How does your net worth compare to the average?

[rkbabang]

Why should we be surprised?  Just go down to your local mega store complex.  I am sure it is the same across NA.  The number of retail outlets has exploded in the last 30 years. 

 

I go to the same Sbux 3 times a week or so and buy the same thing - tall bold, and nothing else.  I sit and nurse it for nearly an hour while I read.  In line with me are people getting latte this and that and some treat and paying 7-10 and they appear to think this is normal.  They ring the purchase through on their Iphone -70 /month, get in their vehicle - 500/month, 150 for gas.  Then they go shopping for things they dont need or buy things for people who dont need them.  The amount of crap that comes through my door that I dont want blows my mind. 

 

Then there is restaurants.  The number of these has exploded as well in the last 30 years.  We go our for dinner about once a month. 

 

Probably the worst thing to ever happen was the advent of easy credit.  I am guessing most on this board are like me.  I have only ever had one credit card, and I only use it for big purchases. 

 

Joe/Jane average (or should I say Joe median) dont live like we do. 

 

 

Absolutely.  My family ate out less than 12 times last year. I make my own coffee at home (cheaper and better).  I do use my credit card for everything though.  I mean everything, even monthly bills like heating oil, electric, cable TV/internet.  I have a Fidelity card that pays me 2% cash back on every purchase with no limits and it gets deposited into my brokerage account.  I've never paid them a penny in interest and they pay me hundreds of dollars per year to conveniently have only one bill to pay every month.  I wish I could pay my mortgage with it.

 

[enoch01]

Another net worth discussion.  Maybe we are getting close to some kind of top.

[crastogi]

I guess I'm not shocked as to how low the median net worth numb's are, with so much conspicuous consumption. My NW is way, way, above the median, and compounding at 15.4% p.a. since 1997. I find it funny when people tell me, i'm good with money. I just spend less the I earn and invest the rest and don't try to keep up with the Jones', who are always one month from insolvency, but drive nice cars. ;)

 

I'm of a similar mindset as you. The amount conspicuous consumption and essentially total lack of saving is really amazing in the US. There are people around me who earn far more than I do, but are in near dire straights financially. So we talk about what they can do, they see the problem (silly spending) and continue as they always have. One or two bad months they'll be in big trouble. It's only useful to say "stop spending" so many times. Eventually it becomes unwelcomed, so I just say ok good luck. No wonder the average NW is so low.

 

This is sort of a side note, but does anyone else here think about how much an item would cost in terms of how many hours they'd have to work to earn the money? Sometimes I do and then realize I don't want item X nearly that badly lol.  :P

 

The lure of "having it all" has put these folks in a treadmill, doing work they may not enjoy, to pay for things they buy to impress people they may or may not even like.  America needs to wake up! 

[Ross812]

I was reading some posts on another forum mentioned here a few days ago. One of the members had a cool calculator for coming up with a safe net worth by age to retire comfortably.

 

NW = Salary * (e^(0.075 * (Age - 20) ) -1)

 

@ 100k per year:

25 yo = 25k

35 yo = 210k

45 yo = 550k

55 yo = 1.3M

65 yo = 2.8M

 

The formula essentially simulates someone who started young and saves approximately 10% of their salary compounded at 7.5%. It seems to work pretty well and you can play with the multiplier (7.5%) if you want to match it to your own net worth and see how you measure up to a diligent young saver. I.e. if you used 10% to match your NW to the model you are 33% ahead of the curve. 6% and you are 20% behind.

 

[Guest deepValue]

The straying from Victorian virtues (i.e., self control) and the ability for many to become suddenly rich (and the ease with which information about their subsequent lifestyle travels) are to blame for Americans' inability to take care of themselves. Though sometimes difficult to find in old money families these days, impulse control is even rarer in the lower classes. Rarer still is the desire to improve one's self.

