As promised I have started to look at how your net worth should change depending upon you age. Also as the Millionaire Next Door formula was quite crude I have looked around the internet to see if there are any other ideas for how your net worth can be calculated and I came across this interesting way of calculating net worth from The Simple Dollar blog, it has a slight tweak compared to the Millionaire Next Door. The target Net Worth formula is (age -27) x Annual Pre-tax income / 5 compared against the Millionaire next door formula of age x Annual Pre-tax income/10.
I have recently been reading an American book called the Millionaire Next Door it was released in 1996 and was written by Thomas J. Stanley and William D. Danko. The book is based on research carried out by the two authors over several years. It looked at how millionaires became millionaires and what they did to accumulate this wealth. It also looked at deciding how you can identify if a person has a high net worth compared to their current wages. I though we would look at deciding if we have a high net worth and at a later date I will look and doing some more posts.
With auto enrolment in to a pension scheme now being available for most employees in the UK I thought it was time we looked at what this potential pot of money could become and will it give you enough money to live in retirement.
The UK scheme initially had a minimum contribution rate of 2% this was shared between the employer and employee at 1% each this was effective until April 2018. From April 2018 – April 2019 the minimum contribution rate is 5% with 2% from the employer and 3% from the employee. From April 2019 the final increase will take the minimum contribution rate to 8% with an employer contribution of 3% and an employee contribution of 5%.
We have been looking at getting a new car recently as we have two cars one is a Honda Civic the other is a Citroen Picasso. Both are over six years old in fact one is approaching ten years old. Both are still running well as far as I can tell but the older car will probably need some money spending on it soon. So I thought I would look at the different way I could finance a new car.
In July 2017 the BBC published a list of its stars that earn more than £150k. Some of the newspapers put together articles on why the salaries earned by the stars were unbelievable when you consider how much the people who have to pay for the TV licence actually earn. There were 96 people on the list earning from £150k up to £2.25m. There is a problem with the report in that there are also a lot of hidden salaries that have not be given in the report due to the TV programs being produced by outside companies or the BBC commercial arm that are not regulated by the BBC charter and therefore the BBC does not need to report these.
The average weekly earnings of a person living in the UK is currently £503 per week or £26,156 per year this would give a net salary of £20,873.28 with deductions of Tax £3,111.20 and National Insurance £2,171.52. Some would call this the salary of the Normal Person who will work 37-40 hours a week. This is compared to the salaries of the Premier league football stars who can earn anything from £20,000 per week to £400,000+ per week giving a salary of somewhere in between £1,040,000 and £20,800,000 it is however difficult to decide how much time a footballer spends working in an average week as it is not just two ninety minute matches a week for the season. It is sometimes said that the high salary is required due to the short working life of the footballer but when you compare the normal person’s salary it would take them almost 40 years of their working life just to get the lower end of the Premier league footballer’s yearly salary. It could be debated whether this is justifiable or not but it is said that the Premier league is one of the riches football leagues in the world. Similar salaries will also be paid to the stars of Spanish BBVA La Liga Table, the German Bundesliga and the Italian Serie A.