Category Archives: Anything

Net worth of the middle class from 1992 – 2013

One recurring request for the net worth percentile calculator on this website to show a break down of what makes up that net worth value. Here it is for a typical middle class household!

Here are the results of that request for a typical middle class household with comparisons for the past 20 years.  The overall trend for the shows that net worth has increased slightly, but assets and debts have also increased at almost the same rate.

Housing is by far the largest contributor to middle class wealth with investments contributing a far lower amount. In 2013, real estate contributed 54% of net worth ($110k in real estate assets – $64k in real estate related loans).

Net worth peaked in 2007 prior to the recession, and as of 2013 has not recovered yet. The 2016 data should be available over the summer in a few months, so we’ll see if the downward trend continues.

Net Worth Component Definitions

  • Real Estate : House(s) and other real estate
  • Investments : Retirement funds, stocks, mutual funds, stock options
  • Low Risk Investments : Cash, bonds, CD’s, and cash value of life insurance
  • Other Assets : Cars and other assets
  • Real Estate Debt : Mortgages and other real estate related loans
  • Student Loans and Auto Loans : These were already combined in the source data as installment loans.
  • Credit Cards and Other Debt : Credit cards and other debt

The data is sourced from the Federal Reserve and all values are adjusted for inflation to 2013 dollars.  The 2016 data will be published over the summer and I am planning to update the calculators and this chart to show additional trends.

We used the data for the 40-60th percentiles to create a weighted average net worth of what makes up the wealth of an average household, and to represent the middle class. Because it is a weighted average (mean), the net worth values are skewed slightly higher than a median based calculation.

Summary Table of Net Worth for the Middle Class

Note: these values are adjusted for inflation into 2013 dollars.

Year Total Assets Total Debt Median Net Worth
1992 $131,000 ($48,603) $82,397
1995 $152,434 ($63,897) $88,537
1998 $171,146 ($67,091) $104,054
2001 $185,715 ($68,590) $117,125
2004 $213,655 ($93,009) $120,646
2007 $250,588 ($111,403) $139,185
2010 $185,185 ($97,994) $87,191
2013 $161,126 ($76,052) $85,074

If the graph doesn’t load here is an image:

Measuring and Tracking your Financial Progress

The best thing about tracking and setting goals is that you are in total control of what you want to track and how you want to track it. At work, I typically have goals and metrics cascaded down to me from above whether or not I agree with those metrics and goals. For my personal finances it’s freeing to be able to set my own goals and decide how I want to measure success. Read on for examples of metrics and processes that you could use to track your financial goals and progress.

How I’m tracking this year

For this year, I decided to set my goals by loading my planned spending, income, and net worth in MadFienst’s lab and compare my end of month actuals to the plan. As each month goes by, I overwrite the planned numbers with actuals. Here’s an example graph with actuals thru March.

Planned and actual

How other people are tracking their goals and measuring their stats

I frequent the Rockstar Finance Forums and one of the things I wanted to find out was how others measure their financial success. I reached out to some of my fellow forum goers to get some new ideas. Here some of them.

setting targets

1. Setting SMART goals (specific, measurable, achievable, relevant, timely)

To recap, in 2017 I’ll measure how I’m doing financially on the following goals:

  • Increase year-over-year net worth growth with 50%
  • Invest 10% of my take-home pay in the stock market
  • Establish a concrete plan for building a new source of income

Probably not the most ambitious goals for a year, but I’m content with setting goals that’ll allow me to spend little time thinking about finances right now. The first two are done more or less by the “autopilot” I’ve set up to manage my finances. –

Better Goals for A Better Year – Abovare

2. Tracking year over year percentage increases

I do a monthly Net Worth check up and use the value $10,000 as my over/under on a good month. That would represent about 7/10’s of 1% increase. If I hit it 12 months a year I get an annual up 8.3%, I am good with that. I also do a year to year comparison in October (have been for 10 years) to see what % I am up for the year compared to other years. This fluctuates a lot but averages, 21.9% up a year. Year Over Year Net Worth – Othala Fehu

3. Focusing in on simple goals like generating passive income

I keep things simple. Long ago I worked out what it costs to be me, to live my life largely how I want it to be. Bollocks to frugality and minimalism and all that compromise.

I then set about building a passive income generating machine to fund that lifestyle.

In a given month where I earn more than I need, I do the happy dance and embarrass the hell out of my kids.

Alternatively should I earn less than that I curse the financial gods, before slapping myself upside the head for not being accountable for my own f*ck ups. Then I go figure out where things went awry.

Usually it is something simple like a void period between tenancies, or the result of a significant splurge such as an extended holiday.

On the rare occasion that it isn’t so easily explained I go looking for the underlying reason… maybe lifestyle inflation, or perhaps an increase in fees or interest rates or whatever.

