In this article, we will look at the wealth equation. We will discuss how to calculate your wealth percentile, what percent of the population has wealth, what is the average wealth of the population, and what is the wealth gap. We will also discuss how to measure your wealth.
Wealth Percentile
There are two types of wealth – financial wealth and material wealth. Financial wealth is money, cash, savings, investments, etc. Material wealth is stuff – real estate, cars, jewelry, antiques, etc.
Financial wealth is the total of all your assets minus any liabilities (debts). Material wealth is the total of your assets plus any liabilities. If you have no debt, then you have no material wealth. If you have $100,000 in assets and $10,000 in liabilities, then your net worth is $90,000. If you have $500,000 in assets and $50,000 in liabilities, then you have $450,000 in net worth.
If you have no debt, then your financial wealth is $100,000. If you have a mortgage of $100,000 on a house that is valued at $200,000, then your financial wealth is reduced to $75,000 ($100,000 – $25,000 = $75,000). If you have a $50,000 car loan, then your financial wealth is decreased to $35,000 ($50,000 – $15,000 = $35,000). If you have $5,000 in credit card debt, then your financial wealth has been decreased to $0 ($5,000 – $0 = $5,000).
The above examples show that if you have no debt, then the total of your assets is equal to your financial wealth. If you have a mortgage on a house that is valued higher than your current home value, then your financial wealth is less than your home’s value. The same is true with a car loan. If you have a $50K car loan on a $100K car, then your financial wealth is only $50K. If you have a $20K car loan on a $40K car, then your financial worth is $20K. If you have $5K in credit card debt, then you have no financial wealth.
Now let’s take a look at the wealth equation. This equation shows the amount of wealth that you have in relation to the amount of wealth that the rest of the world has. The wealth equation looks like this:
(Your Assets) + (Your Liabilities) = (The World’s Assets) + (The World’s Liabilities)
Let’s say that you have $50,000 in assets and $30,000 in liabilities. This means that you have $20,000 in net worth. Let’s say that the world has $20,000 in assets and $20,000 in liabilities. Therefore, the world has $0 in net worth.
Let’s say that there are 2,000,000 people in the United States. This means that there are 2,000 people who have $20,000 in assets, but 2,000,000 people who have $0 in assets. Therefore, there are 2,000 people with more wealth than you. There are 2,000 people who are wealthier than you. This means that you are one of 2,000 people who have less wealth than the rest of the world.
Now let’s look at the wealth equation in terms of percentages. You have $50,000 in financial wealth and $30,000 in material wealth. Therefore, your financial wealth is 50% and your material wealth is 50%. The rest of the world has $0 in financial wealth and $0 in material wealth. The rest of the world has 0% in financial wealth and 100% in material wealth.
The above example shows that the rest of the world is 100 times richer than you are. If you have $50,000 of financial wealth and $30,0000 of material wealth, then you have a wealth percentage of 10%. If you have $50,0000 of financial wealth and $0 of material wealth, then you are considered to have 0% wealth.
The wealth equation is used to determine where you stand in relation to the rest of the world. It is also used to determine how wealthy you are in comparison to the rest of the world.
