Remember how I told you not to care about other peoples’ net worth? I told you that net worth is personal, that different people have different stories and include different things in their net worth calculation, so don’t worry about other people. Just worry about yourself and how your net worth changes over time.
That was probably naïve.
Everybody wants to know how they compare to other people. Ok fine, I want to know how I compare to other people, so I assume you do to. If you don’t, move on to the next article. But if you’re like me, read on to see how you compare to others tracking their net worth.
Why net worth is so ripe for comparison
Of all the personal finance metrics (net worth, income, expenses, account values, etc.), net worth seems to be the most compared. I think this is because, on the surface, net worth seems to equalize many variables. If you live in a high cost of living area, you income might be higher but your expenses are likely correspondingly higher. This would seem to even out in a net worth calculation. Similarly, you may choose to have a lot of money saved in your IRA, while I chose to save in a 401(k). Net worth combines all accounts into a single value.
But I already told you why, despite these seemingly attractive qualities, you really shouldn’t use net worth to compare yourself to anyone but yourself. So let’s just get on with it and do the thing we’re not supposed to do: compare ourselves to others. It can be hard to find data about net worth, but here I’ll share two sources.
Compare your net worth to the average American’s
A little while ago I read this article from TIME, which provides information on net worth calculated in the 2011 census. 2011 data is slightly out of date at this point, but the lack of inflation recently means that it is probably still reasonably accurate. The article gives a brief overview of net worth, what specifically was included in the census bureau’s calculation (note that even the census bureau has to make decisions about what to include/not include), and draws a few conclusions. I don’t agree with everything in this article – especially the point made at the beginning that comparing your net worth to others can help you determine if you’re on the right track (just because everyone else is doing something doesn’t make it right) – but the data it presents is very useful.
Source: TIME Magazine and the US Census Bureau
I’ll leave you to interpret this graph for yourself for the most part. The thing that jumps out at me the most is that all ages seem to have an exceptionally low net worth. Granted, this chart looks at the median, so half of all people have higher net worths, but that still means that half of all people have lower net worths! Anyone who thinks they can retire with a net worth of less than $200k is off their rocker.
Compare your net worth to personal finance bloggers
May personal finance bloggers (and there are A LOT of personal finance bloggers) share their net worth. You can read through individual blogs to find this information or access a rather complete list at Rockstar Finance. Here you find a really wide range of net worths, from over $2 million to negative $100k. I don’t follow all of these blogs and haven’t taken the time to find out the stories behind each value, but you could certainly learn more about specific individuals if you so desire.
One important thing to remember here is that these are net worths of people who have decided to blog about their personal finances. It’s a self-selecting group, and these bloggers are likely to spend more time thinking about their money than the average Joe. Just keep that in mind when you read that #1 on this list (Asset-Grinder) is only in his late 30s….
Do you like to look at how your net worth compares to other peoples’ net worth? How do you stack up?