From a financial perspective, what do all these symbols mean to you?
From a financial perspective, what do all these symbols mean to you?
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Which of these would you group into category 1 and category 2 respectively? Please argue!
From a financial point of view, what are people who hold public office obliged to do when they take office and during their term of office?
From a financial point of view, what are people who hold public office obliged to do when they take office and during their term of office?
Personal Net Worth
Personal Net Worth
What is the value of your wealth?
What is the value of your wealth?
Decide whether you're filing your declaration of assets as an individual or as a couple.
Most important personal financial number [PNW]
Most important personal financial number [PNW]
So Personal Net Worth is the value of everything you own minus everything you owe.
It is quite possible for a person on a very low income to have a substantial net worth if they are careful with their debts and save money regularly.
At the same time, it is just as likely that someone with a very high income - like the bankrupt characters mentioned below - will spend every penny they earn and then have a negative net worth.
Starting in our financial foray from the fact that some people - high performing athletes or actors - who earn very high incomes each year, cannot pay their bills and often declare bankruptcy, we can speculate that PERSONAL NET WORTH (PNW) is a realistic and very accurate measure of wealth.
But what is an appropriate personal net worth? [NrV]
But what is an appropriate personal net worth? [NrV]
Thomas Stanley and William Danko, in their book The Millionaire Next Door: The Surprising Secrets of the Great Wealthy", suggest we use the following formula to calculate how much we might be worth at our current age, taking into account the annual amount of income from all sources.
(a) your age* (or the average age of the couple)
multiply by
(b) your (or, where applicable, the couple's) net annual income
and divide by 10
*if your age or the average age of your couple is under 27, in point (a), calculate (age - 27)
Excluding inheritances, your estimated personal net worth is the result of this multiplication.
The interesting thing about this formula is that it adapts according to the standard of living.
The interesting thing about this formula is that it adapts according to the standard of living.
This exercise is a current state analysis that shows how the financial decisions taken so far have led to the current results.
How do we interpret the concept of Wealth Accumulation?
How do we interpret the concept of Wealth Accumulation?
Prodigious Accumulators of Wealth
Prodigious Accumulators of Wealth
A PAW (prodigious accumulator of wealth) has a personal net worth that is double the estimated net worth for their age.
Under Accumulator of Wealth
Under Accumulator of Wealth
An under accumulator of wealth (UAW) has only half of the estimated net worth for their age.
Average Accumulator of Wealth
Average Accumulator of Wealth
An average accumulator of wealth (AAW) has a personal net worth that varies between the two amounts described.
From this perspective, whatever your numbers look like at the moment, it's fine!
From this perspective, whatever your numbers look like at the moment, it's fine!
The good news is that you now have a reference model that will allow you to make moderate or significant changes in your own financial behavior, if you wish, starting today.
You are the only person who decides what kind of Wealth Accumulator you want to be in the future!
You are the only person who decides what kind of Wealth Accumulator you want to be in the future!
To get back to normality, you might like to assess your 'financial health' at the end of this year, with the aim of planning your desired increase in Net Personal Worth for the year ahead.
Sources:
The Millionaire Next Door: The surprising secrets of the great rich Thomas Stanley, William Danko
- Global wealth databook 2021, Credit Suisse, www.credit-suisse.com
- https://www.worldometers.info/world-population/romania-population/
- https://money.cnn.com
- https://euro-area-statistics.org
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