3 signs you aren't as rich as you think you are

Mark Evans/Getty ImagesSigns you aren’t as rich as you think you are.
  • Though there isn’t a clear-cut measurement of how much money you need to have to be “rich,” your net worth gives you a good indication of your wealth.
  • Even if you think you’re saving, having a lot of liabilities – or money you owe – could mean you’re not as rich as you think you are.
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Being “rich” can be a broad term.

Typically, when we think “rich” we think of yachts, luxury clothing, and mansions. While these may count as status symbols for the ultra-rich, having wealth could be just as simple as having a high net worth, or what you own minus what you owe.

Read more:
17 things millionaires do differently from everyone else

Jeff Bezos, for instance, is the world’s richest man because he has the highest net worth: about $US150 billion.

How large your net worth needs to be to be considered “rich” is subjective. Some Americans consider a $US2.4 million net worth to be rich, according to a survey by investment management company Charles Schwab. The government, meanwhile, defines wealthy as individuals earning at least $US500,001. If your net worth or income falls under those thresholds, you may not be considered rich.

“Rich” can also differ person to person. If you calculate your self worth and find you have one that is lower than you expected, you aren’t as rich as you thought.

Even if you think you’re rich, here are some signs that you may not have a net worth considered wealthy.

1. You have a lot of financial liabilities

Having a lot of liabilities, or debt you still owe, can impede your ability to attain positive net worth.

While some liabilities can help increase your net worth over time – like taking on student debt to get a high-paying career in the future – too much debt that has high interest rates can dig into your savings, Dana Anspach, certified financial planner and founder of Sensible Money LLC, tells NerdWallet.

2. You don’t have hefty retirement savings

If you’ve been saving for retirement, you might be on track to be a millionaire at age 65. Without saving the years leading up to that day, however, you can’t reach the millionaire threshold.

While how much you need to save for retirement varies, Lauren Cole, Business Insider reporter and certified financial planner, suggests dividing your desired retirement income by 4% to figure out how much you need to retire. For instance, if your perfect retirement salary is $US80,000, Cole explains, that’s $US2 million when divided by four – nearly the amount of net worth you need to be considered rich.

Saving over a million dollars takes work and strategic planning. Read more about saving for retirement here.

Are you on track for retirement? Find out with this calculator from our partners:

3. You spend more money than you make

As mentioned in the introduction, having a high net worth means having more assets than liabilities.

Even if you don’t have debt, not increasing your assets could be cutting into your net worth. Experts and (conventional wisdom) say you must save more than you earn. This can be tricky when you have bills to pay and families to feed, but “rich” people are those who can adequately save and spend money without taking on liabilities (like credit card debt).

NerdWallet suggests the 50/30/20 budget to help manage your bills and spending: devote 50% of your income to rent and insurance, 20% to paying off debt or contributing to savings and investing, and 30% for fun.

Being “rich” is a complex topic without a clear-cut definition or measurement, but the best you can do to increase your net worth is to save as much as you can while avoiding taking on too much debt.

To learn more detailed strategies to save money and pay off debt, check out Personal Finance Insider.

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