Everyone wants to be rich. However, becoming rich is comparatively easier than staying rich. Additionally, becoming rich when you are accustomed or resigned to making an average income is nearly impossible. Unless you are born rich or marry into money, you will likely not luck into wealth like they do in Hollywood movies.
No one becomes rich just by working 9-to-5 and accomplishing the bare minimum. You must have motivation, drive, a vision, and a realistic plan to execute that vision. If you want to become rich, you have to believe you are worth the kind of income you desire and realistically try to attain it. Keep in mind that the average American earns a little less than $50,000 annually, with some statistics showing that number to be about $60,000.
When you crunch the numbers, it becomes more apparent why a term like, “the 1%,” exists. Currently, about 1% of Americans – the wealthy elite – own about 40% of the country’s wealth. Whether that is good or bad, right or wrong, is a debate for another time. Until the world as we know it changes, it is what it is. If you want to increase your chances of becoming rich, you’ll need to understand and calculate your lifetime wealth ratio.
Calculating Your Lifetime Wealth Ratio
Your lifetime wealth ratio is a calculation of how much money you have earned, paid in taxes, bills, accumulated investments, and so on, from whenever you started working until your planned retirement. It is a financial calculation to assess how much wealth you have created in a lifetime, how well you have maintained that wealth, and how much more you stand to make before retiring. Minus all bills and financial liabilities of course.
Everyone’s lifetime wealth ratio calculation is unique. So whatever data you include will be specific to your life and circumstances. If you started working full-time and paying bills at 18, you would include all your personal data unto to the present day. Such data can include accumulated income, income tax payments, mortgage payments, various insurance payments, taxes, car-related finances, student debt, food, credit card debt, and so on.
You are basically calculating how much money you have made in a lifetime versus your accumulated expenses. This number will tell you how much wealth you have created in a lifetime, how well you have maintained it, and how much money you will probably earn for the rest of your life.
The formula for calculating your lifetime wealth ratio is:
Net Worth ÷ Total Income Earned = Lifetime Wealth Ratio
Remember: It’s Just a Guideline
If you want to be rich, you can use a lifetime wealth ratio calculation as a guideline for improvement. The average person makes about $1.8 million throughout their working lifetime. Or, $1.5 million after taxes. If you can make that much money in a lifetime on an average salary, how much more can you make if you push a little harder?
- How to Maximize Your Wealth Potential
- Do We Need Wealth Management Experts?
- Being Wealthy Is Not Ungodly