E-Devotional-Week 16

NET WORTH-WEEK 3


HOW MUCH SHOULD YOUR NET WORTH BE?

By: Barry G. Allen- President & CEO

Last week you calculated your current net worth.  We suggest you periodically update this calculation as your circumstances change.  As you reduce your indebtedness, your net worth should increase.  Regularly compare your net worth to your financial goals to determine what progress you are making in achieving those goals.

How much should my net worth be? There are several different formulas financial planners use to determine the appropriate level of one’s net worth at different phases in one’s life cycle.  The different life cycle phases are: independence/young adult phase; establishment phase – wedding to birth of first child; childbearing phase; childrearing phase; child launching phase; empty nest phase; retirement phase; single partner phase – death of a spouse.

To oversimplify this determination, let me suggest for your consideration the formula presented in the popular book, The Millionaire Next Door.  It suggests this formula to compute your expected net worth: multiply your age times your realized pre-tax annual household income from all sources except inheritances.  Divide by ten.  This, less any inherited wealth, is what your net worth should be.

Here’s an example: age 30 times annual household income of $50,000, divided by 10 equals an expected net worth of $150,000.  If you’re short of this expected amount, let me suggest you contact a certified financial planner to assist you in developing a plan for corrective action in the future.

Prayer Focus: Ask God to help you better to live beneath your means so you can accumulate your net worth for the accomplishment of His purposes for your possessions.

Next Week: How Much Does A Person Need?

For more information, please call us at (502) 489-3533 or toll free in KY at 1-(866) 489-3533

The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.