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Money Guy Show
Are You Richer Than Your Friends? (2025 Edition)
00:47:39
Money Guy Show | Combined Survey Show
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- [00:01]
A
Bo, a few years ago when you and I were involved in a big negotiation, I kind of mandated that you go sign up for Masterclass with me so we could listen to Chris Voss's Never Split the Difference Masterclass.
- [00:14]
B
Yeah. And it was super helpful. And that's just the start. Masterclass gives you unlimited access to over 200 classes from the best of the best, leaders, writers, chefs, you name it. Starting at just $10 a month, you can watch how former FBI agent Chris Voss taught negotiation. And you can see a PA of CIA agents show you how to spot red flags and make smarter decisions both at work and in your day to day life. That stuff is fascinating to me.
- [00:41]
A
Three out of four members say they feel inspired every time they watch Masterclass. And I love that you can stream anytime and on any device. You're hearing wisdom from people like Gordon Ramsay, Marques Brownlee, Simone Biles and so many more. I can't wait to check out Bob Igers. And I gotta tell you, I was really surprised and even entertained by Deadmau5 series.
- [01:01]
B
Plus, every new membership comes with a 30 day money money back guarantee. So there's no risk. Right now our listeners get an additional 15% off any annual membership@masterclass.com MoneyGuy that's 15% off@masterclass.com MoneyGuy this episode is brought.
- [01:19]
C
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- [01:38]
A
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- [01:41]
C
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- [01:48]
A
The financial landscape of America may actually surprise you. Are you ahead, behind or right where you're supposed to be?
- [01:54]
B
Brian, I am so excited about this because this year we got survey data from thousands of Americans. And today in this show we're going to say what does the average American look like? What does an abound wealth client look like? And what do you financial mutants look like?
- [02:09]
A
That's right, right here. Today we're going to walk you through these numbers including age specific stats. And this is going to actually shock and surprise you with that. We have so much to cover. Let's jump right in.
- [02:26]
B
All right, Brian, so let's jump right in. Let's start with the numbers. What do your numbers look like? And I think before we can dive into the details, we ought to zoom out sort of our 30,000 foot view and look at the overall picture of the average American, a financial mutant, and then ultimately in a mountain wealth client.
- [02:47]
A
So this is fun to me. When I used to go to high schools and talk to students about personal finance, the two things that they'd ask me, they wouldn't want to know how to actually build wealth. They just want to know, hey, how much money you make and what are you worth? So I think it's great that we're starting this show off exactly like those high school students. And we're actually going to go ahead and share with you the numbers, the overall numbers on where income and net worth fall for these key categories.
- [03:10]
B
So when we think about the average American, again, this is data that comes from the U.S. census Bureau. The average American average household income right now is $83,730. If you look at the average American's net worth Today, it is $193,000. But Brian, we talk about this all the time. Our financial mutants are not average. So we want to say, okay, well how do they look relative to the average American?
- [03:37]
A
Yeah, now look at this is you guys are built differently because look at this, the big shovel financial mutants come in at $170,000. That's pretty much double where the average American is. And then net worth wise, I'm not even going to do that public math, but it's $650,000 compared to the typical American at 193,000.
- [03:58]
B
And then we stretch this one step further. We talk about those folks who have completed the abundant cycle. They have decided to take the relationship to the next level. We look at the actual wealth management clients that we work with on a day to day basis. The average income for our clients is about $250,000 a year and the average net worth is about $2.2 million. So you can see that average Americans are different than financial mutants. And even financial mutants are on their way to being those that complete the abundance.
- [04:30]
A
Come on, there's, there's some things we need to go ahead and just put out in the open is because a million dollars for a 20 year old is completely different than a million dollars for a 65 year old. And I know with our clients, look the typical American or the typical millionaire, we know that that happens in your 40s. That's right after you've had decades of saving and investing. So already our, you know, our abound wealth clients, they're going to skew older. We need to bring this back and give some context to this so that people can actually, if you out there in the audience, maybe you're in your 20s, maybe you're in your 30s, how does this actually turn into teachable, usable data that you can actually apply to your own personal financial journey?
- [05:11]
B
And we're going to dive into this in a moment. We're even going to talk about how we consider net worth and what we look at versus when the US Census Bureau bureau measures net worth. How do they measure that? But I think it's going to be viable. Just like you said, Brian, 20 year olds are different than 60 year olds. So let's dive right in. Let's start at the beginning with our 20 year olds. When we think about the survey data that we receive from you guys as financial mutants, we know that right now the median household income for the average American is about $75,000 a year for those aged 20 to 29. But when we think about the financial mutants you guys that responded and answered our survey, for those of you in your 20s, the median household income was a whopping $120,000.
