It’s important to keep an eye on your finances, whether that means checking your credit card balances to make sure they don’t grow too large or peeking at your checking account to make sure you’re paying your bills. cover short-term bills.
But one number you may not be very aware of is your net worth, and that’s understandable. That’s because your net worth may not be entirely clear to you without doing some digging and running some numbers.
Not sure what the net worth is? Fine. It is basically the sum of your various assets minus any outstanding debts. As a very simple example, if your only assets are a $30,000 savings account balance and a $300,000 home, but you owe $200,000 on an outstanding mortgage, this brings your net worth to $130,000 ($330,000 – $200,000) .
At age 30, you may not be thrilled about your net worth. But remember that net worth increases with age. And you have plenty of time to bring yours.
Do you have a decent amount of money for someone your age?
Data from Empower shows that the average person in their 30s has a net worth of $260,090. But that does not tell the whole story.
First of all, someone in their thirties could be 38 or 39. If you are 30 years old, it means that they have had almost ten years more to work, earn money, invest money and accumulate wealth. They’ve also had so much longer to pay off a mortgage and build equity in their homes.
Also, while the median net worth for the over 30s is $260,090, the median net worth is $38,343. And if you have a median well below the average, it indicates that a higher proportion of people have less than average wealth rather than more.
So, let’s say your net worth is $130,000 at age 30. That would seem to indicate that you’re in a pretty solid position financially. So does a net worth in the ballpark of $38,000. A net worth of $6,000, on the other hand, may tell you that you may want to consider some changes that will allow you to grow more wealth in the years to come.
How to increase your net worth
If you’re not happy with the way your wealth looks, or you’re happy with it but want to see it grow, there are steps you can take to make that happen. Keep budgeting wisely first so that you are constantly saving money for your savings.
Then invest money you don’t need for short-term goals or emergencies. By depositing money into an IRA or brokerage account, you can grow it beyond what a savings account allows.
Plus, the faster you can pay down your debt, the less money you’re likely to lose in interest. This doesn’t mean you should rush to pay off a low-interest mortgage. But if you have a credit card balance on you, chipping into it is a smart move.
Remember, it takes time to build your net worth, and by age 30, you’ve probably been working full-time for less than a decade. So save yourself some slack if your net worth isn’t as high as you’d like. But don’t assume that this number won’t grow exponentially over time either.
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