How To Be Wealthy By Age

Money Guy Show

The Money Guy Show breaks down wealth-building milestones by age, offering a decade-by-decade roadmap for achieving financial success in you

Key takeaways

• The power of compounding is strongest in your 20s—starting early can turn $95/month into a million dollars by retirement.
• Gen Z often feels financially behind, but most Americans don't start saving until after age 30, making early savers ahead of the curve.

Main topics

• Net worth benchmarks by age group
• The role of time in compounding wealth

Notable quotes

"You're not behind. The typical American doesn't even start saving until they're beyond 30."

"In your 20s, you are a billionaire of time."

Conclusion

The episode emphasizes that financial success is achievable through consistent, early

Transcript preview

Speaker 1 (0:00) Do you want to be wealthy? Well, the truth is being wealthy is going to look different based on your age. Brian, I am so excited because today we're going to show you what it really looks like to be wealthy at every stage of life. We're also going to show you how to overcome the challenges and take advantage of the opportunities in each stage of life so that you can truly be wealthy. If you're not aware, I'm Brian, he's Beau, and we're The Money Guy Show, where two financial advisors walk you through your wealth building journey. With that, let's dive right in. Speaker 1 (0:34) So Brian, as we were talking about how to lay this out, we thought there would be an interesting format to walk through each stage and age. We want to look at a financial snapshot. We then want to look at what are the challenges in that decade? What are the opportunities? What does an actual wealthy person look like? And what are the net worth targets that you ought to be hitting if you're truly a financial mutant at each of these ages? And this is going to be fun because I think for a lot of us, we aspire. Speaker 1 (1:00) or we think we should look like a 50 or 60-year-old when we're in our 20s, and that's just not the case. I mean, when we pull back the layers and you see that the typical person who buys a Corvette is 63 years old, you realize, I don't need to be buying those type of cars when I'm in my 20s. So I love that we're going to just shed light. And with that, let's jump right into what does it look like to be wealthy? for your 20s. Yeah, I think this is great. Despite what Instagram says, despite what the highlight reel would suggest, the actual makeup of a 20-year-old is a little bit different. We know that the median household income across 20-year-olds right now in this country is a little over $60,000 a year. Their total debt load, not including their mortgage, so this would be student loans, credit cards, auto loans, about $24,500. Their median retirement savings, just a... Speaker 1 (1:53) touch under $12,000 and their total net worth on average, on the median for those in the 20s, right under about $21,000. I think it's important. This decade especially, there's going to be a huge difference from the way you enter this decade and the way you leave this decade. You know, other decades, like you think about your 40s or 50s, you know, yes, there's going to be differences, but it's not going to be the night and day difference for a 41-year-old versus a 49. I think 20s, Speaker 1 (2:21) you're likely broke as a joke when you're in your early 20s. And then as you leave your 20s, hopefully you've started catching some traction. So don't let those numbers throw you off. If you look at this and you're in your 20s and you're broke as a joke, everybody in their 20s is a winner. But before we talk about all the good stuff, let's talk about what the challenges are in your 20s. Yeah, I think a lot of people, especially in today's day and age, coming into their working career, Speaker 1 (2:48) They recognize that student loans are a big issue. But I mean, you talked all the time about even when you were coming through school, the cost of higher education is very different than what the cost of higher education is today. So a lot of 20-year-olds are facing a thing or a reality that their parents did not face. Yeah, if you look at the stats, this is, look, the average balance of student loan debt for Gen Z is a little under $22,000. Look, the promise of education, guys, Now you need to be much more of an active participant to make sure you're actually going to get the return on investment of that education. So go into this experience with your eyes wide open. Another challenge that we see for folks in their 20s is that expenses are high, but frankly, starting out the very beginning of our careers, we're all often in a low income position. Entry level pay makes it difficult to... Speaker 1 (3:39) pay for rent, pay bills, pay utilities, and be able to save for the future. So if you're someone who's just starting out and you don't have a ton of discretionary capital, you don't have a ton of discretionary cash flow, it's okay. A lot of people in your position are in that same place. Well, and that leads to, remember I started off saying when you're 20s, you start off broke as a joke. Well, that means you also likely don't have a big emergency fund. Because, you know, this is what's going to keep you from making desperate decisions when weird things show up in your life, like your car breaks down or you have a period where you're unemployed. So don't fall asleep on this. And that's why if you look at the stats, the median emergency reserves for a Gen Z is only around $400. If you remember in the financial order of operations, emergency reserves is so important. Speaker 1 (4:27) We want you to have it as steps one and four. So at a minimum in your 20s, start trying to have that highest insurance deductible cover. What I think is so heartbreaking is that $400, I bet for most Gen Zs, that doesn't even cover their highest deductible. I bet that doesn't even cover their health insurance deductible. It's not going to keep you protected from an emergency. I think a lot of young people feel this pressure. And so what they begin trying to do is say, okay. Speaker 1 (4:51) I'm behind. Life is hard. Things are expensive. I got to figure out the hack. I got to figure out the cheat code. So they start looking at these get-rich-quick schemes, whether it be something like sports betting or maybe some sort