- [05:59]
A
That kind of blew my mind because if you remember, some of my milestones was I wanted to have six figure income by time I was 31. So to see that our audience is actually well into six figures in their twenties is amazing. Now a lot of you are probably noticing, hey, where's the abound wealth? Because you guys are doing this comparison of these three key categories. Where are they at? And here's the reality situation. We do have a few clients, just a handful of clients in their 20s. Majority of our clients are in their 30s and 40s. So we just didn't have enough data to actually put in a bound wealth number for the 20s. But don't worry, they'll be there for the 30s, 40s and beyond. But it is interesting to note with the big comparison, your 20s is the financial mutant. You the audience members compared to the atypical American.
- [06:41]
B
Now before we dive into net worth, I think it is important for us to delineate how we count net worth for purposes of this show versus how the US Census Bureau is doing it. So when we take the data from the Federal Reserve, when they look at financial assets, they're looking at checking and money market accounts, CD accounts, bonds, stocks, retirement accounts, cash value of whole life insurance, pensions and other financial assets. But when we ask either on the Financial mutant survey or via our Abound wealth client survey, we really want to hone in on investable net worth. We want to be talking about only the assets like your Roth IRAs, your HSA is your 401ks, 403bs, 457 taxable brokerage accounts or trust accounts. We want those assets, those accounts that you are considering for your long term financial independence. So when you look at our numbers, they're not going to include cash, they're not going to include emergency fund, they're not going to include emergency savings or any sort of real estate home equity type values. It's only liquid investable net worth because that is the money that you can actually turn into living expenses.
- [07:50]
A
So if I was hearing that difference and the big, big part is the cash reserves being taken out, a lot of you go be like, well wow, that's probably a significant amount. You're probably going to undercut what's going on for the financial mutants and the abound wealth clients. Oh don't you worry, you'll see. Even with that conservative assumption of removing what likely for most people is three to six months of living expenses off of what's investable net worth, they you guys are a very disciplined group and you're not going to disappoint.
- [08:22]
B
All right, so let's look at this. Remember, if we think about the average income for someone in their 20s, the average American has an income about 75,000. But the financial mutant on average average has an income of about 120,000. That's just the shovel. When we think about how they turn that income into actual liquid financial net worth. The average American has financial assets. This includes their cash of just under $14,000. But when you look at our financial mutants, you guys that responded to the survey, $120,000 exactly equal to one times the average salary for those in their 20s.
- [09:01]
A
Look, I'm hoping the audience, I know we'll break this up into age categories, but I do hope everybody notices a trend here. As you watch the 30, 30s, 40s and beyond. Is that the typical American? We hear all the time about the latte effect. People, you know, focusing on, just focus on the little decisions. That's what's hitting. And I always say, look, it's not the latte effect. It's really the cars that you're buying, it's the houses. But I think this does, there's something to the fact that the income of the typical American is $75,000. And by the way, we actually this data could skew up close to six figures if you took out people over 65 years of age. So this number is actually even higher for the average. Yet it never shows up in net worth. And I think that this is a key discipline problem. This is what you're going to find out is the difference between financial mutants bound wealth clients is that these people, yes, they make good incomes. But it's also back to, why do you think that is? There's a discipline muscle that probably goes into life decisions as well. It breaks my heart that the typical American just is not turning that valuable, powerful thing of wages and labor and turning that into actual usable army of dollar bills. You're going to see this throughout the study.
- [10:13]
B
Now, one of the things we want to lay out for you is are you ahead of the curve, behind the curve, or on the curve? And the fact is that in your 20s, 20s can look very different. Some people don't go to college and they start working when they're 18 years old. And some people don't even get out of college until they're in their 30s. And so what we want you focusing on your 20s is not, am I ahead of the curve, behind the curve, on the curve in your 20s, we want you focusing on those behaviors. We want you focusing on exactly what Brian said. How am I turning the money that I'm earning, the income that I'm creating, into wealth that will build over the long term? And if you can master those behaviors in your 20s, then the picture starts to get a lot more exciting as you move into your 30s.
- [10:55]
A
Yeah, if you look at the 30s, this is something household income. I mean, once again, you guys knocking. I mean, just hitting that leather so hard that it's just amazing the difference, because the typical American, right, at $100,000, you know, for. For those that are in their 30s, the financial mutant, 185,000. For our Bound wealth clients, $320,000. You guys are just built differently.
- [11:19]
B
So what we want to know, though, is, okay, in the 30s, are the financial mutants, are the bound wealth clients actually able to turn that into meaningfully meaningful net worth different than the average American? And the answer is a resounding yes. If we look at the average net worth, the average of financial assets for the average American in their 30s, it's about $25,000. When you look at you guys, financial mutants in your 30s, the median net worth, median liquid asset is about $400,000. And if you look at our abound wealth clients, it is just over. For Those in the 40s, liquid assets of about $1 million.
- [11:59]
A
Now, this is important because we're only going to show this slide, really, in the 30s. And then we go Start seeing how we did this in the 40s, 50s and beyond. But we actually said, hey, let's compare what the income is to what the net worth is. And unfortunately for the average American, 24,000 close to 25,000 out of 98,000 is like three.
- [12:19]
B
That's right.
