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Wealth Equation

What is your Wealth Status?

Run the equations below to determine where you are in your wealth accumulation. Are you an Under Accumulator of Wealth, an Average Accumulator of Wealth, or a Prodigious Accumulator of Wealth.

The wealth equation as determined by Stanley and Danko, "The Millionaire Next Door" is as follows:

Expected Wealth Status = [(Age * Average Pretax Household Annual Income)/10] - Inherited Wealth

Inherited wealth is any sum of income that has been recieved from a dead relative or even a large winning such as lottery.

For Example: If you are 30 years old and you have averaged $30,000 per year over working lifetime and have no inherited wealth:

(30 * $30,000)/10 - $0.00= $90,000

The $90,000 in this example represents what this person should have as a current Net Worth. Net Worth is determined by subtracting your assets from your liabilities.

Net Worth = Assets - Liabilities

Wealth Status is measured in three ways:

UAW - Under Accumulator of Wealth (Net Worth is well under Expected Wealth Status, half or less)

AAW - Average Accumulator of Wealth (Net Worth is near Expected Wealth Status)

PAW - Prodigious Accumulator of Wealth (Net Worth is significantly over Wealth Status, twice as much)
If you are a UAW or an AAW, you can use the Books, Software, and Games on this website to become a PAW.

 
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