Pod Insights Money Guy Show How To Get Rich and Stay Rich in 2026 (By Age) About this episode We often talk about how to get rich, but how do you stay there? We're walking you through the actionable steps you can take (based on your age) to put yourself on an optimal path for building wealth. Then we shift our focus to maintaining that wealth, rather than losing it all. See if you're checking the boxes for your decade and start preparing for the next one, too!
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Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Speaker 00 Hey Spotify listeners. When you travel with American Airlines, you'll enjoy comfort and convenience at every altitude. Before takeoff, unwind in the Admirals Club Lounge with curated self-serve offerings of hearty bites and refreshments. In flight, stay connected with high-speed Wi-Fi. Sponsored by AT&T. Your journey is designed to feel easy from the moment you check in to the moment you arrive. No matter where you're going, American gets you there. Book now at aa.com.
0:26 Speaker 01 Cheers to fall savings at Whole Foods Market, home of higher ingredient standards. This Halloween, share chocolates and candies made without that spooky high-fructose corn syrup. Throwing a party? Make it easy with a Berry Chantilly Cake. Ready-to-cook pizza? No antibiotics ever chicken wings. And sushi made fresh daily. Fall gatherings never tasted better. Save through November 3rd at Whole Foods Market.
0:53 Brian Preston? If you want to be rich, you've got to do the right things with your money. And it's going to look different depending upon your age.
1:00 Speaker 03 Brent, I am so excited because today, we're not just talking about how to get rich, but also the traps to avoid in each stage so that you can stay rich.
1:10 Brian Preston? With that, let's jump right in.
1:18 Speaker 03 So Brent, let's level set because we have this belief that anyone can be wealthy, no matter where you're starting at, no matter where you are today. But you have to understand some basic components. And one of those basic components are the three ingredients to wealth creation.
1:35 Brian Preston? This should feel so simple, but when you hear it all pulled together, you're like, that makes complete sense. Because the first ingredient to wealth creation is discipline. Basically, can you live on less than you make?
1:47 Speaker 03 That's right.
1:47 Brian Preston? And then if you can take that, living on less than you make, that creates margin in your life that should be money, that if you do the smart thing with it and turn that money and actually put it to work for you. And then here's the most important component. Give it that sprinkle of time. If you can let your money work harder than you can with compounding growth, amazing things will happen.
2:08 Speaker 03 Now, no matter what age or stage you're in, the ingredients are the same. It's the same three ingredients, but how you use those and how they manifest in your situation might change. That's what we want to talk about. We're going to go through how to get wealthy and stay wealthy using these three ingredients at different ages and stages. So with that, Brian, let's jump into the twenties and let's talk about tips for the twenties, traps for the twenties, and then goals that you should have in your twenties.
2:36 Brian Preston? Now, let's first just jump right in with the tips on, and look, we put start investing, but the reality is if you do absolutely anything when you're in your twenties, you're going to have success because you are a billionaire of time. That's not a misstatement. You literally are a billionaire of time, so you ought to put that to work in your favor.
2:58 Speaker 03 And the younger you start, the earlier you start, the easier it is. Think about this. If you're a 20-year-old and you want to be a millionaire, all you have to do is start saving $95 a month, and you will be a millionaire by the time you reach age 65. That means that $948,000, almost $950,000 of your million dollars was actually growth. It was your money making money. But the longer you wait, the harder it becomes. Where the 20-year-old only has to save $95 a month, the 40-year-old has to save $780 a month. The earlier you can figure this out, the sooner you can catch on, the easier the path becomes.
3:38 Brian Preston? Yeah, I mean, I want to go easy as possible. And I love the fact, I mean, you just said it, but I think it's worth repeating, especially for all the people listening out there on the podcast side of things. That person, the 20-year-old, only 51,000 of that is their money. The 950, exactly what you said, is all the growth component. Guys, get in on the easy stuff. Early and often is going to be your friend when it comes to saving and building your millions.
4:04 Speaker 03 But maybe your goal is it just to have a million, maybe your goal is financial independence. And we have a great tool out there for you. You can go to moneyguy.com/resources and check out our deliverable, "How Much Should You Save?" And what you can do is look at, based on your age, if I were to start saving X% right now, 25% right now, 15% right now, fill in the blank, you can determine how much of your pre-retirement income you'll be able to replace. And like you can see, if you start in your twenties, if you just start doing something, doing anything, your future can be incredibly exciting.
