5 Key Benchmarks To See Where You Stand

Most people know how they feel about their finances—they may feel stressed, secure, behind, or ahead on their goals. However, relying on your feelings alone will not give you a clear picture of your financial situation. 

Whether you’re earning $50,000 or $500,000 a year, evaluating your financial health semi-regularly will help you understand whether you’re actually building wealth or hurting your financial future. 

Using financial benchmarks will provide you with a clear, actionable framework to assess where you stand, identify any gaps, and help you make informed decisions about your money. 

Here are five benchmarks that help paint a complete financial picture of your financial health and where you stand. 

Benchmark 1 – Net Worth (The Big Picture)

Your net worth is the most fundamental measure of your wealth. The calculation is simple: take everything you own (assets) and subtract everything you owe (liabilities). The number you get, either positive or negative, represents your overall net worth and financial position. 

Calculating Your Net Worth

Assets – Liabilities = Net worth

To calculate your net worth, start by listing all of your assets. This could include: 

• Checking accounts 
• Savings accounts 
• Retirement accounts 
• Investment portfolios 
• Real estate equity 
• Valuable personal property (cars, jewelry, etc.) 

Next, list your liabilities. This could include: 

• Mortgage balance 
• Student loans 
• Credit card debt 
• Car loans 
• Any other money you owe 

The difference between these two totals is your net worth. 

Why Net Worth Matters 

Net worth provides context that your income alone cannot. Someone earning $200,000 a year with $300,000 in debt may be in worse financial shape than someone earning $75,000 with no debt and retirement savings. 

R.J. Weiss, CFP, founder and CEO of The Ways to Wealth, warned against falling into the common trap of comparing your financial situation to someone else’s. 

“Net worth is a good measuring stick for yourself, a way to provide feedback on how you’re doing financially,” he explained. “I avoid using net worth comparisons, however, because it’s not very useful as a measuring stick to others. Focusing too much on how you compare to others can be damaging to your financial well-being and state of mind.”

Instead, Weiss recommended using net worth “as a tool to measure one’s individual circumstances and as a way to provide feedback on the general direction someone is headed by tracking it over time.”

Age-Based Milestones 

“As a general rule, your first goal should be to be out of debt in your 30s. Getting out of debt will bring you to zero net worth, which tends to be the hardest to achieve,” said Jay Zigmont, CFP and founder of Childfree Wealth.

Zigmont added, “In your 40s, your goal should be to max out your retirement accounts. If you are out of debt and max out your retirement accounts in your 40s, you will have more than a quarter million in net worth.” 

“The key with net worth is to realize that net worth does not equal self-worth,” Zigmont stressed. “I encourage people to check their net worth twice a year and ensure it is going in the right direction.”

Benchmark 2 – Savings Rate (Your Wealth-Building Engine)

While net worth shows where you currently are, your savings rate will reveal where your finances are headed. This benchmark measures the percentage of your income you’re setting aside for future goals, and it’s arguably the most powerful tool for building wealth. 

Calculate your savings rate by dividing the amount you save each month by your gross monthly income (before-tax income), then multiplying by 100. Financial experts recommend saving at least 15% to 20% of your gross income, though the ideal rate will depend on your goals, age, and timeline. Your savings rate, not your income level, determines how quickly you build wealth. Someone earning $80,000 a year and saving 20% ($16,000 a year) is building wealth faster than someone earning $150,000 but saving only 5% ($7,500 a year). 

When 15% to 20% Isn’t Realistic 

“With more than half of the US living paycheck to paycheck, saving 15% to 20% may be unrealistic,” said Zigmont. “The key is to make progress. First, focus on paying off your debt, then save and invest. It isn’t about exact percentages but about going in the right direction.”

If you are currently saving nothing, getting to 3% is important progress. For people struggling to save at all, Zigmont suggested focusing first on getting out of debt. “Focus on getting out of debt. You will get a better return on your money by paying down your debt than by saving in a high-yield savings account.”

Benchmark 3 – Debt-to-Income Ratio (The Hidden Wealth Killer)

Your debt-to-income ratio (DTI) measures how much debt you carry relative to your income. Calculate your DTI by dividing your total monthly debt payments by your gross monthly income, then multiplying by 100. 

Lenders generally consider a DTI below 36% healthy, with no more than 28% going towards housing costs. A DTI above 45% often signals financial stress and may disqualify you from certain types of loans. More importantly, a high DTI means you’re dedicating income to paying for past decisions instead of building future wealth. 

Change Your Perspective on Debt 

“If you have consumer debt, particularly credit card debt, it is time to hit the alarm button,” said Zigmont. “The concepts of ‘good’ and ‘bad’ debt were created by the people who want to sell you debt, and shouldn’t be how you live your life.”

