Or, a better phrased question should be, what is your net worth? Many of us don’t know the answer to that question. I recommend taking a few minutes to take inventory of your financial net worth using this Excel template I found on the internet. It is simple and easy to understand.
Now, let’s take this a step further. After the above exercise, compare your actual net worth to what it should be. Here is the formula to calculate that number.
Target Net Worth = (Age – 27) X Annual Pre-Tax Income / 5
To understand the formula above, click here.
Congratulations if your actual net worth is more than your target net worth. If your actual net worth is below your target net worth, don’t feel discouraged. Work at it.
I wish you the best.