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- [00:00]
A
Here's a question. Don't know if it's healthy, unhealthy, Are you richer than your friends?
- [00:10]
B
Brian, I am so excited that we get to talk about this because oftentimes understanding where we line up with our peers can be helpful. It can be a valuable exercise. But on the flip side, it also could be negative and it could be detrimental.
- [00:26]
A
Well, I want people to always take an active role in your personal finances. I think you've gotta, you've gotta, you really gotta figure out what gives you purpose, what's the why, what brings you tremendous happiness. So you can lean into that. But you also need to kind of know and hold yourself accountable. Are you ahead of the curve? Are you behind the curve? Are you right where you're supposed to be? And also I want to dispel something I see out there in social media, especially in the personal finance circles. One of the housing hack things that are out there is it says, go buy the cheapest house on a nice street of homes because it'll go up.
- [01:00]
B
In the market, it's going to make.
- [01:02]
A
A lot more money over the long term. You'll be in this nice neighborhood and you got in cheaper than everybody else. Your house will likely appreciate more than others. However, there is something that is left unspoken about that, is that if you are the poorest person on your street and you surround yourself, you have set yourself up, There's a reason. There's a saying, stop trying to keep up with the Joneses. If you're trying to keep up with the Joneses, you will literally drive yourself crazy. And there was actually a research study done by Yale School of Law, said being poorer than your peers can actually take a toll on both your health and your happiness. So if we're telling you, look, comparison is the thief of joy and you don't want to always be the poor friend that can't keep up, can't go out to eat, can't go on a trips. You still need to kind of know, take an inventory of where you are so you can actually be on the healthy side of this.
- [01:55]
B
Well, I'll take it a step further. I don't think there's anything wrong with looking at other successful people that have made good decisions and you figure out how do I take some of decisions they've made and apply it to my situation. So it's more about making it a learning exercise than a comparison exercise. So I don't want you looking at someone else saying, oh man, I should have what they have or live in that house or drive that car, but rather say, oh, if someone's had some level of financial success, what are the behaviors and things that that person is doing that maybe I should begin instituting in my life so that I could have a similar outcome? And I think one of the best things you can do if you really want to, like, level up your financial is make sure you subscribe and ring that notification bell so you can stay up to date on all of the content that we put out there for you every single week.
- [02:45]
A
Let's jump in. BO so. Well, first of all, there's already this misconception. What's the difference between wealth and what's the difference between being rich and a lot of people, they get those two confused. Just because you have a good income, you might be rich, but it doesn't necessarily mean you're wealthy. So let's first just jump into for all those people who want to measure off of income, where do people fall?
- [03:07]
B
Well, I think this is maybe even an unfair metric because where your income falls is very much dependent on what part of the country you live in. I mean, a lot of times when we do our net worth studies or income studies, we'll get people in the comments say, yeah, yeah, but I live on this part of the country or I live here. And there is some truth in that. So we thought about in terms of comparing or thinking about where our income measures up, we know that the median household income in the United states is about $81,000 right now, this according to the Census Bureau in 2024. But if we look at high cost of living areas like Hawaii or Massachusetts, California, New York or New Jersey, you can see that those median incomes are significantly higher than the national average. They're at 96,000, 100, 6,000, 95,000. So if you are above the median income, but you live in one of those areas, odds are you're probably not feeling super wonderful about how your income.
- [04:07]
A
Status, well, this is why you have to be careful with stats, because I even look at and you see it's very close to the actual median. But we all know like New York City is completely different than other parts of the state of New York. So but this is probably if you living in one of those high cost of living areas, we know you're heard, we want you to feel that way. But it still, it puts a lot of pressure on you that you still, even though you might be in a high cost of living area, the good news is a lot of times these places also are where some of the higher Incomes earned also reside.
