Net worth is subjective.

By that, I mean it depends on where you live (city, state/province and country), what you make, and your lifestyle.

Some people can’t live on $60,000 and others can’t even imagine spending that much.

(*cough* *cough* two guesses about which category I fall into….)

It is good however, to try and benchmark yourself against some averages or “standards” just to see where you stand, what others are doing and what you could do to improve your situation if you feel as though you aren’t on track.

Seriously though, “on track” is really only applicable to YOUR track.

NET WORTH COMPARISONS ARE ONLY ONE BENCHMARK

I do yearly net worth comparisons to charts and calculators because I’m a nosy biatch, but also because I want to know how well I am doing in general compared to what people think I SHOULD be saving.

Here are the general net worth calculations I go through that are classic and some unconventional.

• What should my net worth be?

Also, I am in Canada. So when I compare myself to American net worth benchmarks (which are far greater and wider in number), I don’t really get the picture of how I am doing in my own country with my own economic reality.

As of this writing, I have a personal (single-income) net worth of:

$631,851.79

My income I am using for this is:

$87,336.69

My age:

34

Why so “low”?

Because I am factoring in my income over the years.

Some years, I didn’t work at all and traveled instead.

Believe it or not, I have not made that much money on average as a salary, in the past 10 years of working….. You can read my post here on the calculations I have done over the past years of my average salary.

If I look at my salary based on “days worked” which is not realistic because employees work the whole year but also take vacations that are paid, I made on average $156,832.63.

More on that later, I plan on posting an updated post on my working days and salary. Later.

Let’s use my life as a calculation for

THE MILLIONAIRE NEXT DOOR

Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be.

[ 34 x $87,336.69 ] / 10 =

$296,944.75

So apparently, I am $334,907.01 over this “goal” of what I should have saved, or 2X more, which I think puts me in their category of “Super Saver” or something like that.

THE MILLIONAIRE NEXT DOOR ADJUSTED

((Age – 27) x Annual Pre-Tax Income) / 5

This one is the more realistic calculation that takes into account student debt — of which I had $60,000 of and nailed in 18 months with The Budgeting Tool.

( [ 34 – 27 ] x $87,336.69 ) / 5 =

$122,271.36

I’m about 5.16 times higher in net worth savings compared to what I should be at.

THE CHATZKY CALCULATION

30 Years Old = 1X your income

40 Years Old = 3X your income

50 Years Old = 6X your income

60 Years Old = 8X your income

Retirement = 10X your income

Since I’m in between 30 and 40, let’s say 2X my income as an average:

$174,673.38

I’m 3.6 times higher than this calculation

THE COST OF LIVING CHART

I really liked the idea of using your city’s cost of living to factor into what your net worth should be.

Someone living in Toronto is not going to be able to save as much as someone living in Windsor! I mean, things just cost more or less in certain cities.

H/T to Freedom 35 for the idea and the net worth chart.

So, I found my cost of of living for Montreal, which is: 0.6778

Multiplying that factor against the chart above, I get:

This means, with my net worth of $631,851.79, I am $45,948.21 off from having a net worth of “Rich”.

Update: My net worth at my current age 35 ended up being $772,324.12, so.. I did end up in the “Rich” category.

My next goal is to hit a million-ish by the time I’m 40. 😉

Update: Actually my new money goal is to be a millionaire by the age of 36.

(For my Toronto friends, here’s your chart. Does anyone want a chart for their city? Leave it in the comments below.)

San Francisco Bay Area

Vancouver

NET WORTH IS REALLY SUBJECTIVE

I hope the above calculations made it super clear that net worth is super subjective.

Did you see how varied these calculations were based on my age and income?

To recap, the goals were ranging from the $27,112 to the $670,000s…

• Millionaire Next Door: $296,944.75
• Millionaire Next Door Adjusted $122,271.36
• Chatzky Rule of Thumb: $174,673.38
• Cost of Living Net Worth: $27,112 to $677,800

Average of all of those numbers?

$259,760.30

Net worth is SO subjective, and it is such a wide and varied number depending on your background, your history, your occupation, type of life… that you really cannot say what your net worth should be at any given time or age.

The thing I will say however, is that it is always good to benchmark yourself against these things once in a while to kind of get a feel for where you are, and to push or motivate yourself to reach higher to make those goals, to reach that “Excellent” column for instance, or to come close to it.

It’s never a bad thing to save more money, but not at the expense of cutting back to bare bones living, which brings me to my next and SUPER important point…

I REALLY DO NOT WANT TO SCALE BACK MY LIFESTYLE

Seriously. Did this come as a surprise to you? I hope not!

That is not mah destiny, y’all!

If you plan on still spending at least $45,000-$50,000 a year (like me after my scare of 2017 where I spent over $60,000), living where you want to live, doing what you want to do, then GO FOR IT.

However… (catch coming up, isn’t there always one?)

Just remember that for each dollar extra you plan on spending per year, you need to save double that to account for taxation, loss of appreciation and investment returns etc.

If you’re cool with all that, then by all means, work like a mofo because your motto is more than likely:

Other ways to check your financial health is how much you are saving and your PF score.

HOW MUCH ARE YOU SAVING?

Track your money.

Track your money.

Track your money.

Track your money.

Can I say it enough?

Track how much you are spending, in something like my budgeting tool, and then whatever you are NOT spending is what you are saving (presumably).

The only thing that kept me on track thus far, is tracking my spending AND LOOKING AT IT.

Near to the end of 2017, I just.. went into Ostrich mode. You know, where you just bury your head into the sand because you know that even though you are diligently tracking everything you are spending, the numbers are very, very ugly and you don’t want to face the music?

That was me.

The new me, checks my budget daily. Obsesses over how much I have spent so far (OMG.. $2000 and we are only in the FIRST WEEK of this month? FML…), and then calms down when I see where the big chunks of money have gone (booking Travel tickets for instance).

I also try to look at my spending holistically, that is, over the entire year, so that I can see what is left in each category each month, and what would roll over to the next category, so on and so forth, so that I build up a “credit” in the areas I want to spend, and I don’t deprive myself.

I just adjust my mindset to:

I am saving for something I really want.

Not spending mindlessly like some shopaholic zombie.

LOOK AT YOUR OVERALL PF SCORE

WTF is a PF score? Read this post – What is a PF score – and then come back.

Over the past few years, I have found this very helpful because it has helped me see how I am reaching an overall goal.

I said it at the start but it bears repeating that your net worth is subjective because if your money is invested, you’re at the stock market’s mercy of their dips up and down (like a certain month I would actually like to forget…).

If you have money just saved somewhere, it slowly grows at a snail’s pace but you are probably just breaking even because even if you earn 3% on your high-interest savings, inflation is on average 3%, so…

3% earned – 3% “spent” on inflation = 0%

Your money has done nothing but sit there and twiddle its thumbs.

DAMN.

So over the years, I have at least used another factor in calculating how well I am on track, and in all of my yearly budgets, you can see I talk about my PF score.

Here’s an example from 2012 to 2017:

The higher the number, the better.

2017 was terrible for spending, but I still managed to eke up my PF score by a bit (goodness knows how I managed that financial wizardry but one shouldn’t ask so many questions).

What I really want to reach though, is far, far off from this 10.07 number.

I am looking to hit the 30s, and this means I need to drastically increase my income (ummmm….. very hard at this point, imho), or lower my expenses (far more realistic and doable), which all ties back to my first point above:

TRACK YOUR SPENDING.

And there you have it folks.