Money Management

Evaluating your net worth compared to your peers can give you insight into your finances. Read on for a look at the data. [[{“value”:”

Americans have a long, rich tradition of comparing themselves to each other in ways big and small. For example, the phrase “keeping up with the Joneses” is about exactly that — competing with the neighbors, presumably named Jones, who may have bigger and better vehicles, a nicer house, better wardrobes, and so forth. A lot of those “achievements” are incredibly superficial and won’t really get you far in life.

What may matter to some (or many) Americans is their net worth. By understanding what the net worth is of our peers, we can all better understand if we’re headed in the right direction or if we need to be playing catch up.

What is net worth?

Net worth is measured in many different ways, but the most common and basic definition of net worth, and how the Federal Reserve defines net worth is this: “The difference between families’ assets and liabilities.”

It’s that simple. So, if you have a house worth $300,000 and a mortgage of $200,000 and that’s your only asset, your net worth is $100,000. $300,000 − $200,000 = $100,000.

If you have more assets, though, it can get a lot more complicated.

Defining assets

Assets, for the purpose of this calculation, include securities like certificates of deposit, bonds, and stocks, as well as other investments like retirement accounts. Transaction accounts like checking accounts and savings accounts are also included in the calculation, as is real estate, whether a primary home or a rental property. Cars, boats, airplanes, motorcycles, RVs, and the like are considered assets as well.

The government basically considers anything that can be easily valued to be an asset — for example, employment-related stock options are not considered an asset because they are often not publicly traded and are bound by many rules that make their valuation very uncertain. This also implies that valuable antiques or collectables are not strictly assets since they can be difficult to value and liquidate.

Defining liabilities

Liabilities are much more straightforward than assets. Liabilities are essentially any debts you owe to anyone for any reason. This includes balances on credit cards, mortgages, car loans, loans against your retirement accounts, and even “buy now, pay later” plans.

Defining America’s middle class

Just who makes up America’s middle class is a different question, and another that’s vital to answering the question of how your net worth compares to the average middle-class American’s. After all, if your net worth is higher or lower, what does that even mean if you don’t know if you’re middle class?

There are lots of definitions, but we’re going to use a very simple slice of data provided by the Federal Reserve’s recent publication “Changes in U.S. Family Finances from 2019 to 2022.” In this report, the median income for all American households in 2022 was $70,300. If we drill down deeper, we see that the median band of “usual income” for the 40th through 80th percentile, which is a pretty good chunk of Americans, is $71,200 to $115,700.

So, the question is now, how does your household compare to those making $71,200 to $115,700?

Middle class net worth

Now, the moment you’ve all been waiting for, where we reveal the big number – the median net worth of America’s middle class. First of all, as a point of comparison, the median net worth of all American households in 2022 was $192,900.

For American households that are within our definition of the middle class, median net worth was $159,300 to $307,200.

Why net worth matters

Some might argue that net worth doesn’t matter, or at least it doesn’t matter with a lack of specificity.

“Net worth” as a general term could mean you inherited a valuable house that you’re living in with no debt, or that you have a substantial nest egg put aside for retirement. So, when you’re asking about net worth, you should ask yourself why you want to know to find the answer you really need.

If you’re trying to determine if the net worth of your assets is enough to retire on, for example, you’ll want to subtract the net worth contained in your current home if you intend to remain there through your retirement. After all, there’s no equity you can use in your retirement if you choose to keep your home; it will remain locked up and inaccessible. In this scenario, the answer to your real question is more about retirement than overall assets, and net worth is just a starting point.

If you want to know more about your net worth because you’re simply trying to see if you’re keeping up with the Joneses, well, now you know the average middle-class American’s net worth. But remember that the Joneses in rural areas have less net worth than those in metropolitan areas, and other factors like race, age, and education hugely influence net worth, too.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Kristi Waterworth has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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For many, going into business for themselves is the American Dream. Keep reading to learn about five of the hottest small business ideas for 2024. [[{“value”:”

If the idea of working for someone else makes your skin crawl, it may be time to strike out on your own. Several factors go into determining the kind of business you should start, including where your passion lies and potential income. Here, we feature some of the hottest business ideas for 2024 and let you know a little more about how much you can expect to earn.

1. Auto repair shop

There are nearly 297 million registered vehicles on the road, and dependable auto repair shops can be worth their weight in gold. As evidence: The auto repair business grosses over $383 billion in revenue annually, making it one of the largest industries in the U.S.

