What Net Worth Puts You in Upper, Middle, and Lower Class

In this episode of the Personal Finance Podcast, we're going to talk about what net worth puts you in the upper, middle, and lower class. How Andrew Can Help You: Don't let another year pass by without making significant strides toward your dreams. "Master Your Money Goals" is your pathway to a future where your aspirations are not just wishes but realities. Enroll now and make this year count! Join The Master Money Newsletter where you will become smarter with your money in 5 minutes or less per week Here! Learn to invest by joining Index Fund Pro! This is Andrew’s course teaching you how to invest! Watch The Master Money Youtube Channel! , Ask Andrew a question on Instagram or TikTok. Learn how to get out of Debt by joining our Free Course Leave Feedback or Episode Requests here. Thanks to Our Amazing Sponsors for supporting The Personal Finance Podcast. Shopify: Shopify makes it so easy to sell. Sign up for a one-dollar-per-month trial period at shopify.com/pfp Chime: Start your credit journey with Chime. Sign-up takes only two minutes and doesn’t affect your credit score. Get started at chime.com/ Thanks to Fundrise for Sponsoring the show! Invest in real estate going to fundrise.com/pfp Thanks to Policy Genius for Sponsoring the show! Go to policygenius.com to get your free life insurance quote. Go to joindeleteme.com/pfp20 for 20% off! Indeed: Start hiring NOW with a SEVENTY-FIVE DOLLAR SPONSORED JOB CREDIT to upgrade your job post at Indeed.com/personalfinance Go to Acorns.com/pfp and start automating your investments and get a $5 bonus today! Links Mentioned in This Episode: The Biggest Financial Wins of 2024 (Time to Celebrate!) How to Break The Paycheck-to-Paycheck Cycle (IN 2025) The 1-3-6 Method For Building & Managing Your Emergency Fund Why Coast FIRE May Be The Perfect Strategy for You with Andy Hill Master Money Free Ebook Connect With Andrew on Social Media: Instagram TikTok Twitter Master Money Website Master Money Youtube Channel Free Guides: The Stairway to Wealth: The Order of Operations for your Money How to Negotiate Your Salary The 75 Day Money Challenge Get out Of Debt Fast Take the Money Personality Quiz Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Andrew Giancola?

  Longtime listeners know, one of the best ways to build wealth is to increase your income. And one way to do that is by starting a side hustle. And that's one reason why I absolutely love Whatnot. Now, my son and I, we love collecting sports cards. And we've used Whatnot to buy and sell cards. It's been a really fun way to enjoy something we love together. Now, Whatnot is a live shopping platform where people sell everything from sports cards to clothing, electronics, and collectibles. And what's really cool about it is you can turn something you're passionate about into a business. And you could do it right from your phone. You don't even need a storefront or a website. So whether you're looking to make some extra money or find great deals on your next shopping trip, check out Whatnot.

• 0:44Andrew Giancola?

  Search Whatnot, that's W H A T N O T, in the App Store. Download and start selling right away. When I started the Personal Finance Podcast, I had no idea how big it could become. I just knew I had something I wanted to share, so I started putting it online. And looking back, I definitely wish I would have started a decade earlier. One of the horror parts about building something online, though, is making it look professional. A website used to mean hiring a developer, figuring out design, and potentially spending thousands of dollars. In fact, on my website, I spent tens of thousands of dollars. That's what impressed me when playing around with Hostinger's AI website builder.

• 1:27Andrew Giancola?

  I told it what kind of website I wanted, and I built the first version in minutes. No coding, no designer or developer needed. And Hostinger doesn't stop at launch. Their AI can help with SEO, website copy, email marketing, and more. Plus, your domain, website, email, and marketing can all live in one account, with plans starting at just $3 every single month. Hostinger builds your vision step by step. Create your website today. Go to hostinger.com/pfp and use code PFP for 10% off now. On this episode of the Personal Finance Podcast, what net worth puts you in the upper, middle, and lower class.

• 2:24Andrew Giancola?

  What's up everybody and welcome to the Personal Finance Podcast. I'm your host, Andrew, founder of MasterMoney.co. And today on the Personal Finance Podcast, we're going to be talking about what net worth puts you in the upper, middle, and lower class. If you guys have any questions, make sure you join the Master Money Newsletter by going to MasterMoney.co/newsletter and follow us on Spotify, Apple Podcasts, YouTube, or whatever podcast player you love listening to this podcast on. And if you want to help out the show, consider leaving a five-star rating and review on Apple Podcasts, Spotify, or your favorite podcast player. Cannot thank you guys enough for following and leaving those five-star ratings and reviews. Now, you can also watch this on YouTube.

• 3:08Andrew Giancola?

  If you just search Andrew Genkola, my name, you'll be able to find this on YouTube as well and follow along as we talk through this episode. Now, this episode is going to have a ton of statistics. We're going to throw those up on the screen on YouTube so that you can see those. And we're going to be diving into a bunch of different net worth levels and what it takes to level up to the next level. Now, one big thing I want you to note on this episode is this episode is meant to motivate you. My goal with this episode is to show you, I think that you can move up to the next level as we start to talk through this. So maybe, for example, you are in the lower class. And when you are looking at this, you're saying to yourself, man, I'm in the lower class. It's this person's fault or it's somebody else's fault. Instead, what I want you to do is I want you to completely

• 3:50Andrew Giancola?

  change your mindset and say to yourself, what am I going to do personally to focus on the things that I can control so that I can level up my wealth building skills? Because what I want you to do today is I want you to make a life change. It's up to you to do it because nobody else is going to come and save you. Nobody else is going to help you earn more, or invest more, or get more dollars towards your freedom. And what I want for each and every single one of you is I want you to achieve financial freedom. That's what I want for you. I want you to have freedom with your time, with your energy, and with everything you do day in and day out. I want you to be able To spend more time with your family. I want you to be able to spend more time with your kids. I want you to be able to do the things that you want every single day.

