Here’s the Average Net Worth of 40-Year-Old Americans (How Do You Compare?)

Turning 40 is a major financial milestone. By this age, many Americans are hitting their stride in careers, growing families, and starting to build their nest eggs, too. But how does your financial progress stack up against others in your age group?

Even though we're constantly told not to compare ourselves to others, most of us still do. If you're turning 40, understanding the net worth of the average 40-year-old American can give you an idea of where you stand.

Use the following benchmarks to see how you stack up and if you're on the path to building wealth for decades to come. You'll also find a few tips if you need to play catch-up.

You may want to sit for this. In America, the national average net worth of 40-year-olds is $791,616. However, averages can be a bit skewed depending on whether the data includes significant outliers.

A more realistic picture might come from the median net worth of 40-year-old Americans. This number is a more sensible (and less terrifying) $125,370.

Calculating your net worth is fairly simple on paper. You subtract your liabilities from your assets. Liabilities refer to debts (e.g., credit card balances, mortgages), and assets are what you own (e.g., retirement accounts, real estate). For example, someone who owns a $150,000 home and has $5,000 in credit card debt would have a net worth of $145,000.

If your net worth doesn't match the average of a 40-year-old, don't worry. There are several ways you can catch up.

First, you need to start by getting a clear picture of your financial situation. List all your assets, debts, income, and expenses. This is critical.

Did you know that more than 40% of Americans are paying recurring bills they are unaware of? Taking a snapshot of your finances will help identify problem areas and opportunities.

A quarter of Americans don't have a monthly budget. Even among those who do, many struggle to stick to it. 

Make sure you create a budget that reflects your current goals rather than past mistakes. Cut unnecessary expenses, prioritize savings, and track every dollar. A well-planned budget can put you back in control.

If you want to catch up and even surpass the net worth of the average 40-year-old American, you need to aggressively pay down high-interest debts, which for most people is credit card debt.

The average American has $6,434 in credit card debt. There are a variety of strategies to pay off this debt, including the "avalanche" and "snowball" methods. Whatever you choose, understanding where your high-interest debt lies is a smart place to start.

Even at 40 years old, you should be thinking about retirement. Max out your retirement accounts (e.g., IRAs, 401(k)s) to secure tax advantages, compound growth, and financial security for the future. 

Increasing contributions, even a small amount over time, can make a significant difference when you leave the workforce.

You've probably heard this repeatedly, but the importance of an emergency fund cannot be overstated. Start by setting aside one month's expenses, but your eventual goal should be three to six months. This is a conservative estimate, so don't be afraid to save more.

You can also consider using a high-yield savings account to really see your money grow.

Many people believe their income is a fixed number. However, this isn't always the case. 

You can increase your earnings by asking for a raise, seeking a promotion, or taking on a side hustle. Your extra income can be directed towards savings, debt repayment, or investing.

While it's more important to pay off high-interest debt than to invest, investing when you can is crucial for financial security. Even if you can only afford a small amount, focus on diversified, low-cost index funds.

Increases in your investments and the power of compounding can help you close the wealth gap with the average 40-year-old American.

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It's human nature to want a nice car or a home that's your own. However, you should hold off on major purchases until your financial footing is secure. Redirect money that you'd spend on vacations and large purchases into savings or debt reduction.

Sacrificing short-term luxuries can significantly impact your long-term progress.

It's essential to utilize bonuses, tax refunds, or inheritance money in a deliberate manner. These windfalls may seem like an excuse to splurge, but they're better used to secure your financial future.

Allocate funds to high-interest debt, savings, or investments. These rare opportunities can help you make significant progress in a short period.

Maintaining good habits can be challenging. That's why it's essential to take every opportunity to automate them. For instance, statistics show that individuals who automate their savings tend to save money even when they'd rather spend it.

Automating your savings, bill payments, and investments can reduce your mental load and help you avoid missed opportunities.

If you're serious about catching up or surpassing the net worth of the average 40-year-old American, you need to set realistic, measurable goals. Ensure your goals are concrete and have specific deadlines. 

For instance, set a goal to save $5,000 in six months or pay off a credit card within one year. Regularly tracking your progress will help you achieve your long-term goals.

The adage that we shouldn't compare ourselves to others is technically true. We're all on our own journeys. However, there's a point when self-reflection becomes crucial. 

If you've fallen behind your peers, there's no shame in wanting to catch up. Many people find themselves off track not because of a lack of effort, but due to surprising financial mistakes they didn't even realize they were making.

It's essential to recognize that you are not alone. Approximately four in every 10 American adults have no retirement savings. By making a concerted effort to change now, being behind your peers today will mean nothing in 20 years.