How Does My Net Worth Compare to the Rest of Australia

Whilst the appearance of wealth is one thing, the true measure of wealth comes down to looking at your net worth. Net worth is simply your net financial position and is easy to calculate. Simply add up all of your assets and take away all of your liabilities. For household net worth (which this article discusses), just do the same for your household. Like many financial measures, net worth values can vary depending on age, household composition, location and many other factors.

What is the Average Net Worth?

The average net worth across all Australian households comes in at $1.04 million according to the 2019/2020 ABS statistics. If you think this figure sounds high – then you’re probably right. The average figure is skewed by some of the ultra-wealthy households in our country. For a better measure, we should consider the median (or midpoint) household net worth value which is $579,200. This is almost half of the average and a figure that better represents where most households sit.

Adjusted to 2019/2020 dollars (using CPI), the average household net worth value has increased by just over 41% over the last 16 years – this works out to be just over a 2.7% increase year on year. The median net worth on the other hand has only increased 29% over the same 16 year period – a 1.9% year on year increase.

Where Do I Rank?

Using ABS data points we can approximate the percentiles of household net worth. By calculating your own household net worth, you can see which percentile group you fall into below. As an example, if your net worth is $500,000, you’d be just above the 45th percentile which means you have a higher net worth than 45% of households in Australia, but lower than 55%. To be in the top 1% of households you would need at least $8 million dollars in net worth.

At the time this data was measured, there were over 9.7 million households. So a single percentile in this chart equates to about 97,000 households.

Assets and Liabilities

For the average household, the largest asset category by far is the family home. Superannuation is the 2nd largest, thanks to Australia’s compulsory superannuation scheme. The remaining assets are then broken down into investment properties, other financial assets including shares, bank accounts and owned businesses, and other non-financial assets including vehicles and contents.

When looking at the breakdown of liabilities for the average household, the majority falls under property loans – primarily the mortgage on the family home. Other liabilities include study loans, credit cards and other types of non-property loans.

Where Do I Rank by Age

As net worth generally increases with age (up until retirement years), you may want to compare against how others in your age group are doing. Younger Australian’s will start out with much less as they haven’t had the same amount of time to build up their assets.

When comparing the average and median values across the age groups, the difference continues to grow as the divide between the wealthy and the rest of the population increases. An interesting point here is that the average net worth for the 65-74 age group increases, but the median decreases.

There are also some differences in the asset and liability allocations per age group. On average, asset levels peak around the 55-64 age group and debt levels peak around the 35-44 age group.

Why It Is Important to Track Your Net Worth

Measuring your net worth against others gives you an indication on how you stack up against others financially, however it’s also worth keeping tabs on your net worth over time. Tracking your net worth allows you to project your financial position into the future and consider things like whether you are on track to meet your financial goals or whether you need to make some adjustments. These goals may include things like retirement planning, paying for the kid’s schooling or a property purchase for example. It’s also nice watching the growth (hopefully!) over time as a reward for your hard work.

How to Track Your Net Worth?

This part is easy. There are a number of apps around that will do this for you, however you can also create a simple spreadsheet to track your numbers. Just create a few columns for your assets (bank accounts values, super, property, etc) and then a few more columns for your liabilities (property loans, vehicle loans, etc). Your final column will simply be your assets minus your liabilities. Updating these values should be done on a recurring basis – I tend to update my spreadsheet at the beginning of each month as it’s easy to remember. Once you have some data built up, create a graph to chart your progress. You can then look at adding more advanced features to your spreadsheet like trend lines to project future growth or additional columns to calculate the variance in savings each month.

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