• 4:34Andrew Giancola?

  And the only way to do that is to take personal ownership of your financial situation and turn it around today. I know you can do it, and that's the entire goal of this podcast is to teach you how to take that ownership and then go forward with that information and take action. There are so many people, we just did our biggest wins of 2024 recently, an episode on the biggest financial wins. We're going to do that every single year, but when we went through that episode, it was just so amazing that the people that took action just from listening to this podcast, how much wealth they were able to build in just a short period of time. And I know each and every single one of you, if you start to take action on some of these things, you will change your life and turn your life around. So here's the sections we're going to be going through today is we're going to be going through the lower class,

• 5:19Andrew Giancola?

  the lower middle class, the middle middle class, and kind of talk about what each of these are. The upper middle class, the lower upper class, and the upper upper class. And what we did is we went through the US census data of what the median incomes are for people and what the median net worth is for people, in addition to some federal reserve data as well. And we pulled that information to create this episode. So this is going to be one where we're going to show a lot of statistics in this episode on some tendencies for each class. And I'm going to talk about if you're in this class, what you can do to move up one level. This is not in any way, shape or form an episode where we're saying, oh, you're in the lower class. You are a lower level, absolutely not. In fact, the entire goal of this episode is to show you that I truly believe that you have the opportunity to build wealth,

• 6:03Andrew Giancola?

  no matter what class you're in, and we're going to show you exactly how to do that today. I am really, really excited for this episode because if you're sitting there and you're like, I don't know what else to do. I feel lost. I feel confused. This is the episode for you. So first, we're going to dive into, you got to know what net worth is in this episode before we go any further. So if you already know what net worth is, you can skip ahead two minutes. If you don't know what net worth is, I'm going to dive into it here. So net worth is your assets minus your liabilities. Okay? So this means that it is the best single metric overall to figure out what your financial health is. In fact, Your net worth growing over time is a huge, huge benefit and it is your financial scorecard. That's the way I see it is your net worth is your financial scorecard.

• 6:46Andrew Giancola?

  And the goal for you is to make sure that you are reducing those liabilities. And we'll talk about what that is in a second. And you are increasing your assets. You want to add to your asset bucket and you want to decrease your liability buckets. You want to take that liability bucket and start pouring it into assets as the huge key that you want to be doing here. So what is an asset? An asset is anything of value. So this can be cash, like your checking, your savings, your money market accounts. It could be your investment account. So stocks, bonds, index funds, REITs, those types of things. Retirement accounts, 401ks, Roth IRAs, IRAs, all of those. Business ownership, home equity, even the value of your vehicles. All of those things are your assets. Now, what are your liabilities?

• 7:31Andrew Giancola?

  It's going to be all of your debts. So your mortgage debt, your student loans, your credit card debt, your car loans and your personal loans. And so what you do is you add up all of your assets. Or if you're looking at your home, it's the equity in your home. And then you subtract it by your liabilities. As of right now, the median in the U.S. has a net worth of $20,000. That's where the median is currently right now as it stands. Now, I want you to think through this for a second because I want you to understand these financial classes before we dive into them. The top 10% of Americans hold nearly 70% of the country's wealth. And this is according to the Federal Reserve in 2023. While the bottom 50% hold just 2.5% of the total wealth in the U.S. And the middle class is actually shrinking.

• 8:15Andrew Giancola?

  So 10% smaller than 1971, where the upper class has grown by 8%. Now, income alone is misleading because nearly 53% of millionaires say that they're still not financially stable. And I want you to understand some of these numbers because there is a shift in the way that wealth is being distributed. Now, there's going to be a very interesting thing coming up over the course of the next 10 years. Because the baby boomer generation has a massive portion of the wealth in the U.S. In fact, they own the majority of businesses, they own the majority of homes. And as they start to Pass down some of their assets to generations like Gen X or the millennials. They are going to see a huge shift in wealth like we have never seen before.

• 8:55Andrew Giancola?

  And so this is going to be an interesting dynamic to watch how this happens because the wealth is going to shift from the baby boomer generation to a lot of the younger generations that are coming down the line. And so we're going to see a huge shift in some of these financial classes. It's going to be interesting to see if this actually evens out over time. I don't have a crystal ball. I am not in the business of making predictions. It is not something I normally would do. And so it's something that we want to see what is going to happen over the course of the next 10 years. But as we start to talk through this, I want you to understand that as much as you possibly can, you need to try to grow your net worth. So you may be doing this calculation and you're saying, okay, I'm adding up all my assets here. I don't have many assets yet, but I have a ton of liabilities. I have credit card debt. I have a mortgage. I have all these different things.

• 9:39Andrew Giancola?

