Photo from Unsplash
Originally Posted On: https://www.empower.com/the-currency/money/what-is-the-average-net-worth-by-state
Tracking your net worth is a common way to gauge your financial health. You can determine your net worth by subtracting all of your liabilities (debts) from all of your assets (things you own).
We set out to find how different states’ residents rank according to their net worth. This information can help you determine if you want to take additional financial steps, like saving or investing more.
Following is the average and median net worth of people who use the free Empower Personal DashboardTM, broken down by state.
Net worth breakdown by state
It turns out that residents of Connecticut have the highest average net worth of any state in the country. The top five states in average net worth are Connecticut, California, Vermont, New Jersey and Washington.
On the opposite end of the spectrum, residents of North Dakota have the lowest average net worth of any state in the country. In addition to North Dakota, West Virginia, Mississippi, Utah and Louisiana round out the five lowest states in average net worth.
Following is a full list of the average and median net worth of residents in every state, from the highest to the lowest average net worth.
|Rank||State||Average net worth||Median net worth|
Anonymized data from Empower Personal DashboardTM as of August 2023
Trends and observations
A closer look at the list reveals that there are more East Coast states in the top 10 than West Coast states. Six of the top 10 states are located on the east while only two — California and Washington — fall on the west.
Not surprisingly, many of the states where families have the highest net worth also rank highly in average 401(k) balances. This data points to the valuable role of 401(k) savings (and overall retirement savings) in building net worth.
How to increase your net worth
Regardless of where your state ranks in average net worth, you can still improve your own financial standing. Here are a few ideas to consider:
Pay off debt
Go back and look again at the definition of net worth at the beginning of this article: all of the assets you own minus the liabilities and debts you owe. One of the best ways to increase your net worth is to decrease your debt.
Credit cards may be a good place to start since they usually carry the highest interest rates. Paying them off not only lowers the debt side of your personal financial ledger, but it also reduces the amount of interest you must pay. Money saved in interest can go toward building net worth.
Save more for retirement
As noted above, residents of states with high average 401(k) account balances and total retirement savings also tend to have high average net worth. One reason is because money saved in a tax-advantaged retirement account like a 401(k) is able to grow on a tax-deferred basis, which can result in more potential growth over the long term.
Another reason is that many employers offer to match employees’ retirement account contributions. An employer match is the closest thing there is to a “free lunch.”
Reduce your liabilities and expenses
Expenses are part of life. Everybody has to pay for a place to live, food to eat, clothes to wear and a car to drive.
The key is distinguishing between necessary and excessive expenses. Consider taking a close look at where you spend your money; you might be surprised at what you see.
This isn’t suggesting that you live a bare-bones lifestyle with no comfort or entertainment expenses. You may consider the 50-30-20 budget, which allocates a percentage of your income to essentials, enjoyment and savings. Aligning your spending with your values and goals could help you save more, and boost your net worth over time.
In short, a way to help build your net worth is saving more and spending less.
That starts with knowing where you stand. You can help get clarity on your financial life and goals using Empower’s award-winning tools for money management. Millions of U.S. households rely on the tools to:
- Keep track of their true net worth
- Review categorized transactions from all financial accounts
- Analyze investments and uncover hidden fees
- Evaluate retirement readiness with the Retirement Planner