How to choose your net worth goal (and why mine is 1,5 million)

Everybody should have a financial number. In this blog post I explore how choose your net worth goal in a fact-based manner. I think most people have at some point in their life dreamt about this number. Often it is expressed in big, chunky numbers like:

  • I want to have 500 000€ on my bank account
  • I want to be worth 1 000 000 €
  • To be rich I would need 10 000 000€

I used euros as a currency here, but currency is completely irrelevant when most people set their number. Whether we are paid in USD, euros or pounds, our dreams for financial wealth do not really differ. At the very most people will add or subtract a few zeros depending on the currency (think Zimbabwean dollars, Congolese frank, etc…).

There seems to be something magical about these big round numbers. As if they will set us free from our shackles and liberate us from a life of employment. But this seems a bit random. So how should you set your number?

choose your financial goal

Net worth goal setting approach

The metric I have chosen is net worth, but this applies to any metric. You want to set S.M.A.R.T. goals. Specific (as in put a number or metric on your goal). Measurable. Ambitious (go for that stretch). Realistic (but don’t overdo it). Time bound (have a deadline).

I’ll discuss three ways how you can triangulate the right net worth target that is realistic, ambitious and measurable:

  • 4% rule
  • extrapolating income and spending
  • benchmarking

Get the goal right

4% rule

A major idea in the personal finance arena is the “4% rule”. The idea is that you can become financially independent as soon as one year of your expenses does not exceed 4% of your net worth. Or stated differently, you need to have 25 times your annual expenses as a minimum net worth to consider yourself financially independent. I believe that the 4% rule is a bit flawed, but let me just run with this guideline for the purpose of this analysis.

I would consider myself king of the hill if we could live in a house worth 400 to 450 000€. I also consider that as a family we could live a royal life on 30 000€ per year (with a home fully owned). To cover these 30 000€ of expenses, you would need about 750 000€ in financial assets to generate the dividends in excess of 30 000€.

So I could consider myself financially independent ( house + financial portfolio) and living the life of my dreams at a net worth of 1,15 to 1,2 million euros.

Extrapolating on my current earning and spending pattern

My budgeting system allows me to relatively easily make estimates for the following years. I have also kept a track record since 2009. This gives me a solid dataset on which to make extrapolations (I will show you how in a future post). It teaches me that if my lifestyle is not significantly altered (no dramatic increases or drops in either expenses or income) I’m heading for a net worth of 850 000€ by 45. That is some serious money. Fingers crossed that I continue to be the lucky guy that I am. This in essence forms my base scenario.


I researched what a reasonable net worth for an adult living in Belgium. Average net worth information is available for most countries. If the information is not available per age bracket, you can make your own assumption. Decrease from the average if you are younger. And add to the average if you are older than average.

I pulled these numbers from the 2016 Global Wealth Report from Credit Suisse (by the way, if you haven’t read this, you should check this out ).

  • Median wealth of an adult in Belgium: $154 815
  • Average wealth of an adult in Belgium: $270 613
  • Percentage of people with a net worth > $1 million dollars (= 945 000 euros at time of writing) = 3,6%

The report does not state what the average wealth is of the top 1% wealthy adults in Belgium. But if I had to guesstimate based on a typical distribution curve, I’d say that it would require a net worth of at least  1,9 – 2,1 million euros to be in the top 1%.

By the way, just as a side note. Income inequality is moderate here in Belgium. While the bottom 10% of net worth adults own  -0,1% of the country’s assets, the top 10% own 44% of Belgium’s assets. Compare this to the U.S. where the bottom 10% owns -0,7% of assets  and the top 10% owns 75% of all assets.

Set a deadline

Napoleon Hill said:”A goal is a dream with a deadline”. So the very first step you should take to setting your net worth goal is set a date. I set my target at 45 because :

  • This leaves 12 years to work towards my goal. This is ambitious, but leaves enough time for the magic of compounding to kick in.
  • I have seen too many executives shoved aside around the age of 45. If you are still heavily dependent on a salary when that happens, things can get ugly.
  • At 45 I can enjoy life with my spouse and young kids. It would also be an easier age to market my services as a freelancer, consultant or interim manager.

How to choose your net worth goal

Now lets bring this all together:

  • 850 thousand € seems to be the bottom scenario to aim for in terms of net worth by age 45.
  • 1,2 million € is what I would need (read want) to live carefree for the rest of my life.
  • 2,1 million € is what it should take to be in the top 1% of wealthy adults in these parts of the world.

I finally decided to settle on 1,5 million € to be reached by 45. It seems stretch, but not completely unrealistic. But if I want to achieve it, I’ll have to work on a solid plan.

Always stay out of your comfort zone and keep grinding.


So what is your number and how did you get to it? Please leave a comment in the section below.

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