‘Less education may be worth more.’ While college graduates have about 5 times the net worth of high school graduates, here’s what can matter even more than that college diploma

The average college graduate has about four times the net worth of someone who started but didn’t finish college, and about five times the net worth of someone with only a high school diploma.

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The median net worth for an American household is $748,000, but the median net worth of Americans is much lower — at just $121,700, according to the Federal Reserve’s latest Survey of Consumer Finances released in 2020 (2022 report due out). in 2023). One of the biggest factors in determining your net worth is education. In fact, the average college graduate has about four times the net worth of someone who started but didn’t finish college, and about five times the net worth of someone with only a high school diploma. The good news? Your net worth isn’t just about education, and Americans of all education and income levels can increase their bottom line. That’s how.

Average net worth, by education level

School level

Average net worth

Median equity

No high school diploma



High school diploma



Some colleges






Source: Federal Reserve

Additionally, a 2019 study by the College Board revealed that “Over their lifetime, and accounting for the cost of obtaining a college degree, people with college degrees can earn approximately $400,000 more than people with a high school diploma.” . ”

While all of this data seems to imply that college is always worth it, it’s not always that simple. In fact, according to a 2019 report by Merrill Lynch and Age Wave, 36 percent of college graduates who are paying off their student loans say they weren’t worth taking on their student loan debt.

And 2021 research from Georgetown University’s Center on Education and the Workforce finds some interesting things: About a quarter of high school graduates earn more than associate degree holders, and a quarter of workers with college degrees earn more than half of workers. with a master’s or doctoral degree. According to the report, “Less education may be worth more. Some certificates pay more than some associate degrees, some associate degrees pay more than some graduate degrees, and some graduate degrees result in higher earnings than some graduate degrees.

Consider: “Associate degree holders who have studied STEM make $60,000 a year. That’s more than bachelor’s degree holders who majored in humanities and liberal arts,” found a 2018 CEW report. Another example: “Education majors need a bachelor’s degree to reach average earnings of a college graduate. , as well as majors in arts, psychology, and social work”.

In other words, what you study plays a big role in how much you’ll be able to earn after you graduate. A February 2022 study by the Federal Reserve Bank of New York indicates that the best-paying college majors for recent graduates include a variety of engineering, computer science, and pharmacy degrees. Conversely, the highest-paying undergraduate majors for recent graduates include family and consumer sciences, general social sciences, performing arts, social services, anthropology, early childhood education, theology and religion, psychology, and the liberal arts.

How To Build Your Net Worth Regardless Of Your Education Level

That said, there are ways to get over not graduating from high school or college — or choosing a major that doesn’t lead you to bank — and still build your net worth.

“My favorite recommendation is to let time do as much work as possible through the composition. The process involves saving and investing as soon as possible, as much as possible, and as consistently as possible,” says certified financial planner Bill Kan, founder of Candent Capital.

See the highest savings rates you could get now here.

If you were to save $50 a week for 40 years, starting when you were 25, you would have $332,020 if your interest rate was 5% a year. If you invested $50 every week for 40 years with a 7% return, you would have $572,510. With a 9% return, your $50 investment each week would yield $1,025,112 after 40 years.

Other things to consider when your goal is to grow your net worth include proper diversification to manage risk, keep costs low, and have reasonable expectations. “Reasonable expectations include the size of the returns, when the returns will come, and an understanding that there will be periods, sometimes extended periods, of disappointing results that will resolve over time,” Kan says.

Of course, the amount of net worth you have or need to retire is different for everyone. Kan says, “When I started out, people would ask me if $1 million or $2 million was enough. I’ve always found the figure arbitrary because it said nothing about other resources available to them, their spending needs, when and where they expected to retire, or how much time they should be retired.

A simple rule of thumb, according to Forza Wealth Management’s certified financial planner Michael DeMassa, is to start saving and investing 20 percent of your earnings in your 20s. “Your net worth should take care of itself by your 30s, 40s, 50s and 60s,” says DeMassa. See the highest savings rates you could get now here.

Because everyone’s financial situation is different and net worth can vary wildly depending on life circumstances that extend beyond age, Andy Rosen, investment spokesperson at NerdWallet, says the best ways to increase your net worth are ” pay off debts, save more money [and/]or make successful investments that increase in value over time.

He also recommends using a net worth calculator to determine how much you should have. More specifically, certified financial planner John Bovard of Incline Wealth Advisors, says that at age 30 you should have 2 times your annual salary, at 40 you should have 4 times your annual salary, at 50 you should have 10 times your annual salary yearly and by age 60 you should be getting 15 times your annual salary. “You’ll need at least 10 times your annual salary saved up by age 60, and since not all of your net worth is spendable, you’ll need 10 times more,” says Bovard.

He also recommends increasing your net worth with small and large winnings. “Increase your retirement contributions by 1%, pay off high-interest debt, automatically invest $100 a month in a brokerage account directly into an S&P 500 index fund, ask for a raise to increase your salary, use your debt to buy a rental property or use a loan to buy a business,” says Bovard.

And “it is useful to be wise in assuming responsibility. Some liabilities make sense, like a mortgage for a long-term appreciation on a home or a student loan for a college degree that will generate higher future income, but many liabilities just subtract from your net worth,” says Certified Financial Planner Eric Uchida Henderson of East Investments on the horizon.

The advice, recommendations or rankings expressed in this article are those of MarketWatch Picks and have not been reviewed or approved by our trading partners.

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