  Man, I have a negative net worth. This is absolutely crazy. And don't not worry. If you have a negative net worth, what we're going to do is help you dig out of that hole. Or you may be saying to yourself, wow, I'm in a way better situation than I ever thought I would be. I've actually built a ton of wealth and I have a way higher net worth than I thought I would. Maybe my, your house appreciated, or maybe, you know, you have a couple of vehicles that are paid off. And you have some great investment accounts that have built up over time. And you haven't looked at your 401k in a couple of months and man, it really did take off. Those types of things are really cool to see as well. And when you do your net worth calculation for a lot of people, they're like, man, I can't believe that we have grown our net worth this much over the course of the last couple of years. So it's a really, really cool thing to see how this works.

• 10:22Andrew Giancola?

  And over time, I'm really, really excited to see you all grow your net worth. So now that we understand net worth, let's jump into the first class. All right. So number one is the lower class. Now, this is the bottom 25% of the country. And the lower class are going to be folks who do not have a high income. In fact, the median income for the lower class is $34,000. And the median net worth for the lower class is $3,500. But the average net worth is actually negative. It's negative 5,300 and it's negative due to carrying debt.

• 10:56Andrew Giancola?

  Why your net worth would be negative is you have more debt than you have assets. And that is why you have a negative net worth. And this can be very common for folks in the lower class because they're just focusing on trying to get by day in and day out. So the typical jobs for the lower class are going to be retail workers, janitors, cashiers, young professionals with student debt, those types of things. Now, when I first graduated from college, I made $30,000 per year. And so I know exactly what this feels like to be in the bottom 25% of the lower class and how to claw your way out of this. I lived paycheck to paycheck for a good portion of my first year that I was in a job. I was trying to figure my life out. I was trying to figure out how adulting worked.

• 11:35Andrew Giancola?

  And so I went through this entire process and I can tell you, you can claw your way out of your financial situation and get yourself to the next step. And I'm going to talk about some of the things that I did for this class specifically, just so you can understand that it is possible to get out of that financial situation. So key struggles with this class is that 40% of Americans can't cover a $400 emergency expense. That is one of the worst statistics out there, I think, for most people. It's a scary financial statistic because you are playing with fire if you don't have an emergency fund set up. Now, I am not out of touch. I know how difficult it can be when it comes to not making much money. You are just putting every single dollar you can on survival. And so that's all you're trying to do day in and day out is survive.

• 12:18Andrew Giancola?

  We're going to tell you how to get a little bit of a cushion here in a second. 61% of US workers live paycheck to paycheck at this level. That is completely understandable because you only have so much money coming in. And unless you are going to live an extremely frugal lifestyle, you are going to have to spend a larger portion. So a lot of times you'll hear us talk about your baseline expenses. Well, folks in the lower class are going to have a higher percentage going to baseline expenses because they have to. Their income is not high enough to shift that yet. And then household debt to income ratio is 92%, which this means every $1 earned, 92 cents is already committed to debt payments. This is according to the Federal Reserve Bank. So how do you move up from this class? If you are in the lower class, how do you move up to the next level?

• 13:03Andrew Giancola?

  Number one is I want you to build a Small emergency fund and I want you to follow the 136 method. Okay. So what is the 136 method? Your initial goal, if you are at this level is I want you to build up one month of expenses in an emergency fund and you're going to put this in a high yield savings account. That is your number one goal is to save up enough cash where you have enough cushion for one month expenses. Why do you want to do this? Because folks who do not make a lot of money, when they have financial hardship come up, maybe your car breaks down. Okay. When their car breaks down, this will derail their entire financial situation. And in fact, if they are trying to make financial progress, it will take them backwards and in reverse. What do I mean by that?

• 13:44Andrew Giancola?

  That means they will go into debt in order to pay for any financial emergency. I don't want that for any of you. The number one thing you need to do is try to focus on getting extra dollars into a high yield savings account so that you have one month of expenses in an emergency fund. Now that may sound daunting for you if you're living paycheck to paycheck. How am I going to do this? But what we're going to do is you need to slowly figure out how to do this. Now we have an episode, we just recently did a couple of episodes back called how to break the paycheck to paycheck cycle. If you have not listened to that episode yet, I highly encourage you to do so because that episode breaks down exactly what to do step by step. And it's about a 50 minute long episode that is going to show you exactly what to do to get out of that paycheck to paycheck cycle.

• 14:26Andrew Giancola?

  So I'll let you check that one out if you have not already. Secondly, is we need to stop using a credit card if you are going deeper and deeper into credit card debt. The majority of folks in this situation are the ones that are getting deeper into credit card debt because they have to. Eliminate credit cards if you have to for the time being until you can responsibly utilize them. So what I would do is one of two things. One, you can use something like a secured credit card, which works like a debit card, but you can help to build up your credit at the same time. So if you have bad credit or if you're someone who does not have a good credit history, then utilizing a secured credit card will be a great option for you and it's going to allow you to not overspend. And that's the key here is we do not want to overspend on a credit card or go any deeper into debt. Your number one goal today is I'm not going to go deeper into debt.

• 15:11Andrew Giancola?

