LOUISE FAIRSAVE: How wealthy are you?

Last week, I put it to you that once you earn a reasonably comfortable income, you have ample opportunity to become wealthy in your lifetime. You are wealthy when you have earned, saved and invested enough to maintain your lifestyle without having to continue to work.
A useful approach in measuring how you are doing on building wealth involves considering your age, your income and the length of time you have earned income, assuming you maintain a satisfying lifestyle.  For example, take your age and divide it by ten, and then multiply the result by your current annual realised pre-tax income from all sources except inheritance income. This final result less any inherited wealth is a benchmark for what your net worth should be if you have been a good wealth builder.
Specifically, for a 36-year-old man who earns $44 000 before tax annually, plus another $1 000 in bank interest income, his total annual realised pre-tax income would be $44 000 plus $1 000 equals $45 000. His age, 36, divided by 10 is 3.6. Then 3.6 X $45 000 gives $162 000 which should be his expected net worth. He should then prepare an analysis of his net worth and compare it to this benchmark.
Other men of similar age and income level would be expected to have similar levels of net worth. It is clear, though, that the length of time working affects the level of wealth accumulation. That is, although two men may have the same age and income levels, one of them may have started working at an earlier age. It would be expected that the man who has worked for a longer period would have the higher net worth.
The man who achieves this benchmark can be described as wealthy for his income level and age category. If earners are then grouped by income level and age, they can be compared.
If an earner has net worth well above the benchmark, then that person is a strong wealth builder  For an earner who is just about at the benchmark level in term of his net worth, he is an average wealth builder. In cases where the person’s net worth falls below the benchmark level, then he is an under-developed wealth builder.
If his net worth is twice the benchmark level or more, then he is an excellent wealth builder. You would be really very wealthy when you have a net worth which is at least four times the expected benchmark level for net worth!
On the other hand, if his net worth is less than half the benchmark level he is obviously travelling along the wrong street. For you, even if you cannot check how well you compare with persons in your grouping, you have a means of self-evaluation. How do you rate?
It is important to distinguish between being wealthy and being a millionaire. A lot depends on the spending lifestyle, the consumption of earnings. To be a millionaire, you must have accumulated a net worth of a million dollars or more. Given the limiting levels of some incomes, everyone does not have the opportunity to be a millionaire in their lifetime, yet everyone can be called wealthy based on the benchmark definition.  Many people with relatively high incomes are caught up in the lures that encourage conspicuous consumption.   For them, it is harder to accumulate wealth although they earn a high income. 
Poor wealth builders typically have a high propensity to spend; they live above their means. Excellent wealth builders, on the other hand, tend to be frugal; they tend to live below their means.
• Louise Fairsave is a personal financial management advisor, providing practical advice on money and estate matters.  Her advice is general in nature; readers should seek advice about their specific circumstances.