How Do You Know If You’re Rich?

Test 1: Compare your net worth to others’

One way to define being rich is having a high net worth. Clearly, to be considered rich, you’ll need to have more assets than other Americans. But how much more? What net worth is considered wealthy? And who’s doing the considering? These are among the subjective details we can’t pin down. But a little math can show you where you fall on the wealth spectrum.

Your net worth

Your net worth is the value of all your assets (real estate, vehicles, bank accounts, investments, valuables, etc.) minus all your debts (mortgage, student loans, car loan, credit card balances, etc).

For example, say the value of all your assets is $250,000, but you also have $150,000 in debt. This would mean a net worth of $100,000. You can use an online calculator Opens in new window to help figure out yours.

The average American’s net worth

When comparing your wealth to others’, it’s common to think in terms of averages. According to the Federal Reserve  PDF opens in new window, in 2019 the average American household had a net worth of $748,800. (The Fed updates its consumer data every three years.)

Does that mean the typical American is three-quarters of the way to millionaire status? Not really. Remember that an average includes billionaires and those below the poverty line—and the nation’s wealth gap has been widening Opens in new window for decades. When a few households at the top own massive amounts but many more own very little, the average ends up skewing higher.

A more meaningful gauge than the mean (average) may be the median—the midpoint amount, with equal numbers of households having more and less. Indeed, the Federal Reserve notes that as of 2019, the median U.S. household net worth was $121,700. Those below that line—the bottom 50% of American families—held just 1% of total wealth. (Fully 13.4 million families in this group actually had a negative net worth—they owed more than they owned.) On the other hand, the top 10% of families (each with a net worth of $1.22 million or more) held 76% of the country’s wealth.

If your net worth is above the median, that means half of Americans have less wealth than you. That may not necessarily translate to being “rich,” but it’s a good sign.

Of course, what’s considered rich depends on many factors, including location. For example, based on the 2019 data, rural Americans have a median net worth of $90,400, while those in cities have $126,000. Does this mean urbanites are richer? Not necessarily, when you consider that the cost of living—particularly real estate—tends to be higher in urban areas. After all, home value can be a major component of net worth, but a four-bedroom, $250,000 ranch in Manhattan, Kans., may be nicer than a four-room, $1 million apartment in Manhattan, N.Y.