Wealth Accumulation

You first learn to survive, then you learn to prosper.

by Jeffrey Whaley


You should know where you are starting from on your journey to wealth accumulation.

Start with a net worth analysis. You add up all you assets less your liabilities. This will give you a starting point on your road to a better life. Once you know where you are starting from now you can decide how to budget better, and save.

Without a basic understanding of how to budget, and save, you will never get to invest.

I hear people say they do not budget. You may not have a written budget, but you definitely should have at least a mental budget in your head.

A budget is the marching orders for your money. You are telling your money where

to go in order to cover monthly expenses, and be able to save for the unexpected.

Startup Stock Photos

After you have saved a minimum $1000, for the unexpected, along with 3 month of leaving expense, you are now ready to start on the road to wealth accumulation by investing the rest in a 401k at work, mutual funds, index funds, ETFs, or my personal favorite real estate.

Based on the book the millionaire next door, by Thomas J. Stanley, and William D Danko. there are three type of wealth accumulators,

PAWs (Prestigious Accumulators of Wealth) – You accumulate twice the wealth formula

AAWs (Average Accumulators of Wealth) – You accumulate at or above the amount in the wealth formula.

UAWs (Under Accumulators of Wealth) – You accumulate half or lower the wealth formula.

How wealthy should you be?

Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This is what your net wealth should be.

Leroy the bus driver is 50 years old, earns $110,00 a year, and has investments that return another $10,000, he would multiply $120,000 by 50. That equals $6,000.000.

Divided my 10 equals $600,000. So a PAW would have $1,200,000, or trice the AAW, and the UAW would have $300,000 or half the AAW or lower.

This formula is mainly of people 40 years or older. So if you are in your 20s or 30s don’t despair. Most people don’t reach these number until their 40s or 50s. The idea is to stay clear of things that rob you of your wealth like credit card debt, buying high-end clothing, cars, and homes. Your best investment starting out is investing in your self. Improving how you think, and adjusting your philosophy when it comes to money.