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2 months ago

Five Net Worth Benchmarks You Should Know

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Americans have a funny relationship with money. We, as a society, celebrate the ostentatiousness with which the Kardashians live their life on TV. They are famous because they are rich, have cameras, and show a little vulnerability so people feel like they can relate.

TV is entertainment. It’s an escape. It’s fun. I don’t begrudge that or them.

But it becomes dangerous when you start internalizing that, confusing net worth for self worth, and bringing that thinking out of the experience.

Your net worth is a lot like your weight.

It’s a single number that does an adequate job of capturing your financial health but it’s not the most important.

You can calculate it quickly, especially when using a free tool like Personal Capital, and accurately with much work.

But you can’t compare yours with someone else’s without knowing a lot more information. The average lineman in the NFL is over 300 pounds – is that a healthy or unhealthy weight? Now factor in their average height of 6′ 5″. And how quickly they can cover 40 yards (around 5 seconds).

Your net worth is valuable to know, net worth benchmarks are valuable to compare against, but it is just one metric. A valuable metric but not the ultimate one.

The One True Benchmark

Before you see these five net worth benchmarks, I want to share the only true “benchmark” that matters.

We all start at different points. I was fortunate that my parents emigrated to the United States, were well educated and employed full-time for my entire life, and were able to provide financial assistance in college. I graduated with $35,000 in student loan debt but that’s nothing compared to some of my peers.

I had it good.

So when I point to my net worth in my twenties, that’s a function of my good luck. I chose a degree that was in demand (Computer Science), got a good job in a strong industry (defense), and my net worth improved each year.

And that’s the one true benchmark – me vs. last year. Me vs. 5 years ago.

Understand your own financial progress. Over a five year window, your net worth should increase. Year to year it might fluctuate, but the trend should be moving upwards.

That’s it. That’s the one true benchmark. Yourself.

Now, onto these benchmarks…

READ MORE…

Jim Wang of Wallethacks.com is a thirty-something father of two who has been featured in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money. He can show you the philosophies, strategies and methods he used to become financially independent and free to pursue what was important.
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3 months ago
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