In summary: Celebrate the small wins, which means if you’re doing it right you’ll be celebrating often. When you’re not figure out why, then do something about it. And repeat.

4. Managing spending

We mainly look at our spending. We automated our investments and only invest in index funds so the investing part is pretty straight forward. On the spending side, we focus on our biggest expenses and try to cut down all the fluff. Open Book Frugal – Our Financial Path

5. Managing debt and looking forward to milestones

I do a monthly net worth check and want my net worth to go up more than the previous month’s change. Now that I’m out of the bad debt repayment portion of my plan and more into the stock market, that is sometimes difficult with the crazy market fluctuations. So to keep it going up, I’ve got to keep paying more into savings/investments and to keep paying down the “good” debt.

I also look to hit some major milestones every year and if I don’t, I don’t consider it a success. Things like max out 401k contributions and increase in savings/non-retirement investments. I also have some spending goals like home renovations and car purchases that I want to pay for in cash. And a cool vacation for the mental break from everything!80-20 Your Finances

6. Publicly tracking and reporting on your status

For the last couple months I have been doing a monthly net worth check and, this month I started posting it on my blog

I also posted my goals, they are very simple at the moment, I want to hit a net worth number by the end of the year and I want to invest 3k into dividend yielding stocks. Every month from now on I’ll simply look at how much time there is left in the year to see if I’m saving enough or if I need to bump that number up next month. Buy Back Freedom

7. Using Mint to budget and track spending

This is an awesome idea for a post. I track our budget closely with Mint to make sure we’re staying on track with our spending. I also track our net worth each month using Mint and Personal Capital. Based on what we’re spending, how much money we’re putting towards our debt, and how much our net worth has grown, I get a good idea on whether we’re continuing in the right direction.

Here’s a post where I talk about my goals for 2017:End of Year Review & 2017 Goals – Spill Spot

8. Using personalized spreadsheets of spending.

I use Personal Capital and lots of Spreadsheets. I track monthly spending, update net worth monthly, and track net worth growth goals year over year, and I also have a retirement accounts growth projection / goal tracker with a countdown to what we need. Life Zemplified

9. Being analytic to create rolling averages to track progress versus budget.

We track our income, expenses, and net worth in Quicken and monthly we prepare a spreadsheet to show our progress compared to our budget, including a rolling 12-month average of actual expenditures in each category. We then make revisions when necessary to get us back on track to achieving our desired results. Our 5 Big Personal Finance Goals for 2017 – Super Savings Tips

9. Tracking net worth and tracking cash flows

I measure my net worth each month, and have done for some years.

I’m reasonably relaxed about investments ups and downs, but monitor our cash movements like a hawk!

i.e. we should be £x up this month, but we’re only £y – why? I allow for regular savings etc, but I expect our monthly cash to build each month, until I move it to an ISA / savings account, so if it hasn’t gone up as much as I expect – time for a deep dive!Cracking Retirement

Learning Experiences from Going Viral (134k users in 1 day!)

Over the last 2 years, I’ve gone viral twice, most recently with a Reddit post that went way beyond my expectations. I had just wrapped up a months worth of work experimenting with some new data on savings rates, and I wanted to show off to /r/DataIsBeautiful. Data is Beautiful is a subreddit where analytical redditors post interesting graphs and charts. The nice thing about Data is Beautiful is that they allow original content, so that people like me (/u/shnugi_) can self post.  Most subreddits ban self posting, because it invites a deluge of spam.

I thought that I would get maybe a few hundred people to check out my data and give some constructive feedback. Well, this happened:

Went viral via reddit post.

134,752 sessions in a single day. My highest day ever.

The post I had made had attracted hundreds of comments and a Reddit score of 9898. Over ONE HUNDRED THOUSAND PEOPLE visited that day.

Dark Side of Going Viral – My Server Was Not Ready

Reddit #19 r/all

This is a screenshot my SO sent me of the post hitting #19 on r/All. It might have gone higher, but we were busy trying to fix the server.

I had a plan to be able to support a similar size of visitors as the Lifehacker feature (21k sessions in one day). My plan totally worked, until I completely blew past 21k sessions.  After that, my server was throttled for the next few hours.  My SO is much better than me at techy things, so I called in the reserves for help. We tried a bunch of things like resizing my Digital Ocean droplet, increasing PHP and MySQL memory limits, and then finally increasing the number of concurrent connections on Apache. The last one fixed the problem for me and my site resumed to normal speed, while also supporting over 1200 active users at the same time.

What I learned

  1. Have an even bigger plan next time.
  2. Load test my server to test the bigger plan, so that it isn’t like a fire drill every time it happens.
  3. Don’t be afraid of sharing. Typically, I shy away from self promoting, but it’s good to have some positive feedback when I do self promote that people like what I make.

