Let’s say I’m 30 years old. What’s the net worth (assets, like savings and houses, minus liabilities, like mortgages and credit card debts) that most people my age have? (I’m sure answers will vary greatly depending on where one lives, so to simplify things, assume that I live in a first-world country, like America or Canada or Britain. Answers will still vary, but less so.) Are most people my age in debt? Is there a graph somewhere plotting mean or median individual net worth vs. age for a given country?
I would say between two to three million USD would allow you a comfortable, if modest, lifestyle. Hopefully, you didn’t major in philosophy or anything daft like that.
For the U.S., more data than you ever wanted to know is available in the Survey of Consumer Finances (PDF); the section on net worth starts on page A10. In particular, the median net worth for households whose head was under 35 was $11,800 in 2007. I couldn’t find what percentage of such households have negative net worth, though obviously it’s less than half; the other charts & spreadsheets that the Fed makes available might have more info.
I’m not sure about the graph. The rest of your questions sounds more like a “Humble Opinion” deal.
In the spirit of the latter, I can only say, “it depends.”
At 29, I had few assets. A 3-year-old Mazda Protege, about $40K in a work-sponsored 401K, a few grand in savings, the clothes on my back and the furniture in my apartment. It was counter-balanced by ~30K in grad school loans and a few thousand in credit card debt.
At 30, I added a $300K house to that number, but not much else.
If I could do it all over again, the four pieces of advice I’d have for the 25-year-old:
– Get credit cards, and then never use them. Good, long-term credit helps, but consumer debt will ruin your most productive years. You can buy that nice car and TV in your 30s. Your 20s are for three things: making friends, meeting girls/guys, and establishing a responsible foundation for the rest of your life. Most people focus on the first two and completely ignore the latter. That doesn’t make your 30s impossible, but it will make them harder than they should be.
– If you have a job with a 401K plan, max it out. You’re young, the market will bounce back, and you’ll have made more money in the long run. If you don’t have a 401K, invest elsewhere-- mutual funds, CDs, whatever it takes to start generating long-term wealth. Just remember to diversify, and remember that this money isn’t for your 30s, it’s for your 50s and beyond. Long time away, but unless you’re dead at an early age, it will show up.
– SAVE. Rainy days always happen. It’s hard to do, very hard to do, but you should aim for that six to eight month emergency fund. Once you have that money saved, put it in something safe but accessible (money market or short-term CDs). . . then forget you have it. At that point, it’s insurance, not spending money.
– This may not apply to everyone, but I wish I had bought my house sooner. I didn’t buy it too late in the real estate upswing, so I still have equity in it even after the crash, but I would have been in an even better position had I bought my place (or an even nicer place in a better location) only a few years earlier. Really, buying when I did cost me anywhere from $100K to $400K in additional equity I could have today, even after the crash. Grrr.
Home-buying is a tricky thing, however. Some economists will say that over a long enough time there’s no return on your investment, and that you’re better off renting and putting the money you would otherwise spend on your home into other investments (which are more liquid than your home equity-- particularly in this market, where getting home equity loans is much harder than it was before, and selling your house is obviously much harder).
IMHO, home buying is a largely emotional decision, like buying a new car for the smell. It’s actually going to cost you a lot more than the mortgage payment to own a house, and whatever you put into it is going to be hard to get out (except during real estate booms-- but who can count on another one of those again anytime soon?).
Most dudes your age are in debt, unless you include their 401k, etc.
Here’s my advice- Max out your retirement. Most of it should be high-medium risk. Don’t try to time the market.
No CC debt unless you can pay it all off monthly.
Debt for a hard asset is fine, as long as you have paid enough down so that you aren’t underwater. So, there’s nothing wrong with buying a car on time, as long as your down/trade-in was around 20%.
Mostly like what davekhps sez.
These things are tough for most people in their twenties, because they’re struggling just to make ends meet. Most are either working low-paying jobs or saddled with student debt (and many folks have both issues to deal with).
The OP asks, “Are most people my age in debt?” I think the obvious answer is yes. Most Americans are in debt, regardless of age. A google search will turn up an almost infinite number of figures, but I’d guess the average 30-year old has no assets, no savings, and ~$5k in credit card debt.
Business Week had an article a couple of years ago called “Thirty and Broke,” which talked about how the current generation had the double whammy of skyrocketing tuition costs plus easy access to credit cards.
Oh, cool! That table was exactly what I was looking for! 
Is there some reason you choose to disbelieve the previously posted government statistics showing that Americans under 35 have a median net worth of $11,800? There’s quite a difference between 11,800 and −5000.
Well, they have stuff, like a TV or a car, and that’s an asset. Then they also have a few 1000 in a 401k, maybe even more. But neither is really all that easy to cash out. So, most dudes that age have a few hundred in the bank, and $5000 in CC debt.
Yes, but not much. Really. If by age 30 your net worth is $12K . . . what can I say, life ain’t gonna be easy. In the big picture $12K today is pretty much indistinguishable from nothing. I can understand low net monetary worth for someone aged 30 who has spent his time mostly studying and investing in his future so he has still student debt and has started working recently but his future earning potential is very big. If he is going to be making $500K/yr soon then the fact that he has little now or is even in debt is not important.
But for someone who has been working for 10~12 years and has only saved $12K I think that is a bad position to be in because future earning potential normally will not be huge. So if you save the equivalent of $1000/yr (and I include home and all net assets) you can look forward to retiring at say age 60 with all of 40~45K at which point your best hope is to die soon because it is not going to last you long.
