How Wealthy Should You Be?

How wealthy should you be?

Well, it really depends on your age and income. How much should be the ideal average wealth in your age and income cohort and than compare it with your current wealth. If your current wealth is much more than the average, you are wealthy and if not than you are not wealthy.

Now, How to determine your age & Income group’s average wealth?

“Multiply your age times your realized pretax annual household income from all sources and divide it by ten. This is what your net worth should be.”

Suppose, if you are 30 years of age and your monthly Income is Rs.1 Lakh than your wealth should be (30 multiplied by 12 Lakhs divided by 10) Rs.36 Lakhs. If your current wealth is Rs.50 Lakhs, than it means that you are wealthy and if your current real wealth is Rs.30 Lakhs than you are not wealthy.

So according to this formula, if someone’s wealth is Rs. 10 Lakhs than he can be wealthy (Because his age & income group’s average wealth may be much less than Rs.10 Lakhs) and if someone’s wealth is Rs.1 Crore, he may not be wealth (Because his age & income group’s average wealth may be much more than Rs.1 Crore).

If someone has a wealth of Rs.1 Crore that doesn’t necessary mean that he is wealthy. Because how many years he could survive if his annual expense is Rs.50 Lakhs? 2 years or Maximum 3 years?….. A Wealthy by definition is one who has substantial amount of valuable assets and he can live without working for more than 10 years (Actually much more than this) on his wealth.

So if some one’s wealth is Rs.10 Lakhs and his annual expense is just Rs.1 Lakh than he is wealthy because he can survive for more than 10 years on his wealth, in reality may be his life time if he knows how to manage & invest money very well.

So while considering a Tag of “Wealthy”, you have to consider your expenses also because you can not be wealthy by spending more, you can be wealthy by saving & accumulating more….!!!

So Tell me are you Wealthy?….