 

The political system worked well enough in the days when (speaking about Texas, at least) George R Brown and a handful of other men decided on legislation, passed it along to the speaker of the house, and all the Democrats lined up behind the speaker to pass the legislation. Now, you have so many pockets of political power that it's near-impossible to find loyal soldiers. Now you have something approximating democracy, or as close to it that the country has ever come. That's a dangerous path to go down; the average American really isn't qualified to vote.   

[AtlCDore]

Why should we be surprised?  Just go down to your local mega store complex.  I am sure it is the same across NA.  The number of retail outlets has exploded in the last 30 years. 

 

I go to the same Sbux 3 times a week or so and buy the same thing - tall bold, and nothing else.  I sit and nurse it for nearly an hour while I read.  In line with me are people getting latte this and that and some treat and paying 7-10 and they appear to think this is normal.  They ring the purchase through on their Iphone -70 /month, get in their vehicle - 500/month, 150 for gas.  Then they go shopping for things they dont need or buy things for people who dont need them.  The amount of crap that comes through my door that I dont want blows my mind. 

 

Then there is restaurants.  The number of these has exploded as well in the last 30 years.  We go our for dinner about once a month. 

 

Probably the worst thing to ever happen was the advent of easy credit.  I am guessing most on this board are like me.  I have only ever had one credit card, and I only use it for big purchases. 

 

 

 

Joe/Jane average (or should I say Joe median) dont live like we do.

 

 

Funny you should mention SBUX.  When SBUX was becoming a national brand, I thought to myself how can this concept work.  I can't imagine people regularly paying $4 for a cup of coffee.  Obviously, I was wrong and SBUX went on to become a brand on par with Coke. 

 

I really believe people get a "high" spending money.  And once you become addicted it is a very difficult "habit" to break.  I remember back on both set of my grandparents (who lived through the depression) and one set never owned a credit card and thus had no credit and the other had a credit card that they rarely used.  The times have certainly changed.

 

A friend who was making really good money became more in debt as he made more money.  Unfortunately, he is not an isolated case.

 

 

 

 

[Crip1]

The concentration of wealth in our country is too high.  The explanation I hear some places that this is due to financial illiteracy or lack of discipline is not true in a lot of cases  The bigger problem is that too many people aren't getting a good education which is resulting in whole communities being stuck in a cycle of poverty.  Something needs to be done about this in my opinion.  It will benefit everyone.  We have already decided we won't let these people drop below a certain living standard so their financial problems will be ours too.

 

I couldn't disagree more.  When I look at people I know with financial difficulties ( whether they be friends, acquaintances, family members, or extended family members), what I see is one stupid financial decision after the next over a period of years then decades without ever a thought to saving a penny.  When advice is given (even after they bring up the subject with their complaints) it is met with hostility and is certainly not welcome.  I hate to think that I'm becoming a curmudgeon, but the older I get the more I believe that most people are just stupid and irresponsible.  They make bad decisions and don't want to be called on them, don't want to admit to them, and don't want to be held accountable for them.  This explains in a nutshell why democracy can't work.

 

I see that with the middle class people, but not so much with poor people with limited education and prospects.  Anyway all I am saying is that the education system for poor people needs a lot of improvement because a lot of poor kids are coming out of high school miles behind the wealthier kids.  I understand letting adults fend for themselves but I think kids should get more help to level the playing field.

 

 

rhbabang – You are correct in many instances. My profession is mortgage. It’s fascinating to me to see folks who make good money spending 44% of their pre-tax income on debt (housing, cars, credit cards) and who have minimal reserves (i.e. net worth). Makes me want to say “Really, your family of 4 could not have been happy in a 3,000 s/f house so you had to buy a $4,000 s/f house?” I think it’s a matter of people who hear what they want to hear. If someone really wants that nice house, or that nice car, and are told 9 times by 9 different people that it’s beyond their means, but they then hear from the 10^th source that “Yes, you can afford that”, they are making a conscience decision to ignore the masses and do what they want. It is irresponsible to be sure…definitely a matter of a fool and their money soon parting.

