What is the Net Worth to be Considered Wealthy?
You want to know what is the net worth to be considered wealthy. This is such a commonly asked question, and the answer is that it depends on several factors. What country do you live in, the currency in which you hold your wealth, and the value of your assets? One million dollars goes much further in a small town than in New York City.
First, it’s important to understand what net worth is. Many believe that if they are making good money, that means that they are wealthy. This is largely because your salary is a primary source for creating wealth, but it all depends on HOW you spend that salary that determines your wealth. A high salary often does not lead to high net worth, and I will explain how.
Whether you earn a salary from an employer or create income through your business, the result is the same. It’s not your salary that makes you rich. It’s not how many sales you make that make you rich. To get rich, you need to know how to manage your money. You need to know how to increase your net worth because at the end of the day, net your net worth is what makes you rich.
If you want to learn how to calculate your personal net worth and manage your finances better, register for the Cash Catalyst course to teach you how to bulletproof your finances today! Remember that if you own your business 100%, which most business owners do, the value of your business will increase your personal net worth.
What percentage of Americans make over $100k?
Per Policy Advice, “About 30.7% of households earned over $100,000 in 2020.” So if you are in the 30.7% of those making over $100k, you need to understand how that money does not make you rich.
Your income does not make you rich. Your assets make you rich because that is what you own. People who are smart with their money build net worth by investing in assets that appreciate over time. These people learn how to get their money working for them and live off the income their money can generate over time.
That is not meant to discourage you. I share this information to help set you up for wealth because I want to help make you wealthy. And wealth does not come from income alone. But I will share the strategy for getting wealthy with you below.
Lifestyles of the wealthy
When we think of the lifestyles of the rich and famous, we often conjure up ideas of celebrities vacationing on yachts, lots of bling, wearing the latest trends, living in mansions, and driving Bentleys. But does that image ring true?
Realistically, you may be surrounded by millionaires and not know. Many millionaires who think like millionaires know they don’t need to flaunt their wealth. They are aware that if they spend money on the latest trends and fashions, buy expensive (and highly depreciable) cars and vacations that offer no value, they are wasting their money.
There is an opportunity cost to everything. When you spend money on “things” that don’t offer value, you miss the opportunity to invest in appreciable assets and build your wealth.
What does one percenter mean?
Many look at being in the top 1% in one of two ways: how much you make or what your net assets are worth.
Many business owners strive to reach the top 1%. This is an admirable goal but not necessary for the masses. Whatever your financial goal is, it should be set at a limit that challenges you, provides you with the lifestyle you want and does not overextend yourself.
For many, the top 10% or 20% works well. Whatever that number is for you, please know it is respected and supported.
Personally, I do not feel I need to hit the top 1%. If I do, then fantastic, but I also know I can live a comfortable and fulfilled life with less.
How much is the top 1 percent worth?
Per madisonadvisors.com, to be in the top 1% for net worth, you need to have $10M of net worth. Net worth is all your assets less all your liabilities and what you are left with is your net worth. Your net worth is most important over your income because that is what you would have left over if you sold off everything you owned.
Whether you aim for the top 1% or are happy with a different goal, here are some tips on increasing your net worth. When you follow these tips, you will be on your way to increasing your net worth and reaching your personal financial goals.
Four tips to help build your net worth:
1. Live within your means
Even millionaires need to live within their means. You will be putting yourself in debt if you spend more money than you bring in each month, whether through your business or personal income. When you create too much debt, you are forced into bankruptcy. Carrying debt depletes your net worth due to the high costs associated with that debt and the opportunity cost of not investing the money you borrowed.
2. Get your money working for you
It is wise to put your money into investments where not only the actual investment vehicle appreciates over time, but the investment vehicle also provides income throughout the year.
For example, if you purchase a rental property, the building will appreciate over time, and the investment will provide you with rental income from tenants throughout the year.
Another example is if you were to invest in the stock market. When you purchase quality shares such as blue-chip, they will expect to appreciate over time and provide you with dividend income throughout the year.
These strategies are what it means to get your money working for you because when you are in debt, you owe money, and you are working to pay off your debt. But when you invest, you are having your money make money for you. This strategy will get you closer to achieving your financial goals much faster.
3. Create a plan for your money
Building a profitable business financial plan will help your business optimize profitability, increase net profit margins, and leave you with more money where you can use those funds to either grow your business or invest. Knowing what your financial goals are and creating a plan on how to achieve them will offer actionable steps that you can monitor your progress against.
For example, if you currently make $10,000 revenue in your business per month and want to increase that to $100,000 per month, when you create a business financial plan that helps you plan out what you need to do in terms of increasing revenue and how the costs will increase as well, all, while you are ensuring your net profit margin, stays tight or increases. Growth is only good if your profits grow along with the increased sales.
4. Work on your money mindset
When you learn to think like a millionaire and act like one, the money can start to align with your reality. Being cash confident as a business owner and in your personal finances will create massive wealth for yourself. When you create a financial plan and have the mindset and discipline to follow through on that plan, that’s where the reward will be – achieving your goal.
The bottom line is regardless of whether your financial goal is to land in the top 1% net worth or you want to achieve a comfortable lifestyle, the point I want you to understand is that you are worth your financial dreams. You deserve to meet your financial goals, provided you are willing to do the work. It might not be the easiest undertaking to build your net worth, but it will be worth it when you achieve it.
If you want to learn how to calculate your net worth and get on your financial journey, register for the Cash Catalyst course that will show you how to calculate your net worth and increase it month over month and year over year.