- [04:38]
B
And then if you are someone who lives in one of these lower cost of income areas and perhaps your income is below the median, but you live in a low cost of living area, you might be actually feeling pretty good. So assessing where you are and where you live matters when you're going to think about, okay, how should I be feeling? But we know that you guys don't consider yourselves to be the median. You're the financial mutants. And so maybe one of the questions you have is how do we stack up to other financial mutants out there? How, how do I look when it's compared to the other folks who tune into financial content and make wise financial decisions? And we thought that this information, this data was fascinating. We looked at gross household income by age.
- [05:24]
A
Yeah, this one kind of blew my mind is because I gave you guys a lot of credit. My financial mutants. I knew you're already a special type of person that you tune into a financial show to figure out how you can do things better with your personal financial decisions. Little did I know, you guys are smart, you're successful, and you're overachievers when it comes to the income category. Because check this out, we broke it out, we stratified it to those that. And let's focus on primarily those that make over $100,000. I can remember when I was in my 20s, I aspired to break six figures by the time I reached age 30. And it seems like a lot of you guys not only aspired to that, but you blew the doors off of it. Because check this one really blew my mind. For 20 to 29 year olds, 54% of our financial mutants make over six figures.
- [06:15]
B
That's wild.
- [06:16]
A
That's wild. I didn't reach that status 30 to 39 years of age. 83% of you financial mutants that did our survey make over $100,000 for 40 to 49 years of age, 87%. For those 50 to 59, 86%. And for even those 60 and beyond, a lot of these people even potentially retired. 72%. That's amazing.
- [06:38]
B
It's unbelievable. And so you may be sitting there asking this question, okay, well, what do I learn from this? Obviously, the median for financial mutants is very different than the median national average. So what are some of the key takeaways? Well, if you look at this and you recognize that you are below the median, what are some things you can do? Well, the very first thing is avoid lifestyle creep just because someone else lives in the nicer home or drives the nicer car or takes the more extravagant vacation does not mean that that needs to be part of what you're doing. If you find yourself continuing to chase that lifestyle, what you're going to end up doing is squeezing out your ability, certainly at a lower income, to be able to build the financial future that you actually want.
- [07:21]
A
When I saw that cost of living area, there's two things that hit me is that we often hear, you know, you only have really two levers to pull. You can either make more income or you can lower your expenses. If you live in a low cost of living area. When you see the data we just shared, maybe you need to cut your expenses even more to figure out if some of that can turn into additional savings and investments. However, if you live in a high cost of living area, as I've already shared this is the answer here, is that for a lot of people who live in high cost of living areas, there's also a lot of income opportunities, meaning you can make more money in those high cost of living areas than people who live in, you know, the sticks or the rural areas of America. So go ahead and see if there's some additional opportunities for you to level up your income.
- [08:06]
B
And if you're someone who is above the median income, maybe you're one of those financial mutants or doing even better. 1. Celebrate your hard work. That's incredible. Now you have a large shovel. You have something that you can use to begin to build towards financial independence. But don't be complacent. Don't. Just because you make a high income, just because you're able to comfortably make ends meet, that does not mean that you don't have to take your finances seriously. You don't have to make wise financial decisions. Because we all know it's less about how much money you make and it's more about what you do with that money, how you effectively use your shovel. And if only there were some system or some method or some mechanism that could walk us through as we're making income, what we should be doing with our next dollar.
- [08:56]
A
It's almost like there needed to be an instruction manual, an order of operations, if you will, on what to do with your next dollar. That's actually what we've created with the Money Guy show, even went a step further with Millionaire Mission, the book that came out this year, you guys. By the way, thank you for all the support on that. If you want to just get a free copy of this resource, just go to moneyguy.com resources we'll go ahead and Share it with you on what you should do with your next dollar so you don't fall into the traps of the typical American. We want you to fall into the financial mutant category where you're a maximizer of every dollar that comes your way.