- [12:20]
A
But if you look at the financial mutant, 185,000 turns into 400. That's a multiplier. That's amazing, you guys. And we're going to compare this in a minute. And then for a bound wealth, you guys are even better. It's just sad to me. Like I said, you're going to see a separation here. And we'll get to this. We're going to get through the numbers first, but at the end of the show, we're going to talk about and we're going to close out with behaviors and things that we've noticed in the content on what financial mutants as well as abound wealth clients are doing differently than the general public. So you can hopefully learn from these mistakes too.
- [12:53]
B
So, you know, if you've been listen to us, we feel like there are some mile markers that you likely ought to be hitting on your way to financial independence. So in our 30s, we know that by the time you get to 30, we want you to have one times your annual salary saved. By the end of your 30s, we want you to have three times your annual income saved. So if you think about the midpoint and you're going to shoot for around age 35, what should the midpoint between those two milestones be? It should be about two times your annual salary. Well, Brian, you already walked through this math. If we think about the average American, their Multiple is only 0.3.
- [13:27]
A
That's sad.
- [13:27]
B
They have about 0.3 times their annual income saved. Our financial mutants about 2.2 times their annual income saved by the midpoint of this decade. And for our abound clients, it's 3.3 times. So if you were to chart these out, you were to map these out and say, okay, are we ahead of the curve, behind the curve or on the curve? What you can see is that average Americans are pretty far behind the curve. Like they are having a hard time finding where they should be. But financial mutants, you guys in your 30s are doing amazing. You are right on the curve at a Multiple in your mid-30s of about 2.2 times your annual income. And for our bound wealth clients, those who've been able to complete the abundant cycle, they hit about 3.3 times their annual income by the time they get to their mid-30s.
- [14:16]
A
So that's that. We've done 20s, we've done 30s. Let's talk about somebody in their 40s. And now that you guys understand, we want to go through this content pretty quickly so we can get to the behavioral stuff once again, the numbers on income, pretty amazing stuff. Now look, typical American six figures is the average for Americans. For financial mutants it's 210,000. And then for our bound clients it's 325,000. But when you actually say, hey, how much of this actually turned into investable net worth once again, you would think by 40s. Remember, this is a key decade that in your 40s is when the typical millionaire is minted. It's not somebody in their 20s, it's not somebody in their 30s. It's typically after you've had over two decades of saving and investing and that discipline being rewarded. But look at the typical American. They're not even at half of their income. After two decades of out there earning income in the workforce, it's just, it kind of really breaks my heart because what could have been is now being left in the rearview mirror. But I am happy to see look at the financial mutants. Wowzer. I mean that's a four times or.
- [15:23]
B
The median is $880,000 of household investable assets.
- [15:27]
A
And then a bound wealth does resemble the stats of what we see for millionaires is close to a million and a half dollars. 1,424,000 in net worth from an income of 325. Pretty cool to watch how you're turning your time into an actual army of dollar bills that will work harder than you can with your back, your brain and even your hands.
- [15:47]
B
So again, if we want to think about our money guy mile markers in the 40s, we know that by age 40 we want you to have three times your annual income saved up in liquid investments. And by the time you get to 50, we want you to have about 6.4 times your annual income. So if we're going to choose a midpoint, we're going to look right in the middle of the 40s decade. By age 45, we want you to have a 4.5 times multiple of your annual income. So let's see how the average American stacks up, how the financial mutants stack up, and how our bound wealth clients stack up. Well, again, the average Americans have not really include improved their trajectory at all.
- [16:23]
A
Time didn't help.
- [16:24]
B
Time did not help. They're at 0.4 times their annual income on average. But if you look at financial Mutants, you guys are absolutely crushing it. By 45, on average, you have 4.2 times your annual income saved up in liquid investments. And for Abound wealth clients, those who have completed the abundance cycle, 4.4 times their annual income. So I would say that in their 40s, our financial mutants as well as the financial clients that we work with at Abound wealth are right on target with where they ought to be at this age and stage of this decade.
- [17:00]
A
Yeah, it's amazing. Well done to all of our financial mutants, well done to all of our course bound clients that have fulfilled the abundance cycle. You're actually seeing the fruits of your discipline and turning that, you know, living on less than you make into an army of dollars that can work so hard for you. So now let's transition. And by the way, whoever on the content team thought that people in their 50s and 60s just universally wear top hats and canes.
- [17:27]
B
Well, you have been wearing a lot of top hats lately.
- [17:30]
A
I don't, I'm not a hat person and I'm definitely not walking with a cane yet. But it is, I see what they're trying to say. You're at the point. And look, I don't mind. Shar, your peak earning years are going to happen somewhere between your late 40s and early 50s. So you are going to see key earning potential here. Still in your 50s with the average American making right around $104,000 as a household. Financial mutants are right around $200,000 and then a bound wealth client's $235,000. Still very healthy. You will notice a trend in a minute when we get to the 60s that this starts dropping down. But still in your 50s, a lot of opportunity to turn that into discipline that can turn into your army of dollar bills.
