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That's according to the authors of "The Millionaire Next Door," who devised a formula to determine whether you're wealthy — or at least, as wealthy as you should be. "Prodigious accumulators of...
Thomas J. Stanley and William Danko wealth equation determines how rich, wealthy or affluent you are based on your age, household income and total net worth to see if you are balance sheet affluent or income statement affluent.
The Millionaire Next Door formula multiplies your age times your pretax annual income divided by 10 to get your expected net worth—this excludes inheritances. You are wealthy if your net worth is twice as large as your expected net worth.
Many people have contacted me since I first published the Wealth Equation in Marketing to the Affluent, aka marketing to the millionaire next door. They seek yet another form of special dispensation. Most often these people are in their 20s, 30s and some 40s. They argue that they haven’t been working long enough to accumulate what […]
Try using The Millionaire Next Door formula (age x income / 10) to see how your net worth measures up (if you are under 40 check-out our formula modification in the video below). To qualify for this level of wealth, you should have a net worth double the number produced by the formula.
Differences between UAW, PAW, and AAW are explained here: en.wikipedia.org/wiki/The_Millionaire_Next_Door. An individual who is an under accumulator of wealth (UAW) has a low net wealth compared to income. One who is an average accumulator of wealth (AAW) has a Net_Worth = Age * 0.1 * Annual_Income. –
According to the authors' formula he should be saving 10% yearly and should have about $1.25 million in net worth (50*250,000*10%). If their net worth is lower, they are an "Under Accumulator". The UAW style is based more on consumption of income rather than on the method of saving income.