Is your net worth what it should be?

Thomas Stanley and William Danko wrote the US bestseller “The Millionaire Next Door”. It is an excellent book as it gives many insights into the misconceptions of who our rich are and the lifestyles they have. There is a test I will show you so you can establish if you are on the right track to become a millionaire.

Stanley and Danko are University Professors who conducted research on over one thousand millionaires and present their findings in the book. It’s fascinating.

One of the key findings is that that nearly 70% of millionaires had set goals and had a plan for how they were going to achieve them. Of those that didn’t plan, most had either retired (having achieved their main goals) or inherited their wealth.

They also found that most millionaires knew the value of money, living well within their means. This gave them the best opportunity to invest.

The book describes three types of people. Those who are good at accumulating wealth, average wealth accumulators and poor wealth accumulators. While you would expect that high-income earners, such as lawyers and doctors, would be wealthy, this is not what the research uncovered.

Many high-income earners like to have a lifestyle that reflects their status. But this comes at a cost. These types tend to spend all they earn and often a little more. They value items such as new and expensive cars, overseas trips, flash restaurants, large homes, country club memberships, private schooling for children etc. These people have all the outward appearances of being wealthy, but without the wealth.

The book also has the following simple test to indicate if you are good, average or poor at accumulating wealth. Multiply your age by your gross income (i.e. before tax income) then divide this by 10. This is an indication of what your net worth should be. As an example, a 50 year old on an income of $80,000, should be worth around $400,000.

If your net worth is twice or more than this figure then you are an excellent wealth creator. If it is half or less of this amount, then you are a poor wealth accumulator.

You can use calculators at www.PropertyInvestor.Info to work out your actual net worth and what your net worth should be.

If you find out that you’re not the wealth creator that you would like to be, then contact me for an appointment. I will not sell you property, but I will analyse your situation, both financial and personal, show you how property can help change your situation and help develop goals and strategies to meet your personal expectations.

All the best with your investments.