  I'm going to start building an emergency fund and then I'm going to pay off that high interest debt. Percent interest rate, we need to focus on getting paid down, but we got to get that one month emergency fund in place first so that we do not derail our financial progress towards paying down that debt. And so really, really important stuff as we go through this. Three is I want you to look into utilizing your employer's 401k match. So that's how you can get started investing, at least get some dollars moving and get them growing over time is if your employer offers a 401k match, always, always, always invest at least up to the match. Why? Because it's free money and you want to take advantage of that free money and get that hundred percent rate of return. But secondly, you can also take advantage of things like the

• 15:53Andrew Giancola?

  earned income tax credit or the EITC. And this provides up to $7,400 for low income workers. So make sure that you take advantage of that as well as you start to look through this. So lower class, I want you to listen to that paycheck to paycheck cycle episode. If you're living paycheck to paycheck, or anybody who's living paycheck to paycheck, you could be making a ton of money and living paycheck to paycheck. Make sure you're listening to that episode because that's gonna be a really important episode for you to get yourself out of that situation. Number two is the lower middle class. So this is the 25th to 45th percentile. And you're gonna be actually surprised at some of these numbers. So the median net worth in the lower middle class is $71,000 and the median income is $44,000. So the lower classes median income was 34,

• 16:37Andrew Giancola?

  it's $10,000 more for the lower middle class with the median income. So this can be young professionals, this can be like construction workers, factory workers, truck drivers, those types of things. Now, what are the key risks of the lower middle class? The lower middle class has 60% of Americans earning $50,000 plus and still living paycheck to paycheck. So again, the median income is $44,000, but there's people on the higher end of that spectrum and the lower end of that spectrum. The average new car loan, this is the sickening one. And this is where a lot of people will get themselves into a tough financial situation. Now, we have an episode coming up on this exact subject on how much car you can afford. But the average new car loan is $41,000 with a monthly payment of $733. If you're making $44,000 per year and you go out and get a

• 17:26Andrew Giancola?

  $1,000 car loan, you're working in reverse. This is not a good situation to put yourself in. If you use an entire year's salary on a depreciating asset, cars go down in value every single year, and I'm sure you know that. Do you think that's a wise decision for you long term? No, instead, what I want you to do is try to save up a little bit of cash and just buy an older car and try to drive it as long as possible. Now, old reliable cars are the big thing that you want to look for. We've done a few social media videos looking for things like Honda Accords or Toyota Corollas and saying, hey, can you find one under $10,000 that you could pay for in cash that will last you, you know, five or so years? And we've done videos showing that you can do that right now, today, in this day and age.

• 18:10Andrew Giancola?

  And so this is going to be one that I think for a lot of people, if you want to start building wealth, you have to make some sacrifices in specific areas. You've got to choose what those areas are. Maybe it's housing, maybe it's transportation, maybe it's reducing the spend on food. But it's got to be in some of these bigger areas that make a huge impact. It's not cutting back on your lattes. That's not going to make a huge, huge impact for you. What is going to make a huge impact is the big ticket items, housing, food, transportation. So you've got to think through that. Now, the average credit card balance for this group is $6,960. The problem with having a credit card balance, everyone, if you don't understand this yet, is that the interest rate is so incredibly high that that balance is going to continue to grow if you make those minimum payments. You have to make sure that you are paying down that credit card. It's really, really important to do this.

• 18:56Andrew Giancola?

  Now, how do you move up from this level? Number one is we want to increase our income. Income is the number one driver to allow people to build wealth. Because once you get your income high enough, but you keep your expenses the same, you will be able to take that extra income and put it towards wealth building activities, which is going to buy your financial freedom. Every dollar you put towards investments, or every dollar you put towards real estate investing, or every dollar you put towards your high-yield savings account for the emergency fund is taking you one step closer to freedom. You are buying back your freedom, and I want that for every single one of you to go out there and buy your freedom. So increase your income first by negotiating your salary. Now, if you don't know how to negotiate your salary, we wrote you a free ebook.

• 19:36Andrew Giancola?

  If you go to mastermoney.co/courses, we wrote a free ebook talking on exactly how to do this. It's called Finally Get That Raise. And in that ebook, I give you the step-by-step exact system that we follow. We also have a podcast episode on it, or we might have two of them now. We actually have two podcast episodes on it that will show you exactly how to do that. Now, workers who switch jobs earn on average 14.8% more, according to ADP. And so this is one where I think a lot of people need to consider, if you've been stuck at your job and the same pay for a longer period of time, switching jobs is going to actually give you a huge payday as well. So look into that. We have an episode actually talking about how to do that. And I think it's really, really powerful for a lot of people, especially if you've been stuck with the same salary

• 20:20Andrew Giancola?

  for the last two or three years, you need to make sure that you are increasing that amount. Investing early is key. So waiting until 40 instead of 25 can cost you over $1 million in investment growth. So for those of you who are in this class, maybe you just started your first job. The goal for you is to start investing right now. The sooner you get started investing, the faster you can start to build and grow your wealth so that you can have financial freedom. And you can have financial freedom, I promise you, in your late 40s, your early 50s, if you start now. But you have to start now because as your income starts to increase, you're going to take those extra dollars and start to invest more over time. And this is going to compound and it's going to snowball. It's going to be like a giant snowball rolling downhill.

• 21:03Andrew Giancola?

