Net worth compared to Annual Income

[fhaloanboise]

Really It's a great information..

[MattNY]

interesting i'd interpret "net worth" much differently and not base it on income at all

focusing on "net" when I consider my own net worth I subtract my liabilities from my assets. Just like a company does on their balance sheet.


For instance
(Value of your Real Estate + Value of your investments + Value of your cash, etc) - (Mortgage balance + credit card balances + auto loan balance, etc)

-Matt

[Nutria]

I'm 29, have a NW a little over $200k and I don't feel we are overachievers when it comes to savings or spending - we just have a couple houses, save 15% for retirement and don't have any consumer debt.

How many kids?

[Nutria]

interesting i'd interpret "net worth" much differently and not base it on income at all

focusing on "net" when I consider my own net worth I subtract my liabilities from my assets. Just like a company does on their balance sheet.

I don't think he's asking how to calculate NW. Rather, he mentions "rule of thumb" and "target" NW for a given income.

[Leo]

For this type of scenario, I don't actually believe in rule of thumbs. Income can change all the time. Income is not permanent, may lose your job, switch job, etc. Life is full of changes.

For instance, When I was 20, Income $35,000/year. Now, Age 25 Married, Income $90k/year + wife $30k/year = $120k. That's a huge difference. Our current net worth is around 40k. I'm expecting our net worth to increase a lot in the next few years because we will have more traction and will become debt free by next year.

Also life is full of "experiences". Natural disaster, life-long medical disease, legal battles, start a business, etc. Those events can make your net worth from zillions to nothing and nothing to zillions.

[RedHotLama]

$240K by 35 (assuming $60K)?! I'm sorry but that's just not realistic for the average Joe with a family in my opinion...I'm certainly no expert, but still...

My wife and I are 32/33 and we each have more than the 35 line for our income. But we both started maxing out retirement as much as we could once we started jobs after college.

[Singuy]

Assuming a household makes 60k/year, two parents and two kids.

Total federal taxes: $2,991
State Income Tax: ~500?
401k: 6,000
Health/dental/vision Insurance via work: 3000/year


This will leave you 47,589

Rent: 14400/year
Electricity: 2400
Water: 600
Cellphone: 2000
Internet: 840
Netflix: 120
Car Insurance (2 cars): 2000
Food: 6500/year
Gas: 900
MISC: 2000
Fun money: 3000

Savings: 12,829

X 13 years @ 1% interest: 177,047(after tax)
401k : 89,845 @ 2% return

NW after 13 years: $266,892

So yeah reaching a 240k of NW after 13 years of work is easy...you can buy a house and perhaps end up with more NW(though property taxes/interest eats up a good portion of your money so you got to figure that out).