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The average American has $90,460 of debt—but the average net worth is actually more than that

Knowing your net worth can help you decide if your debt load is manageable or not. CNBC Select reviews the average net worth by age based on Federal Reserve data.

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While a debt-free lifestyle might seem enviable, the reality is that most Americans carry some sort of debt and that's not necessarily a bad thing. In 2019, credit bureau Experian reported the average total debt per consumer (including mortgages) was $90,460, which outpaced the average annual income of $50,413.

If that sounds alarming, remember there's more to someone's financial situation than just their debt and income. Another key figure to look at is net worth, or the total value of your assets minus your debt.

Experian doesn't include net worth in its 2019 report, but CNBC Select took a look at the Fed's latest Survey of Consumer Finances and learned the the overall average net worth of U.S. households is $748,800.

But $748,000 is not truly representative of how much wealth most everyday Americans have to their name — it's too high. The most affluent households in the U.S. skew the proportions, resulting in an average that's well above most people's realities. A better indicator is the overall median net worth of U.S. households, which is $121,700.

Net worth varies widely based on a person's circumstances, such as your income, cost of living, family inheritances, race or ethnicity, housing status (renter or buyer) and educational background. Here's a breakdown of both average and median American net worth by age, according to the Fed:

Household net worth by age

Age of head of family Median net worth Average net worth
Less than 35$13,900$76,300
35-44$91,300$436,200
45-54$168,600$833,200
55-64$212,500$1,175,900
65-74$266,400$1,217,700
75+$254,800$977,600

How to calculate net worth

Net worth simply looks at the difference between what you owe on your current debt balances and the value of your owned assets.

Your debt is referred to as your liabilities. It includes credit card debt, student loans and any outstanding balances on your mortgage(s) and/or installment loans.

Your assets include the cash in your bank/investment accounts, the equity you own in properties and other belongings with cash value.

To calculate your net worth, add up your total assets, then subtract your liabilities.

Assets - liabilities = net worth

You can also use a net worth calculator to plug in your numbers. There are plenty of free options available online.

Platforms such as Personal Capital and Mint make it even easier by giving you the option to link all of your accounts, including checking, savings, money markets, CDs and retirement accounts. That way, you can see all your assets in one place (and monitor how balances go up and down). You can also add any credit cards and/or loans you have so that you have an up-to-date snapshot of your liabilities (what you still owe) as well.

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Why is net worth important?

Net worth is a good barometer of your ever-changing financial situation because it shows you a big-picture view of the tangible assets you have in your name, compared to the cash you still owe. While keeping a monthly budget and tracking your daily expenses is just as important, checking net worth every few months helps you make sure your hard work is moving you toward your goals, not against yourself.

For instance, if you have $5,000 in savings but have a credit card balance of $4,000 that is costing $140 in interest every month, you might not notice how this balance is cutting into your overall net worth when you're only making the minimum payments. But by tracking the growing balance compared to your other assets, you'll notice a dip in your net worth if the balance balloons too high.

Net worth is also helpful when assessing whether your money is working for your lifestyle. You may have heard of being "cash poor," which means that your money is all tied up into non-cash assets, like a house. So while your net worth might be well above $200,000, you still struggle to pay your monthly bills. If that's the case, you might consider refinancing to free up some cash for everyday living expenses, even if it means paying off your mortgage a little slower.

Who should think about net worth?

Net worth is important at any age because it helps you decide how much risk you're willing to take on. That could mean deciding whether to borrow additional money to buy more assets, or if it's worth going into debt for a college degree.

Your net worth also should inform the kinds of insurance products you choose and how to plan for your estate. If passing on property, cash and other assets to your heirs is important to you, know that this will be challenging if your debt outweighs your assets.

And if you're not ready to think about estate planning, knowing your net worth can help you decide the value of your life insurance policies (if you still have debt to pay off), as well how much your disability insurance covers in the event you lose income and are still paying off debt like a mortgage.

Bottom line

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.