  But you have to learn how to start investing now. Now, another thing to consider at this level is can you afford a home? A lot of people will want to afford a home at this level because they can start to make a little bit more money and they can start to save up for a down payment on a house. What I want you to do is run total cost of ownership, TCO. That means you're going to figure out, A, is this house actually worth it with all the additional costs associated with it, the maintenance, the capital expenditures, and all the additional costs associated with a house? We have a free calculator for you. So if you go to mastermoney.co/resources and you go to the total cost of ownership calculator, it'll show you exactly how to run these numbers. It's one of my favorite resources that we have because most people don't run the numbers on a house. And if you run the numbers on a house and it makes a ton of sense,

• 21:46Andrew Giancola?

  Right now, then you can go buy a house and it'll help you build wealth over time. A lot of people utilize houses as wealth storage vehicles, meaning that one good reason to buy a house is that you can start to at least increase your net worth over time. The problem is, when you run total cost of ownership, you're going to see the rate of return is not that great on a personal residence. And that's okay for some people if you have enough wealth. But if you're just at the beginning of your wealth building journey, you want to put all of those dollars in the highest growth activity that you can possibly allocate them towards. And so that is going to be really powerful as you start to grow over time. Now, those are going to be the first two. Now, we're going to get into the middle class. All right. My relationship with money has changed a lot over the years.

• 22:29Andrew Giancola?

  Early on, I thought building wealth was about making more money. Now, I know it's really about having clarity. When you know exactly where your money is going and whether you're on track, you make better decisions. That's one of the reasons I love Monarch. It's the personal finance app that tracks everything from your accounts and investments to your savings, goals, and spending. So you can see your entire financial picture in one place. One habit that's made a huge difference for me is my five-minute drill every single morning. I open Monarch, check my spending, investments, cash flow, and net worth, and I'm done in just a few minutes. It gives me confidence that nothing is slipping through the cracks. I also love the AI weekly recap because it'll flag spending changes,

• 23:11Andrew Giancola?

  upcoming expenses, or shifts in my net worth before they become a problem. Instead of reacting after the fact, I can make adjustments early. It really feels like having a financial advisor in your pocket. Write your own money story with Monarch. Use code PFP at monarch.com to get your first year of Monarch Core half off at just $50. That's 50% off your first year at monarch.com with code PFP. If you've been listening to this show for a while, you know it's not just me anymore. It takes a great team behind the scenes to make everything happen. And if I had to hire someone tomorrow, I'd want someone who could jump right in and make an impact. That's why I'd use Indeed Sponsored Jobs. When workplace chaos hits, Indeed

• 23:56Andrew Giancola?

  Sponsored jobs helps you reach qualified candidates faster. Your job gets boosted in search results, so you're spending less time searching and more time interviewing the right people. Plus, you only pay for results, which I absolutely love. Sponsored jobs posted directly on Indeed are 95% more likely to report a hire than non-sponsored posts. That's a huge advantage when you're trying to grow your business. Spend less time searching and more time actually interviewing candidates who check all of your boxes. Less stress, less time, more results. When you need the right person to cut through the chaos, this is the job for Indeed sponsored jobs. And listeners of this show will get a $75 sponsored job credit to help get your job

• 24:40Andrew Giancola?

  the premium status it deserves at indeed.com/podcast. Just go to indeed.com/podcast right now and support our show by saying you heard about Indeed on this podcast. Indeed.com/podcast. Terms and conditions apply. Need to hire? This is a job for Indeed sponsored jobs. It's kind of amazing how much can change in just a single year. Every summer, the kids are a little bigger, a little more independent, and life looks a little different than it did the year before. And it reminds me that while we can't predict the future, we can prepare for it. That's one of the reasons I like PolicyGenius. See, PolicyGenius isn't an insurance company. They're an online marketplace that lets you compare life insurance quotes from some

• 25:22Andrew Giancola?

  of America's top insurers side by side for free. And their licensed team helps you compare coverage, prices, and terms, answers your questions, and even handles the paperwork so you can get the right policy without the hassle. For me, having life insurance isn't about expecting something to happen. It's about knowing my family is protected so I can actually enjoy these moments together instead of worrying about what comes next. And with PolicyGenius, you can find 20-year life insurance policies, starting at just $276 a year for $1 million of coverage. Head to policygenius.com to compare life insurance quotes from top companies and see how much you can save. That's policygenius.com.

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• 26:34Andrew Giancola?

  Right, so number three is the middle, middle class, which is really most of the middle class. And this is going to be the 45th to 65th percent time. And so these are going to be a lot of the professionals out there who are, you know, working a nine to five, or maybe you're an electrician or a plumber. But if these are the careers that, you know, typically will take a degree or some sort of certification in order to move forward. Now with the middle, the middle class, the median net worth is about $159,000 and the median income is $71,200. Typical jobs are things like IT specialists or some entry level accountants. A lot of accountants now are making, you know, well over 100,000. But the entry level accountants, maybe some mid level managers, some electricians, some plumbers, those are going to be who is in the middle, middle class.

• 27:19Andrew Giancola?