 

That said, I believe matjone has a very compelling point. Public schools in the US teach a lot of facts, but many of those facts are simply not useful in the adult world. Knowing the cosine of a 40 degree angle is nice, but it’s not going to be useful information to the general populace to the extent as creating a budget, balancing a checkbook, understanding the power of compound interest or other things that would be part of “Financial Literacy 101”. My oldest son took a personal finance class in High School and, while I would not call it the be-all, end-all, of education, it did expose him to ideas and concepts that he may not have understood without this class. And, for those who say it is a parent’s job to do this, you are 100% right (although, those of us with teenagers all know that teens have a habit of disregarding everything their parents say, just like we all did at that age). BUT, our education system also has an obligation (less so than parents, but an obligation nonetheless)to prepare students to be responsible citizens, and personal finance is a step in that direction. Granted that this will not make EVERY student more financially literate or more responsible, but increasing the knowledge base amongst our youth will have substantial benefit overall…for those who are rich or poor.

-Crip

[fenris]

I agree that teaching financial literacy is helpful and necessary. But in the end most people don't want to hear or know the truth. They want their cake and they want it now. They value pleasure and convenience now higher than the uncertain benefit from saving for the future. They have the tools to do so (consumer credit) and they find encouragement and confirmation in the media and their peer group.

 

It can be quite difficult and painful to break these habits and establish a different mindset. It is possible, of course, but not only does it mean delaying the gratification that used to be instantaneous, it also means acting differently than your peer group. It creates a kind of dissonance with the values and actions of a lot of your friends.

[DTEJD1997]

How many young people have a NEGATIVE net worth?

 

I'm not talking about a few hundred or a few thousand on a credit card or owing for a car.

 

I PERSONALLY know two youngsters who are going to spend $100k+ on an undergraduate degree.  Both of them are going to borrow substantially ALL of that amount.

 

How long till they have a positive net worth? 

 

They are not isolated cases.

 

Or look at my home town.  More than HALF of it's residents are functionally illiterate.  The literacy rate is now LOWER than it was 50, 75, 100 years ago...

 

We don't need anymore education!  I would argue that we need LESS education, but of a better quality.  Most schools have no financial/economics training.  Is it a wonder people don't know how to balance a check book, or understand saving/investing?

 

How many of today's jobs could be performed by someone who got a VERY SOLID 8th grade education (think from the 1940's) and then a month of on the job training?  Quite a few...

 

 

[rkbabang]

How many young people have a NEGATIVE net worth?

 

I'm not talking about a few hundred or a few thousand on a credit card or owing for a car.

 

I PERSONALLY know two youngsters who are going to spend $100k+ on an undergraduate degree.  Both of them are going to borrow substantially ALL of that amount.

 

How long till they have a positive net worth? 

 

They are not isolated cases.

 

Or look at my home town.  More than HALF of it's residents are functionally illiterate.  The literacy rate is now LOWER than it was 50, 75, 100 years ago...

 

We don't need anymore education!  I would argue that we need LESS education, but of a better quality.  Most schools have no financial/economics training.  Is it a wonder people don't know how to balance a check book, or understand saving/investing?

 

How many of today's jobs could be performed by someone who got a VERY SOLID 8th grade education (think from the 1940's) and then a month of on the job training?  Quite a few...

 

 

Yes, now that is a real problem.  The availability of easy credit, low interest rates, government backed loans with payments and interest delayed until after graduation,  along with a culture which encourages everyone to go to college regardless of what they wish to do for a living has made education costs skyrocket.  I feel bad for anyone graduating today starting their adult lives 6-figures in debt, many of which have useless degrees in non-technical fields.  The only thing these people did wrong is listen to bad advice from their idiot parents (many of whom make good money, but live paycheck to paycheck) and school guidance counselors back when they were teenagers.