- [09:33]
B
When we think about how we stack up and how we compare with our friends or our peers or other folks in our financial situation, we have to think about, especially in the context of financial order of operations, where does it begin? Where does it start? And for most folks, one of the early places that we begin to see some differences between financial mutants and non financial mutants is in cash reserves. How are you or how are your peers managing that thing that's going to effectively keep your financial life out of the ditch?
- [10:04]
A
Well, unfortunately, typical American does not do this. Well, now I want to give one of our writers credit here because I think he'd be sad if I didn't use this analogy. I don't know how good it's going to hit, but I feel like I have to use it anyway. Just like when there's an emergency, what does our federal government do? They send in the National Guard.
- [10:24]
B
Oh, that they got to protect the home.
- [10:26]
A
So our writer Nick wanted everybody to realize, look, just like when you have an emergency, you need to have something in your army of dollars that you can send in. So he came up with the Cashnel guard. Oh God, it hit worse than I thought.
- [10:42]
B
No, no. People out there in the audience are laughing. So in your army of dollar bills, just like we need a national Guard, you need a castional guard. And why is that the case? Because most folks don't do it. We know that right now, 56% of Americans could not come up with $1,000 for an emergency without going into debt. That is a problem. And that is a sad reality that exists right now in this country.
- [11:10]
A
Yeah, and this one scares me. Because that's when you make those desperate decisions, life is going to throw some chaos at you. No doubt. You never know what's coming your way. And if you just don't have $1,000, how are you going to cover your health insurance deductible? How are you going to cover if you got in a car accident? That's why. Step one, highest deductible cover to the financial order of operations is your first level. So you're not making those desperate decisions.
- [11:34]
B
And we know that right now if you look, the average health care deductible in the United states is about $2,500. So if you have accumulated $2,500 and you have passed step one of the financial order of operations. You're already in the context of this show, richer than 56% of Americans that could not come up with that thousand dollars. So make sure that you're making the decisions that will prevent your financial life from falling off the rails.
- [12:03]
A
And this is more of doubling down on the bad decision making. We already knew Americans couldn't come up. 56% can come up with 1,000. Well, you're not going to be surprised to learn that 72% of Americans don't have a fully funded emergency fund of three to six months. I wasn't completely shocked by this. If you have 56 that can't even reach 1,000, why would we expect three to six months to be even better? Of course it' could be a worse number.
- [12:26]
B
Again, thinking through the context here, if you are in step five and you're funding a Roth IRA or funding an hsa, that means that you have already built a fully established emergency fund in step four. If you've done that, you're doing better than 72% of your peers out there. Then the question becomes, okay, if these folks even where the median income in the United States, if they have this money coming in and they're not building it up in cash reserves and they can't even come with $1,000 for emergency, where's the money going? What is happening to it?
- [13:01]
A
Yeah, well that leads to consumption decisions, unfortunately. And look, there is an entire industry out there trying to get you to easily part from the money you earn. And they just want you to spend it, not save it, not give it away. They just want you to spend it on their consumable goods. And a lot of times that's done through high interest credit card debt.
- [13:20]
B
Yeah, it's this idea that I can aff anything in the world one month at a time, a couple hundred bucks at a time. If I can swipe it, I can afford it. And far too many Americans are falling into the trap of not living, not living below their means, which what you're supposed to and not even living at their means, but actually living beyond their means. And they are literally robbing their future self of financial independence by accelerating those consumption decisions into today. If you are someone who finds yourself in that place, I think that you're doing it wrong. You're not stacking up well.
- [13:55]
A
That's why this is once again going back to the financial order of operations. This is why this is step three. The high interest debt. You've got to get that under control. There's no way you'll ever get ahead if you're expecting to make somewhere between 8 to 11% out of the financial markets while you're paying somebody else twice that. With credit card debts being over 20% these days. That's why we wanted to give you some guardrails or some ways you ought to think about this so you just don't fall in those same traps.