- [18:10]
B
Well, and as they use that discipline to turn in, we can see the average American from a liquid asset standpoint, the median amount of liquid assets available for the average American, about $67,000 for folks in their 50s. Very, very different from you guys, the financial mutants out there in the audience that consume this content. The median household investable assets is about $1.6 million. And for our abound wealth clients, median financial assets for those in their 50s is a little over $2.2 million. These are folks who have allowed time to compound. They have compounded good behaviors and they now have an impressive army of dollar bills working behind them.
- [18:53]
A
Well, look, this is where I'm just going to tell you. Money gets really cruel at these stages. When we get into the 50s and 60s is because we talk about all the time the wealth multiplier. And when you're in your 20s, a wealth multiplier of 88 times over for a 20 year old is pretty powerful. Even for a 30 year old it's 23 times. I mean that's amazing when your money can 20 times up itself over just letting the money have time to work. The sad thing is by the time you reach your 50s, that number is as low as three. By the time you get to your 60s, it's getting really close to one on one time for what your money becomes in the near future. I'm just sad to see that the average American never reached one times their income because you add that with the realization that now you just don't have the time value of money to do compounding interest and compounding growth. It just is not a recipe for success. And that's what bo's going to share with you on these money guy markers. It's more of the same, is it? It's a failed of what could have been for the typical American.
- [19:55]
B
Yeah. As we think about our 50s, by the time we start our 50s, we want to have about 6.4 times our annual income income in liquid investments. And by the time we leave that decade we want about 13.7 times our annual income. So if you're going to have a target for your mid-50s around age 55, this is the point where you ought to have 10x, you ought to be 10 times your annual income. So if we think about how the average American, the financial mutants and a bound wealth client stack up, average Americans still just have not figured it out 0.6 times. And again, time is now working aggressively against you. It's what Brian talked about. This is a cruel season. But if you have been doing the things that you're supposed to be doing, our financial mutants on average have an 8.0 time multiplier by the time they get to their mid-50s. And our Abound wealth clients are right at nine and a half times. So again, right on target, right on pace, right on the curve with where you ought to be at this stage.
- [20:52]
A
Well, that's why we'll transition to talking about income in your 60s. This is where man, it's hard to tell the difference between the typical American, the financial mutant and the bound client is because now we're not relying upon how big our shovel or annual income is. Now we're relying on hey, what did we do in our life from a disciplined approach to actually build up assets in the background. Because when you look in the 60s, realize most of us are starting to think about retirement or in retirement at that point. That's why you see the average American income is still right around $74,000. For a financial mutant, it comes in at $105,000 for household income. And then for the abound wealth client, right at six figures is $100,000. Like I said, this is not one of those things where you can compare and contrast and go, man, that's a huge difference. But man, oh man, in a minute we're going to get into net worth and you will see a difference. But I think it is, we ought to talk about the timing because just on the previous slide, a few slides ago, and we can pull this up too, there's a difference between your income in your 50s versus your 60s. It makes sense that now you're no longer. It's just harder in the marketplace. You're going to find that you're not in your peak earning years. So you better have really turned something into some assets.
- [22:07]
B
And a lot of people that have done the things that they're supposed to do, a lot of the financial mutants like you guys, a lot of our bound wealth clients, by the time you get in your 60s, you are financially independent. You're likely not working. So it makes sense. We see a large drop in the 50s and a large drop in the 60s, from 50s to 60s for both financial mutants as well as for our abound wealth clients. And even though we see that drop in income, what we don't see is a drop in total net worth. Because if we look at the total net worth on average for the average American, a financial mutant and a bound wealth client, you can see that the average American in their 60s has a median financial asset load of about $103,000. We've just now at this decade, crossed over to where we have greater than one times our annual income.
- [22:53]
A
But that's not because of the discipline. That's just because income go down. Congratulations. You finally have more assets than you have in income. And it's more likely, you know, not because of your good behavior, but our.
- [23:04]
B
Financial mutants, you guys that responded to the survey, you on, on average, you have a median household investable asset of $2 million in your 60s. And our abound wealth clients are just a little bit ahead of that at $2.2 million. So when we think about the mile markers, we know that by age 60 we want you to have about 13.7 times your annual income. And by 65 in order to be financially independent, a good mile marker to use would be about 20 times your annual income. Now before you guys say this, we recognize financial independence is based on living expenses. So you may not need 20 times your annual income to be financial independent. But we don't know what your living expenses are and it would be crazy of us to assume okay, living expenses for someone living on the west coast in the Bay is very different from someone living in the middle of the country in a rural town. So we're using multiples of income. So if you want to think about financial independence in your mid-60s, a nice rule of thumb mile mark would be 20 times your annual income. And when we see how the average American stacks up to the financial mutant who stacks up to the amount of wealth client, you can see that the average American is just at 1.4 times their annual income. Whereas financial mutants, those that have been making the right decisions for an entire career are at 19 times and our bound wealth clients are at 22 times. You can see that those who made the decisions early on to make the hard decisions early are not having to make hard decisions later on in life. They're actually able to reap the fruit of their labor and hard work early on. Brian, if you had to choose one tool to help you with tasks like writing work emails, planning documents and show notes, and remember, just one tool to help you set the right tone and get your message right, what tool would that be?
