finance

How much the average person is worth in their 20s, 30s and 40s. (And 4 simple ways you can catch up.)

It’s hard not to be pervy about other people’s finances. It just is. We’re always going to be curious about how much people spend, how much they earn or what they have in the bank. Mostly, because: (A) hardly anyone talks openly about money, and (B) we want to know that we’re doing not totally rubbish in comparison.

Perhaps the most telling benchmark of financial health is your net worth. That is, the total value of your current assets (and here’s the kicker) minus your total debt.

Assets include things like: cash, property, shares, superannuation. Debts include: mortgage, HECS/HELP, money owing on your credit card, etc.

Video by Mamamia

There are a number of online calculators to help you work out yours. But what about other Australians?

Smart Investing recently crunched the numbers as best they could, and came to the following averages for Aussies at various ages:

20: $15,000

30: $80,000

40: $249,000

50: $378,373

60: $567,558

(Note: Smart Investing stresses that these are very rough calculations. As James McGrath wrote, “the unavailability of data make coming up with a single rough-and-ready number really quite difficult.”)

What if you’re not quite… average.

For some, those figures will be satisfying. For those of us who don’t measure up, though, they can be a tad demoralising.

But as Bryanna McDermott, CEO of Fearless Female Traders, argues, it’s important to remember that someone else’s financial position needn’t be cause for you to panic about your own.

“Instead, we should try to understand what our own individual financial goals are, and find our own pathway to get there,” she told Mamamia. “If you have good money habits, and aren’t living in a cycle of bad debt, you’re already on the right track for your earning capacity and situation. That right there, is where you want to be.”

ADVERTISEMENT

She notes that one of the key reasons someone might fall short is debt.

“Big, bad, ugly debt — the kind that keeps you in a perpetual cycle of paying only the minimum on interest, paying more than what it was actually worth, and in some cases depreciating, all just to get it now, buy it now, want it now,” she said.

Think credit cards…

“Credit card debt is on a steep incline among young Australians and is one of the main causes of bankruptcy in young people under the age of 35 — shocking right?” she said. “Unfortunately it’s all too common.”

The Barefoot Investor, Scott Pape, wants to go on a money date with you. (Post continues below.)

How to improve your net worth… starting now. Seriously. Now.

Significantly improving your financial position is always going to be a long game, which is why age-related financial goals make a lot of sense — particularly when factoring in milestones, like home ownership, children, retirement, etc. But Bryanna said that smaller, yearly goals can definitely help, too.

“The truth is, we’ve all made money mistakes and most of us would probably ‘wish’ we planned out our money goals a lot earlier, but we can all make little changes today that will make a big difference in 10 years time,” she said. “You just have to start.”

Bryanna insists this is the easy part; far easier than most people realise.

These are her tips for what you can do right now to improve your net worth.

  1. Cut up all your credit cards. “All of them. And pay off any debt until it hurts. Any debt that isn’t attached to an appreciating asset is most likely bad consumer debt, and it’s like a financial perfect storm just waiting to explode. If you find yourself justifying a credit card for any other reason than to spend money you don’t have, here’s a little secret… it’s a trap!”
  2. Set-up a budget that isn’t an over-complicated spreadsheet that is going to confuse you. “Make it simple and convenient so you stick to it. A lot of people find the Barefoot Investor (barefootinvestor.com) a good place to start to change their money and budget habits.”
  3. Find other investment options that don’t require a $200,000 cash deposit and another $50,000 in fees and furniture. “What I’m trying to say is, think about investing in shares! Exchange Traded Funds — also known as ETFs — are fast becoming the most common first purchase for young Australians looking to enter the share market. It’s where I started, and now I invest in six different types of ETFs. In the last financial year my personal share portfolio grew 19.6 per cent and continues to add more to my net worth year on year than my house portfolio.”
  4. Take a big, fat interest in your superannuation fund. “Yes, that thing your employer seems to siphon much-needed money into. The earlier you take an interest, the better your net worth will be. First of all, make sure you only have one account, because I’m here to tell you that multiple accounts will be draining any savings on fees and unneeded insurance. Such a waste. From January 2020, I will be contributing an extra 3-5 per cent of my monthly income to my superannuation fund to boost my net worth even more, month on month. Typically, companies contribute 9.5 per cent to their employee’s super, and if you’re lucky it could be at 11 per cent. I’m hoping to invest up to 12-15 per cent.”

Bryanna’s take-home message: “Invest AND diversify your investments — don’t put all your eggs into one basket. Take advantage of compounding interest, and for once, let your money work for you to build your net worth rather than the other way around!”

Note: The information in this article is general advice only and does not take into account your personal financial situation. Consider obtaining specialised advice from a financial planning professional before making any financial decisions.

READ MORE:
What My Salary Gets Me: A single mum living in Brisbane with three-year-old twins.
What My Salary Gets Me: A Sales Director on $120,000 a year, who refuses to cook.
What My Salary Gets Me: A part-time physiotherapist who spent almost $2000 in a day.

Tags: features , finance-2 , investing
00:00 / ???