00:00Have you ever wondered just how much wealth you need to have to be in the top 1%? I've done the
00:04research and in this video I'm going to share the average net worth figures for US households
00:09for the top 10% and the top 1% based on data from the Federal Reserve. If you're new to this channel
00:15I'm Matt, I'm a finance consultant. I've spent over eight years working for one of the top
00:19consulting companies in London. I now run my own company and on this channel I talk all things
00:24personal finance. So before we get going it's worth explaining what net worth is and how it's
00:29calculated. It's the calculation of what you own your assets minus what you owe your debts and
00:36liabilities. So for example if you had a $350,000 house, $50,000 in your pension and $10,000 in cash
00:45in a bank account then you would have a total of $410,000 worth of assets. However for your net worth
00:51you need to subtract any debts that you had. So if you had a $250,000 mortgage and $2,000 worth of
00:59credit card debt then the total net worth would actually be the $410,000 minus the $252,000
01:07equaling a total net worth of $158,000. You can use an online net worth calculator to help you calculate
01:14your own net worth. The key categories of net worth are firstly physical wealth which includes things like
01:20the value of any cars that you own or household possessions such as jewelry, watches, electronics
01:26or expensive furniture. Secondly property wealth which includes your home or main residence and then
01:32any other properties that you might own such as rental properties or a holiday home. It's the value
01:38of these properties minus any mortgage debt. Thirdly is the value of your pension wealth and investments
01:43and fourthly is your financial wealth from things like savings, stocks and shares and any other
01:49financial investments that you might have minus any financial liabilities like credit card debts or
01:54personal loans. Importantly it's not to be confused with earned income which is your paycheck or your
02:00salary that you earn each month. You could be earning over $100,000 a year but if you spend it all rather
02:06than saving, investing and having assets then your net worth is going to be zero. So let's start with the
02:12net worth for people aged between 18 and 24. For a lot of people at this age they're either in or
02:17finishing college or university they're just starting their careers and they've often got large amounts
02:23of student debt to pay back. However surprisingly we still see the top 10% with net worth of over
02:29$184,000 and the top 1% already has around $653,000. For the age group between 25 and 29 who are really at
02:39the early part of their career the top 10% have net worth of almost $297,000 and the top 1% have a
02:47staggering amount for their age group at around $2.1 million. In the early 30s age group between 30 and
02:5434 the net worth for the top 10% increases again when compared to the late 20s age group. The net worth is
03:01over $538,000 and for the top 1% is around $2.6 million. And then by middle to late 30s net worth increases
03:10much more rapidly almost doubling by 35 to 39. The net worth for the top 10% is over $864,000 and for
03:20the top 1% is $4.7 million. In the late 40s and 50s age groups again we see big increases in net worth.
03:28This is where people's pensions and investments have grown. They've likely owned and held property
03:33which is appreciated in value over time and they might also own businesses which has also contributed
03:39to their net worth. It's also the age groups where on average they earn the most amount of money they
03:45will do over their lifetime. So they're able to save, invest and grow their wealth at a much faster
03:50rate. For the age group between 40 and 44 the net worth for the top 10% is now over $1.1 million
03:56and for the top 1% is around $7.8 million. And then if you go from early 40s to mid to late 50s
04:04the net worth shoots up and doubles. For the age group between 55 and 59 the net worth for the top
04:1110% is now over $2.6 million and for the top 1% is around $15.3 million. Mind-blowing. And then from
04:20mid to late 60s net wealth peaks and then gradually starts to decline from early to mid 70s when pension
04:27and retirement spending is increasing. Often at this point people start turning their investment
04:32strategies from wealth appreciation to wealth preservation to support their retirement plans.
04:37For the 65 to 69 age group the net worth for the top 10% is over $2.9 million and it peaks for the top
04:451% at around $22.1 million. And then for the 70 to 74 age group we then start to see the net worth
04:52decline for the top 1% to around $18.7 million. That's still a very nice pension to be living off.