- [14:20]
B
Don't mishear us, we are not anti debt zealots. We even talk about low interest debt and it's okay if you have low interest debt and you can even push that all the way back to the end of the financial order of operations, back to step nine. But if you have high interest debt, things that are often tied to consumption, well, that's something that has to be prioritized before you start saving and investing, before you start building, and likely even before you build up a full emergency fund. So one of the questions we get asked all the time, Brian, is how do I know what counts as high interest debt and if I have high interest debt, does it change? And how do I quantify where that falls in my financial order of operations?
- [15:02]
A
Yeah. So we figured we'd go ahead and cut the corner off, give you a head start on some of the things we've realized over our time. So we even stratified this by age. Obviously you're different when you're in your 20s versus the journey you are when you're in your 40s. So that's going to change things. Student loans, for instance, we know, look, that's a noble thing that you're bettering yourself through education, but there is too much of a good thing. And a lot of people have fallen into a lot of student loan debt. And that's why we always remind people there's some key things. But let's give you the overview. First of all these categories. Student loans, looking at risk premiums, your age, the opportunity cost of what that money could do. For student loans, it's 6%. For those in their 20s, 6% or greater.
- [15:42]
B
If it's over 6%, you may want to prioritize paying it off. That counts as high interest debt.
- [15:47]
A
30S, it's going to be greater than 5%, 40s, greater than 4%. Now that's completely different than like car loans, because car loans, look, I get it, these are higher percentages. But we also know that the difference between student loans and car loans is car loans are going, especially when you follow our 23, 8, they're going to be extinguished and gone within three years. We're not going to let these things hang around and just punish you and punish you over and over again. We're going to get them extinguished as fast as possible. So that creates a little bit more grace in what the interest rates can be before you can focus on other goals. So if you're in your 20s, it's greater than 10%. 30s is greater than 9%. In your 40s, it's greater than 8%.
- [16:27]
B
And then obviously, credit cards are a zero sum game. If you have a credit card debt, we want you to get it paid off. We have a little saying around here, Brian, how's it go?
- [16:39]
A
It goes, credit card use is a, okay, but credit card debt, no way. And look, I get it. A lot of you financial mutants think you're just getting away with something Incredible with the 0% credit card introductory offers and playing the transfer game. Don't do it. These things are traps. They literally are traps that they're trying to get you to fall into. Because instead of you addressing the behaviors that keep digging the hole deeper and deeper and deeper, you're just moving the shells around the table and not actually extinguishing the debt. So don't fall into that trap. Because also what people don't realize about these things is a lot of times they accrue in the background. They have fees, like even transfer fees of 3 to 5% of the balance. There's all kind of little caveats or asterisks or small fine print that you can fall into a trap. And you'd be like, uh, oh, I didn't realize that. I thought I was so smart. No, the banks have fleets of people that are smarter and working on this stuff, hoping that you fall into the trap. And you're always going to be under their thumb.
- [17:40]
B
So what we've done is we've devised some rules to help try to keep you inside some guardrails. When it comes to the times and areas where you might use debt for student loans, we have a first year financing rule. We do not want the total amount of student loan debt that you accumulate to be greater than your first year salary. So if you're going to come out in the vocation that you're studying for and make $50,000 a year, you want to make sure you keep your student loan balances below $50,000 when it comes to buying cars. You already alluded to this, Brian. We have our 238 rule. We want you to put, put 20% down. We don't want you to finance for any more than three years. And you cannot let your car payments exceed 8% of your monthly gross income. Luxury cars do not apply. If you buy a luxury car, it has to be paid off within one year, same as cash. And under no circumstance should the amount that you have monthly going towards your auto payments be more than the amount you have going towards your investments. If you can do that, if you can stay inside of those lines, inside of those guardrails, you're going to allow yourself to get through this debt, get it paid off, and then get to this phase of life where you can start actually building for a great big beautiful financial future.
- [18:52]
A
What's amazing is I already went and talked about how consumption decisions trap a lot of people. And if you need more proof, just realize that we're right at the halfway point, basically a fork in the road, that half of Americans are carrying a credit card balance every month.
