As of today, my first net worth goal has been achieved. $260K saved. The breakout looks like the following:
41% – Taxable Account
37% – Thrift Savings Plan (Government 401k)
22% – Roth IRA
According to the Millionaire Next Door, I am officially an Average Accumulator of Wealth. In the book, they give you an equation to determine where you net worth “should” be. The equation is:
(Age * Pre-tax Income) / 10
Plugging my own numbers in, this means that I should have (31 * $85,000) / 10 = $263,500. An Under Accumulator of Wealth (UAW) has less than the number produced by this equation whereas a Prodigious Accumulator of Wealth (PAW) has twice this amount. Critics of this equation state that it is biased against young people who cannot even hope to come close to achieving this kind of net worth early in their lives. For example, a 23 year old just graduating college and making $60,000/year should already have (23 * $60,000) / 10 = $138,000. While this is true, implementing good savings habits early on can catch you up pretty quick. Next goal for me is $500K by 35 and $1 million by 39. Happy saving.