High-interest credit card debt, carrying 18% to 30% interest rates, creates a financial situation that makes accumulating wealth nearly impossible. If you’re paying $500 a month in credit card interest alone, that’s $6,000 in one year that could have been invested. 

If your DTI is currently holding you back from growing your net worth and financial situation, Zigmont recommended that you “start by locking your credit cards so that you can’t take out any more debt. Then make paying off the debt a priority, not something you do with money that is left over.”

Benchmark 4 – Retirement Readiness (Future-Proofing Your Wealth)

Retirement readiness measures whether you’re on track to maintain your desired lifestyle in retirement. Start by estimating how much money you will need. Although this will vary depending on your lifestyle, health care needs, and other factors, people commonly need 55% to 80% of their pre-retirement income. 

Many financial professionals suggest having one year of your annual salary saved by age 30, three times your salary by 40, six times by 50, eight times by 60, and 10 times by age 67. 

Why One Retirement Amount Doesn’t Fit All 

“All of the retirement benchmarks are like a one-size-fits-all shirt. They really fit no one,” said Zigmont. “For example, your retirement goal is completely different if you are childfree and single than if you are married with three kids. The key is to make progress each year.”

Retirement needs vary dramatically based on lifestyle choices, location, and personal preferences or priorities. The power of compound growth means that even small increases in retirement contributions made early on can have major effects decades later. 

Often, the reality is that the best time to start saving for retirement was 20 years ago; the second-best time is now. 

Benchmark 5 – Liquidity and Emergency Funds (Your Financial Safety Net)

You can have an impressive net worth on paper and still face financial catastrophe if all of your wealth is locked up. Liquidity, or your ability to convert assets into cash to cover unexpected expenses, separates real financial security from fragility. 

The standard recommendation is to maintain three to six months of essential expenses in an easily accessible savings account. 

Determining How Much You Need

“If your life and job are more stable, you may be able to have three months in your emergency fund. If your life or job is a bit more precarious or dynamic, you may need six months or more. It is not only your job but also your life and overall situation,” said Zigmont. 

Self-employment, commission-based income, unstable industries, being a sole earner, health issues, or limited job markets will push you towards six months or more. Dual-income households with stable jobs may only need three months. 

The Risk of Illiquidity 

“One can have a high net worth and watch it grow during boom times, but that can mask liquidity and cash flow issues,” said Weiss. Without adequate liquid reserves, you might be forced to sell investments at a bad time in the market or take on expensive debt to cover emergencies—both of which can derail your wealth-building progress. 

Where To Keep Emergency Funds

“In general, the best place to keep your emergency fund is in a high-yield savings account,” advised Zigmont. “You want your money to be safe and available when you need it, which is what a HYSA provides. The key is to not invest or gamble with your emergency account.”

Think of your emergency fund as insurance for your wealth-building plan. It allows you to stay invested during market downturns and maintain your savings rate even if your income changes or is disrupted. 

Putting It All Together

Evaluating your wealth isn’t about focusing on any single metric—it’s about understanding how these benchmarks interact. You may have a strong net worth, but low liquidity, or a great savings rate that is being undermined by an excessive amount of high-interest debt. 

Create a Priority Framework 

You may have weaknesses in multiple areas of your finances. Zigmont said, “The first priority should always be to get out of debt. Once you are out of debt, fill your emergency fund with three to six months of expenses. Then focus on maxing out your retirement accounts. The order matters.”

Working in this order helps avoid becoming overwhelmed and follows mathematical logic—paying off high-interest debt provides a guaranteed return, emergency funds protect your progress, and retirement accounts benefit from consistent long-term contributions. 

Think Long-Term 

Make wealth evaluation a regular practice. Both advisors recommend checking in periodically rather than obsessively monitoring your net worth. Zigmont suggested checking your net worth twice a year, while Weiss emphasizes the importance of keeping a long-term perspective, even when the markets fluctuate, which they will. 

“If their sole focus is net worth as a benchmark, it may lead them to make short-term decisions that protect their net worth but bad long-term decisions,” said Weiss. This is especially relevant during market downturns, which can trigger panic selling, a decision that will lock in your losses and abandon the power of compound investing. 

The Bottom Line

Life changes constantly, and your financial approach should too. Regular check-ins allow you to adjust your financial course as your life circumstances change. 

Remember that these benchmarks exist to empower you, not make you feel inadequate. As Zigmont put it, “As a CFP professional, sometimes the best thing I can do is to provide a client with an unemotional look at their finances. Money is not just a number. We all have a good or bad relationship with money, and our money behaviors are more likely to impact our goals than the actual dollars and cents.”

Instead, focus on what you can control: spending less than you earn, eliminating debt, building emergency savings, and consistently saving for the future. Wealth evaluation isn’t just for the rich; it’s a tool that can help anyone become financially secure, regardless of where they are starting from.