- [19:09]
B
What was the saying again, Brian?
- [19:11]
A
Credit card use is a. Ok, but credit card debt, no way.
- [19:15]
B
So you're saying that 50% of Americans, one out of two, is not getting that second part. They're actually carrying the balance from month to month, letting compound interest actually work against them.
- [19:25]
A
Yeah. And realize a lot of these credit card are charging greater than 20%. Matter of fact, there's even potential that I'm entering the whole political season. One of the most bipartisan things that I saw coming out of the presidential election was multiple people were saying, hey, wouldn't it be great if banks were capped at like 10% on credit card debt? Because it is crazy that we let the banks charge twice what you can even hope to get out of the financial market. So don't fall into that trap. This is a choose your own adventure. You just get to choose if you're going to fall into this consumption trap that the banks have set up for you.
- [19:58]
B
And if you want to know how bad it is, like how steep the chasm is, look at this. The average American credit card balance, not that they're using, but that they are carrying over month to month, is a little over $7,000. Those are dollars that are accruing interest every single month. Now we're talking about how do you stack up to your peers and how do other financial mutants and how does the average American work? Well, the average American, one out of two of them, carries a balance month to month and that balance on average is about $7,000. And yet when we did our financial mutant survey of tens of thousands of you out there and said, how do you use credit cards? What Is your method. We found that 88% of you have no credit card debt. That's not that you don't use credit cards. You fall into the credit card use okay part. But you recognize that it can be absolutely detrimental to your financial wealth building. And you said, I am going to carry $0 over month to month and have absolutely no credit card debt.
- [21:05]
A
So go ahead and fall into the comfort of the behavior that 9 out of 10 financial mutants, they're paying their credit cards off every month.
- [21:13]
B
That's right.
- [21:14]
A
Nine out of ten financial mutants are doing this. You should do it too. Because I've shared it many times. All of our seven figure, eight figure clients, I don't have a single one of them that came to us as prospects. And they said, you know what, I need you guys to help me tackle paying off this credit card debt. It's just not the behavior that you see successful people struggle with. So if you are in one of those struggles right now and you're trying to extinguish that debt, let's make sure that you go ahead and just cut it up, be done with it, and let's get on the right side of this.
- [21:44]
B
All right, Brian. So we've talked about the foundational stuff. We talked about cash reserves and consumption decisions. Now let's talk about the exciting stuff. Let's talk about what do the actual wealth building behaviors of folks that are making sound financial decisions look like? And how does that stack up to the average American and how does that stack up to the financial mutant? Because we know that when it comes to the financial order of operations, the early steps are all about building the foundation steps 1, 2, 3, 4, foundational. But then once we get into steps 5 through 7, now we're talking about building wealth. Now we're talking about doing something pretty exciting.
- [22:20]
A
Well, but we first, I mean, there's a reason step number two in the financial order of operations is we have to get that free money back.
- [22:26]
B
Oh, that's right, the employer.
- [22:28]
A
I mean, I want you to think about this. If somebody came to you, we've done so many 401ks, but it's been a while since we've made this analogy. Is that if every one of you guys who's watching right now, if somehow in some creepy way I knew where your home address was and I, like Ed McMahon could just show up at your house. And I said, hey, I sent you a text. I said, hey, by the way, go check your front door. Because it wasn't Amazon that set off your ring doorbell Cam, it was me and I set up outside your door. I set up $500 just sitting there waiting for you in an envelope. Every one of you guys would immediately go to your front door and check and say, holy cow, he really did leave me $500. You would just be so excited about it. And that's why that 50%, 100% guaranteed rate of return that your employer is offering you if you will just contribute to your retirement plan is so powerful that it made it to step two.
- [23:20]
B
Yep.
