One of the reasons why I started this blog is to share what I learned about how to accumulate wealth. I regularly read books and other blogs to learn and improve my financial literacy. In order for me to make a sound plan on achieving my financial goals I must first determine specific numbers that I must attain.
According to a study by the NSCB back in 2010, a family who has an annual household income between Php295,000.00 - Php2,400,000.00 is considered middle class while an annual household income above Php2,400,000 is considered rich. If we take inflation into account these values will be an annual household income of Php 340,000 - Php 2,770,000 for the middle class and above Php2,770,000 for the affluent.
The study however does not mention any criteria regarding the age and Net Worth of the person. One method of determining the average net worth required is by using the TARGET NET WORTH FORMULA from the book "Millionaire Next Door". Below is the formula for the TARGET NET WORTH of an AVERAGE ACCUMULATOR OF WEALTH (AAW)
( GROSS ANNUAL INCOME X AGE ) / 10 = NET WORTH
In order to be considered wealthy a person must become a PRODIGIOUS ACCUMULATOR OF WEALTH (PAW) and must have double the target net worth of the AAW.