  Now, key struggles for this group is that 64.3% of the middle class wealth is tied to home equity. And this is something that we need to have a conversation about for a lot of people. I don't want the majority of your net worth being tied to your home equity. What you want to do is shift that balance from your home equity to your investment accounts. Now, this takes some time to do, especially when you first buy a house. And let's say, for example, you bought a house in 2020, your home is going to drastically appreciate if that's something that you did because from 2020 to now, a lot of homes have appreciated. So you're going to have a lot of equity in that house. And so if you have a lot of equity in that house, this is something you really can't control. But at the same time, I want you to start to try to turn the tables because the scale

• 28:02Andrew Giancola?

  is going to be your home equity is much more weighted than your investment accounts is. But I want you to balance that out and then over time, your goal is to make sure your investment account is way higher than your home equity because your investment accounts are what you can utilize towards your financial freedom. Your home equity is not something that you're using towards your financial freedom. And so you want to make sure that you are really increasing those investment accounts. Secondly, only 53% of middle class households have a taxable brokerage account. And so this is one where most of middle class households are not. Investing outside of maybe possibly their 401k. And so you want to grow your investments in a bunch of various ways and make sure you take advantage of tax buckets. And so really, this is going to be something that can be powerful for a lot of people because how you move up is first,

• 28:44Andrew Giancola?

  get your 401k match and then start maxing out your Roth IRA and your 401k. You want to try to get those dollars into that Roth IRA or 401k, especially if you are in the higher level of median income of this class, you want to make sure that you are getting more dollars in those retirement accounts. Why? Because you're going to get tax advantages because of that. But secondly, you're going to grow your money in a way that is going to help you once you hit retirement age. Now, a lot of folks in this middle, middle class are going to be interested in possibly retiring early, especially if you want to retire in your late 40s, early 50s, which is what I want really everybody to be able to do when they have the opportunity, especially if you're getting started in your 20s or 30s. I want you to have the opportunity to retire in the next 20 to 25 years.

• 29:26Andrew Giancola?

  And so because of that, we need to make sure that we are increasing our contributions to our 401ks, our Roth IRAs, those types of things. In addition, utilizing your HSA account can tremendously help you because it's got that triple tax advantage. Now, if you do not have an emergency fund already, that's going to be very, very important. You've got to follow the 136 method. If you have not seen that episode, make sure you just Google the 136 method and it'll pop up. But that is our episode talking about the emergency fund and how to totally build it out and making sure that you have at least six months in your emergency fund is going to be really, really important. So the middle, middle class is going to be a lot of you. That is where you kind of stack up is the median income is 71,200, the median net worth is 159,000. Now, the upper middle class, this is going to be the 65th to the 85th percentile.

• 30:11Andrew Giancola?

  So the majority of Americans are going to be the upper middle class and below. Now with the upper middle class, this is going to be people that are finally feeling like they're doing something. Or maybe they have a high income, but they feel like they're spending it all on things like daycare or they feel like they're spending it all on their mortgage and car payments and all these different things. A lot of folks who are living paycheck to paycheck in the upper middle class are doing so because of lifestyle inflation. This means as they start to get salary raises because they're high performers or as they start to increase their income, they also increase the amount that they are spending by the Same amount. That's the key phrase, the same amount. What you want to do is increase your spending so that you can enjoy your life. But at the same time, you also want to increase your investment contribution.

• 30:53Andrew Giancola?

  So maybe 50% goes towards your spending and 50% goes towards your future freedom. So that you can buy back your freedom and get out of this job and the rat race and the things that you do not want to be doing day in and day out. And so this is what I want for all of you is I want you to see that vision. Imagine yourself waking up and you don't have to work if you don't want to. Or imagine yourself waking up and you quit your job and you could do whatever you want day in and day out. You could drop your kids off at school or maybe your kids are a little older. And you can go do whatever you want. Maybe you want to go golf, play pickleball, go to yoga class, go to Pilates. I don't know what you want to do, but you could do that day in and day out because you set yourself up financially early. This is the result of setting up your financial situation properly. And that's what I want for all of you is to be able to set up that financial situation properly.

• 31:37Andrew Giancola?

  And so when it comes to the upper middle class, the median net worth is $370,000. And the median income is $115,000. So these are the folks that are typically making over six figures. And this is going to be senior managers or engineers or architects. Maybe you have a specialized degree or you have a degree in a specific field or you're just a high performer at your job. Maybe you're in sales, something like that. Only 8% of Americans at this level max out their 401ks. Now, if you're making that much and you don't have dependents, you definitely need to make sure that you are maxing out that 401k. That is going to be something where your lifestyle could be too high if you're not maxing out. So try as hard as you can to max out that 401k. Only top 20% of earners are 5X more likely to own rental properties.

• 32:22Andrew Giancola?

  Rental properties are not for everyone, but if they are for you, this is probably the level where you can start to look into that. If you're maxing out some of your retirement accounts and getting your dollars working for you. Then if you want to start to look into investing in rental properties, that can be a phase that you can look at this. Now, how do you move up? Okay. The question is, how do you move up? Number one is if you're at this level, you need to prioritize investments. If you are not investing currently, you need to make sure that you get started investing as fast as you possibly can. If you don't know how, we have a course called Index Fund Pro that you can check out. Exactly how to invest and if you haven't started yet then looking at getting your 401k match, starting to look and see if you're eligible for an HSA, starting to contribute to a Roth IRA and if you make too much, you can do a backdoor Roth IRA and then getting

• 33:03Andrew Giancola?

