The Average American Family's $1,063,700 Net Worth Could Be Yours if You Do These Things


As someone who likes to be on top of her finances, I have a pretty good idea of how much money is in my checking account at any given point. Similarly, I’m aware of how much emergency savings I have, and I know what my credit card balances look like.

My net worth, on the other hand, is something I’m a bit clueless about. Sure, I have a basic idea of what that number is. But because there are so many factors that go into calculating net worth, it’s hard for me to get a good handle on it.

In case you’re not familiar with the term or aren’t quite sure what it means, your net worth is the sum of your assets minus your liabilities, or debts. As a basic example, let’s say you own a home worth $500,000 and have $50,000 in your savings account. That means you’ve got $550,000 in assets. If your only debt is a mortgage you owe $400,000 on, your net worth is $150,000.

Recent data from the Federal Reserve puts the average American family‘s net worth at $1,063,700. Of course, it’s worth keeping in mind that a small percentage of very high net worth families could be pulling the average up.

The median net worth among American families is just $192,900. And that discrepancy tells us that $192,000 is more indicative of the typical family’s net worth than $1,063,700.

But a net worth of $1 million and change may actually be more attainable than you’d think. Here’s how to get to a number like that.

1. Get into the habit of saving money automatically

Growing your net worth starts with solid financial habits. Spending less than you earn is a core one. Some people make the mistake of collecting their paychecks, paying their bills, seeing what’s left at the end of the month, and then putting money into savings.

A better bet is to automate the savings process so you’re setting money aside for different goals off the bat — before you’ve gotten a chance to spend your paycheck in full. You can automate your savings in different ways, but a few popular options include:

  • Setting up an automatic transfer from a checking account to a savings account
  • Signing up for an employer’s 401(k)
  • Arranging for money to go from a checking account to an IRA

2. Invest your money in the stock market

Here’s a little secret — you don’t have to save $1 million and change to end up with that sum of money. If you invest over a long period of time, you can potentially turn a small sum of money into a much larger one.

The stock market’s average annual return over the past 50 years has been 10%, accounting for good years and bad. So let’s say you get into the habit of saving $500 a month, whether for retirement or another goal, and you do so over 31 years. If you invest your savings in stocks and your portfolio delivers that same 10% return, you could end up with $1.09 million and change — a bit more than the average family net worth today.

3. Buy a home — or invest the money you’re not spending on homeownership

Home values have a tendency to rise over time. So buying a home is a great way to grow your net worth. If you purchase a home for $300,000 and its value increases to $750,000 over 30 years, you’ve just gained $450,000 in net worth.

However, don’t stress if homeownership seems unattainable for you, or if it’s just not something you’re interested in. Owning a home costs a lot of money beyond your down payment and mortgage. There’s upkeep, repairs, and property tax bills, just to name a few expenses. Owning a home also requires a lot of actual work on your part — work you may not want to do.

There’s no reason to write off the idea of growing your net worth to $1 million or more just because you don’t own a home. If you take the money you aren’t spending on homeownership expenses and invest it instead, you could come out way ahead financially.

Don’t obsess over your net worth — but set yourself up to grow it

The reason I don’t fixate on my net worth is that it doesn’t necessarily impact my day-to-day spending. For example, I have a lot of my net worth tied up in my home. But since I’m not selling it, that’s not money I can use to pay bills right now.

For this reason, I’d encourage you to focus more on covering your incoming expenses and fixate less on your net worth. But now that you know how to grow yours, you can set yourself up to be worth a lot of money one day down the line.

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