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Payday Challenge #4: Know Your Number

Ormon calculator by faasdant
source: faasdant

Aren’t you curious about where you stand? Whether you got a B+ on the test? Or maybe this time it was an A. Aren’t you the wee bit interested in knowing if your few weeks on the P90X program has budged the needle on the scale? I bet you can’t wait until the spring when you’ll find out if your tomato garden will grow taller than your neighbor's this year because of the new ingredient you added to your fertilizer the autumn before. Is it not informative to know if your blood pressure is in the high, normal or low zones? Of course it is.

Comparative analysis is a great tool. And when it comes to your finances it is no different. Most of us are, and if we’re not we should be, curious to know if our daily financial happenings are moving us closer to financial independence or further away? Well that’s what Payday Challenge #4 is all about - “Know Your Number”. I posted a PC on Twitter and Facebook a few weeks back of similar ilk,

Payday Challenge #4: Know ur numbers. 3-parts. 1) $$ for financial independence, 2) ur savings rate, 3) the return... http://fb.me/Fe40n9lm

We’ll get to those numbers later, but for now I am remixing that PC. The “Number” we’re concentrating on today is where each of us should stand in terms of wealth given our age and household income. I gave you the formula in the last post, “Your Wealth Ratio”. In case you missed it here it is again:

The Brick Wealth Ratio© = [(Age * Age) / (22 * (100 – Age))] * Income

If you’re math phobic don’t fret. I’ve also provided a calculator that can also be found in the previous post. All you need to do is plug in your age and income and presto, it spits out whether you have been good, bad or just plain ugly (Mom always says, “No one is ugly.”) at accumulating wealth.

But that’s not all I want you to do. The second part of the challenge is to share your results with me. Privately of course. (I am bound by privacy laws.) Are you a BA/PAW? If so, how did you do it? I want to learn from you. Was/is it diligent saving? An unexpected inheritance? What? Maybe you’re an IA/UAW. Even if you are, I still want you to share your results. Let me know why you think you might not be doing as well as you could. Do you have a plan to improve? Let me know what it is. I want to learn from you as well.

And I’d like to share, those of you who allow me, your story with others as well. Anonymously of course (Again, I am bound by privacy laws). Let’s all learn from each other. Just email me at info@brickfinancial.com and in your own words let me know about your financial successes and your financial hiccups. I may write a future post, with names, dates and specifics appropriately altered, with lessons learned from what you tell me. Maybe some of you might share one great tip or two which can posted on Twitter or Facebook. My vision is that everyone can be better off financially. What better way to learn from each others’ “goods, bads and uglies”.

But a few ground rules should be presented:

  1. If you do decide to share, all I really need to know is what category on the Brick Wealth Ratio you fall into – IA/UAW, AAW or BA/PAW - and how you got there. Minute details are unnecessary for me or the rest of us to learn from one another.

  2. When calculating your net worth figure, anything inside your house doesn’t count as an asset. No furniture, no jewelry, not even your car. Personal financial assets, business assets and real estate are all that count, however,

  3. ALL your liabilities count. For instance, although your car doesn’t count as an asset, the debt on that car does.

  4. If your income has greatly fluctuated over the last few years, use the average of say the last three.

That’s it. Payday Challenge #4 - Know Your Number and share your story.

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About Brick Financial Management, LLC

Blogged by Brick Financial

51 JFK Pkwy, 1st Fl. West
Short Hills, NJ 07078
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Brick Financial Management, LLC is a Registered Investment Advisor specializing in providing investment management services to individuals, families, organizations and institutions. We implement highly focused stock, bond, and balanced portfolios using an investment approach commonly referred to as value investing. Disclosure


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