If cars are your thing and you’re one of those people who can efficiently diagnose and repair a vehicle, opening an auto repair shop may be for you. Before you hang out a shingle, check local ordinances to learn what you need to do about licensing and where your shop can be located.

2. At-home bakery

If your baking skills are all the rage with family and friends, consider cashing in on your natural talent. According to Zip Recruiter, depending on the state, bakery owners can expect to earn anywhere from $88,200 to $135,600 annually. Of course, the amount of business you drum up will make a huge difference in earnings.

Before you rush to pop a dozen cupcakes or cookies into the oven, research the laws of your state. Some states have stricter requirements than others. In short, you need to know if your state requires licenses or permits and if there are any labeling laws that you must follow.

3. Consignment shop

Rather than invest thousands of dollars in buying inventory, a consignment shop owner allows others to display their own inventory. In return for giving them a place to sell (or selling for them online (if you choose to go the online route), you get to keep a percentage of the profits. After covering expenses, Medium pegs the estimated income for a consignment shop owner at around 25% to 35% of sales. So, if you generate $200,000 in sales annually, you can expect $50,000 to $70,000 to hit your business account.

4. Consulting business

Special skills are in demand, particularly among small business owners. Whether you’ve spent years as a media specialist, manufacturing whiz, or software specialist, you can expect to earn between $100 and $400 per hour before expenses. The wide pay range reflects different skill sets. For example, an IT consultant might earn between $100 and $250 per hour, but a cybersecurity specialist is more likely to earn in the $225 to $400 range.

5. Food truck owner

The food truck industry has come into its own. While food trucks might have once been seen in the heart of large cities at lunchtime, they’re everywhere today — from small-town festivals to birthday parties and casual weddings. After the cost of truck expenses, food, insurance, and licenses are taken into account, Cloud Waitress reports that a food truck owner can easily drive away with 30% of the money earned. For example, if your food truck brings in $300,000 annually, you can expect to bank about $100,000.

There’s nothing quite like breaking away from the crowd to pursue your own career path. If starting a business has long been a dream, now may be a good time to make it a reality.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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MacBook Pro laptops are competitively priced and come with free IT and troubleshooting support at Costco. Learn more about why you should buy one there. [[{“value”:”

Costco is well known for offering the best value when you buy items in bulk. But for certain single purchases — like a new MacBook Pro — you might be wondering if Costco still lives up to its low-price reputation.

Generally speaking, yes, Costco typically offers great deals on MacBook Pros — but with a strong emphasis on “typically.” Every now and then, Apple or another retailer, like Best Buy, will give you the best bang for your buck, especially if Costco isn’t running a promotion on its laptops.

Even so, Costco is worth considering when you’re shopping for a MacBook Pro, and not just because of the price. While its electronics selection isn’t vast, here are a few reasons to buy a laptop at the warehouse.

1. Prices are (usually) low

Costco’s MacBook Pros are usually cheaper than its competitors, including Apple itself. In the past, I’ve seen Costco selling new MacBook Pros $50 to $200 cheaper than other retailers, even without extra discounts.

That said, it really depends on the model you’re looking to buy. For example, let’s say you’re looking for a 14-inch MacBook Pro with the following specs: M3 chip, 8GB memory, 10-core GPU, 1TB SSD storage, and the color space gray. Both Apple and Best Buy sell this exact model for $1,799. Meanwhile, Costco has the same laptop listed on its website for $1,749.

But now let’s change up the specs. Let’s say you’re looking for a 16-inch MacBook Pro with an M3 Pro Chip, 18GB memory, 18-core GPU, 512 GB SSD storage, and space black color. Costco sells this model for $2,449.99, which is slightly cheaper than Apple’s list price of $2,499. But it’s not the cheapest price you’ll find — Best Buy is currently offering a $150 discount, which reduces the price to $2,349.

Now, if Costco were to offer its own promotion, it would likely be $150 to $200 off, which would put it on par with Best Buy. But since it’s not currently running laptop promotions, you’d be better off buying it at Best Buy — if price were the most important factor for you.

Pro tip: Get a cash back credit card that earns more at Costco to buy your new MacBook. Since your laptop will be pricey, it’s prudent to earn more than 1% back.

2. Generous return policy and two-year warranty

One unique benefit to buying your MacBook at Costco is getting a generous return policy. You can return your Macbook Pro to Costco for a full refund within 90 days after you purchase it. While there are some procedures you have to follow — such as performing a factory reset and unlocking the laptop — Macbooks fall squarely under its Satisfaction Guarantee.

