Posted by Mike Smith :: March 11, 2008 @ 4:39 amNet worth is a superior measure of wealth compared to using something such as income. Earning a lot of money doesn’t necessarily make you wealthy. The difference between what you earn and what you spend, and how that difference accumulates, is much more indicative of your financial well being.
Net worth is basically just the sum of your assets minus your liabilities. Would you like to see how your net worth stacks up compared to other people your age and at your income level? There’s a tool that will let you do just that here.
What do comparative results of net worth really tell you? In isolation, not much. Taken with other information, however, they can provide some useful insight. The reason your comparative results don’t mean much on their own is that being above (or below) average doesn’t actually give a sense of whether or not your net worth is “”enough.” Being much different from the average, in either direction, may give you the proverbial “warm fuzzy” or put you into a state of panic.
Other factors to consider when comparing yourself to the average include the type of lifestyle you live and your geographical location. Someone with a below average net worth who lives modestly or in an affordable market may be in a better position than someone with an above average net worth who lives a more luxurious lifestyle or in a more expensive market.
Lending Club can help you build your net worth in many ways. You can build your assets by investing in a peer-to-peer loan portfolio and get an average return of 12%. You can also use Lending Club to lower your liabilities by consolidating high interest debt with a fixed rate installment loan.
One other interesting thing to consider is that the comparison tool might put you in different positions based on your age versus your income. A young person with a high salary, for example, would probably have a net worth that’s above average for his or her age, but below average for his or her income. If you find such a discrepancy, I would put more weight behind your relative net worth for your age. If only to see where you currently stand or better yet to take decisive action based on the results, comparing your net worth to the average is a useful starting point and an exercise that is quick and easy.
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[...] LendingClub states it pretty basic as: “…basically just the sum of your assets minus your liabilities. Would you like to see how your net worth stacks up compared to other people your age and at your income level? There’s a tool that will let you do just that here…” [...]
Hello my name is terrisita i would like to know how this works.
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