- [23:21]
A
Now I set that up with you, where we've already figured out we're all going to just dash as fast as we can to see if Brian actually gave you $500. Meanwhile, when I go pull the stats for what the typical American is doing, one in four Americans are not getting their full employer match.
- [23:37]
B
It's devastating.
- [23:38]
A
What are we doing?
- [23:39]
B
One in four Americans don't like free money. That's what I'm hearing. One in four Americans just would not go to their front door to see if Brian was out there with a $500 envelope. And what that means is one in four Americans to me, don't recognize just how powerful their dollars can be. If you think about this, when you think about small incremental decisions, it's the small decisions over a long time period that can have a huge impact. We've talked about this in the past. We talked about, okay, if I could just save 1% more and I'm 25 years old, what does that practically mean for me? Well, that means that by the time I get to retirement, me saving 1% more today could replace 6.5% of my income. When I get to retirement at 35, if I can save 1%, it will replace almost 3.5% of my income in retirement. At 45, 1% still can turn into 1.5%. But that's only part of the story. Because if you're one of those one in four Americans, that is not getting your full employer match. If it's a dollar for dollar deal, that means that for a 25 year old, that actual 1% additional savings you do could replace 13% of your needed income in retirement. For a 35 year old, it can be almost a 7% difference. For a 45 year old, it can be a 3% difference. Leaving that money on the table, what seems like such a small, insignificant decision can have huge impacts on you later in your financial life.
- [25:09]
A
Well, I think that this also catches. We just came through that post inflationary period and young people, especially you're getting squeezed and you feel really frustrated because you're like, I barely afford to pay my rent, I can barely afford to buy food for my family. And you're struggling. And I get it. But that's why it's important for us to share with you these type of stats on what 1%. Because you don't have to think, don't think like you have to eat this elephant all in one bite, in one sitting. You can actually be. The most powerful thing you have is your time, the component of time. But that's why you also can't sleep on letting a decade go by where you lose it. So that's why I would encourage you go to moneyguy.com resources and you need to see we have a download and a resource of what 1% more can do for you. Go see by your age, your specific age, not just some case study that BO just read through. You can actually see what it is for you specifically and get motivated today so that you don't sleep on that. Because that one little small decision can have huge results for your future self.
- [26:10]
B
Alright, so now speaking in the same vein of small decisions, right, we said that saving 1% is a big part of it, but that's only part of it because it's not just about saving the additional 1% that can make the huge impact on your financial life. You actually have to invest it. And unfortunately we've talked about this and we've seen this, there are a lot of people that, that miss that very crucial step.
- [26:38]
A
I was shocked and then I've been amazed. We even have a little short right now that's going pretty viral. It's well into the seven figures. Really what it's showing is that not only do you save money, but then you have to eventually it's a two part transaction. Like when you fund your Roth ira, you make the contribution to your Roth. But then the second component of that is you have to actually invest the money, put it to work, let your army of dollar bills work. You've done the hard part, by the way, the discipline, the deferred gratification. Actually take a little bit of today for the future and save the money is actually the hard work. The easy part is the second part, which is actually just go invest, go buy some index fund to let it do the hard work for you. Sadly, and this is why I need to repeat this step because in the comments of this viral video we have all kind of people are like, I did that, I did that in my Roth. Oh, I did that in my old 401k. Don't fall in this trap. When Vanguard is out there ringing and sharing that 28% of 401k rollovers remained in cash for over a year. It breaks my heart. It really breaks my heart.
- [27:44]
B
It's even worse than that because you know what the study found? The study found that if the cash, if the dollars remained in cash for one year, there was a high likelihood that that money was going to remain in cash for at least seven years.
- [27:59]
A
Oh my gosh.
- [28:01]
B
If we think about the average return of The S&P 500, it's somewhere over like 10%. Do you recognize, just using the rule of 72, that money that you put in there could have doubled over that seven year period? But if you're one of these 28% of folks who just leave your money sitting in cash and actually invest it, you are literally costing yourself tons of money. I mean, literally, you have half as much as you could have had otherwise just by forgetting to do that very simple marginal decision of actually putting the money to work.
