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Are You A Prodigious Builder of Wealth or a "Slacker"?
Friday, January 2, 2009

One of my favorite movie themes is the space-time continuum theme in which the past can be changed slightly to alter the future significantly. Movies such as the classic “It’s A Wonderful Life,” as well as “Frequency”, “ Terminator”, “Back to the Future” and many others use this theme. I like this theme because I really believe that little things in life that people do can make a huge difference in the lives of others, (hopefully a positive difference).

Little amounts saved regularly early in life and invested wisely, given time and the power of compound interest can grow to huge amounts. That is why I wrote my first book, Making a Million With Only $2000 With Only $2000-Every Young Person Can Do It, to show students how they could accumulate large sums by saving early in life. Although we can’t go back in the past, there is no question that small, wise decisions made today can substantially change someone’s financial future. Small steps now can make a person a prodigious builder of wealth. Conversely, inattention to these small steps can make a person an under accumulator of wealth a “slacker”. In “Back to the Future”, one of the space-time continuum movies I mentioned, Marty McFly played by Michael J. Fox is repeatedly called a “slacker” by the school principal. The principal says that since Marty and his family are all “slackers” that Marty would never amount to anything. In the movie Marty goes back to the past, and changes things that fortunately change the future in a very positive way when he goes “Back to the Future.”

Several years ago I saved an article from “Money Magazine”; December 2003 entitled The Path to Wealth by Amy Feldman and Donna Rosato. In this article they reprinted a Wealth Test from The Millionaire Next Door written by Thomas J. Stanley and William D. Danko. Although this was written several years ago I think it is still applicable today. A few years worth of inflation is offset by the current drop in housing and stock values so that the test is still applicable today. The results from this test put a person in one of four categories from prodigious saver to the not so good under accumulator or “slacker”. As follows is the test.

  Example Your figures
  1. Your household income
  2. Your age (if both spouse work,
    average age)
  3. Multiply your income by your age
  4. Divide line 3 by 10. What you get
    is the expected average net worth of 
    someone your age.
  5. Put the total amount of what you
    own (your total assets) here minus
    inherited wealth.
  6. Put your total debt here
  7. Subtract line 6 from line 5 to 
    arrive at your net worth
  8. Divide line 7 by line 4. This is your
    final score.
$75,000
40 years

$3,000,000
$300,000


$450,000


$50,000
$400,000

1.33
_________
_________
_________
_________


_________

_________
_________

_________

What does the score mean? A score of 2 or higher means that according to the authors of The Millionaire Next Door, a person ranks in the top 25% and is a prodigious accumulator of wealth. From 1.00 to 1.99 puts a person above average. A score of .51 to .99 is below average. A score of .5 and lower makes you a prodigious under accumulator of wealth- to make a point what I call, in jest, a “slacker.”

If a person is below average, the question becomes how can he increase his saving and investments to increase this score over time? Little changes can make a big difference over time in a person’s financial future. Don’t be a “slacker”. Start controlling expenses, paying off debt and saving and investing today and you can significantly change your financial future. Then when you go “Back to the Future” you can be a prodigious accumulator of wealth.

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