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 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.
How do you know if you are upper middle class or upper class? ›
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.
How do you answer what is your net worth? ›
To calculate your net worth, you subtract your total liabilities from your total assets. Total assets will include your investments, savings, cash deposits, and any equity that you have in a home, car, or other similar assets. Total liabilities would include any debt, such as student loans and credit card debt.
Are you upper class if you are a millionaire? ›
In fact, 60% of people with $1 million or more in investable assets classified themselves as upper-middle class and another 31% actually placed themselves squarely in the middle class according to a study by Ameriprise Financial.
How much money does the upper middle class have? ›
While the exact threshold fluctuates based on factors such as local cost of living and inflation, those in the upper middle class typically have an estimated household income of $150,000 to $250,000. This income level is much higher than what the average American makes.
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.
What net worth is considered rich? ›
For example, individuals with $1 million in liquid assets are generally classified as having a high net worth. To be considered very high net worth, one might need assets ranging from $5 million to $10 million, while an ultra-high net worth status could require $30 million or more.
Is 100k a year upper 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.
At what point are you wealthy? ›
According to Schwab's 2023 Modern Wealth Survey, Americans perceive an average net worth of $2.2 million as wealthy. Knight Frank's research indicates that a net worth of $4.4 million is required to be in the top 1% in America, a figure much higher than in countries like Japan, the U.K. and Australia.
What net worth puts you in the 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.
You also need an annual household salary of at least $50,000 to be considered middle class in 17 other states, including California, New York, Oregon, Washington, Utah and Hawaii. In California, the difference is $122,000, from a salary of $61,028 on the lower end to $183,102 on the upper end.
What is rich class income? ›
California. 2022 average income of the top 5%: $613,602.
Is 500k a year upper middle class? ›
With a $500,000+ income, you are considered rich, wherever you live! According to the IRS, any household who makes over $500,000 a year in 2023 is considered a top 1% income earner. Of course, some parts of the country require a higher income level to be in the top 1% income, e.g. Connecticut at $580,000.
What determines upper class? ›
The American upper class is a social group within the United States consisting of people who have the highest social rank, due to economic wealth, lineage, and typically educational attainment.
How do you know if you are rich or middle class? ›
Your Paycheck Is High Relative to Your Peers
In both cases — middle class and rich — your paycheck might be higher than your peers. But you're likely rich if you earn significantly more money for your area and can handle far more than basic needs.
How do you differentiate the upper middle and lower class? ›
Today, concepts of social class often assume three general economic categories: a very wealthy and powerful upper class that owns and controls the means of production; a middle class of professional workers, small business owners and low-level managers; and a lower class, who rely on low-paying jobs for their ...
Is 500k a year middle class? ›
With a $500,000+ income, you are considered rich, wherever you live! According to the IRS, any household who makes over $500,000 a year in 2023 is considered a top 1% income earner. Of course, some parts of the country require a higher income level to be in the top 1% income, e.g. Connecticut at $580,000.
