More Bread

This is my quest to get MORE BREAD (ie money), get rid of debt and other random things in my life.

Friday, September 15, 2006

Net Worth Formula

Yesterday, JLP on Allfinancialmatters.com wrote about a net worth formula from the book The Millionaire Next Door. This is one of the books I'm pretty sure is floating around my house and plan to review. The formula basically works like this:
Multiply your age by your pretax income from all sources (except inheritances).

Divide that number by 10 to arrive at what your net worth should be.

So for me, it'd be 24 (my age) multiplied by $50k (roughly what I will make this year) divided by 10, which gives me a target net worth of $120,000. Unfortuantely, I currently have more debt than equity so my true networth is a negative number. But as I commented on JLP's site, this gives me a target to aim for.

2 Comments:

At 9/15/2006 1:52 PM, Blogger Medicated Money said...

Just found your site from reading some of the comments at Allfinancialmatters.com.

My personal feelings toward that equation is that it is a good marker to see where one may stand, but not very realistic for those of us just starting out in our 20's! Nice blog and we look forward to reading more!

-Medicated

 
At 9/18/2006 8:17 AM, Blogger More Bread said...

Thanks for reading MM. I agree that the formula isn't perfect. Congrats on moving your website.

 

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