All the Hacks with Chris Hutchins cover image

25 Money Rules (and When to Break Them) with Brian Feroldi

All the Hacks with Chris Hutchins

NOTE

Estimating Your Net Worth: A Simple Calculation

To estimate an appropriate net worth based on age and income, multiply age by pre-tax income and divide by ten. For example, a 50-year-old earning $100,000 would have an estimated net worth of $500,000. This calculation serves as a benchmark to compare actual net worth against averages for one's age and income. The rule is most effective for individuals over 30 and is less applicable for those under 25 due to their limited earning and saving potential. Additionally, wealth accumulation categories can be identified: if net worth is double the calculated target, one is a 'prodigious accumulator of wealth,' while less than half indicates being an 'under accumulator of wealth.' This method provides a straightforward target to evaluate financial status and encourage necessary changes or celebrate achievements.

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