4:39 Brian Preston? That leads to the next tip we want to give for 20-somethings is, hey, don't skip on having an emergency fund. And guys, this is to keep you from making those desperate decisions. I just had, I was working on another project and I saw a stat that close to 2/3 of individuals that file bankruptcy, it's because of like medical stuff that happens when they weren't prepared for it. And that's why we're not, we're not just boring people that wants you to have a pot of cash sitting over here instead of working for you. It's a matter of you not getting caught on a Tuesday or Thursday with an emergency or something happening that you're not planning for, and not having the money to help you survive and even thrive going forward.
5:17 Speaker 03 Another tip in your twenties is figure out how you can invest in yourself. Now, this could mean going back to college, this could be getting a degree, but it might just mean honing your skillset, adding a skillset that you don't currently have, and focusing on, okay, I know what I'm doing today, I know the job I'm doing today. What things can I invest in myself so that I can continue to succeed in the future? Have a more bright career trajectory, have a bigger shovel later on in life? If you can figure out how to put the time and the effort and the investment in early in your twenties, it's likely to pay dividends much later in your 30s, 40s, and so on.
5:54 Brian Preston? And then kind of begin with the end in mind. The next tip was have a plan. You know, a lot of people, I feel like they are not taking the lead role in their lives in general. They're just kind of rudderless, just letting life happen to them. And I think you'll find just- Just like I talked about, just any type of, you know, participation in investing is going to have huge rewards. I think you're going to find the exact same thing with having a plan. If you will just start thinking about where you want to be in the future, you can start taking steps. You will have tremendous success just from your little bit of preparation.
6:26 Speaker 03 And we've built a blueprint for you. That's what the financial order of operations is. If you want to go to learn.moneyguy.com, you can do a deep dive on the financial order of operations. You go to moneyguy.com/resources and download your free deliverable so that you don't have to guess what's the next best thing for me to do with my next dollar. We actually lay it out there for you. So if you do not have a plan and you need to have a plan in place, let the foo be your guide.
6:53 Brian Preston? Okay, let's talk about, that's the tips. Let's talk about what people actually usually come off the path and they fall in these traps. And the first one is living above your means. Remember I told you the first ingredient of wealth creation is discipline, living literally on less than you make. But sadly, only 38% of Americans spend less than they make. That means, I'll do the math for you publicly, 62%, which is the majority of Americans, are spending more than they even have coming in and hitting their bank accounts each month.
7:25 Speaker 03 Now, look, we're not saying that at this stage of life, don't create memories, don't do fun things, don't have experiences. What we are saying is we ought to dazzle your basic life. Figure out how can I create those memories, create those experiences, create those environments that I can still enjoy, that I can still do without breaking the bank. Far too often, people operate in this mindset, they're towards, well, I'm only 21, so I might as well live it up right now, not recognizing that making that decision is actually robbing from your future self.
7:56 Brian Preston? That leads to the next trap is being unprepared for emergencies. Remember, I've already shared this for the 20-somethings, is the majority of bankruptcies are caused by people being unprepared and having to make desperate decisions. When you find out that less than 46% of Americans report having three months' worth of expenses covered for emergencies, you realize this is the norm. And I'm telling you, you don't want to be average when it comes to your emergency funds. You need to keep yourself from making those desperate decisions by having enough money to get you through, no matter what comes your way.
8:29 Speaker 03 I think this stat's even misleading because this says 46% of Americans don't even have three months. We say three months is the entry level. That's like the lowest level emergency fund. I think those that have less than a fully funded and adequate emergency fund is likely even higher. You want to make sure you have dollars in place that can protect you from those unknown unknowns, or they can protect you from falling into the next trap, which is racking up high interest debt. We live in a consumption society where it's far too easy to buy anything in the world, 20 bucks at a time, 40 bucks at a time, 100 bucks at a time. If you just swipe the card and rack up debt, it is going to be nearly impossible to build wealth. If you have interest, punitively working against you.
