Average Net Worth Statistics by Age

The graph above from an ABS article titled Household Wealth Through the Lifecycle suggests that the average household in Australia has a net worth of about $200,000 when the "reference person" is aged 35. This suggests that if I am able to become a millionaire by 35 I will be far above average.

Household wealth I think is misleading. Currently there are six people living in my household. Add up all their income and you get a household income of $205,000. However, this is not because any one of us is rich. Rather, it is because so many people live under one roof. Thus household wealth is not something I pay much attention to. My brother, who lives with me, I doubt will let me share some of his wealth. When looking at my net worth then I must focus on my own assets that I control. This doesn't mean that family is not important.

In another ABS article titled Components of Household Wealth I am shocked to read about the degree to which the rich (defined as the top quintile in terms of household net worth) have separated themselves from everyone else here in Australia:

This article focuses on three groups of households: low wealth (lowest quintile), middle wealth (third quintile) and high wealth (highest quintile) households, and examines the net worth of each of these groups. In 2003–04, low wealth households held an average of $35,000 worth of assets, middle wealth households $379,000, and the households with the greatest wealth on average held $1.5 million of assets. In terms of liabilities, low wealth households on average held $11,000 worth of liabilities, middle wealth $84,000 and high wealth households $104,000.

Even though my household's income is high, I have no idea what the value of total assets is. I know for a fact that I control about $33,000 so far, made up of my car, managed funds, and super funds. The value of the house is about $400,000. My parents have super balances that total maybe $100,000. I know my brother is saving up for a house. He is using term deposits. I saves $1250 per month, which is more than I am able to save up. My grandma, who is on the aged pension, I don't think saves anything. Being so old, she probably thinks there's no point. All in all, this suggests that my household is not in the top quintile but rather in the third or maybe the fourth quintile. The ABS finds that household wealth makes up a large proportion of wealth among the middle class and upper class. It seems as if the poor are renters who don't save up, that the middle class are home buyers who also don't save up, and the upper class are buyers who do save up.

The statistics also suggest that richer people tend to have more debt (or liabilities) and that liabilities seem to be correlated with asset size. A huge 86 per cent of liabilities is for the home, suggesting that the primary divider of wealth in Australia comes from property. The greater the debt you take on, the more money you made during the boom. This is interesting because property will play very little role in my plan to become a millionaire by 35. My parents (my dad especially) is very interested in property investing.

Almost three-quarters (74%) of all of the liabilities of middle wealth households related to loans on their own home with a further 16% relating to loans on other properties. By comparison, high wealth households had a smaller proportion of their liabilities relating to their own home (35%) compared to middle wealth households, but more relating to other property (51%).

For the average household, super makes up about 10 per cent of assets. The average person has a peak super balance at age 55-64 of about $120,000.

Interestingly, it seems as if everyone has high credit card debt around $10,000. Poor people tend to take out loans to buy cars. Also, rich households are more able to borrow to invest.

High wealth households had a greater proportion of their liabilities relating to investment loans (8%) than did middle wealth households (1%). This is consistent with high wealth households being in a better position to borrow money to invest.