- [24:58]
A
Without a doubt, it's Grammarly. Grammarly has been my best friend when it comes to getting all my writing done from start to finish. Obviously I love communicating and it's a huge part of my career. But when it comes to making sure the details, the tone and even the wording are right, I love having a copilot to make sure I get my point across and avoid mistakes.
- [25:18]
B
90% of professionals say Grammarly has saved them time writing and editing their work.
- [25:23]
A
For sure it works seamlessly across all of my apps. It's so easy to use. Just open a new doc and start typing or ask Grammarly's AI chat for help anytime. It will help you kick off your ideas or even polish them up.
- [25:37]
B
Brainstorm, summarize meeting notes, get ideas for better tone, wording and spelling. It is all there. Sign up for free and experience how Grammarly can elevate your professional writing from start to finish. Visit Grammarly.com podcast that's Grammarly.com podcast money's.
- [25:56]
A
Just a tool to help you focus on what really matters. And for me, that's making memories with my family. We love to travel together, but between those crowded airports, packing and planning, it can really take a toll if you're not care. I don't want to stress or have low energy keeping me from being fully present on our trips.
- [26:14]
B
It sounds like you need something simple that keeps you fueled and feeling good while traveling. If only that existed.
- [26:21]
A
Oh it does. That's exactly why I love AG1. I was so excited when they said they wanted to sponsor the Money Guy show. My wife and I have been drinking it every morning for over a year now. It's one scoop packed with antioxidants, probiotics and functional mushrooms all supporting energy, gut health and immune resilience during this busy holiday season.
- [26:42]
B
Brian even got me on board. I've been taking AG1 every morning and you can too. We've got a great deal for our financial mutants who believe that health is wealth and also love a good deal.
- [26:52]
A
So head to drinkag1.commoneyguy to get a free welcome kit with an AG1 flavor sampler and a bottle of vitamin D3K2 when you've got first subscribe. That's drink ag1.com moneyguy so I love because we are all about show you the numbers and give you the details. So we've given you the analytics but that can only do so much. I think we have to now give context, put meat on the bones with how did we get here? And ultimately it's going to be the behaviors of the financial mutants of the abound wealth clients and even the behaviors of the typical American. And this is what we want to talk about is because this is where the rubber meets the road and you think about the first thing, the first trap that we always tell if you watch any of our by age content we're always like when you get out and you start working, please please please don't fall into the trap of debt. Because we look at debt as chainsaw dangerous. Meaning that if you are using debt as a financial tool and you're not scared to death every time you use it, you are not using it appropriately. This should not be something that you're just willy nilly opening up lines of credit, going out and getting loans on furniture, on, you know, saving money at Target and so forth, you will get yourself in a trap. Because we live in a consumption society telling you this is good, this is normal. But I'm here to tell you success will show you that this is actually a trap and you better turn back, go the other way on it and Our data shows and confirms that.
- [28:23]
B
So let's talk about the first area when we say debt. The first thing that comes to most people's mind is credit cards. Okay, what does credit card look like inside of these three different strata? And so the first question we asked was, okay, do you use credit cards? And we found that 81% of the average Americans use credit cards. They actually swipe plastic for purchase. When you compare that to financial mutants, when we compare that to you guys, 96% of you said, yes, we use credit cards and 97% of our abound wealth clients say they use credit cards. Well, Brian, this must be wrong. This is saying the people with the most money are using credit cards. Something must be off here.
- [29:06]
A
Yeah, well I think also you're looking at this, you're like, wow. Probably the only stat on this in this entire presentation that's going to make the typical American look more disciplined is credit card use. But don't, you know, a little more context would show that the reason that 19% of Americans don't use credit card debt is because of bank with a 10 foot pole wouldn't touch a lot of the general public. That means their credit score is so bad that they probably can't get credit card use. Because you can see in the real financial mutants, in the abound wealth clients, majority of people who have good discipline and don't struggle with running up credit card debt, they do see the conveniences in credit cards. I have a no hypocrite policy here with myself and I use credit cards all the time. I mean, because I get travel bonuses, I get cash rebates, sometimes I'll do transactions on websites. I'm like, man, I'm glad that this is not tied to my bank account. I like that I have some protection from these credit from these banking institutions. You see that with our clients, you see that with the financial mutants. So the better question from a behavioral standpoint is okay, so credit card use doesn't seem like it's that big of a deal. And we even say that all the time. We say credit card use is a, okay, but credit card debt, debt, no way. This is where once again rubber meets road. How many of our audience members, how many of our clients are actually not paying off their balance every month?