For comparison, Best Buy will give you 15 days to return a MacBook (60 days if you’re a My Best Buy Plus or My Best Buy Total member), while Apple will also give you 14 days.

What’s more, Costco also extends the manufacturer’s warranty to two years, giving you two years of coverage for mechanical or electrical failures. Finally, it also sells AppleCare+ at a significantly cheaper price than other retailers: $319 for a three-year policy. In contrast, Apple and Best Buy all sell the same policy for $399.

3. Free technical and troubleshooting support

Lastly, when you buy a MacBook Pro at Costco, you get free technical support through its Concierge Service. This could come in handy if technology really — really — frustrates you, and you don’t have time or energy to troubleshoot your MacBook’s technical problems on your own.

What’s more, Costco will give you technical support indefinitely, whereas other retailers, like Apple, will give you support for a set amount of time, like 90 days. It’s these little extra touches — unlimited support, indefinite return policy, low prices — that make Costco an excellent place to buy your next MacBook Pro. When you’re ready to purchase one, wait until Costco offers a promotion of MacBooks, then strike when the iron is hot to save more money.

Top credit card to use at Costco (and everywhere else!)

If you’re shopping with a debit card, you could be missing out on hundreds or even thousands of dollars each year. These versatile credit cards offer huge rewards everywhere, including Costco, and are rated the best cards of 2024 by our experts because they offer hefty sign-up bonuses and outstanding cash rewards. Plus, you’ll save on credit card interest because all of these recommendations include a competitive 0% interest period.

Click here to read our expert recommendations for free!

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool has positions in and recommends Apple, Best Buy, Costco Wholesale, and JPMorgan Chase. The Motley Fool has a disclosure policy.

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Failing to use your credit card could get it canceled. And there could be consequences beyond that, too. Read on to learn more. [[{“value”:”

A lot of people have credit cards they use on an almost daily basis. And if you’re a credit card user, you may find yourself swiping or tapping your card several times a week to buy things like groceries and gas.

But there may come a point when you stop using one of your credit cards. Maybe it’s that your other cards have a better rewards program. Or maybe you’re consciously trying to pay for more expenses with cash.

You should know that not using a credit card could cause it to be canceled. And that could impact your credit score for the worse.

Will an unused credit card get canceled after 12 months?

It’s a fairly common practice for credit card companies to cancel cards due to inactivity. And the time frame for that happening can vary by card, so you’ll need to check your credit card agreement to see what you’re dealing with.

It’s not unusual, though, for a credit card to get canceled if it hasn’t been used for 12 months in a row. And worse yet, your credit card company may decide to cancel your card without issuing you a notice of a pending cancellation first.

The good news, though, is that you can’t be charged a fee for not using your credit card for a year or more. Inactivity fees were banned in 2010.

The problem with having a credit card canceled

Chances are, if there’s a credit card of yours that you haven’t used for a year or more, you’re unlikely to miss it if your issuer decides to cancel it. But it’s a good idea to avoid that scenario for one key reason — a canceled card could bring your credit score down.

One big factor that goes into calculating your credit score is your credit utilization ratio, which measures the amount of revolving credit you’re using at any given point in time. Keeping that ratio to 30% or less could help your credit score improve or remain strong, whereas a higher ratio than that could hurt your score.

Here’s where a canceled credit card comes into play. Let’s say you have three credit cards with a total spending limit of $10,000, and you’re carrying a $2,000 balance. That puts you at 20% utilization, which isn’t a bad rate at all.

But what if one of those cards gets canceled due to inactivity, and your total spending limit across your cards suddenly drops to $6,000? Suddenly, you’re at 33% utilization, which isn’t nearly as good for your credit score as 20%.

That’s why it’s best to not let a credit card go unused for too long if it adds nicely to your total spending limit. Of course, it is a good idea to cancel a credit card with an annual fee that you’re not getting good use out of. But if the card isn’t charging a fee and can help with your credit utilization, then it pays to avoid having it canceled.

An easy way to avoid having a credit card canceled

One simple way to avoid a credit card cancellation due to inactivity is to set up a small recurring charge on that card, like a streaming service that costs under $10 per month. That way, if the card’s rewards program leaves much to be desired, you won’t lose out on too much cash back by charging that small expense every month. At the same time, you’ll be keeping your account open without having to think about it.

Remember, not only can a higher credit limit help your credit score, but you never know when you might need to charge a large expense on a credit card. Having access to credit is a good thing, so do your part to keep your cards active if there’s no fee for hanging onto them.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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