- [28:35]
A
Well, good news though, a lot of you guys, if you find yourself in a situation where maybe even have an old 401k and you're trying to figure out what's the decision matrix on what to do, once again, we got you covered. There's a reason people go to moneyguy.com resources. We go load you up with all kind of free information. We actually have that exact thing. We created it for you so you know exactly what to do with your old 401ks. Remember, it's a two part transaction. Figure out what to do with the old 401k, but then make sure that money is fully invested and let that army of dollar bills do all the heavy lifting for you.
- [29:09]
B
Now, we said that Vanguard found that 28% of folks who rolled over their 401ks did not actually invest. And so it makes it seem like the investing part is the problem. And while there is a problem that exists there, Brian, I don't think that that's the most significant problem. I think that the most significant problem the average American has is not on actually investing the dollars. It's just making the choice to actually save the dollars, to defer the dollars, to live on less than they made. Because we know that right now the average savings rate according to the Federal Reserve bank in America is 4.6%. That is a far cry from what we recommend.
- [29:50]
A
Yeah, we're telling everybody we need to be saving and investing 25% for the future. By the way, there's some math to this. We'll share it with you in a second. So you can know that we just didn't pull this number out of space. But it shows that, like I said, a lot of people are focusing on the consumption or they're just letting life happen to them. That's not going to be enough to get the job done.
- [30:10]
B
So if you want to know how you stack up to the average American, the average American saves 4.6%. But if you want to know how you stack up to a financial mutant, again, we asked all of you guys, what does your savings behavior look like? How are you building your wealth? It was amazing to see that over one third of our financial mutants save more than 25% of their gross income. And it's not just for the high income earners. It's not just for the folks who make 100,000, 200, $300,000. We found this across most income strata. A third of the respondents, from folks who make even 25 to 50,000 all the way to folks who make 200,000 to 500,000. It is incredibly consistent that financial mutants understand how powerful saving can be and they get their savings rates up around that 25% level.
- [31:03]
A
Well, and I think if we had strat, we did stratify this by age and it was across the board, it didn't matter how old you were. But if we would have expanded this to people who just did beyond 15%, oh, it's, I mean, it would be 50, it would be 50, 60 in some age groups that have been even 70% were blowing the doors off that. So I just want you guys to know, look, it's okay when you're young, it's somewhat assigned, aspirational. But as you get in your 30s, without a doubt, you have to be saving and investing 20 to 25% for the future. If you want to know specifically why we say those numbers once again, I'm going to give you another free resource. I want you to go out to moneyguy.com resources and look at our resources titled how much should you save? But what I always like to say, what 25% can do for you is because look at this thing. You will quickly see this thing is in a graphical format where it's going to show you if you're in your 20s and you have discovered us, congratulations, probably 10, 15% is going to make your day, you're going to be in a great place. But if you're in your 30s, you're right in that sweet spot that 20 to 25% is going to do it. If you're finding us in your 40s, guess what? It might mean a little bit more falls on your shoulders, and your savings and investment rate's going to have to actually increase as a result of putting off that investment component for a few decades.
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B
So we're talking about, Brian, how do we stack up to our peers? And how do the decisions that we make compare to the decisions that our peers make? And ultimately, when we think about adding up all those small decisions, what we're really arriving at is the culmination of the decisions we make in our financial life ultimately impact our net worth. We actually look at the list of what do we own minus what do we owe? How is that changing through time and how is that improving? And so we said, okay, how does the average American stack up? And this is from data from Empower. The average American, the median net worth for someone in their 20s right now in America, $7,500. For someone in their 30s, $35,000 for someone in their 40s, $124,000 net worth, someone in their 50s, about 287,000. By the way, this is total net worth. And for someone in their 60s, median net worth, about $355,000.
