Millionaire next door paw
The traditionally spoken of number is that you should save and invest at least 10% of your salary, although that alone probably won’t get you into the PAW category.
#Millionaire next door paw how to#
Stanley has a few points that he discusses in his book in regards to how to accumulate wealth, and no surprise, one of his main points is that you need to spend less than you make. In order to make it to the category of what Stanley calls PAW ( Prodigious Accumulator of Wealth), then you need to have twice the number, or in Shawn’s case: $3,120,000. $300,000 (annual household income) X 52 (age) X 10% = $1,560,000Īccording to Stanley, Shawn is a UAW, or Under Accumulator of Wealth. In Shawn’s case, and in order to be an AAW, he should have a net worth of: In Shawn’s case, although he didn’t outright tell me his and his wife’s salaries, I can surmise based on some conversations that it’s approximately $300,000 per year. It looks like this: Household Annual Income X Age X 10% Someone who has this amount fits into what Stanley calls an AAW (Average Accumulator of Wealth). The wealth equation suggests that you take your household’s annual income, multiply that by your age, and then multiply that by 10%. What net worth makes you rich? Let me explain. Stanley actually puts this into an equation he calls the wealth equation, which looks at age and income, and then groups people into one of three categories: UAW, AAW, or PAW. ** As a complete aside, The Millionaire Next Door is one of the best books on wealth creation I’ve read in the last 20 years. In the book, The Millionaire Next Door , Thomas Stanley describes someone like Shawn as, “big hat, no cattle.” That’s Stanley’s expression for someone who, by all appearances, looks like they have wealth, but has accumulated well below their potential. The Millionaire Next Door: What Net Worth Makes You Rich? He mentioned this number to me figuring I would be impressed. One day we were speaking about investments, and he happened to mention that he has so far saved $200,000 in his retirement savings account and that he figured his total net worth wasn’t much beyond $250,000. He has this insatiable desire to brag about everything. I didn’t ask.įor whatever reason, Shawn likes to brag about how well he’s doing and how much he spends on things. Shawn’s got a large mortgage on his home and has almost more debt than his assets. I didn’t ask.īoth his daughters attend the best private schools. I know how much he spent because he told me. The lawn is perfectly manicured, and he spent over $30,000 on the nightscaping. What net worth makes you rich? Don’t look to Shawn (not his real name) for any inspiration.