Pay & Salary

Average Monthly Income vs. Net Worth: What’s the Difference?

September 9, 2021

Your average income and net worth can affect your life during your career and after your retirement. Knowing and understanding your average monthly income can help you learn how to manage your debt, improve your quality of life and help prepare you for the future. Understanding the factors that can determine someone's monthly income can help you better plan your finances and know what to expect in your career. In this article, we discuss average monthly income, factors that may impact it and the difference between average monthly income and net worth.

Related: A Complete Guide to Entry-Level Salaries

What is average monthly income?

Average monthly income is the amount of money an individual earns in a month. Using your average monthly income, you can see what funds you have available every month after deductions, such as federal or income taxes. Individuals use their average monthly income to plan for everyday expenses, monthly bills, college funds, future retirement plans and unexpected events, such as medical bills.

Related: 4 Criteria for What Is Considered a Good Salary

Factors that can impact average monthly income

The various factors that may impact your average monthly income can be found on the Bureau of Labor Statistics website and include:

Your occupation

In terms of occupations, the BLS divides wage data into the following five main sections:

  • Management, professional and related fields
  • Service industry
  • Sales and office jobs
  • Natural resources, construction and maintenance fields
  • Production, transportation and material moving industries

Management, professional and related fields have the highest average monthly income at $5,919.33, while the lowest average monthly income is in the service industry, with an average of $2,708.33 per month. The other categories all earn an average of between $3,300 and $4,000 per month.

The BLS data also breaks each of these categories into smaller sections. Among those, farming, fishing and forestry occupations have the lowest average monthly income at $2,855.66, and management, business and financial operations occupations are the highest at $6,261.67.

Related: What Is the Average Salary for College Graduates?


Your level of education is another factor that can have wide-ranging effects on your average monthly salary. A person who has achieved less than a high school diploma often earns an average of $2,686.66 per month, according to the BLS data, which tracks for people only 25 years and older. People who have an advanced degree beyond a bachelor's degree often earn an average of $7,111 monthly.

The other categories it tracks are high school graduates who did not attend college and people with an equivalent to a high school diploma, people who have some college experience or an associate degree and people who have earned a bachelor's degree. According to the BLS data, every level of advancement you make in your education can correspond to an increase in your average monthly income.

Related: 25 Jobs That Pay $150K or More

What is average net worth?

Average net worth is your total amount of assets minus your debts. Often, a person's net worth increases with age because assets such as retirement funds, investments and purchased homes can appreciate in value during their lifetime. Salaries also often increase with more experience in an industry or field.

Average net worth vs. average monthly income

The differences between average net worth and average monthly income are:


Your average monthly income is the amount you earn each month. Depending on your source of income, you can subtract insurance payments, rent allowances and other costs, such as federal and state taxes, from your total income every month.

Net worth is your debt subtracted from your total assets. For example, if you own a car worth $100,000, but owe $50,000 on it, you have $50,000 equity of net worth in it. As you accumulate income and repay debt, your net worth increases. The net worth formula is:

Assets - debt = Net worth

To calculate your own net worth with the formula, first calculate all your assets and liabilities, or debt. Assets can include:

  • Cash owned: Any cash you own outside of the bank
  • Checking account summary: Any money you have stored in a checking account
  • Savings account summary: Savings account money even if it's not accessible
  • Life insurance total: Your total life insurance policy amount
  • Home equity: The equity you own in your home, or what you have paid off
  • Car equity: The value of your car minus how much you still owe on your loan.
  • Other vehicles: Any other vehicles including RVs, buses, planes, boats and mobile homes
  • Home contents: The liquidated value of your home items, such as furniture, jewelry, books and other items
  • Other items: Items that do not categorize into the other list elements, such as land or deeds of ownership

To calculate your debt, evaluate your current liabilities. Items that classify as liabilities include:

  • Mortgage balance: The amount you have yet to pay for your mortgage
  • Unsecured debt: Any unsecured debt you have at the time of calculation
  • Car loans: Money owed on a vehicle
  • Student loans: Any student loans you have toward your education
  • Other debt: Any other debt, through loans or bank statements


Both net worth and monthly income have uses in estimating your financial security. Monthly income shows how much money you have available every month. Net worth calculates the payment record of any long-term debts, loans and other liabilities. A high monthly income does not mean you have a high net worth. While monthly income can help you understand how well you are doing financially for the short term, net worth can help you understand how prepared you are for the future and retirement.

When it's time to accumulate all of your savings and retire, your net worth can be the value you use to understand your financial health, not your total rate of income. Because your financial health accounts for all current debt and liabilities, knowing your debt and how much you need to resolve it can help you take care of it before you retire. Debt after retirement can affect your funds and decrease your standard of living after you retire. Knowing more about your debt and liabilities can help you prepare for retirement.


View More 

Master’s of Finance vs. Economics: Salary and Job Outlook

Discover the differences between a master's of finance versus economics, including their salaries and job outlooks, and explore the roles available for each.

How To Retain Employees When They Hit Their Salary Cap

Learn what a salary cap is, discover the benefits and drawbacks of using one and review seven steps to help keep employees who reach their cap with your team.