{"id":38251,"date":"2021-06-09T11:01:05","date_gmt":"2021-06-09T15:01:05","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=38251"},"modified":"2021-06-11T00:20:44","modified_gmt":"2021-06-11T04:20:44","slug":"millionaire-next-door-formula","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/millionaire-next-door-formula\/","title":{"rendered":"The Millionaire Next Door Formula for Net Worth"},"content":{"rendered":"\n<p>What is <em><a href=\"https:\/\/www.shortform.com\/blog\/the-millionaire-next-door-book\/\">The Millionaire Next Door<\/a> <\/em>formula? What net worth is considered wealthy?<\/p>\n\n\n\n<p><em><em>The Millionaire Next Door <\/em><\/em>formula multiplies your age times your pretax annual income divided by 10 to get your expected net worth\u2014this excludes inheritances. You are wealthy if your net worth is twice as large as your expected net worth.<\/p>\n\n\n\n<p>Discover more on how to <a href=\"https:\/\/www.shortform.com\/blog\/calculate-your-net-worth\/\">calculate your net worth<\/a> using <em>The Millionaire Next Door <\/em>formula.<\/p>\n\n\n\n<!--more-->\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Calculate Your Expected Net Worth Using <em>The Millionaire Next Door Formula<\/em><\/strong><\/h2>\n\n\n\n<p>Here\u2019s how the millionaire next door calculator works:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Multiply your age by your realized (taxable) annual income<\/li><li>Divide by 10<\/li><li>Subtract any <a href=\"https:\/\/www.shortform.com\/blog\/inherited-wealth\/\">inherited wealth<\/a><\/li><li>The result is your expected net worth, or what you should be worth, given your income and age.<\/li><\/ul>\n\n\n\n<p>For example, for a 61-year-old with an annual income of $235,000, her net worth should be $1,433,500 ($235,000 X 61 divided by 10) using the <a href=\"https:\/\/www.shortform.com\/blog\/wealth-accumulator\/\">wealth accumulator<\/a> calculator.<\/p>\n\n\n\n<p>Similarly, the wealth accumulator calculator will show that a 41-year-old with an earned income of $143,000 plus $12,000 investment income, his net worth will be $635,500 ($155,000 X 41 divided by 10).<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>If the millionaire next door calculator shows that you\u2019re in the top quartile (25%) for wealth accumulation in your category, you\u2019re a PAW or \u201cprodigious accumulator of wealth.\u201d<\/li><li>If you are in the bottom quartile (25%), consider yourself a UAW, or \u201cunder-accumulator of wealth.\u201d<\/li><\/ul>\n\n\n\n<p>For <em>The Millionaire Next Door <\/em>formula to place you solidly in the PAW category, you should be worth two times your expected level of wealth. Often, PAWs have four times the wealth of UAWs in their category. If you\u2019re at half or less than the expected level for your category, you\u2019re an under-accumulator. Here\u2019s an example of each (both people are in the same income\/age category):<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Prodigious accumulator: Richards, 50, owns a mobile home dealership and his income is $90,200. His net worth should be $451,000, but it\u2019s actually $1.1 million. He lives a modest, blue-collar lifestyle.<\/li><li>Under-accumulator: Davidson, 51, is an attorney with an income of $92,330. His expected net worth is $470,000, but it\u2019s actually $226,511. He lives above his means, spending significantly more than Richards to maintain the lifestyle\/status associated with attorneys.&nbsp;<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"<p>What is The Millionaire Next Door formula? What net worth is considered wealthy? The Millionaire Next Door formula multiplies your age times your pretax annual income divided by 10 to get your expected net worth\u2014this excludes inheritances. You are wealthy if your net worth is twice as large as your expected net worth. Discover more on how to calculate your net worth using The Millionaire Next Door formula.<\/p>\n","protected":false},"author":10,"featured_media":9004,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[31,25],"tags":[379],"class_list":["post-38251","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money","category-statistics","tag-the-millionaire-next-door","","tg-column-two"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.3 (Yoast SEO v24.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Millionaire Next Door Formula for Net Worth - Shortform Books<\/title>\n<meta name=\"description\" content=\"Are you wealthy? Are you an underperforming wealth accumulator? The Millionaire Next Door formula will help you find out.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.shortform.com\/blog\/millionaire-next-door-formula\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Millionaire Next Door Formula for Net Worth\" \/>\n<meta property=\"og:description\" content=\"Are you wealthy? Are you an underperforming wealth accumulator? The Millionaire Next Door formula will help you find out.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.shortform.com\/blog\/millionaire-next-door-formula\/\" \/>\n<meta property=\"og:site_name\" content=\"Shortform Books\" \/>\n<meta property=\"article:published_time\" content=\"2021-06-09T15:01:05+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-06-11T04:20:44+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/s3.amazonaws.com\/wordpress.shortform.com\/blog\/wp-content\/uploads\/2020\/05\/woman-math-hidden-figures-scaled.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2560\" \/>\n\t<meta property=\"og:image:height\" content=\"1707\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Joseph Adebisi\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Joseph Adebisi\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.shortform.com\/blog\/millionaire-next-door-formula\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/millionaire-next-door-formula\/\"},\"author\":{\"name\":\"Joseph Adebisi\",\"@id\":\"https:\/\/www.shortform.com\/blog\/#\/schema\/person\/d8daf45671a09e8745a7a9f50a03b2a0\"},\"headline\":\"The Millionaire Next Door Formula for Net Worth\",\"datePublished\":\"2021-06-09T15:01:05+00:00\",\"dateModified\":\"2021-06-11T04:20:44+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/millionaire-next-door-formula\/\"},\"wordCount\":357,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/millionaire-next-door-formula\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2020\/05\/woman-math-hidden-figures-scaled.jpg\",\"keywords\":[\"The Millionaire Next Door\"],\"articleSection\":[\"Money\",\"Statistics\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.shortform.com\/blog\/millionaire-next-door-formula\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.shortform.com\/blog\/millionaire-next-door-formula\/\",\"url\":\"https:\/\/www.shortform.com\/blog\/millionaire-next-door-formula\/\",\"name\":\"The Millionaire Next Door Formula for Net Worth - Shortform Books\",\"isPartOf\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/millionaire-next-door-formula\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/millionaire-next-door-formula\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2020\/05\/woman-math-hidden-figures-scaled.jpg\",\"datePublished\":\"2021-06-09T15:01:05+00:00\",\"dateModified\":\"2021-06-11T04:20:44+00:00\",\"description\":\"Are you wealthy? 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