 

[LongHaul]

I lot more people would save if they were like my grandmother.  She went through the great depression and went hungry at times in the 30's.  That is a harsh learning lesson with a lot of pain but I know people who I don't think will learn any other way. 

The older I get and the more I see people pissing their money away on the useless wants the more in favor I am of tough love - even letting people starve a little.  There is wisdom through suffering. 

[fenris]

Or look at my home town.  More than HALF of it's residents are functionally illiterate.  The literacy rate is now LOWER than it was 50, 75, 100 years ago...

What do you mean by "functionally illiterate"?

[DTEJD1997]

Or look at my home town.  More than HALF of it's residents are functionally illiterate.  The literacy rate is now LOWER than it was 50, 75, 100 years ago...

What do you mean by "functionally illiterate"?

 

According to estimates by The National Institute for Literacy, roughly 47 percent of adults in Detroit, Michigan -- 200,000 total -- are "functionally illiterate," meaning they have trouble with reading, speaking, writing and computational skills. Even more surprisingly, the Detroit Regional Workforce finds half of that illiterate population has obtained a high school degree.

 

http://www.huffingtonpost.com/2011/05/07/detroit-illiteracy-nearly-half-education_n_858307.html

 

I suspect that UNDERSTATES the issue by quite a bit.  I have a family member who worked as reading tutor in Detroit maybe 8-10 years ago.  I also have friends/family who are/were deeply involved in public education in Detroit.  I grew up in the city also...and still have family/friends/business there.

 

This may be a topic for a different thread, but what is going on in Detroit is somewhat alarming...

[turar]

I have been looking for numbers on the average net worth of people in various parts of the country and at various ages and have been surprised at what I've found.

 

For example the Federal Reserve Survey of Consumer Finances in 2012 reported this:

 

Median family net worth

Age 45 to 54: $117,900

Age 55 to 64: $179,400

Age 65 to 74: $206,700

 

These numbers seem low to me.  I wonder if this includes retirement accounts and home equity?  For someone who works say for 30 years (age 22 to 52) to have a net worth of $118k seems low, that is the equivalent of saving less than $4k per year with 0% return.  Comments?

 

I wonder how median NW compares to average NW. There was a youtube video going around a few months ago, which was interesting too:

 

[turar]

Wow, so here's the comparison for 2007: http://en.wikipedia.org/wiki/Wealth_in_the_United_States#Statistics

Median: 109.5K

Average: 506.5K

[rkbabang]

Or look at my home town.  More than HALF of it's residents are functionally illiterate.  The literacy rate is now LOWER than it was 50, 75, 100 years ago...

What do you mean by "functionally illiterate"?

 

According to estimates by The National Institute for Literacy, roughly 47 percent of adults in Detroit, Michigan -- 200,000 total -- are "functionally illiterate," meaning they have trouble with reading, speaking, writing and computational skills. Even more surprisingly, the Detroit Regional Workforce finds half of that illiterate population has obtained a high school degree.

 

http://www.huffingtonpost.com/2011/05/07/detroit-illiteracy-nearly-half-education_n_858307.html

 

I suspect that UNDERSTATES the issue by quite a bit.  I have a family member who worked as reading tutor in Detroit maybe 8-10 years ago.  I also have friends/family who are/were deeply involved in public education in Detroit.  I grew up in the city also...and still have family/friends/business there.

 

This may be a topic for a different thread, but what is going on in Detroit is somewhat alarming...

 

I find the whole Detroit thing fascinating.  Whatever the reason(s) for it (large corrupt criminal government with social programs out of control, labor unions, shift to overseas manufacture of automobiles, all of the above and more) it is like watching an advanced civilization regress and vanish right in front of our eyes.  If you've ever wondered what would happen to our cities if humans were to disappear suddenly from the Earth you can just sit back and watch youtube videos of certain sections of Detroit.