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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FAQs
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.
Is middle class based on income or net worth? ›
Middle class: Those in the 40th to 60th percentile of household income, ranging from $55,001 to $89,744. Upper middle class: Households in the 60th to 80th percentile, with incomes between $89,745 and $149,131. Upper class: The top 20% of earners, with household incomes of $149,132 or more.
At what net worth are you considered rich? ›
Someone who has $1 million in liquid assets, for instance, is usually considered to be a high net worth (HNW) individual. You might need $5 million to $10 million to qualify as having a very high net worth while it may take $30 million or more to be considered ultra-high net worth.
What net worth puts you in the top 5? ›
The most recent data from the Fed's Survey of Consumer Finances took a snapshot of the American public at the end of 2022. At that point, a net worth of $3,795,000 was enough to put you in the top 5% of all American households.
What makes you middle or upper class? ›
“The middle class is typically characterized by having a stable income and some level of financial security. They tend to value education, homeownership and health insurance. The upper-middle class is distinguished by having a higher level of income and wealth compared to the middle class.
What net worth is considered upper class? ›
The upper class has an average net worth of $793,120 to $2.65 million, while the lower class has $16,900. The middle class ranges from $58,550 to $300,800. You can grow your net worth by saving and investing consistently, investing in the stock market, and being careful about taking on debt.
Is 400k net worth good? ›
People tend to underestimate “high net worth,” citing $400,000 as the median average, which is significantly less than the broadly accepted definition of a HNWI: someone with at least $1 million in liquid assets. Getting clarity on your net worth is an important step toward financial wellbeing.
What is a good net worth by age? ›
Average net worth by age
| Age by decade | Average net worth | Median net worth |
|---|
| 40s | $713,796 | $126,881 |
| 50s | $1,310,775 | $292,085 |
| 60s | $1,634,724 | $454,489 |
| 70s | $1,588,886 | $378,018 |
4 more rowsFor example, you may be considered rich if you're in the nation's top 1% of earners. In 2022, that group saw an average annual income from wages of $785,968—nearly 19 times higher than the bottom 90%, according to the Economic Policy Institute Open in new tab.
What net worth puts you in top 1%? ›
In the U.S., it may take you $5.81 million to be in the top 1%, but it takes a minimum net worth of $30 million to be considered among the ultra-high net worth crowd. As of the end of 2023, this ultra-high net worth population is on the rise, reaching 626,000 globally, up from just over 600,000 a year earlier.
The upper middle class is often defined as the top 15% to 20% of earners. According to the Social Security Administration's 2022 wage data, the average upper-middle-class income was roughly between $80,000 and $100,000.
What puts you in upper middle class? ›
Many have graduate degrees with educational attainment serving as the main distinguishing feature of this class. Household incomes commonly exceed $100,000, with some smaller one-income earners household having incomes in the high 5-figure range. "The upper middle class has grown...and its composition has changed.
What salary is considered lower class? ›
According to the Census Bureau's Income in the United States: 2022 report, the median household income is $74,580 (a 2.3% decline from 2021), while household income levels for each class level are as follows: Lower class: less than or equal to $30,000. Lower-middle class: $30,001 – $58,020.
How much money do you have to make to be upper middle class? ›
One common way to classify the upper middle class is based on income. The upper middle class is often defined as the top 15% to 20% of earners. According to the Social Security Administration's 2022 wage data, the average upper-middle-class income was roughly between $80,000 and $100,000.
What income makes you lower middle class? ›
Where you rank by income. According to the Census Bureau's Income in the United States: 2022 report, the median household income is $74,580 (a 2.3% decline from 2021), while household income levels for each class level are as follows: Lower class: less than or equal to $30,000. Lower-middle class: $30,001 – $58,020.
What percentile is a $3 million net worth? ›
The 95th percentile, with a net worth of $3.2 million, is considered wealthy, facilitating estate planning and possibly owning multiple homes. The top 1%, or the 99th percentile, has a net worth of $16.7 million and represents the very wealthy, who enjoy considerable financial freedom and luxury.
Is your net worth more than your income? ›
Net worth provides a more comprehensive measure of financial health than income alone. Increasing income and managing debts effectively can boost net worth over time. Assets can include savings, real estate, and investments; liabilities might consist of loans and credit balances.
