Are you rich? A lot depends on how you define that word. Some people consider you to be rich if you earn a lot of money. Others only consider you to be rich if you have a high net worth, which means the value of your assets (like your home and other property) far exceed your liabilities (like credit card debt).
Regardless of how you define “rich,” you can find out below what it actually takes to meet that standard and be considered wealthy in America.
Does your income make you rich?
According to a recent Pew Research study the median income of upper-class households in the U.S. was $256,920 as of 2022. By contrast, the median income of middle-class households was $106,092 and the median income of lower-class households was $35,318. If you hope to be within the upper-income group, or among the richest Americans in terms of income, this would mean you’d need household earnings of $256,920 or higher.
People who earn above $250,000 are in the top 5% of earners in the country, so only a small minority of people fall within this category. That’s not surprising because, of course, not everyone can be rich.
Does your net worth make you rich?
There’s another way to measure wealth beyond income: You can look at your net worth. Many believe net worth is a more accurate measure of wealth since the higher your net worth, the more assets you own free and clear.
For example, if you have a ton of money in real estate and brokerage accounts but don’t owe much, then you’re in pretty good financial shape because your assets can make you financially independent.
According to the Federal Reserve, you need a median net worth of $3,794,600 to be in the 90th to 100th percentile, and you need a mean net worth of $7,810,500 to fall within this group. If you hope to be in the 75th to 89.9th percentile, you would need a median net worth of $1,036,200 or a mean net worth of $1,102,400. This is considerably higher than the median net worth of $356,300 or the mean net worth of $373,700 for those in the 50th to 74.9th percentile.
Obviously, very few people have a multi-million dollar net worth, so if you do, you’d undoubtedly meet most anyone’s definition of being wealthy.
How can you become wealthy in America?
If you aren’t wealthy now, that doesn’t mean you won’t be in the future. You could win the lottery to get there, of course, but that’s probably not the best approach.
Instead, if you want to become rich, there are a few primary things you should do.
- Aim to increase your income. It’s a powerful tool to help build wealth. The more you earn, the more you can devote to buying assets that make you financially secure.
- Spend less than you earn. Save around 20% of your income, at a minimum, to help you grow your wealth.
- Invest in assets that provide a good return. If you can put your money into the stock market and earn a 10% average annual return, this helps you grow wealth without having to earn every dollar since your gains can be reinvested and earn money for you.
With diligent and dedicated effort over time, almost anyone can become rich — so start working toward this goal today if being wealthy is something you aspire to.