04:59If you're thinking well I'm nowhere close to these numbers don't be disheartened these are heavily
05:04skewed by very wealthy households pulling up the average. Think of people like Elon Musk and Michael
05:09Jordan and all of the billions of dollars that they own. Looking at the median net worth of people
05:15in the US is a more accurate representation for most people. The overall median net worth for US
05:21households is just over $192,000. That might help you breathe a little easier. If you're wondering
05:28how you can build and increase your own net worth I'm going to share five tips for how you can do this.
05:34The first one is on how you manage your income and expenses and stopping the cycle of lifestyle
05:38inflation. As you earn more money you spend more money. Many of the people with large wealth aren't
05:44actually the same people that spend lots of money on designer clothes, sports cars or multiple holidays
05:50abroad. If you can do your best to keep your expenses at a similar level or below your means while your
05:56income goes up you'll find you're able to grow your wealth at a much faster rate. One of the things I
06:01found really helpful was to have an income and expenses tracker. It helped me to set a goal on where
06:06I wanted to get to to identify what I could save and invest and it also helped me to target to reduce
06:13the cost of large monthly expenses so I could manage my budget to be within my means each month.
06:18Second is to pay off any high interest debts that you have such as credit card debts, car loans,
06:23personal loans or student debt. It's very difficult to build your savings and your wealth if you have
06:29high interest debt. It can often feel like you're living paycheck to paycheck, your income comes in,
06:35you pay your rent, you pay your bills, you pay off any credit card interest and then at the end of
06:39the month you find you haven't got any money left to save and invest. So if you have any high interest
06:44debt make it a priority to pay off as soon as possible start by listing any debts that you have
06:50with an interest rate of greater than seven percent and pay off the highest interest rate first. The
06:55third point is to save at least 20 percent of your annual income and to put it into your pension
07:00investments. If you haven't done this already start by opening a tax-free investment account such as a
07:05Roth IRA and maximize any employer match pension benefits like 401k. Fourth is to focus on ways to
07:12increase your income so you're able to save more each month. There are a few ways to do this one
07:18way is by investing in yourself to increase your skills so you're more valuable in the job market
07:23either to be able to negotiate a higher salary or to be able to move to a higher paying job.
07:28For example if you're currently a waiter in a restaurant and you manage to save up five hundred
07:33dollars and you take that money and you pay for a sales course which enables you to get a sales job
07:38paying you more money if you're then able to add the ability to do marketing on top while you're
07:43doing your sales job then you're now able to run an ad campaign get customer leads in and close sales
07:50your earning potential has just gone up tenfold compared to the pay you were getting as a waiter.
07:54Another way to increase your income is to start a side hustle business there are lots of videos on
08:00youtube and online giving ideas of what you can start from scratch and many of these don't require
08:05lots of startup money to get going with yourself for example it could be teaching a short course
08:10online about how to edit photos which you can do on platforms such as udemy have a think about what
08:17strengths and skills you already have which could help you to earn some additional money on the side
08:21and the fifth and final point is to invest with a long-term mindset the trend for most people is
08:26that net worth increases as you get older and it's essential to be as consistent as you can with
08:32your investments so that compound interest can do its job in helping your money grow over the long
08:38term if someone who is 30 were to invest 500 per month over a 35 year period assuming an average annual
08:46rate of return of eight percent they would have just over one million dollars by 65 that's pretty good
08:53going the earlier you can save and invest the more benefit you can get from compounding your investments
08:59the other part of this is acquiring assets which grow in value over the long term if you look at
09:04some of the wealthiest people in the world people like elon musk warren buffett bill gates their wealth
09:10is not based on having cash in the bank it's based on the value of the assets they own they've acquired
09:15assets such as businesses or property and their wealth grows from the equity value increasing and also
09:22from the assets generating income and that income is then reinvested in buying more assets and that cycle
09:28keeps compounding growing the size and value of their assets and wealth so these are my top five tips
09:33for helping you grow your net worth and wealth i hope this video has been helpful feel free to leave
09:39any questions in the comments and give the video a like and a subscribe and i'll see you on the next video
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