How to Determine if you are Wealthy?

How to determine if you are wealthy or not? Well, it depends on your age & Income. According to the studies, they have designed various cohorts for various age groups and income groups.

Here is the formula to determine weather you are wealthy or not?

“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.”

Say for Example, if you earn Rs.20,000 per month and your age is 25 years today than your annual pre-tax income is Rs. 2,40,000 (20,000 multiplied by 12). And multiply it by 25 so it will be 60,00,000 and divide it by 10 so it will be Rs. 6,00,000 (6 Lakhs).

So if your age is 25 years today and you are earning Rs.20,000 per month and if your net worth is Rs.6 Lakhs today than you are wealthy otherwise you are not wealthy yet.

Now, suppose if you are a software engineer and earn Rs.1 Lakh per month and your age is 30 years than your net worth should be (1 lakh multiplied by 12 months multiplied by 30 years) / 10 = Rs. 36 Lakhs…!!!

Yes, If you are earning Rs.1 lakh per month and you are 30 years old than your net worth should be Rs.36 lakhs to be tagged as a wealthy. Now calculate your net worth by using this formula and compare it with your actual net worth and tell me that, weather you are wealthy or not?

Of course, many of you will have a negative net worth around the age of 25-30 years because you may have taken educational loan, car loan, home loan, credit cards or any other types of loans. Suppose if you have shares of Rs.50,000 in your Demat account and you have taken Rs.4 Lakh of Education loan than your Net Worth will be Rs. –3.5 Lakhs (Negative).

But remember, you will only be considered wealthy if your net worth is more than this formula….!!!