9:14 Brian Preston? Well, I think all these things are working together. If you think about this is the typical American story here is that we're spending more than we make. We're also being unprepared for emergencies. And then what happens when you have to make the desperate decision? You pull out the plastic and then you're stuck with racking up all this high interest debt. Guys, there is a better way to do money. And that's why we've even tried to give you, if you want to know what is high interest debt, we've got a deliverable for you. We have an illustration that kind of walks you through because look, in your twenties, you have an opportunity cost that your money that you works in your army of dollars has a lot of earning potential. So we give you a little more grace on student loans. It's around 6%. Car loans, look, I'd prefer for you to pay cash,
9:58 Brian Preston? but I know sometimes you've got to have a J O B to be your first part of the wealth building machine. So we're even willing to say, look, if you have to get out there and you need reliable transportation, it's okay for a moment in time if you even have to have a car loan up to 10%. And then credit cards, you notice it's zero, meaning I don't care if it's introductory. We don't want you to carry any credit card debt whatsoever. If you're not paying it off every month, you're not a credit card type of person. Credit card use is A okay, but credit card debt, no way.
10:28 Speaker 03 Now, there is a silver lining in this age where most surveys are actually showing that Gen Z has less consumer debt than older generations. So it sounds like maybe the pendulum is swinging. We want to see you guys continuing to make those sound financial decisions. So what should your goals at this stage be? Number one, start investing something. Start doing something. Start getting some money working for you because if you can just start the habit, you can begin to put that money to work, you will be amazed at what it can do for you later on in life.
11:05 Brian Preston? And I know we've already covered this stat on one of the graphs, but it's worth repeating. If you want to reach a million dollars by the age of 65, for a 20-year-old, all you have to do is $95 a month until you reach retirement. Or if you want to go ahead and get ahead of it because maybe you came into a lump sum of money or a windfall, $11,318 will get you there. The same thing, 25 years of age. Now, but watch this difference just in five years. We went from $95 a month at 22. Now at 25, it's $185 a month. Lump sum is close to $23,000. For a 29-year-old, you can do it at $302 a month or a lump sum of $38,000.
11:44 Speaker 03 If you want to know what the monthly amount you need to save or lump sum you need to save to be a millionaire by 65 is for your specific age, go download Are You On Track to Be a Millionaire at moneyguy.com/resources? And if you're doing this right, if you're making the right decisions, that if you want a checkpoint by the end of your twenties, as you round out this decade, we want your portfolio value, your invested assets to equal roughly one times your annual income. If you're doing that, you are well on your way to start your thirties on a positive foot. So Brian, let's now jump into the thirties. Let's talk about the tips, the traps and the goals that folks should have in their thirties.
12:27 Speaker 03 And what I think is interesting is you get into this like messy middle phase. If the things that happened in your twenties went unchecked, they become problems in your thirties. And one of the very first things that becomes A real problem is still that debt thing.
12:42 Brian Preston? Yeah, I mean, look, it's everywhere. We walk around is all consumption, whether it's the cars you drive, whether it's the education that gets you your first job. We're walking in a society that just encourages you get this credit card, do this store loan. You've got to be careful. You've got to keep the debt in check because a lot of you, if you made bad decisions in your twenties, your thirties is kind of your last step that you still can get a, get out of, get out of jail card is you're young enough that you can recover. So we've got to get that debt in check ASAP.
13:14 Speaker 03 Yeah. In your twenties, a lot of the debt problems you have are around consumption. I had too much credit card. I did too much. I ate too, you know, whatever those things are. But as you get into your thirties, the debt becomes a much bigger issue because you start to have debt on much bigger things. That's why we put our Money Guy rules in place to help keep you protected. When it comes to buying an automobile, we want you to follow 2038. That means you put 20% down. You don't finance a car for any more than three years or 36 months. And the payments for your automobiles cannot exceed 8% of your monthly gross income. This does not apply to luxury cars. If you're buying a luxury car, you got to pay it off in cash in one year, and we never, ever, ever want your car payments to be greater than your monthly
13:58 Speaker 03 investment amount. Make sure you are saving more for your future self than you are paying for your current self.
14:04 Brian Preston? And then don't forget the 3525 because I know in your thirties, a lot of you in your messy middle, you want to get in that first house. That's why we give you the grace that with the three is 3% down payment. Notice I didn't say 20%, I said 3% because we want to make this as approachable as possible. That's only on your first house. We want to make sure that you can stay in that house for at least five years or more because there's just too many transaction and friction costs. It's not a short-term decision. And then we've got to keep those total monthly costs below 25% of your gross income.
