I previously wrote about one of my favorite authors and books, The Millionaire Next Door by Dr. Thomas J. Stanley, and one of his key points within the book; Prodigious Accumulator of Wealth.
PAWs or Prodigious Accumulator of Wealth are those who are very penny-wise, live well below their means, save a large percentage of their income, and are not prone to the latest social trends. As the name Prodigious Accumulator of Wealth suggests, PAWs are phenomenal savers, not spenders, regardless of their age and income.
I recently reread The Millionaire Next Door and the wealth calculator got me thinking where I stand based off my currents savings. For those not familiar with this wealth calculation, it’s very simple. Below is the equation.
Age X Gross Income / 10
Let’s pretend our fictitious friend Millennial Mike makes $50,000 a year and is 28 years old. Based off this wealth calculator, Millennial Mike would only be considered a PAW or Prodigious Accumulator of Wealth if he had $140,000 in savings (retirement, checking, savings, brokerage, etc.).
Age (28) X Gross Income ($50,000) / 10 = $140,000
I know what virtually every Millennial is thinking once they see this – no way could I save that much. Well, you may be right, but there is a reason why this term is only coined for extraordinary savers. You probably are not at this number yet, but it gives you a goal. It gives you a target. Aim high, Millennial’s!
Am I Wealthy? Am I a Prodigious Accumulator of Wealth?
Unfortunately, no. I am not an exceptional accumulator of wealth at the moment. I did my wealth calculation and I only have 78% of what I should based off my age. I calculated this for my wife and she is even farther off, as she only has 25% of what she should for her age. I actually consider us to be very diligent savers but we’re obviously way short.
How do you rank in terms of wealth for your age? Did you hit the mark? Or how far off are you?
I want this post to be a lesson for all of us Millennial’s to save more and live on less. That is how you truly grow your wealth. Find your wealth calculation number and circle it. That’s your goal, but it won’t happen overnight and it probably won’t happen in a couple years. It will take several years but stick with it. I know I will.