Have you figured out YOUR net worth?

Though we’re more used to thinking about net worth for rich individuals and celebrities, it’s important for every member of a household to know exactly where they stand in terms of finances.

But what does net worth mean anyway? A lot of Americans wrongly believe it’s the result of some complicated equation, which is why so many people don’t even bother finding theirs out. We’re here to shed some light so that you can help the people closest to you determine their net worth so that they can make better financial decisions as they grow old.

First, you need to know what your assets are- basically the total of what you own. From that number, you must then subtract your liabilities, aka what you owe. You must, therefore, consider your house/ apartment, your debts, and whatever money you’ve got in your bank accounts.

As we grow older, our net worths are meant to grow as well. If yours starts to decline then you must tip the scales in the opposite direction by spending less and saving more. You must also keep in mind that your net worth should act like a compass, guiding you towards wealth and financial stability.

Financial advisors also say you should check your net worth maybe once or twice a year to ensure you’re on the right path.

Now, you may have children or grandchildren in your life. That’s why we’ve prepared a guide on what a person’s net worth should look like as they grow older. First, impart this information to those around you, and as you get closer to your age in this article, you’ll also know what changes you should make to your spending habits so that you never lose track of your wealth.

20s: Save Early and Often

People in their 20s should start saving early and often. As they are the first steps towards a rich and fulfilling life, younger people must try and focus on their finances early on. Laying the foundations could ensure that, later on in life, they don’t get sidetracked and fall into financial ruins by making mistakes.

Your children or grandchildren may have just started their careers (or one of their careers, if they decide to switch things up as they grow older). Taking advantage of 401(k) plans and their employers’ match is a surefire way to add positivity to their net worth, especially if they have student loan debts hanging over their heads.

Their income levels will grow with time, so it’s not impossible to create a solid net worth even if they’re starting off with big amounts of debt. Plus, the sooner they focus on saving, the easier it’ll be for them to healthy habits when it comes to their money.

Thanks to The Federal Reserve’s Survey of Consumer Finances, we know that on average, the net worth of households under the age of 35 $76,200. The good news? With discipline, it’s not difficult to head up from there.

30s: Pay Yourself First

When your loved ones reach their 30s, this is when they should really kick it into gear. By now they should see that their student loans are declining, so focusing on their savings is a must.

Their salaries have likely increased by now, according to The Federal Reserve’s Survey of Consumer Finances. Families between the ages of 35 and 44 should have a net worth of around $288,700.

Their goals should reflect this growth. Ideally, by the time they reach 30 they should have saved half their salary, say $30,000 out of $60,000. Following this, they should aim to increase their savings on a yearly basis.

If in their early 20s they just started contributing to their 401(k)s, their 30s should take matters a lot more seriously. Add investing and different times of savings account into the mix for the perfect combination of financial stability- not just for retirement, but also for rainy days.

Their long term goals should be being considered wealthy, which is why it’s imperative to start early. They must reach a net worth of $2.3 million to qualify and while that may sound like an impossible amount, clever decisions during this period in time will ensure their success.

40s: Can’t Stop, Won’t Stop Saving

If your loved ones have been careful about their monetary decisions, then it should be easy sailing at this point. By the time they reach 40, they should have well-established knowledge on what does and doesn’t work for them in terms of finances. Making decisions, at this point, is a lot easier.

Ideally, their net worth should be double their annual salary. According to The Federal Reserve’s Survey of Consumer Finances, between 45 and 54 a family’s net worth is, on average, $727,500.

Retirement is just around the corner, so a lot of their financial decisions should be based on their plans for their golden years. Encourage them to study up on retirement while also establishing long and short term goals. Ask them what they envision in their future. Do they want to settle down in a cozy cottage or do they feel like traveling the world? Let them know that from now on, their financial decisions should reflect these plans.

They might be wondering where they’re standing in terms of income class- not a bad question at all! While keeping an eye on their net worth compass, it’s important to consider other financial frameworks that can help them establish their goals.

According to the Pew Research Center the median income for the upper-income class was $187,872. This information should help your loved ones get back on the tracks if they’ve stumbled into some trouble along the way.

50s: Reaching Your Earnings Peak

If you’re reading this then you’re probably nearing your 50s or already in your 50s! So this one’s for you, dear reader.

Your net worth should reach around $1.167 million for households between the ages of 55 and 64. A whopping number! Are you anywhere close to it or do you still need to make some adjustments to your debt tackling plan, lifestyle, and spending?

During this period in time, your wages will be at their highest- in an ideal world, at least. Your savings, however, should be six times your salary. The kids have left the nest and you can focus solely on yourself. If you haven’t had the means or time to save as much as possible, now’s the time to perfect your retirement savings plan. Better late than never, right?

60s: Retirement Is Right Around the Corner

Your retirement is only a few short years away, so now’s the time to make adjustments to your lifestyle. Why? Because things are about to change and the sooner you get used to them, the easier it’ll be for you to settle in your new stage in life.

Those between the ages of 65 and 74 should have a net worth of $1.066 million, according to The Federal Reserve’s Survey of Consumer Finances. A combination of catch up contribution, downsizing, and further selling things you’ll no longer need can help you achieve this goal.

Once you reach your 60s you should have eight times your current salary in savings. You have one decade left to bump those numbers up to ten times your current salary. This will ensure a happy, comfortable retirement.

Don’t Put Off Saving Until Tomorrow, Start Today

With all that said and done, you mustn’t feel discouraged if what we outlined doesn’t match your reality. That’s okay! You should instead use this article as both a framework, a wakeup call in some cases, and a good resource on how you should talk about finances with your loved ones.

Of course, everyone’s situation is different. Some of us may not have been able to start saving as early as 20. Others may not have had the right foundation to make it work during our 30s. The important part is that you should focus on saving as early as possible. Spread this life lesson to those around you and watch their net worth grow every year, we’re sure they’ll be thankful for the advice!

For some more great finance tips check out some of our other articles. We highly recommend: What is Phishing and How Do You Prevent it?