What does it take to be a millionaire? You might think that the title of millionaire only belongs to the rich and famous, or that one guy in the other neighborhood that lives in a mansion, but you may be surprised to find out that you, too, can own that title just like the rest of them.
First, let’s take a look at what being a millionaire really means. Although there can be multiple ways to define millionaire – like a person who has a million or a million plus dollars in cash, or someone whose assets total a million dollar (regardless of what debt they have) – technically, a millionaire is a person whose net worth is equal or greater to a million dollars. So, to determine how close you, or you and your spouse, might be to claiming the millionaire status you will need to calculate your net worth.
Calculate Your Net Worth
So, what is the formular for calculating your net worth? Well, you will find it to be quite simple. It is really is just subtracting your total liabilities from your total assets. Begin by writing down each of your assets and their current monetary value. You might have to make a guess at some of the figures since the figures are very fluid. If you own a home, that will most likely be your largest asset. Determine its market value. Then write down your vehicles and each of their values, and all over personal property (especially furniture, jewelry, and art or other items that may be considered an asset). Write down the money you have in all your bank accounts and finally the value of all your investments. Add all these figures together and this is the value of your total assets.
Now consider all your liabilities. To get an accurate account of your net worth you will need to look at all money owed on any of the assets you listed, or any other outstanding debt. List your total mortgage (what is left to pay off your house), remaining vehicle loans, credit card balance, student loans and all other outstanding balances. Adding all these figures together will give you your total liabilities.
Once you have added all figures from both categories, subtract your total liabilities from your total assets. This number is called your net worth. You can calculate your current net worth with our calculator. The number you get, might surprise you. If your net worth is in the red, don’t despair. With every debt paid off, added dollar in the bank, or growth in investments your net worth is constantly going up (that is, if you aren’t adding more debt). Hopefully, however, you may have found that your net worth was more than you thought it was. If so, you are on the right track and may be on your way to becoming a millionaire! Remember, it isn’t your money in the bank that determines that status, but your total net worth.
While your net worth may not be something you think about every day, it is something you should consider at least occasionally. You may find that with a sound financial plan and real intent, a millionaire status is well within your reach.
Use our calculator to find out how quickly you can accumulate a million dollars!
How close are you to the millionaire mark?