People naturally like to compare themselves to each other. Most people like to have some sort of base line to see where they stack up. This is really true with personal finance.
The best way to give people a sense of where they stand is to lay out some data. Every three years the Federal Reserve Board conducts a national survey that tracks the financial health of American households.
Some of these numbers are quite interesting. If you and yours are bringing in $40,000 a year, you’re doing better than half the households in America.
For many people, this is hard to believe. The numbers do not lie however.
If your household income is $170,000, you’re among the nation’s top 10 percent wage earners and get to park on the top floor.
Anything in six figures means you’re in the top 20 percent.
Annual income
Income level (percentile) Median income (rounded)
Level VI (90 to 100) $170,000
Level V (80 to 89.9) $99,000
Level IV (60 to 79.9) $65,000
Level III (40 to 59.9) $40,000
Level II (20 to 39.9) $24,000
Level I (less than 20) $10,000
Source: Before-Tax Family Income, 2001 Federal Reserve Board Survey
Remember that high income does not equal rich.
Net worth is more telling. Net worth, is the sum of one’s assets — home equity, investments, savings accounts, retirement funds, cars, furnishings and such things as jewelry, furs, wine collection, old baseball cards — minus all outstanding liabilities such as mortgage balance, revolving and credit card debt, college loans and so on. Across all households, the national median net worth is $86,000. Half of your fellow citizens have more than that, half less. As you see, there’s a massive disparity between the haves and have-nots.
Net worth
Net worth (percentile) Median net worth (rounded)
Level VI (90 to 100) $833,600
Level V (80 to 89.9) $263,100
Level IV (60 to 79.9) $141,500
Level III (40 to 59.9) $62,500
Level II (20 to 39.9) $37,200
Level I (less than 20) $7,900
Source: Family Net Worth, 2001 Federal Reserve Board Survey
So take a look at the following: Where do you stand?
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