of more aggressive type investment like crypto. And they begin thinking, well, the only way I'm going to be wealthy is if I figure something out that the rest of the world hasn't figured out. Look at this stat. It's 80% of Gen Z feels they're financially behind, and they're turning to exactly what you said, crypto and sports betting. Speaker 1 (5:19) Can I just hit the pause button? Anybody and everybody, if you're in your 20s, you're not behind anything. We're going to show you in a minute with the opportunities of what 20-somethings have. You guys, you literally are all ahead of the curve. So don't let anybody fool you. The typical American doesn't even start saving and investing until they're beyond 30 years of age. So if you're watching this and you're in your 20s, Speaker 1 (5:42) Don't feel behind. Don't go out there and do something like jumping into sports betting, thinking that's the way to go into this. There is a much more proven and easier path to create your wealth. I think so many young people right now, Brian, are hopeless. They figure, okay, the world is stacked against me. The deck is stacked against me. There is no hope. And one of the best things you can do is actually build hope into your financial plan. Because when you are in your 20s, there are... a number of opportunities that you should be so excited about. And Brian, you just alluded to the very first one. This is literally where you have the most valuable tool, the most valuable ingredient in wealth creation on your side. You have time to let your money work. I mean, the wealth multiplier, this is something we have tried to put out there so you guys get excited about it. Speaker 1 (6:32) And we talk about how $1 for a 20-year-old has the potential to become $88 at retirement. For a 30-year-old, it's 23 times. Still an incredible opportunity. But not 88. But it's not as good as 88 times over. So guys, I'm literally here to tell you, in your 20s, you are a billionaire of time. So get very serious about, yes, you might be broke, but you can trade some of your time and your wages. and actually turn that into money that if you get it invested and give it enough time, it's going to be magical. You're going to understand the power of compounding growth. You also have the opportunity at this stage to begin building these unbelievable habits that will serve you well later. You get to really understand the idea behind long-term investing and why that time can be so valuable. We've talked... Speaker 1 (7:22) all the time about folks in their 20s that have this early start edge, this early start advantage that if you're a 20-year-old and your goal is to get to a million dollars, by the time that you get to retirement, by the time that you hit 65 years old, you've only got to save about 95 bucks a month, right? But if you wait, just waiting 10 years, it makes it actually four times harder. Instead of a 20-year-old having to save $95 a month to get to million-dollar status, A 30-year-old has to save $340. And if you wait until you're 40, it's actually 10 times harder. The earlier that you can figure this out, the easier the process becomes. And your 20s is a great time to start figuring this out. Maybe you didn't figure it out at 21, 22, 23. So what? If you're 24, 25, 26, it's not too late. Yeah, and I think that this, hopefully... Speaker 1 (8:12) This empowers you to now realize the next thing, the opportunity for your 20s is you have the maximum amount of freedom and flexibility. A lot of times you're not necessarily married or you don't have kids yet. And this is why you get to kind of figure things out. You get to try to figure out, hey, what can I go invest in myself? What skill, what trade or what side hustle can I go do because I have extra time on my side? There's lots of ways that you can take your moment in time and try to figure out how you can create some type of arbitrage to put this money to work so it creates something for you in the future. Okay, so let's talk about now, what does it look like to actually be wealthy in your 20s? And again, this is not the Instagram highlight reel. This is not the summer in the Mykonos Islands. This is not the fancy car. This is not the expensive watch. Speaker 1 (9:03) A wealthy person in their 20s actually looks a lot different. It looks like someone who's living within their means. They recognize I've got X number of dollars coming in. I'm tracking where those dollars are going, and I'm making sure that my living expenses are less than that amount. I'm naturally building up margin in my life. Well, you're seeing, we just said, live on less than you make. That's the key. You're never going to build success unless you can live on less than you make, because once you start creating that margin in your life, Speaker 1 (9:32) Now you can start building an emergency reserve so you can avoid the desperate decisions. And I'll take it a step further. Now you can start investing for something for retirement. And Bo, we laid out, if you start doing this, now I know we keep repeating, we talked about $100 a month to get you to millionaire. I think it's important if we take that same concept, but we show what percentage of those savings is your contribution versus how much of it is actually compounding growth. Yeah, it's wild. If you think about that 20-year-old that saves, Speaker 1 (10:01) 95, 96, $100 a month and gets to millionaire status by the time they get to retirement, of that million dollars that they've built, 95% of those dollars or growth dollars of the million, $955,000 of that is your money making money. You only actually had to save about $52,000 over the course of your working career to get to that million dollar status. But as time goes on, you'll notice it decreases. But maybe you're 25, maybe you're 30. You should still get excited because you still, if you are in your 20s, if you have a two in front of your age, time is on your side. Well, I want to put an exclamation point on is that you think about somebody that's in their 20s. You have to save $96 a month. That is literally when we talk about the latte effect, this is probably the only early 20s is the age where literally lifestyle decisions. Speaker 1 (10:56) Our consumption decisions. It's not even lifestyle. It's consumption decisions can turn you into a millionaire. If you fast forward to when you're 25 years