- [30:29]
B
Yeah, we asked the question, okay, which of you, how many of you actually carry credit card debt from month to month? We know that 46%, almost one in two Americans chooses to carry a credit card balance month over month, meaning they are paying interest. When you look at Financial mutants, you guys, less than 10%, less than 1 out of 10 of you are paying credit card interest every month and carrying debt over. When you look at our Bound wealth clients, it's less than 1% and we.
- [31:02]
A
Want to know who that 1% is. Yeah, you're disappointed in the 1% because that means you have a significant net worth. But still, maybe these are 0% credit cards. That's the only thing I can consider because I was, I was shocked when that even came up that we had somebody was carrying a credit card balance. But do you see how it's built different now? Does it, does it like, whoa, wait a minute. There's some clarity in the way that we should look at money is that this money is no more than a tool. You just have to know how the tools all work and make sure you're not working against the wealth building process.
- [31:36]
B
Well, now money is a tool and a lot of things inside the financial world do avoid, evolve and change with time. So perhaps you're someone out there saying credit cards. No, I, I get that. I used to watch the guy that said, don't use those. That's not a problem for me. So we said, okay, well what about even though we can be disciplined, the way that we consume is changing and the opportunities for us to consume differently are changing. So we asked the question of you guys, okay, well, how do you use or do you participate in Buy Now, Pay Later? Because it's different than credit cards and it does not accrue interest. And so perhaps it's the more responsible way to consume. And we found that 31% of average Americans, so three out of 10 folks say, hey, I've used Buy now or I use Buy Now, Pay Later. Of the financial mutants, only 12% have admitted to using Buy Now Pay Later. And for our Bound wealth clients, it's less than 10% of folks use Buy Now, Pay Later.
- [32:30]
A
Well, I think, look, here's the thing. I know a lot of people, they look at this Buy now, pay Later. Even the financial mutants and Bound wealth clients that are doing this, the small percentage, I bet they look at this kind of like the 0% credit cards. They think, hey, I see that I could use this as a tool arbitrage. But I'm here to tell you I think that it's not worth the risk in some ways. Just like I'm not a huge fan of zero percent credit cards, I'm not a big fan of Buy now pay later because I know a lot of the research shows that consumption wise, if you're using buy now, pay later, you typically spend 10% more than people who are, who are not using these services. So there is a risk or associated with this. But I think there is something probably pretty teachable to say. Man, people who seem to appear to be good with money seem to not be using this tool as much as the general public is another thing I.
- [33:19]
B
Think is really interesting. Again, we're trying to dive into the behaviors that allowed financial mutants as well as our bound wealth clients look so much differently than the average American. And I think one of those behaviors has to do with something that most all of us will deal with or have dealt with, and that's automobile ownership. We say this all the time, that automobiles can be the number one wealth builder. They can wealth crusher in your financial life. They can be napalm for your financial life. And so is the way that financial mutants or are the ways that financial mutants and a bound wealth clients used cars different than the average American? And again, the answer is a resounding yes. We know that 63% of Americans drive their cars for five years or less. We know that the average new car loan is somewhere around six, seven years. So people are borrowing money for longer than they are even driving their automobiles. So if that's what the average American looks like, I gotta believe the financial mutants in a battle with clients look different.
- [34:20]
A
Well, this is why every time we do auto content, I'm always amazed that the majority of Americans now are getting negative equity, meaning that they owe more than the car's worth. And this, this is, this is where it is. This is, you can see it, this is the proof is that if 63% of Americans are driving cars less than five years, but the majority of them, because they get, they can't really afford their life, but they can afford anything at $200 a month. So you just stretch that amortization out. They never own their financial life and they drive around in what could be their future wealth. Now compare and contrast that to my financial mutants. Look at this, you guys, 81% of you are driving cars for seven years or more. 84% of Abound wealth clients are driving cars for seven years or More. And we know, look, most of our clients, you're either paying cash or you're definitely following the 238 rules. Do you see how quickly you start, you're wondering how in the world when I see all these income slash net worth numbers, where's the, where's the separation point? Where's the ab binary decisions that are Leading to this big spread, this is a big one is because we just showed you that you think about the typical car loan, 6, 7, $800 a month. If you just, if you strap that behavior of what is going to cars is now going to index funds and growth assets. Right here we're showing you, you drive your cars longer. The people good with money drive their cars longer. Financing them less that money is showing up on the net worth statement. The typical American is literally not doing this key step.
- [35:54]
B
All right, let's talk about another type of debt that a number of Americans face. We know that right now the average graduate, the average college graduate right now is graduating with a loan balance of about $39,000. And we say all the time we want you to follow the first year financing rule. We don't want you to borrow any more in college debt than you anticipate your first year salary to be. It is so exciting. We know that 93% of you, 93% of our financial mutants said yeah, when I graduated I had less than the average, I had less than $39,000 of student loan debt. Again, financial mutants look very, very different than the average American.
- [36:33]
A
Well, look, look, we ask 18 year olds to make horrible long term decisions for themselves for the future. And if you get this wrong, I'm.
- [36:42]
B
Here to tell you been carried around for a long time.
