Net Worth = Freedom

Net Worth = Freedom. No really it does. Keep reading.

Where are you with your Net Worth calculations? Do you know what the average figure is for somebody your age? Well don’t delay in finding out your information so that you can gauge where you are in the spectrum of above or below average for you age range. How else would you be able to know if you are on track with your retirement goals? The reason I titled this post as net worth = freedom is because that net worth figure we all are shooting for in life will eventually be your income after you retire from a traditional job. Obviously a well-funded nest egg will provide a sizeable annual income and the freedom to do what you want. Will social security be around to assist us in our golden years? Maybe, but let’s pretend that it will not be around thus fueling a greater fire within us to save those pennies. A thousand years later if Social Security is still around you will then have extra gravy and steak every night for dinner.

Assets – Liabilities = Net Worth

Assets:                                                                                     Liabilities:

Checking/Savings Accounts                                                     Credit Card Debt

IRA/ 401k Accounts                                                               Mortgage/Student/Car Loans

Stocks/Investments                                                                 Family Loans

Homes/Cars/Jewelry/ Anything that is sellable

My Quote-What we do now with what we have now will definitely impact us later with what we have later.

Don’t be like certain people who could care less to find out their current net worth figure, because they do not want to be let down for falling short on the figure they are supposed to have. If you notice at the bottom of this blog you will see calculators and if you click on the Net worth link you will be enlightened and reborn. No I’m kidding about being reborn, but if you value your future life like I do, you will take notice that you need to ante up your treasure chest. I will give you a quick run-down of the average Net worth figures for 25-54 year age ranges. Now this by no means eliminates you from running your own numbers, stop being lazy. This is just example to give us a visual effect and comparison of the different age groups.

Net Worth by Age as per CNN Money:

25 under: -1,250

26-34 Year Old: -8,525

35-44 Year Old: -51,525

45-54 Year Old: -98,350

To be completely honest I do not agree with these numbers as they are a bit skewed. Somebody who is 41 years old should have a lot more than 51K net worth and somebody who is 32 should have a lot more than 8 thousand as well. Another way to work out your net worth figure is to divide your annual salary by .04 and then divide that by ten and that figure should give you an amount you should aim for which is really aggressive. In this example age has no factor as it is all based on income. So it helps those people who are not content with the figures provided by CNN Money as I am.

Income Based Net Worth Examples:

Income-25,000/ .04= 625,000 / 10= $ 62,500

Income–30,000/ .04= 750,000/ 10= $75,000

Income–40,000/ .04= 1 million/ 10= $100,000

Income-50,000/ .04= 1.25 million/10= $125,000

As these figures are very difficult to attain it is still a possibility with dedication and living a life where you do not have to impress others around you by flaunting items that set you back in life. If you are in between the income figure and age based figure for your specific situation then you are on the right path. But if your Net Worth is less than the age based example then it is pertinent to begin thinking of your future. The closer you are to the income based Net Worth the easier it will be for you to live off of your investments later.

Comment on this post and give us your opinion on what your feelings are about the Net Worth examples and its importance to your future. Do you know what your Net Worth is (Keep yours private) or is it a magical number you have never cared to calculate?

Watch your Money!