People who gain wealth in their lifetime are quite frugal, and have spouses and families that are also conservative in lifestyle.
One formula concerning wealth that was presented in the book assists you in benchmarking with other wealth accumulators.
Take the average of your last three years of net income, farm and non-farm; then multiply that number by your age and divide by ten.
For example, a Midwest producer averaged $80,000 net farm and non-farm income and was 50 years of age. If they were an average accumulator of wealth, they would have combined equity on the business and personal balance sheet of $400,000. Please disregard any inheritance of wealth.
If you were a high achiever in wealth, you would be worth twice the average accumulator of wealth. For example, the same producer would have earned net worth excluding inheritances of $800,000.
The Looks
When I am teaching this in lender seminars, everyone is quick to reach for the calculator to see where they stand.
Overall, I would say farmers and ranchers tend to be above average accumulators of wealth, based upon many of the balance sheets I have examined.
Philosophy
Be careful to never equate your self worth to your net worth.
My e-mail address is:sullylab@vt.edu
Editors' note: Dave Kohl, Soybean Digest Trends Editor, is an ag economist at Virginia Tech. He recently completed a sabbatical working with the Royal Bank of Canada. He is now back at Virginia Tech with his academic appointment, which is teaching, extension, and applied research.
To see Dave Kohl's previous road warrior adventures type Dave Kohl in the Search blank at the top of the page.
This online exclusive is brought to you by Soybean Digest