Some of you might have heard about the formula presented in the book - Millionaire Next Door by Stanley and Danko that determines your target net worth.
The formula looks like this: Target Net Worth = Your Age X Annual Pre-Tax Income / 10
However, everyone knows that after college, you most likely have a negative net worth. Therefore, many people have come up with their own formulas to compensate for that. Here is one I like by the author of the Simple Dollar Blog:
Target Net Worth = (Your Age – 27) X Annual Pre-Tax Income / 10
The second formula gets me a lot closer to my current net worth. It's off by $3K. The top formula places me about $90K off.
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