Net Worth Calculation
Well, I’m not really sure sometimes if reading these help yourself, millionaire-aspiring types of books if helpful to the ego or the self perception, and this is one of those examples, although I will say that it has made me realize that if what they say is true, and the calculation they have you run to see what your “net worth” should be at a certain age is correct, then I’m more than a little behind - along with most of the world!
According to the popular best selling book “The Millionaire Next Door”, their equation for what your net worth should be is your age, divided by ten, then multiplied multiply that by your yearly income. The number I came up with makes me fall about 50% short, maybe a little more than that, however it doesn’t really account for all variable either and is just a simple equation.
What I mean is, does that really mean that I have to have that amount saved to live the same or a better lifestyle that I’m living today when I retire? And what about if my salary that I pay myself has gone up incrementally higher every year? Am I punishing myself for those years that I wasn’t making nearly what I make now? So, if my income went up 30% in one year, I’m still sticking myself to that high number that I should have because this last year I happened to make a lot more money than I had in the past few, and was then able to save a lot more?
While I do have these questions, I still think the books’a good read and really drives home that the people who become millionaires are the ones with self discipline who don’t just spend every cent they make. Saving and investing are pounded into your head again and again, and rampant consumerism is definitely discouraged by the authors, which I agree with and am striving to become more like, because I don’t know about you, I’d like to live the same lifestyle I do now or better in my golden years, and maybe even be able to help out some family members or friends here and there if I can.
