Results are measured in years and decades. As long as you have good money habits, you’ll be going in the right direction.

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