Net Worth in Your 20s: What's Average & How to Improve It

You may be surprised at the answer.

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Key points

• Your net worth is the amount of assets you have minus whatever sums you owe.
• If you're in your 20s, you may have a lower net worth than your older counterparts.

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Many of us are well aware of how much money we have in our savings accounts and how much money we owe on our credit cards. But how many of us have taken the time to actually calculate our net worth?

If you're not familiar with the concept, your net worth is effectively the total value of all of your assets minus your liabilities, or the amounts you owe. So, for simplicity sake, let's say your assets consist of:

• $20,000 in your IRA
• $10,000 in your savings account
• A home you own that's worth $300,000

Let's then say your liabilities consist of:

• A $200,000 mortgage balance
• A $5,000 credit card balance

All told, the value of your assets is $330,000 while the value of your liabilities is $205,000. That leaves you with a net worth of $125,000.

Once you calculate your net worth, you may be curious as to how it stacks up with the net worth of people your age. And to that end, Personal Capital did some digging and has some answers. 

What net worth looks like for 20-somethings

If you're in your 20s, you may not have the same net worth as someone in their 40s or 50s, because people in that boat have had more time to build savings and wealth. But if you're curious as to how 20-somethings are doing, you should know their average net worth is $88,949, while their median net worth is $7,987.

Why are both numbers important? Whenever you have a situation where the median is much lower than the average, it means it's likely that a few outliers are driving the average upward.

So in this case, it's likely that of those surveyed by Personal Capital, a few 20-somethings happened to have a high net worth. But median net worth is most likely more indicative of how 20-somethings are doing in terms of building assets. 

How to increase your net worth

Once you calculate your net worth, you may or may not like the answer. And if you're eager to increase your net worth, there are some steps you can take to do that. These include:

• Adding to your savings and retirement plan
• Investing in stocks
• Buying a home instead of renting one
• Eliminating existing debt

But clearly, these moves aren't easy ones. To do all of them, you basically need one thing -- money. And so to some degree, you may have to just accept the fact that building up your net worth will simply take time. 

Remember, if you're in your 20s, you may only have a few years of earning an income under your belt. That means you may have more debt, less money in savings, and less investment growth in your IRA or brokerage account than someone who's older than you. 

This isn't to say that you should give up on building a higher net worth. But rather, give yourself some grace. 

As a point of comparison, Personal Capital reports the average 60-something has a net worth of $1,726,840, while the median net worth for that age group is $549,872. If you keep making smart choices like focusing on savings, investing money you don't need soon, and minimizing your debt, you may find that by the time your 60s roll around, your net worth is comparable, or even higher.