Net Worth: How do you stack up?
July 20, 2007 by Pinyo.
This is going to be a fairly short post, I came across the CNN Net worth calculator by following the link from The Get Rich Slowly Forums topic that asked the question of how much should someone save by the time they are X years old.
I punched in my numbers and I am glad to say that I am doing quite well compare to people at my age and income (according to the calculator anyway).
Actually, it’s kind of scary that the median net worth for a 33 years old is only $2,125.
I’ve used that calculator and got ridiculous results. Based on my age, my net worth should be a really big number…based on my income, my net worth should be $1,100.
Which extreme should I believe?
That’s probably because you are older. May be a better test would be:
Net Worth = Age * Income / 10
If you have that much saved, you are doing okay.
Whatever ‘number’ the Net Worth Calculator pops out, it won’t be the ‘right number’. To understand how much MONEY you need to support your life, you first need to know how much LIFE you need to support.
Those numbers just seem extremely off from my point of view. I live in NYC and am 32. Most people I know are between 27-35 and pretty much everyone makes six-figures (that is common in NYC even for entry level jobs). My net worth is about $880k largely because I lived rent free for a few years with my parents in Long Island. My net worth is all in cash/investments - no house and the only “illiquid” thing is my 401k which relative to my net worth is fairly small at only around $110k. I am renting now simply because my work situation will probably require me to move overseas soon. Most of my friends are in a similar situation, the net worths vary (e.g. my wall street friends have higher but other friends have less) however everyone has at least a couple hundred grand from what I know. I’m sure it is the same in other big cities like SF, LA, Chicago, Boston, etc.
So I think those numbers are either just very wrong or way too broad. For instance do you really care to compare your net worth to the net worth of people living in tiny towns who dropped out of high school and make $6 per hour? Of course not. It would be good if they broke it down by education, geographical location, industry, etc. Than you could truly see how you stack up.
@PTC — I wish you’re my friend, because I can guarantee you that making six-figures in entry level jobs in NYC is NOT common.
OK, perhaps saying six-figures for entry level jobs is common was not accurate - however I will argue that it is not uncommon. And I should also mention that when I say entry-level job I mean within your first two years. For instance a typical first-year analyst on wall street may or may not make six-figures their first year (if they don’t it will be close). But by their second year it is pretty much guaranteed. As of last year I think the average for 2nd year guys was over $150k. Those are 23 year olds. It is similar for people involved in various aspects of servicing wall street as well, so you have all those jobs. The financial industry is one of the largest employers in NYC and is largely made up of younger people. Granted I am focusing largely on the “fast-track” type people, those who went to various Ivy League schools (like you), over-achievers, etc. But that is not a narrow-focus given how many of those people are in places like NYC relative to the rest of the country.