  dollars into your 401k, those types of things are going to really, really help you long term. And then also in the upper middle class, you want to make sure that you have some tax strategy in place as well. So I would make sure I have a CPA on my side that is helping me through some of my tax strategy to ensure that I am getting either all the deductions I need and/or I'm just taking the standard deduction long-term. This is going to be a great person to have in your corner though, as you start to see your income rise. And so when your income starts to rise at this level, you can do some really, really cool things, but it depends on your family situation and your financial situation. A family of four, for example, a new study just came out from Bankrate that showed if you have a family of four, in a lot of states, you need to make over a hundred thousand dollars. And so this is something where it depends on your financial situation and who is in

• 33:47Andrew Giancola?

  your household. So a lot of things are going to be dependent on your specific situation, but we want to grow those investments. When you start to earn more and you're working really hard to get those promotions, you need to make sure that you are capturing some of that income and putting it towards your freedom. I want you to have financial freedom. What comes after all of that is things like maybe your kids' college savings, all that type of stuff. You want to do that later on, but you want to make sure that you're taking care of your retirement first before you do these additional things. We're going to jump into the upper class next.

• 34:18Andrew Giancola?

  All right. So the next one is the lower upper class. Now, the lower upper class is the 85th to the 95th percentile. And so the median net worth in the lower upper class is going to be $747,000. The median income is going to be $189,000. Now, remember the income is a median income. So there are some that are higher, some that are lower. Typical jobs in this level is going to be lawyers, doctors, senior managers, business owners, those types of things. Now, key struggles for this class is that 30% of households earning $200,000 per year are still Living paycheck to paycheck. Now, this is why we talk about this on this podcast all the time. Having a really high income does not mean that you are wealthy. What means you are wealthy is how much of that income that you keep.

• 35:01Andrew Giancola?

  So you can make a lot of money, but if you do not keep a portion of that income, then you will never become wealthy. In fact, you're going to be a slave to your job until you make that shift. What you have to do is keep and maintain a portion of your income and put it towards wealth building activities. I cannot stress this enough. You're going to hear me say this over and over in this episode because I want you to understand it. You've got to take a portion of your income and you've got to invest those dollars towards future you. And so 30% of households earning $200,000 are still living paycheck to paycheck. And this is according to Lending Club. So you have to make sure that as you start to grow your income, you are also taking a portion of that income and putting it towards investments. This is why we talk about the 50/50 rule all the time for raises

• 35:44Andrew Giancola?

  is that when you increase that income, put 50% towards what you want to do in life. Maybe you want to spend more on your kids or you want to spend more going to fitness classes. You want to spend more, you know, on more vacations. More power to you, but take the other 50% and put that towards wealth building activities. Your 401K, your Roth IRA, your future you, your brokerage account, maybe your real estate investments, whatever you're doing at that time. I want you to take more and put it towards your future you. Now, the higher your income is and the more that you are spending, that means you need more invested in order to be able to retire. Because if you know how the 4% rule works, that means you could draw down 4% of your portfolio every single year in order to preserve your wealth over time. And so we got to do this calculation.

• 36:25Andrew Giancola?

  So if you're spending $200,000 per year, that means you need $5 million invested in your portfolio to be able to retire. That is your freedom number is $5 million. And so for a lot of people, you need to increase your investment contributions in order to get to that number if you want to hit it at a certain point in time. Now, a lot of people who are doctors or they're lawyers, maybe they love their job. I have a friend who's a lawyer who's never going to retire. He could have retired a long time ago, but he's never going to retire. I have friends who are doctors who got into it to help people. And so they're not going to retire anytime soon. So if that is you, you can reduce the amount. That you were putting towards your freedom number, but honestly, I would just get ahead of it. If you have the extra dollars, put it towards that if you can. And then over time, you can start to reduce that spend. Now, there's something that we talk about a lot called

• 37:10Andrew Giancola?

  coast fire, where if you're making a really high income, what you could do is save a huge portion of your income, put it towards coast fire, and then you can stop at a certain level, because once you get to a certain level, it's going to compound over the course of the next 20 years to hit your freedom and retirement number. We have an entire episode on coast fire, if you want to check that one out as well. Now, high income earners lose 30 to 40% of their earnings to taxes if they don't optimize deductions. So when you're at this level, you have to have a CPA in your corner. And if you want to get an advisor as well in your corner, a financial advisor, you can do both if they can help you optimize your taxes. But a CPA and a financial advisor in your corner is going to be really, really helpful for a lot of people when you have a really high income.

• 37:52Andrew Giancola?

  If you don't have the time to think about this stuff, that can be really, really helpful in the long run. Now, how to move up? If you really want to move up, it's A, maxing out all your retirement accounts at this level. You need to make sure that you are doing that. B, investing in other avenues. Maybe you want to invest in businesses, or maybe you want to invest in real estate. But getting your dollars working is going to be really, really important, and making sure that you utilize trusts and LLCs to protect yourself and do asset protection in a very specific way. So get an attorney, make sure you have your asset protection set up, so that at this level, you are doing the right things to make sure you're protecting yourself. Now, we're going to get to the last class that I'm going to talk about here, which is the upper, upper class. So the median

• 38:31Andrew Giancola?

  net worth of the upper, upper class is $2.5 million, and the median income is $378,000. So you know, in this class, it's going to be business owners, it's going to be people who are working in tech, it's going to be doctors who are specialists, it's going to be high performing sales folks, there's going to be a lot of people within this classification. Now, key characteristics is 50% of this group actually owns a business. So the upper, upper class, nearly 50% of them owns a business, and business owners have a 4X net worth of salaried employees. Now, let me tell you something about owning a business, because I own multiple. It is not for everybody. It is not for the faint heart whatsoever. In fact, business Feel sometimes like it's a war out there. And so what you need to understand is that it is not for every single person.

