How to Tell If You’re Rich

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I got this article from the Apartment Owners Association. I thought it was informative so I want to share with others.

IRS figures show that the top 10% of income earners make 43% of all the income and pay 70% of all the taxes. The 2% of income earners pay approximately half of all income taxes.

If your annual household income is $108k, you are in the top 20% of income earners. If your income exceeds $150k, you are in the top 10%. If your income exceeds $210k, you are in the top 5%. If your household income is $520k, you are in the top 1%.

According to the Federal Reserve Survey of Consumer Finances, a net worth of $416k puts you in the top 20% of American households. You are in the top 10% if your net worth is $952k. This jives with the findings of Dr. Thomas Stanley – author of The Millionaire Next Door – that 1 in 8 American households has a net worth of $1M or more. If your nest egg totals $1.86M, you are in the top 5%. If you have a household net worth of $6.82M, you are in the top 1%.

How do you get rich if you aren’t currently? The basic formula is pretty simple:

-Maximize your income by upgrading your education or job skills

-Minimize your outgo by living beneath your means

-Religiously save the difference, and

-Follow proven investment principles

Most millionaires are not big spenders. According to Dr. Stanley, the vast majority of millionaires in the U.S……

-Live in a house that costs less than $400k

-Are more likely to wear a Timex than a Rolex

-Generally pay $15 or less for a bottle of wine

-Have never paid more than $400 for a suit

-Are more likely to drive a Nissan than a BMW

-Spend very little on prestige brands and luxury items.

Yes, they’re frugal, but they’re also happy, not to mention financially free. They are not dependent on their families, their employers, or the federal government. If you want to be rich, you have to stop acting rich and start living like a real millionaire.

Good investing