Tracking your net worth is a common way to gauge your financial health. You can determine your net worth by subtracting all of your liabilities (debts) from all of your assets (things you own).
By analyzing our user data, we set out to find how different states’ residents rank in their net worth. This information can help you determine if you want to take additional financial steps, like saving or investing more.
Calculate It: Know Your Net Worth
Before we dive into the breakdowns, it’s worth noting that people who use the Personal Capital Dashboard tend to adhere to smart money practices: maintaining a comfortable emergency fund, contributing regularly to their retirement accounts, and optimizing their investments for tax efficiency. As a result, these people tend to have a higher-than-average net worth.
Following are the average and median net worths of Personal Capital Dashboard users, broken down by state.
Net Worth Breakdown by State
It turns out that residents of California have the highest average net worth of any state in the country.
The average net worth of California families is $884,003. Connecticut ($873,746), Washington ($865,309), New Jersey ($810,106), and Massachusetts ($787,154) round out the top five states in average net worth.
On the opposite end of the spectrum, residents of North Dakota have the lowest average net worth of any state in the country. The average net worth of North Dakota families is $339,955. West Virginia ($376,690), Mississippi ($407,691), Arkansas ($439,790) and Oklahoma ($448,494) round out the bottom five states in average net worth.
Here is a full list of the average net worth of residents in every state, from the highest to the lowest average net worth.
Trends and Observations
A close look at the list reveals that there are more East Coast states in the top 10 than West Coast states. Six of the top 10 states are located on the East Coast while only two — California and Washington — are located on the West Coast. Also, at number 11, New York is just outside the top 10.
Not surprisingly, many of the states where families have the highest net worth also rank highly in average 401k balances.
Half of the states that rank in the top 10 for average net worth also rank in the top 10 for average 401k balances: Connecticut (#1), New Jersey (#2) Virginia (#4), Washington (#5) and Massachusetts (#9).
Also, seven of the states with the highest average total retirement savings rank in the top 10 for average net worth: Connecticut (#1), New Hampshire (#2), New Jersey (#3), Virginia (#5), Vermont (#6), Maine (#8) and Washington (#9). These statistics indicate the important role that 401k and overall retirement savings plays in building net worth.
Why Some States Rank High or Low
Not surprisingly, some of the states with the largest numbers of millionaire households ranked high in net worth. For example, New Jersey has the highest ratios of millionaire households per capita (9.76%). Connecticut (9.44%), Massachusetts (9.38%), California (8.51%), New Hampshire (8.47%) and Virginia (8.31%) also rank in the top 10 in both average net worth and ratio of millionaire households per capita.
In addition, Alaska and New Hampshire recently made the top 10 in our list of the best states in which to retire in 2021.
Meanwhile, a high cost of living, including high taxes, could be a factor in some states not ranking highly in average net worth. For example, Delaware, Tennessee, Wyoming and Florida are among the top five states with the highest total tax burden, while Hawaii has the highest cost of living of any state in the nation.
How to Increase Your Net Worth
Regardless of whether you live in a state with a high, low or somewhere in-between average net worth, you would probably like to improve your own financial standing.
Here are a few ideas to get you started.
Pay off debt.
Go back and look again at the definition of net worth at the beginning of this article: All of the assets you own minus the liabilities and debts you owe. So one of the best ways to increase your net worth is to decrease your debt.
Credit cards are a good place to start since they usually carry the highest interest rates. Paying them off not only lowers the debt side of your personal financial ledger, but it also reduces the amount of interest you must pay. Money saved in interest can go toward building net worth.
Save more for retirement.
As noted above, residents of states with high average 401k account balances and total retirement savings also tend to have high average net worths. One reason is because money saved in a tax-advantaged retirement account like a 401k is able to grow on a tax-deferred basis, which can result in more growth over the long term.
Another reason is that many employers offer to match employees’ retirement account contributions. An employer match is the closest thing there is to a “free lunch” — it represents a risk-free return on your investment that can boost your net worth over the long term.
Reduce your liabilities and expenses.
Let’s face it: Expenses are a part of life. Everybody has to pay for a place to live, food to eat, clothes to wear and a car to drive or public transportation.
The key is distinguishing between wise and foolish or excessive expenses. Take a close and critical look at where you spend your money; in fact, consider writing down everything you spend for a week or even a month. You might be surprised at what you see.
This isn’t suggesting that you live a bare-bones lifestyle with no comfort or entertainment expenses. However, you might discover that you’re spending more money than you realized on some things that just aren’t worth it. Cutting back on these expenses will free up money that could help boost your net worth.
In short, the key to building your net worth is saving more and spending less.
That starts with knowing where you stand. You can get clarity on your financial life and goals using Personal Capital’s award-winning tools for money management. Nearly three million U.S. households rely on the tools to:
- Keep track of their true net worth
- Review categorized transactions from all financial accounts
- Analyze investments and uncover hidden fees
- Evaluate retirement readiness with the Retirement Planner