How To Lead a Rich Life

By: Polly LaBarreWed Dec 19, 2007 at 12:39 AM

(Revised and Updated for a Poor Economy)

Can money buy happiness? (You'd be surprised!) What is the measure of true wealth? (Hint: Don't look at your brokerage statement.) Why do so many people with high incomes have such limited assets? (Check out your garage...and your pool...and those vacation bills.) A values-driven guide to mastering the Money Issue.

Thomas J. Stanley has no get-rich-quick formula for aspiring millionaires. What he does have is a formula designed to tell you if you're accumulating wealth at the rate you should be. By his calculations, for example, if you're a 43-year-old professional with an annual income of $250,000, you should have a personal net worth of $1,075,000 (including equity in your house). Plug your data into his formula, and see how you stack up. Multiply your age and your realized pretax annual household income. Divide by 10. This, less any inherited wealth, is what your net worth should be. If your actual net worth is close to your expected net worth, you're on track to financial freedom -- but you're not there yet. If you're interested in being a serious wealth accumulator, your net worth should be twice the number produced by the formula.

Polly LaBarre (plabarre@fastcompany.com) is a Fast Company senior editor based in New York.