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A
Now, here's what's sad. And we know this because we see the Fred data. We keep up with the data pretty closely because we're that nerdy. This is going to include home equity. That's exactly because net worth does include not only investable assets, but also includes the equity you have in your primary residence. If we strip away home equity, these numbers are going to look even more anemic. And it's really a sad thing. Now, here's the good news. If you've just discovered us, you're in great company because we don't want you just to be average or the median of the general public. Because like we said, there's a lot of bad information out there. There's a lot of the bar is not set at the right place, and it's not going to protect you and help you build your financial independence. We want you to compare yourself to our fellow financial mutants. And that's why it was really a superpower that we've actually done this survey with so many thousands upon thousands of you who have actually completed this, because we've got up here on the screen, this is the average American. But, Bo, I'll let you give the big reveal of when we lay side by side, the average American to now, what is the financial mutant. Look at these differences again.
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B
We're talking about total net worth. For Those in their twenties, the average American, 7,500. Our financial mutants have a net worth somewhere between 100,000 and $400,000. For folks in their thirties, the average American has a net worth of $35,000. Our financial mutants have a net Worth somewhere between 400,000 and $750,000. For those in their forties, the average American, $125,000 net worth. Our financial mutants are now in seven figure land. 750,000 to $1.25 million in net worth. For those in their fifties, average American, about 287,000 net worth financial mutants somewhere between 1.2 and 2.5 million. And then for those in their sixties, the average American has a net Worth of about 355,000. But when you look at our financial mutants, when we look at you guys, your average net worth by the time you get into your 60s is somewhere between one and a quarter to two and a half million dollars. Very, very, very different than the average American.
- [35:36]
A
I think a lot of you are, by the way, congratulations, you discovered this content and this show at the perfect time is because you're seeing this and you're probably going net worth, man, that's a huge spread. I see what Americans do. And these guys keep telling me, these financial mutants, how do I stack up? And you might even say I've never done a net worth. What is that? Here's what I want to tell you. This is why it's better to be lucky than good sometimes. Because you have found this content, I want to encourage you once again, go out to moneyguy.com resources. We have a free, a completely free net worth tool template that you can use. If you use this and you like it and you like the ability to actually see, hey, I'm paying down my debt each year this much or I like seeing my investable assets, meaning I'm going to be able to retire and use these assets. Ergobema army of dollar bills is growing and you want a bigger and better dashboard to really beef up your navigation. We actually have a great tool that we've created called the net worth tool that you can go to learn.moneyguy.com and this is actually what Bo and I use. It is really fun, it's really nerdy to kind of have all those metrics so you can see how your different account structures work between your after tax, your Roth assets, your tax deferred to see how you're paying down the debt to see how efficient you're being with the Inc income and your savings rate. All these things are built into the tool and it's a pretty exciting thing. This is why it's kind of like our super bowl or awards ceremony of the year is we actually get to take a measure to see how we're doing and hold ourselves accountable. And that's what I hope all financial means. I hope all Americans will discover this and kind of move it forward. So moneyguy.com resources, that's all the free stuff. And then learn.moneyguy.com if you really want to dive in and accelerate your journey through some of the courses, some of the tools we've created, here's what I want people to hear though. When you hear content like this and you hear about all of our financial mutants doing so well, a lot of you might be just like me and Bo. Where we don't come from money, we come from pretty humble beginnings. And that's the majority of you seven figure millionaires. You also come from humble beginnings. 80% plus typically don't come for money. So I want you to know how your journey started does not have to define how it ends. Just be deliberate with every second of time and start making those good decisions today. I'm your Host, Brian Preston. Mr. Bo Hansen. Money Guy Team out the Money Guy.
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B
Show is hosted by Brian Preston.
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A
Abound Wealth Management is a registered investment.
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B
Advisory firm regulated by the securities and Exchange Commission.
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A
In accordance and 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 Show. The information provided is for informational purposes only and does not constitute financial, tax, investment or legal advice.