Recently a number of younger clients have held appointments with part of the discussion evolving around how well they were positioned to meet their future financial goals.

The difficulty at earlier stages of wealth accumulation is that you tend to be on lower levels of income compared to latter years of life and you therefore tend to have very luttle if any ability to save and build wealth.  Therefore it is difficult to know whether you will be able to reach long term goals such as retirement and the like.

A simple tool we use is Benchmarking your financial position in terms of stages of life.

One formula set out in Stanley and Danko's "The Millionaire Next Door" is Age multiplied by Pre Tax Household Income divided by 10.

By this formula, a 30 year old person with an income of $30,000, would have a target wealth of (30 × $30,000) / 10 which equals $90,000. 
 
This is a useful start, but we decided that a model more suited to the Australian context, and the realities of life, and could be developed.  Importantly, we think that the formula proposed by Stanley and Danko is unrealistic for people just starting work, and for those at the point of retirement.