- [36:44]
A
If you come out of college with $39,000 worth of debt and you're not making a good income to where you can pay that back in a few years in the future, that's a problem. But yet we have young people making this decision. That's why you should sit up in your chair right now. If you have kids in the house that are in middle school, high school, how do you make sure that you don't come out the other side? Begin with the end in mind. That's why we have the, the income rules. We want you thinking about what major am I going to do? What type of school? Because there's nothing wrong with community colleges. Nothing wrong with being very strategic with where you go to school and how you structure it. Don't be a passive player in your financial life.
- [37:24]
B
But debt and investments aren't the whole story. We know that even just having access to cash is a huge advantage. It's an advantage that a lot of financial mutants and a lot of our bound wealth clients have. So we asked, okay, well how do you handle cash? What's your thought on keeping liquid cash available? And we found that 46% of Americans say that they have a fully funded emergency fund of three months. That means that there is 54% that do not have a fully funded emergency fund. And yet 85% of our financial mutants said, I have emergency fund of at least three months of living expenses. And 94% of our Abound wealth clients have at least a three month fully funded emergency fund. What this suggests to us is that financial mutants and abound wealth clients recognize that unknown unknowns can come your way. And if an unknown unknown comes your way and you're unprepared for it, it has the potential to derail your financial life.
- [38:24]
A
Yeah, this keeps you from making desperate decisions because we know the majority of bankruptcies caused by like, medical expenses and other things that just are not planned for. So this will protect you. That's why emergency reserves and cash is so important. It's not one step in the financial order of operations. It's actually two. It's steps one and it's steps four. Don't sleep on this. But Bo, this is the part where, remember when we were sharing all those net worth, we took out cash. It wasn't emergency funds that was even included in ours. It was really with the way the financial means, with the way the abound wealth, how they saved and invested. I know you guys in the comments section, you always say, you guys say the word save so much, but y' all are using it interchangeably, meaning with investing. I'll give you that. Yes, we should probably clarify that. But we think it's more of the behavior when we're talking about saving. We're talking about also investing for the future and savings rates and investment rates for financial mutants and abound wealth is just different than what's going on with the general public.
- [39:23]
B
If you look at this from you guys, the 25,000 of you that responded, financial mutants, you can see the vast majority have savings rates above 16%. The numbers, if you're out there listening to podcast, only about 2% of you save less than 5%. About 5 and a half percent of you save 5 to 10%. About 12% of you save 11 to 15%. 18 and a half percent of you save 16 to 20%. 26.5% of you save 21 to 25% and 32%. This is the big idea. 32. Almost 33% of you, one out of three financial mutants say I save more than 25%. I save and invest and build for my Future more than 25%.
- [40:10]
A
Well, I mean, you think of it, if you just add the retirees, you add the 25%. More than 25%. The 21 to 25. I mean we're getting, you know, you're right at 60% of those of you who fill this out. Because look, we know on how much you should save. If you go to moneyguy.com resources, a number of you in your 20s, you know, so you're, you're, you might be doing exactly what you needed to be doing, even if you included 16 to 20%. Now this thing we're, we're close to 80% of you guys out there are doing what you supposed to. If we just go beyond 15% and a lot of you because of your age, you can get away with it. You're just doing things differently. Because Bo, the question I'm going to have is I want to know where abound wealth clients are. And then of course, now I want to know. I've been so unimpressed with the general public. Where are those two numbers?
- [40:57]
B
Yeah, as you would expect, our abound wealth clients also fantastic savers. We have 20% of Abound wealth clients save 16 to 20%, 43% of Abound wealth clients save 21 to 25%. And 16% of Abound wealth clients save more than 25%. So as you can see, financial mutants as well as abound wealth clients are committed and disciplined savers. But when you think about the average American, you saw how the numbers were when it stacked up on net worth earlier in the 20s, 30s, 40s, 50s and 60s, the average American has a 5.3% annual savings rate.
- [41:36]
A
Yeah, see there, there's 1, 1, 1, 1. I mean that's, it's just, it's disappointing because it's, you know, it's one of those. And truthfully that's probably, that's only getting you close to getting your employer match, you know, step two of the financial order operations. And you think about, we have a nine step process, a system and to find out that the typical American never even gets out of step two because they, they running up credit card debt, they're not saving and investing like they should. Is there any, any, any reason that we should? I mean, I hate to say it, it disappoints me. It really does because I see so much potential. This is why guys, we both come from humble beginnings. This is not us sitting up in our top of the mountain and just raising our nose and going, holding out our pinky finger and going, yes, the great Poupon is great up here. No, we come from humble beginnings. And I was just like you guys didn't get broke as a joke and didn't know how money worked at all. And I'm just telling you, that's why education is the ladder out if you guys can get your mindset right. And that's why I love the transition. Because now that we've told you the numbers on the behaviors, let's talk about mindset because I don't want you guys that so many things in the world right now are saying you can't do this. And I'm here to tell you, Bo is here to tell you you can do this. If you just do a few things that will work for you. So your army of dollar bills can be more powerful than even you can with your back, your brain and your hands.
