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.


Wednesday, July 20, 2005

How to Determine if You're Wealthy

Have you ever wondered if you were "wealthy?" There is a rule-of-thumb formula used in The Millionaire Next Door for determining whether or not you are wealthy. For those who are interested, the formula is:

Multiply your age by your income from all sources. Then divide that number by 10 to arrive at what your net worth should be.

So, if you are 35 years old and your household income is 60,000 per year, your networth should be $210,000 [(35 X $60,000)/10 = $210,000] in order for you to be considered wealthy.

If you are 9 years old and you get an allowance of $468 per year, you would be considered wealthy if your net worth was greater than $421.

UPDATE: You can also read a follow-up post to this one.

Tags: ,