One of the reasons I started this blog was to share the knowledge I learned about accumulating wealth. I regularly read books and other blogs to learn and improve my financial knowledge. In order for me to make a sound plan on achieving my financial goals I must first determine specific numbers that I must attain.
According to a study by the NSCB back in 2010, a family who has an annual household income between Php 295,000.00 - Php2,400,000.00 is considered middle class while an annual household income above Php2,400,000 is considered rich. If we take inflation into account these values will be an annual household income of Php 340,000 - Php 2,770,000 for the middle class and above Php2,770,000 for the affluent.
The study however does not mention any criteria regarding the age and Net Worth of the person. One method of determining the average net worth required is by using the TARGET NET WORTH FORMULA from the book "Millionaire Next Door". Below is the formula for the TARGET NET WORTH of an AVERAGE ACCUMULATOR OF WEALTH (AAW)
( GROSS ANNUAL INCOME X AGE ) / 10 = NET WORTH
In order to be considered wealthy, a person must become a PRODIGIOUS ACCUMULATOR OF WEALTH (PAW) and must have double the target net worth of the AAW.
If we take into account the data above. The three factors that will determine whether you belong to the RICH upper class in the Philippines are as follow Annual Household Income, Age, and Net Worth. I personally place a lot of weight on NET WORTH among the three since this determines whether I have properly managed my income. Even if I may eventually earn a high income, I won't be able to reach a high net worth if I spend all of my income.
So what are the qualification for one to be qualified as RICH in the Philippines. Since one of the factors that determines whether a person is rich or not in the Philippines is age I provide examples based on AGE. In order for me to be considered as one of the few 30 year old RICH Filipinos I must have an annual income of more than Php2,770,000 and a Net Worth of at least Php16,620,000. If I plan to retire at the age of 60 years old I should have at least a net worth Php33,240,000.
These figures might look daunting but I have a good chance of attaining one of the two criteria. I may not be able to achieve an annual income of Php2,700,000 but reaching a Net worth of Php33,240,000 at the age of 60 is achievable. I will discuss how an ordinary employee can retire wealthy at the age of 60 on future posts.