Understanding Your Net Worth: A Breakdown by Age and Tips to Increase It

The Importance of Knowing Your Net Worth: A Snapshot of Your Financial Health

Many people associate the term “net worth” with celebrities and CEOs, but in reality, it’s a financial metric that everyone should be aware of. Your net worth is a simple calculation: subtract your debts from the total value of your assets. This number gives you a snapshot of where you stand financially.

According to the Federal Reserve’s Survey of Consumer Finances from October 2023, the median and average net worth of Americans varies by age. The figures show that the average net worth is skewed by the most affluent households, making the median net worth a more accurate representation of where most Americans stand financially.

Assets that contribute to your net worth include cash, investments, retirement accounts, property, cars, and even art and collectibles. On the other hand, liabilities such as credit card debt, student loans, mortgages, and auto loans detract from your net worth.

One way to boost your net worth is by utilizing high-yield savings accounts, with some offering annual percentage yields above 5%. UFB Portfolio Savings is a top pick for high-yield savings accounts, offering competitive rates and no minimum deposit requirements.

As your income fluctuates and you make financial decisions like investing, borrowing, or paying off debts, your net worth will change. Tracking your net worth regularly can help you make informed decisions about major purchases or financial moves. Apps like Empower can simplify this process by linking all your financial accounts and providing a net worth calculator.

Understanding your net worth is crucial for financial planning and decision-making. By knowing where you stand financially, you can set goals, track your progress, and make informed choices about your money. Subscribe to the CNBC Select Newsletter for expert tips and advice on maximizing your finances.