How to know if you are Rich?
Almost everyone nowadays wants to be rich and retire early and that is totally fine and honestly, a great goal to strive for according to me.
However, have you ever had this question in your mind? How much money do I even need to have to call myself rich?
I knew, you did!
So, you have come to the exact right place if you want this question to be answered. Here is the formula —
(Your Age x Your annual household income) / 10
So for example, if you are 30 and your annual household income is $200000, then to call yourself a rich kid, your net worth should be -
(30x200000)/10 = 6000000/10 = $600000
Net Worth Meaning
Net worth basically means your assets — your liabilities
Assets mean something that will provide you a monetary value in your future, like your house, stocks, 401k, pension plans, etc.
while liabilities mean something that obligates you to pay in the future like your home loans, student loans, borrowings, credit, etc.
But what if I dont have that money as my Net-Worth? Am I poor?
No, if you have a net worth equal to or more than what comes from the formula, the you can be categorised as rich , if your net worth is below the amount in the formula but more than 50% of it, then you are an average saver, and if you have less than 50% of what your net worth should be from the formula, then you should save more and invest in assets as soon as you can.
