Wealthy individuals are typically described as either millionaires or billionaires. But beyond these categories, there are significant variations in wealth. A person who has managed to save $1 million for retirement is different from someone with a $900 million dollar nest egg. And how can you quickly define someone who barely has $1 billion to someone of Jeff Bezos’ financial stature? Furthermore, there’s no clear-cut way to define someone with less than a million dollars. Feeling that words like “thousandaire” and “hundredaire” would never catch on in the popular lexicon, the folks at Bloomberg have developed a new wealth index.
Understanding the Bloomberg Net Worth Scale
The Bloomberg net worth scale is based on the powers of 10, also known as scientific notation. Since it’s probably been a while since elementary school, here’s a quick refresher. Scientific notation is a way of easily expressing either very large or very small numbers. To express $10,000, you would write 1 X 10 to the fourth power. To express a negative net worth of $10,000, you would write 1 X 10 to the negative fourth power. Similarly, 1 million equals 10 to the 6th power, which is why Bloomberg designated a 6 on their net worth scale for a person with a net worth of $1 million. The total scale extends from -2 to 11. The higher up on the scale you are, the greater your net worth is.
Finding Your Net Worth Number
The lowest number on the scale, -2, is reserved for people who have $0.01 to $0.09. About 1.5 billion adults in the world fall into this category. Here’s a look at the rest of the scale. The first column of numbers is the net worth numbers, followed by the bottom of the category’s wealth bracket.
- -1: $0.10
- 0: $1
- 1: $10
- 2: $100
- 3: $1,000
- 4: $10,000
- 5: $100,000
- 6: $1 million
- 7: $10 million
- 8: $100 million
- 9: $1 billion
- 10: $10 billion
- 11: $100 billion
The Bloomberg scale notes that people with a net worth number of 3 are considered to be the prototypical American renter, capable of dealing with a small emergency without going into debt. Those with a net worth number of 4 are considered to be a median American family, while those with a net worth number of 6 are capable of affording a small vacation home. As you go up the scale, a net worth number of 9 means you can afford your name on a college and 10 means you can buy a major sports team. The last category, 11, is populated only by those like Jeff Bezos and Bill Gates.
Regardless of where you fall on the wealth scale, a Certified Public Accountant (CPA) can help you maximize your tax refund while minimizing your tax liability. At The Royce CPA Firm, we specialize in wealth and tax strategies for entrepreneurs. We believe in empowerment through education and knowledge transfer. Call us today at (520) 321-4626 to request an appointment with our experienced CPAs. Our office in Tucson works with individuals, joint filers, businesses, and nonprofits.