"Rich Americans", that's our global reputation. We share that world view and never seem to wonder how are we really doing. When you look at money and wealth around the world, Americans are poorer than we think.
One of the most useful calculations a person can make when it comes to their personal finances is to figure out their net worth. Simply put, net worth is the value of your assets (what you own) vs. your liabilities (debts). The average net worth of Americans is $301,000 per adult. Our country ranks number 4 in net worth behind Switzerland (#1), Australia (#2), and Norway (#3). Sweden, France, Singapore, Denmark, Canada and United Kingdom fill our the rest of the top ten respectively.
Median net worth shows us a figure which puts half the adults with more than that amount and half with less, the median. In America the median net worth is $45, 000 ($44,900 per adult). United States ranks number 19 in this category, well below much of Western Europe. Australia takes the lead in median net worth followed by France, Italy, U.K.,and Japan, making the top five countries. Switzerland, Finland, Norway, Singapore and Canada rank six through ten respectively.
You can see that there's a big difference between the two measures. Super rich Americans skew average wealth upward. United States has 42% of the world's millionairies. Forty nine per cent of those have more than $50 million in assets. It's no surprise that America ranks #1 in wealth inequality.
One of the main reasons for an American's low wealth is lack of real estate assets. Home ownership rates are higher in many European countries than in the U.S. Thus, Joe European has more assets to his name than his American counterpart. Another reason for our low wealth is that it's easier for us to borrow money which allows our debt to eat away at our net worth.
America's middle class was hurt greatly by the housing collapse at the end of the last decade. Median wealth of families was $77,300 in 2010, a nearly 40% drop from 2007 according to Federal Reserve Statistics. Changes in home prices have a big effect on wealth in the middle class.
Middle class Australians led the pack in highest median net worth at $219,500. Australia also has low wealth inequity. Why, you ask. It's the country's strong tradition of home ownership, coupled with mandatory retirement savings programs. These programs require you to save more than 9% of your income for your Golden Years. Most Australians carry low credit card debt and low student loan debt.
The average Canadian has quietly become richer than the average American. Over the past five years, net worth of Canadian households has exceeded the net worth of American households for the ifrst time. The average Canadian household is more than $40,000 richer than the average American house hold, in 2011 $363,202 vs $319,970. The impact of the 2008 economic crisis and the collapse of the U. S. housing market are cited as the cause for the change.
Wages in American have stagnated for more than a decade. median household income was $51,017 in 2012 vs $56,080 in 1999 per Census Bureaus Stats. Middle class incomes are suffering due to the decline in union power to negotiate higher wages and benefits, jobs have shifted overseas, displacement of worker due to increased technology in the workplace, and employees pay more out of pocket for basics such as healthcare and higher education. All these factors reduce our ability to build a nest egg because we haven't been able to save.
When Americans stop voting against their own best interest and demand appropriate action from their lawmakers, maybe our financial situation will improve...not just for some, but for all Americans.
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