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How to determine if you are wealthy!

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    How to determine if you are wealthy!

    According to the millionaire next door book, this is how you determine if you are wealthy.
    Multiply your age times your pretx annual household income from all sources except inheritances.
    Divide by 10
    This (less any inherited wealth) is what your net worth should be.

    How do you measure up?

    #2
    Re: How to determine if you are wealthy!

    : Wealthy x 2. :

    I guess washing out those ziplocks really helps after all!

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      #3
      Re: How to determine if you are wealthy!

      Does the equity in one's home count?

      What about for a one-income family? Is the net worth that is being calculated for the couple?

      Gong by my meager upcoming salary I'm beyond wealthy, but that doesn't really seem like an accurate assessment given that I couldn't live on my salary. Combining with DH's income creates a calculation for a couple, and hence my question.

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        #4
        Re: How to determine if you are wealthy!

        The equity in your home certainly does count!

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          #5
          Re: How to determine if you are wealthy!

          Oh, and we are a one income family, so i used my husband's income plus interest in banks, and first, I used his age, then I used mine.

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            #6
            Re: How to determine if you are wealthy!

            Hmmm. By that formula I fall a little short of wealth.

            Why does this not surprise me?

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              #7
              Re: How to determine if you are wealthy!

              The other rule they give: to be a PAW , you should be worth twice the level of wealth expected. PAW is prodigious accumulator of wealth.

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                #8
                Re: How to determine if you are wealthy!

                well by income we are wealthy when you count equity in the house by dh's income we fall a little short but not by much my excuse for that is raising 3 kids they are for sure eating us out of house & home!!!

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                  #9
                  Re: How to determine if you are wealthy!

                  Originally posted by Ima saver
                  The equity in your home certainly does count!
                  In that case we are doing just fine. If not, we are at least on our way.

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                    #10
                    Re: How to determine if you are wealthy!

                    I am a PAW!! The other terms are UAW and AAW!! (under and average)

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                      #11
                      Re: How to determine if you are wealthy!

                      there are other ways to determine wealth than $ in my opinion. family, a good job, happiness, a great woman in my life, being able to treat her good, ect ect.
                      wealth of knowledge is big too...if you keep yourself in line, everything else will fall into place.

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                        #12
                        Re: How to determine if you are wealthy!

                        Definately not wealthy.....yet

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                          #13
                          Re: How to determine if you are wealthy!

                          I think their formula is nice as one way to measure wealth, but I think there are some serious flaws, especially for younger folks.

                          When you are young, your income flucutates and can grow quite rapidly--the formula really doesn't account for that.

                          For example, say you're 25 and make 100k per year. According to the formula, your net worth should be $250,000 (interesting, since when you were 20 you were probably making 10k a year at a part-time job). However, say in the next year you got a nice raise and your spouse began working. Now you're 26 and your income is 150k. All of the sudden your net worth is supposed to be $390,000.

                          I don't think even the most prodigious of PAW's could parlay an extra 50k a year in income into another 140k in net worth in just a year in any kind of "normal" context.

                          I find the formula interesting, but I won't be paying too much attention to it until I hit my late 30's or so.

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                            #14
                            Re: How to determine if you are wealthy!

                            pearl, I think you are exactly right. I think it is a lot more accurate for people in their 40's and 50's! ( I also can't imagine making $100,000 in one year)

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                              #15
                              Re: How to determine if you are wealthy!

                              I'm an under accumalator of wealth. A combination of having low earnings years and not having good savings habits. I'm not too far behind though.

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