Q: What is a good net worth by age?

A common formula from 'The Millionaire Next Door' is: (Age × Pre-Tax Income) / 10 . If you are 30 earning $100k, aim for $300k. But in reality, just having a positive net worth in your 20s is a win.

Q: Should I include life insurance?

Only if it is 'Whole Life' or 'Universal Life' with a Cash Surrender Value . Term life insurance has no value until you die, so it is not a current asset.

Question 1

What is a good net worth by age?

Accepted Answer

A common formula from 'The Millionaire Next Door' is: (Age × Pre-Tax Income) / 10. If you are 30 earning $100k, aim for $300k. But in reality, just having a positive net worth in your 20s is a win.

Question 2

Should I include my home?

Accepted Answer

Yes, but remember you can't eat your house. Track 'Total Net Worth' (with home) and 'Liquid Net Worth' (without home) separately.

Question 3

How do I value my car?

Accepted Answer

Check Kelley Blue Book (KBB) or Edmunds for the 'Private Party Value'. Do not use the price you paid.

Question 4

How often should I check?

Accepted Answer

Quarterly is best. Checking daily leads to obsession over market moves. Checking annually is too infrequent to catch bad habits.

Question 5

My net worth is negative. Is that bad?

Accepted Answer

It's common for young adults with student loans. As long as the trend is moving upward (less negative over time), you are doing fine.

Question 6

Should I include life insurance?

Accepted Answer

Only if it is 'Whole Life' or 'Universal Life' with a Cash Surrender Value. Term life insurance has no value until you die, so it is not a current asset.

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