• 39:15Andrew Giancola?

  You can take the path where you work a nine to five. You save a portion of your income and you go home every single day and get to spend more time with your family and kids. Now, if you want to work nights and weekends, that's when business owners come in. Cause you gotta work really, really hard as a business owner, especially when you're starting out. Cause you're the only one doing everything. And so it really does depend on who you are. So don't listen to stats like that and say to yourself, well, that's what I want, but I'm not willing to put the work in. You have to be willing to put the work in, but if you are willing to do it, it really does pay off. How to move up at this level? Well, really at this level, what you really want to do is make sure you structure your wealth through family trusts, estate planning and have 70% of generational wealth is lost by the third generation. So you also want to equip your kids on how to manage money.

• 39:58Andrew Giancola?

  You want to make sure that you provide that financial education because 70% of wealth is lost by the third generation. You want to make sure that's not you. And so we have a ton of content talking about, you know, how to equip your kids and help them through this process. And so making sure that you do that is really, really important. Also getting involved in possibly real estate investments or just putting extra dollars towards other avenues is going to help you diversify your portfolio. But I just love, you can go the old fashioned index fund and ETF portfolio if you wanted to too. I mean, there's nothing wrong with that whatsoever. You're going to make a lot of money doing that if you put your high income towards that. And so that is something that you can definitely do as well. Look deeper into that if you want to. So these are all the classes that we're going to be talking about today. And here's some final lessons that I want to talk through. A, the middle class is shrinking.

• 40:42Andrew Giancola?

  The wealthy are growing their assets and the lower class is starting to struggle. I want you to understand if you are in the middle class or if you're in the lower class, or even if you're in the upper class. I want you to understand how to grow your wealth. I want you to understand how you personally can get wealthy this year. And you gotta start by taking action on some of these things. Investing 20 to 30% of your income is the fastest way to move up. Now you can work your way up towards that. We talk about the 1% rule all the time, meaning that you can increase your investment contributions by 1% a month or 1% a quarter, or 1% every couple of months to ensure that you're growing your investments over time. This is going to really, really help you in the long. Run when it comes to growing your wealth. Lastly, is entrepreneurship and business ownership are the primary path to the top percent?

• 41:26Andrew Giancola?

  If you want to be really, really wealthy, some people have that goal. They want to be really, really wealthy. If that's your goal, then entrepreneurship is probably going to be the way. If you're not going to go with entrepreneurship, you've got to be a doctor, lawyer, maybe in sales, something that has a really high commission rate. Avoiding lifestyle inflation is key, especially if you're in the middle class or the lower class. Don't go broke trying to look rich, meaning that don't go out and buy the fancy car when you really can't afford it. Don't go out and buy the fancy watch or the Rolex when you really can't afford it. Don't go out and go on the amazing vacation when you can't afford it. Making sure that you live within your means is so powerful if you want to buy your financial freedom. Do you want freedom or do you want to be able to look rich in front of other people? Other people don't care.

• 42:08Andrew Giancola?

  They're more focused on themselves and so you don't need to look rich in front of other people. Instead, making sure that you make good, conscious, prudent financial decisions is what your entire goal should be. And it's really, really important. Now, if you struggle with this, if this is something that you really struggle getting past, read the book, The Millionaire Next Door. That book absolutely changed my life in my early twenties when I read it and I realized really, really quickly that the truly wealthy people, they're not buying the Gucci belt. Instead, what they're doing is taking their extra dollars and putting them into assets. Now, once you have those assets, let your assets pay for the luxury items. Let your assets pay for the massive vacations. I want you to take the vacations, just don't take the $20,000 Hawaiian vacation when you're making $50,000 per year.

• 42:51Andrew Giancola?

  And that's where I think a lot of people fall short. So making sure you kind of think through this is really, really important. Meet with your spouse, kind of talk through, what are we going to do to increase our income? Meet with your friends, your family, keep each other accountable through this process. That is going to be super, super helpful. So if you fall into any of these categories, number one, what I would do is focus on increasing your income. That is the number one thing that you can do is increase your income. Number two, have a financial protection plan, making sure that emergency fund is in place so that nothing can derail your financial progress. And then number three is making sure that you invest your extra dollars over time and cutting back expenses, you can only Cut back so much, but I want you to start to look at cutting back if you can,

• 43:32Andrew Giancola?

  just the unnecessary crap, the unnecessary waste, making sure you're looking into that as well. Those are the four areas that you can take action on today. I want to see you take action on some of these and really, really excited for you all to be here. And thank you so much for investing in yourself because that's exactly what you do when you listen to this podcast is you are investing in yourself. Share this episode with a family member or a friend if you got value out of it. Cannot thank you enough again for being here and we will see you on the next episode.

• 44:13Speaker 02

  At Edward Jones, we believe rich is more than caring about the latest and greatest. It's also taking care of what gives your life meaning. That's why your dedicated financial advisor meets you where you are with personalized financial strategies that help protect what matters so you can preserve your progress while creating a path forward. The key to being rich is knowing what counts. Let's find your rich together. Edward Jones. Member SIPC.