How Does Your Net Worth Compare to the Average Middle-Class American's?

Americans have a long, rich tradition of comparing themselves to each other in ways big and small. For example, the phrase "keeping up with the Joneses" is about exactly that -- competing with the neighbors who may have bigger and better vehicles, a nicer house, better wardrobes, and so forth. But a lot of those "achievements" don't matter much in the grand scheme of things.

What may matter to some (or many) Americans is their net worth. By understanding the net worth of our peers, we can all better understand if we're headed in the right direction -- or if we need to be playing catch up.

Don't miss out: These accounts can help you grow your net worth.

What is net worth?

Net worth is measured in many different ways, but the the Federal Reserve defines it this way: "The difference between families' assets and liabilities."

It's that simple. So, if you have a house worth $300,000 and a mortgage of $200,000, and that's your only asset, then your net worth is $100,000.

$300,000 - $200,000 = $100,000

But almost everybody has more than one asset to their name, so the calculation can get a little complicated.

Defining assets

Assets, for the purpose of this calculation, include investments like certificates of deposit, bonds, and stocks, and essentially anything you have in a retirement account of brokerage account. Transaction accounts like checking accounts and savings accounts are also included, as is real estate. Cars, boats, motorcycles, RVs, and the like are considered assets as well.

The government basically considers anything that can be easily valued to be an asset -- for example, employment-related stock options are not considered an asset because they are often not publicly traded and are bound by many rules that make their valuation uncertain. This also implies that valuable antiques or collectables are not strictly assets since they can be difficult to value and liquidate.

Defining liabilities

Liabilities are much more straightforward than assets. Liabilities are essentially any debts you owe to anyone for any reason. This includes balances on credit cards, mortgages, car loans, loans against your retirement accounts, and even "buy now, pay later" plans.

Defining America's middle class

Just who makes up America's middle class is a different question, and another that's vital to answering the question of how your net worth compares to the average middle-class American's.

There are lots of definitions, but we're going to use a very simple slice of data provided by the Federal Reserve's recent publication "Changes in U.S. Family Finances from 2019 to 2022." According to this report, the median income for all American households in 2022 was $70,300. If we drill down deeper, we see that the median band of "usual income" for the 40th through 80th percentile, which is a pretty good chunk of Americans, is $71,200 to $115,700.

So, the question is now, how does your household compare to those making $71,200 to $115,700?

Middle-class net worth

Now, the moment you've all been waiting for, where we reveal the big number: the median net worth of America's middle class.

For American households that are within our definition of the middle class, median net worth was $159,300 to $307,200.

As a point of comparison, the median net worth of all American households in 2022 was $192,900.

Why net worth matters

Some might argue that net worth doesn't matter, or at least it doesn't account for everything.

A high net worth could mean that you inherited a valuable house, that you have little to no debt, or that you have a substantial nest egg put aside for retirement. So, when you're looking into your net worth, ask yourself why it matters and what that information says about your financial situation.

If you're trying to determine if the worth of your assets is enough to retire on, for example, you'll want to subtract the value of your current home if you intend to remain there through your retirement. After all, the value of your home will remain locked up and inaccessible if you never intend to sell it.

In any case, if your net worth is far below your peers', or even negative, it can be a sign that you need to save more aggressively and/or pay off debt ASAP.

If you want to know more about your net worth because you're simply trying to see if you're keeping up with the Joneses, well, now you know the average middle-class American's net worth. But remember that the Joneses in rural areas have less net worth than those in metropolitan areas, and other factors like race, age, and education hugely influence net worth, too.