A personal finance blog dedicated discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance.


Thursday, July 21, 2005

How to Determine if You're Wealthy - Part 2

Wealthy, as it is defined in the The Millionaire Next Door, is determined by one's net worth. The authors define the threshold level of being wealthy as having a net worth of $1,000,000 or more.
(NOTE: This book was published in 1997, therefore, $1,000,000 today isn't worth what $1,000,000 was worth back in 1997.)

Another way the authors defined wealthy is based on one's expected level of net worth. I referenced this definition in Part 1. People who exceed this number are considered Prodigious Accumulators of Wealth (PAW). People who have a net worth less than expected are called Under Accumulators of Wealth (UAW). Those who fall in the middle are, you guessed it, Average Accumulators of Wealth (AAW).

If you haven't read The Millionaire Next Door, I urge you to do so. Also, if you know young people who are just starting out in life and haven't yet made serious mistakes with their money, GIVE THEM A COPY OF THIS BOOK!

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