Are you a super accumulator of wealth? Low salaries may apply :)

[LemonSwan]

I always see on here threads about how much savings you have, how much income you have, how much mortgage you have etc, and it can be very demoralising for those on lower or even high earners on non london salaries.

I have been reading The Millionaire next door recently and he had this interesting calculation for anyone of any age and any income to assess whether they are accumulating the wealth they should to enable you to set realistic targets.

So I thought I would share the calculation:

Take your age and times it by your pretax income. Then divide by 10 = the expected value of your networth for your age/ income
*Or for a household your average age x household income
ie. 30years old x £20000 salary = 600000 / 10 = £60000 expected networth

Now to the quartiles:
Take your current networth and divide it by your expected value.
ie. £50000 networth / £60000 expected = 0.83

A number bigger than 2 you are a super accumulator of wealth
A number between 1.99 - 0.51 you are an average accumulator of wealth
A number below 0.49 you are an under accumulator of wealth

Please feel free to post your thoughts on this or share your quartile. Super accumulators please feel free to give any wisdom to the rest of us :)

2.3. But that's because of property wealth and now being retired. My 'wisdom' would be to get in a time machine and go back to the 80s to buy a house. Then again, if house prices stay high then most younger people buying a house now will also surely be super accumulators once they are retired won't they?

0.13.

Not surprised. I don’t save. I should, but I don’t.

Do you divide your equity if your house is jointly owned?

3 if full equity
1.7 if half

It’s all balls as it’s just equity in an overvalued house.

I don’t think it’s a great measurement. To have a calculation of 1 I would only have £11200, there would be something pretty wrong if at 33 My total worth was only that amount. If my equity is included my score is 8. I have a slightly above average salary, and a house in a very expensive south east area. No help financially from family.

Oh I didn’t split my equity in half for my DH. If I do that my score is then reduced to 5.

I am an under-accumulator also known as 'poor'.
I'm not sure these kind of equations help anyone- except to provide a pat-on-the-back to fat-cats who don't need it!

Yes merry I divided the equity.
Although you can do it as a household income with all the equity if you prefer.

Well I think its a mixed reaction on the value of this calculation

Just realised I did the whole thing wrong and my score is actually 1! That makes a lot more sense. Maybe I’d have a higher score if I was better at maths.

Racoonworld
I think you might have missed a 0.

If at 33 you are on 33,000, you should have accumulated 108900.

Cross post :)

Yes that makes sense lol. I was going to say that is very impressive if you truly are on 8 at 33!

@LemonSwan

Racoonworld I think you might have missed a 0.

If at 33 you are on 33,000, you should have accumulated 108900.

Yes did it wrong. This is why I don’t have much money!

You do lol!

1 is great especially at 33. I am 30 on 0.8 so hope to be you in a few years :)

I read the book at it really helped me prioritise my spending and stop trying to keep up with the Jones'.
I am older, and more settled but by following his key points hope to make the most of the income we have.
I'm going to dig it out and re read. Thanks OP!

Well I’ve got nothing in my savings account so I know where I stand 😆 Can’t start saving until next year when we move and the credit card bill is gone. My plan is to start my saving in around October 2022, just can’t do it before then.

0.28. does that mean I'm financially fucked?

I think it’s about as accurate and useful as “twist the apple core A, B, C, D and whichever letter you’re saying when it comes off, THAT’s who you’re going to marry”

Sorry, but equity is only the part of your house / mortgage that isn’t owed by the Bank, Not the value of your house ?

This is interesting OP.

So in January, before DH and I got pay rises our quartile was 1.72, so upper end of average. Now we've had a pay rise it's 0.59. It's soon to be even lower as we're extending the mortgage.

I've been wanting to read this book! Do you recommend it OP?

Im 33 and my number is 0.46. Thought I was doing quite well but have only been on current salary for 18 months so maybe that's why.

My number is 6.29. My 'secret' is being born at the right time and buying a few houses in London when they were very cheap. So I have no 'financial wisdom' to impart as, without the help of a time machine, it's something that really isn't possible now. The numbers are going to be very skewed by older property owners - they are almost certainly going to have much higher numbers than everyone else - and not as a result of any savvy saving or hard work or anything else. Just being old and owning property.

Just over 2. Not sure why you would exclude inheritance which has already crystallised (as opposed to a potential inheritance which might never happen).

Not included equity as can’t remember what we’ve paid and what we owe, but at 45 my number is 2.6.
I think that’s okay?!

5.4 but so it needs to be as I'm getting ready to retire early.

36 and low average

0 / expected networth = 0