- [43:05]
B
If you're even listening to the show right now, you've taken a step in the right direction. Because one of the things we asked in our surveys was, hey, at what age did you begin thinking about finances? Seriously, at what age did you think, man, now is the time that I need to take hold and start taking, grasping my financial future. I want to control my financial future so that my financial future does not control me. Well, the average American said that they figured it out at 33. Financial Mutants said that they began taking it seriously around 25. That's the median. And then our bound wealth client said in the median, that was before age 30. What this is showing me is that if you can start thinking about it and you can start paying attention to it, you will recognize, man, if I can make some small decisions today, they don't have to be that hard. But if I put it off and put it off and put it off and wait till the future and let my 40 year old self, my 50, maybe my 60 year old self begin to think about that, well then you have to start making some very, very hard, very, very difficult decisions. The earlier you figured out, the earlier you start thinking about it, the earlier you take it serious, the easier the journey can be on your path to financial independence.
- [44:18]
A
Look, it's easy to say on paper I'm going to take this serious at age 33, but if it doesn't actually result in actionable behaviors, that actually is measurable for you. Really, you're dreaming. You didn't create a plan, you didn't create an action, you just dreamed. And I think that's what unfortunately the majority of Americans fall into and then that transitions into what's their outlook on life. And sadly, now look, we got everybody on a happy year because I have done this type of research in the past, where it's almost a coin flip to where there's actually been years where there's more pessimists in America than there are optimists. But right now, I guess good enough, things are going on in the economy that 58% of Americans identify as optimists. It's 75% of financial mutants identify as optimists, 80% of abound wealth clients. This is the part I'm telling you. You can take an active role in your life. You can be the victor and be the action hero. Villains and victims are never going to accomplish what they want to. I talk about that in Millionaire Mission. I'm here to tell you I don't care where you come from, you can be the hero of your financial journey story. You just have to start making things happen.
- [45:31]
B
Now. Look, we don't want you to think, okay, this entire show is about how do I compare myself to others and how do I stack up. But I do think that we can look at other folks more successful than us or a little bit further along than us, and there are lessons that we can learn. This was a survey show where we kind of compared to the average American, to our financial mutants, to the abound wealth clients. But if you want a deep dive into what the financial mutants actually said on their surveys or what the abound wealth clients actually said on their surveys, we have two shows you could go check out. You can go check out the show titled we asked 25,000Americans how they manage money. The results may surprise you. Or we asked a thousand millionaires how they got rich. Here's what they said. Those are the other two survey shows where we do a deep dive. And what we want you to take away are the traits and the tricks and the mindsets and the ideas that really can help you do money better by learning from other folks that are doing money better.
- [46:28]
A
Well, I think you know, because you said, be careful with comparison. And the saying is comparison is the thief of joy. So you're like, you might be asking yourself, what's the difference between what you guys just did? Guys, we're trying to show you a trajectory. You're on a journey, and you're going to have milestones all through this journey. And it's going to be very important for you, for you to say, am I behind the curve? Am I ahead of the curve or right where I'm supposed to be? And as you can tell from the content and the data we've shown today, the typical American is beyond being behind. So we've got to give you the data points not because you want to have envy, because you want to be jealous of somebody. Because you just need to try to figure out, hey, how do I triage and look at my personal financial life and make sure I am doing everything I'm supposed to? And that's what we're here for. We will, if you go to moneyguy.com resources we will load you up with tons of free content, data, tools, dashboards, calculators, everything's just waiting there for you. Because that way if you're in your early 20s, if you're in your 30s, if you're in your 40s and you're excited and motivated to know what you can do, we'll meet you there. And if you do this long enough, and this is what we know, and this is why we call it the abundance cycle, that you will be rewarded is that all of a sudden those small little decisions that are very fruitful for your long term self will create so much success that your simple life becomes wildly complex. And guess what? That's where we leave the porch light on for you. And we've realized that enough of you financial mutants, man, you already resemble our clients in a lot of ways. Maybe we just caught you a few years earlier in the journey before you become full on a bound wealth client. But this is your, your kind of your invitation if you resemble and recognize yourself in those behaviors. But you just know, hey yeah, these guys are right. I cross into seven figure and this is getting somewhat complex because I don't know what I don't know. I don't know where my blind spots are. This is my first time being here and I'd love to have somebody who's done this hundreds if not thousands of times. We are right there for you. Consider going to moneyguy.com money become a client and we will hook you up. I'm your host, Brian Preston. Mr. Bo Hanson for the rest of the Money Guy crew. Money Guy out.
- [48:46]
B
The moneyguy show is hosted by Bryan Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the securities and Exchange Commission. In accordance in compliance with the securities laws and regulations, Abound Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guy shows. The information provided is for informational purposes only, may not be suitable for all investors and does not constitute financial, tax, investment or legal advice. All investments involve a degree of risk, including the risk of loss.