Calculate Net Worth and Benchmark It
 

Your net worth is a measure of how wealthy you are.

A person may be cash rich, while another may be cash poor. But because the cash poor person owns a property, both of them could have equal net worth.

And do you know there's a rule of thumb for telling whether your net worth is up to scratch?

According to the book The Millionaire Next Door if your net worth equals (or exceeds) your age times your annual income divided by 10, then you are a "wealth accumulator". I suppose that means it's good. This is your target net worth.

So if you are 30 years old and make $60,000 a year, you'll be called a wealth accumulator if you have an actual net worth of $180,000 or more.

To calculate your actual net worth, you simply add up all your assets, and subtract from that sum all your liabilities.

Er, exactly how?

For assets, add up all your cash savings, CPF balances, insurance cash value (you may want to take the surrender value of all your policies). Then add the market values of all your shares, unit trusts and properties. The result is the sum of all your assets.

For liabilities, add up your mortgage balance (how much you still owe the bank or HDB), credit card balance, renovation loan balance, and car loan balance. Add other sums of money you still owe banks, financial institutions, CPF, HDB, relatives and friends, and you'll get the sum of all your liabilities.

Then apply this simple formula:

Your Net Worth = Sum of Assets - Sum of Liabilities

And compare it with your target net worth.

To save you time, here's a tool to help you calculate and benchmark your net worth:



http://www.salary.sg/2007/calculate-...-benchmark-it/

372
 

If you bought a condo that costs S$600k but have not fully paid for it, can you use that S$600k as part of your net worth or asset?

373
 

Masindi, you can take the market value of that condo, say S$650k as part of your assets. BUT you also have to include the mortgage balance - what you still owe the bank - as part of your liabilities.

445
 

T_T I'm not a wealth accumulator... /wrist...

725
 

after all these years, i came to realise that salaried workers should never equate fix pay with wealth. anyone who wants REAL wealth, go be a self employed. it is silly to push HR so hard for a pathetic $300-$500 increment and end of the day, the real wealth increase is not even worth 1% to a self employed.

if a worker's salary is not ridiculously low compared to the mass, leave it. fight for minimal increment for the sake to expand "wealth" is silly. fight for "acceptable living allowance" sounds better to me.

bonuses and director fees are different altogether.

851
 

No need to fight with HR. The market will determine your pay. As in, shop around. If you're making 6000 per month, and the HR refuse to give you a single cent more than 500 increment (which makes it 6500), then shop around.

Go for interviews and ask for 7500. Can you get one? If you can, leave. If you can't, and everybody pushes you down to 6600, then either (1) you're not that hot of an employee, or (2) maybe you're near the ceiling of your profession or post.

I totally agree with you that fighting for minimal increment for the sake of expanding wealth is silly. Because the fact is you can't get wealthy by getting 300-500 increment every year.

1795
 

I agree with Razor.

You can't expect REAL wealth from your employer who only employ you to work.

Save/plan/budget/invest your way outside the scope of your job to expand your wealth.

One might be able to afford better luxury items with better income, but WEALTH IS another ballgame altogether.More often than not, wealth IS NOT determined by your monthly income.

net worth
 

aged 37
Annual Income: SGD 302,400
(age*annual income)/10 = SGD1.119M

MV stocks: SGD 298,200
MV property: SGD 1.8M
Loan on property: SGD 1.3M
Cash: SGD 20k

Net worth: SGD 818,200 < 1.119M

I'm a loser!

No loser will make $300K a year. You are just not a PAW (yet).

Save and invest more wisely and you'll be out of the rat race faster than 95% of the population. :)

networth
 

Heard from somewhere that your income affords you your _lifestyle_.

In "The M... next door", the author mentioned a surgeon who earns like 700 grand USD a year yet worries whether he can ever retire, as he and his family spend like there's no tomorrow!

Not a PAW myself either... just normal accumulator.

I think I would have to disagree. If you can get a 500 increment a year, 10 years later your income would have increased by 5k, which equates to 65k p.a. , including 13th month. Any bonus you get (especially in high bonus industries) will be based on your monthly salary. I think that will actually help a great deal in your journey.

Of course, I'm assuming you don't spend the increment on additional MBS/RWS trips.

I have a different view on this. focus on the long term and sustainability of your career. Not everyone is cut out to be self employed. so if your pay is low, instead of fighting over that small increment, look at how this job can help move you up the ladder or transfer to another job with a quantum leap in income. I won't quibble over the small increment if you don't lose sight of the big picture.

I was averaging 120k pa in singapore between 30-34. I have 60k savings, one HDB flat and 100k cpf. Nothing to shout about.

I left singapore at the age of 35 and pay went to 220k to 360 pa. I bought another property in beijing and now my net worth is roughly 2million.

And a big one too! :D just kidding, you have not include your CPF, market value of your car, insurance, etc. Those are part of your networth too.

With an income of 300k, a cash holding of only 20k seems too little. How does he spend his disposable income?

paijud righteous
 

His loan for property also very high.

Your income is 300K and your cash is only 20K. OMG, you're screwed man!

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