Hopefully, someone finds this helpful.  For me, I know both the times that I’ve gone viral I’ve been highly under-prepared.  Good luck to all the other content creators out there!

38% of US Households Spend More Than Income

According to data from the 2015 Consumer Expenditures Survey by the Bureau of Labor Statistics, nearly 38.5% of US households spent more than they earned. Overall, 49.4 million out of 128 million US households are estimated to have had expenditures that exceeded their after tax income (table below). Another 21.1% (27.1 million) of US households saved less than $10,000 per year. One interesting fact is that 8.9% (11.3 million) US households are able to save at least $50,000 per year which is roughly equal to the median US household income.

Hover or click on the graph for more information.

The original Consumer Expenditures Survey considers retirement contributions as an expense, and even with adjusting those into savings 37.5% of households still spent more than they earned. Recently, there have been many studies reiterating the lack of savings that Americans have on had for emergencies. This data aligns with those earlier views on the poor health of the average American’s finances.

Source Data and Methodology

These results are calculated using the 2015 Bureau of Labor Statistics (BLS) Consumer Expenditures Survey (CEX) microdata. The microdata has survey results for a sample of 30,000 US households which are used to estimate the spending and income of the total US population. The data is weighted on a variety of factors by the Bureau of Labor Statistics so that the households sampled model reality. I used the pre-built SAS macro for the 2015 data to merge the interview with the diary files and aggregate expenditures by survey household unit. The interview and diary don’t link on a 1:1 ratio, so I allocated the diary expenditures across each survey household in the interview files. Each survey household was allocated a variable amount from the diary expenditures based on the household unit’s income, expenditures reported in the interview files, and population weight. I also took steps to ensure that the rolled up results still matched the published statistics on the BLS.

Annual Savings Amounts Table

Households Unadjusted : 38.5% of US households spent more than they earned in 2015. This was calculated using the CEX total annual expenditure by household. The CEX lumps all retirement contributions (401k, pensions, TSP) into expenditures. Household annual savings calculated as : [Estimated Pre-Tax Income] – [Estimated Taxes] – [Estimated Expenditures]

Households Adjusted : Adjusted for retirement contributions, 37.5% spent more than they earned in 2015. This was calculated using CEX total annual expenditure minus household retirement contributions by household. Social Security is still included in the expenditure values. Household annual savings calculated as : [Estimated Pre-Tax Income] – [Estimated Taxes] – [Total Estimated Expenditures] + [Total Estimated Retirement Contributions].

Annual Savings  Households (unadjusted)  Households (adjusted)
 <-$150k       1,994,856            1,867,628
 -$150k to -$140k          232,678                242,359
 -$140k to -$130k          355,854                303,275
 -$130k to -$120k          405,725                363,365
 -$120k to -$110k          429,066                411,577
 -$110k to -$10k0          553,061                513,501
 -$10k0 to -$90k          508,511                477,909
 -$90k to -$80k          593,815                581,473
 -$80k to -$70k          662,847                646,504
 -$70k to -$60k          919,974                932,389
 -$60k to -$50k       1,294,006            1,215,488
 -$50k to -$40k       1,851,218            1,833,831
 -$40k to -$30k       3,044,652            2,888,244
 -$30k to -$20k       5,260,480            5,229,834
 -$20k to -$10k       9,618,222            9,421,512
 -$10k to $0    21,733,884          21,187,798
 $0-$10k    27,128,611          26,860,088
 $10k to $20k    17,256,672          17,137,557
 $20k to $30k    11,193,070          11,312,717
 $30k to $40k       7,325,112            7,590,525
 $40k to $50k       4,709,618            4,965,180
 $50k to $60k       3,124,669            3,342,971
 $60k to $70k       1,994,672            2,250,973
 $70k to $80k       1,521,623            1,584,928
 $80k to $90k          929,844            1,064,559
 $90k to $100k          770,054                830,612
 $100k-$110k          632,352                659,814
 $110k to $120k          542,022                618,322
 $120k to $130k          450,592                484,008
 $130k to $140k          278,440                347,594
 $140k to $150k          219,223                217,597
 >$150k          901,936            1,053,230

If the interactive chart didn’t load for you, here is an image of the chart.
US Households by Annual Savings ($)

Related Topics

Savings Rate Ranking : This uses the adjusted savings rate calulation listed above to compare savings as a percentage of income.
Net Worth Rank by Age : This uses Survey of Consumer Finances data to calculate the net worth percentile rank depending on the age of the head of household.
Income Rank by Age : This uses Survey of Consumer Finances data to calculate the income percentile rank depending on the age of the head of household.