What Is Negative Net Worth
Negative net worth occurs when total liabilities exceed total assets. It means a household or individual owes more than they own, even if income is stable.
How Common Is Negative Net Worth
In the United States, roughly 10 to 15 percent of households have zero or negative net worth, according to the Federal Reserve Survey of Consumer Finances. Rates are higher among younger adults, low-income groups, and communities with limited access to credit and savings. Federal Reserve Survey of Consumer Finances
Why Negative Net Worth Matters
Zero or negative net worth can limit access to credit, increase vulnerability to shocks, and reduce long-term wealth building. It often reflects high debt relative to assets, such as student loans, medical bills, or mortgage debt exceeding home value.