Like I said, there’s more data in that Fed survey than you would ever want. All of the numbers below are for households whose head is 35 or younger. On the assets side:[ul][li]Median amount in “transaction accounts” (savings & chequing), among the 87% of households who have them: $2,400[/li][li]Median amount in retirement accounts, among the 42% of households who have them: $10,000[/li][li]Median value of vehicles owned, among the 85% of households having them: $13,300[/li][li]Median value of primary residence owned, among the 41% of households having one: $175,000[/li][/ul]And on the liabilities side:[ul]
[li]Median outstanding mortgage value, among the 37% of households having one: $135,300[/li][li]Median outstanding “installment loans” (car loans, student loans, etc.), among the 65% of households having them: $15,000[/li][*]Median credit card balance, among the 49% of households carrying one: $1,800[/ul]
When I was 30, I put down a 50% deposit on a house.
Always paid off credit cards, never smoked or drank…
I think the OP means what is a reasonable amount of assets / debt he should have, not how much he would need to never work again.
Somehow, I think that is an unlikely scenario. Unfortunately, I think a lot of Americans actually live like they are though.
Of course they are. Heck, I was in the same boat ten years ago. Still, that doesn’t invalidate good advice-- it just makes it harder to follow it.
Honestly, in your 20s you don’t need to save a lot of money-- just save some of it. Build a reserve. Build that safety net so you can survive between jobs, since the hallmark these days is switching a lot of jobs.
And of course, don’t run up credit card debt. I didn’t have as much trouble as most folks my age-- I know people at 30 who had $10,000, even $30,000 (!!) in credit card debt-- but I also ran it up in my college years and the immediate years following buying stuff I didn’t really need. It’s so much better to get into a good habit of buying things with cash when you’re younger.
That said, some debt is unavoidable, even welcome. Buying a house, attending school, etc. Then again, that starts a whole other discussion about the relative values of that. Like I said before, a house doesn’t necessarily make economic sense for everyone, and I would add, neither does a college education.
Pardon the hijack, but when I was younger I bought into the same societal mantra that you need a college degree, that nothing less will suffice. Unless you’re going into a technical field, or you know you’re going to continue on to get a more useful advanced degree, I just don’t see it worth anyone’s time and money to go into serious debt for minimal return. If you’re just going to go to college just because your parents want you to go, for heaven’s sake, don’t go into debt doing it. As nice as you (or your parents) might think it is, there’s minimal value in going to Harvard or Stanford or Yale to major in liberal arts, psychology, communications, or a similar “soft” degree.
IME, any job worth having that requires a four-year degree is a job that will eventually require a master’s degree to get ahead-- thus, it makes sense to plan out your education accordingly. Go cheap for undergrad, go into debt for your advanced degree (if you have to go into debt at all).
That, or best of all, skip college, learn a trade, make good money, and eventually own your own business. Beats being another lawyer or financial advisor out of a job.
Well, except that if your maxing $100,000 a year or more, you are living within your means and saving each month losing your job means an annoying inconvenience while you take a vacation from work until you find something new. If you are living paycheck to paycheck (really at any salary level), losing your job can be disasterous.
I also agree you should go to college with the purpose of pursuing a particular degree. You can always change careers later, but this whole going to expensive 4 year schools to “learn how to learn” from some fluff major is horseshit.
Because you recognize the value of the hard sciences, you will no doubt pay us the courtesy of supporting your claims with actual data and not a bundle of homespun notions of how the world works, yes?
That’s just hooey.
When I was in my mid 20s, I had saved $100,000. I drove a crappy car, did not have cable TV (I still don’t) and lived well below my means. I have a figure in mind that I aim to have by the time I am 40, 45, 50 and hope to partially retire at 50. I would not have felt comfortable at 30 with less than about $250K.
Here is a data point.
I am 29, and turn 30 in Oct. My wife is 25, 26 in June. We have a Truck worth 11K, a motorcycle worth 5K, 1.5K in the bank, 5K in student loans, 1K on a credit card. That makes our net worth is 11.5K which is pretty close to what the PDF linked says most are at. I also have a IRA that I don’t know how much is worth. I ignore it because it is depressing even if I know it will climb again before I touch it.
I see my net worth climbing alot quicker now than I did in my 20s. I am not making the stupid financial decisions I made before, I am qualified for higher paying jobs, and I have minimal living requirments. I am saving a higher percentage of my income than I did in my 20s. Most of that savings is going to retirement funds, or long term investments. The next 10 years should get me to the point where I don’t worry about my retirement anymore.
One generally doesn’t switch jobs until they have a new one lined up.
If you fail to start a 401k in your 20s, that’s another 10 years of compounding interest and employer matching you’re missing out on. A lot of people don’t though and that’s a mistake. I used to see a lot of kids at my old job who were right out of school fail to take advantage of our company’s 401k (100% matching up to 6% of income) or Employee Stock Purchase Program (15% off lower stock purchase price at beginning or end of each 6 month period). That’s like throwing money away.
I’ll agree that college doesn’t make sense for some people. My junior year roomate and fraternity brother changed majors like three times. When he got out he struggled with some corporate jobs for awhile until settling on being an electrician. He didn’t need to go to a $25000 a year university to do that. He could have easily gone to a trade school and saved himself some money.