14:37 Speaker 03 So another tip that we want you to do, we said in your twenties, you ought to be saving something. You ought to just be getting some dollars working for you. But in your thirties, it's less about doing something. And it's more about doing the right thing and our goal for you in your thirties is to be saving 25% of your gross income. Again, you can go to moneyguy.com/resources. You can download our deliverable. How much should you save? Because if you can save 25% starting in your 30s, you are going to give your future self options and flexibility and freedom. If you want to live the life that you want to live on your terms, doing what you want, when you want, the way that
15:17 Speaker 03 you want, you got to start saving early for that or else you will get behind the curve and have to continue to play catch up as you're moving along that line.
15:25 Brian Preston? Well, that ties into, don't, don't sleep on the emergency reserves. Once again, this is going to keep you from making the desperate decisions. And then more than likely in your 30s, it's not just you anymore. You either have a spouse or potentially you have even children at this age. You need to make sure that you're at least covering the basics. So you don't get caught in those desperate decision making traps that are laying out there. So save and fund those fully emergency funds.
15:52 Speaker 03 So now it's interesting, Brian, we walked through like
15:54 Brian Preston? I said, save, fund, fully, just have an emergency fund.
15:57 Speaker 03 So it's interesting, you know, we walked through the tips of the 30s. It's no surprise that the traps in the 30s are the things that catch you if you're not following the tips in the 30s. And one of the very first things that we see people do is we see people overspending on cars. We've already walked you through, we want you to follow 238, but let's ask the question, how good are Americans, how good are car purchasers doing at 238? Well, we think about 20% down that you should put down on a car, but we look at Edmunds and we look at the value of auto purchases, the average down payment on a new car right now is 14%.
16:37 Brian Preston? Well, on top of that, there's usually negative equity too. So people are already blowing this up, not even doing 20%. That's a disaster, Americans.
16:46 Speaker 03 What about the three? We don't want you to finance for more than three years, more than 36 months. When we look at the average loan term for an automobile, it is 70.1 months or 5.8 years, almost Double the Money Guy prescribed amount.
17:01 Brian Preston? And by the way, every year that I look at this stat, it's getting longer. And now I'm even hearing that there's 96 month loans out there. Guys, we are going the wrong way with this. There's a reason we have three years is to keep your eyes and your pride away from, we want it to be actually be connected to your wallet and what's going on with your net worth statement. Whereas it feels like this consumption society is pushing you further and further at a hundred to $200 a month.
17:26 Speaker 03 And then we want your car payments to not exceed 8% of your gross income. The average new car payment right now is $754 a month. If you compare that to the median household income right now, it is 10.8%. So a lot of folks, a lot of folks in the messy middle, a lot of folks in the 30s are not following these car buying rules. And they're falling into this trap. And we believe that there's a better way to do money. If you want to make the decision the right way, we would encourage you to go to moneyguy.com/resources. And we actually have a car affordability calculator that will help you figure out based on your unique situation, how much car can I afford?
18:08 Speaker 03 What can I do to prevent myself from falling into the same trap that my peers fall into?
18:13 Brian Preston? What I hate, Bo, is that this is the incremental decision that's going to keep you from being a millionaire. Because more than likely, that additional money is going to the car payment. If you're doing this versus following 238, it's money that could be funding a Roth IRA, it could be funding the emergency reserves, could be putting more into your employer's retirement plan. This is foundational stuff that's now, instead of you having wealth in the future, you're literally driving it into the ground.
18:37 Speaker 03 Another trap that we see in the 30s is high interest consumer debt. We've already acknowledged that that's a problem you have to watch out for in your 20s. But in your 30s, if it's lingering around, now compound interest has been working against you for a long period of time. We know that right now, the average millennial has almost $7,000 of credit card debt. That's $7,000 costing you 15, 20, 25% a year. Again, it's going to be so difficult.
19:08 Speaker 03 Difficult to build wealth if you have compound interest working against you.
19:12 Brian Preston? Well, and these traps are all building on top of each other's because you're overspending on cars. You're building up the credit card debt and then we're even leading into buying too much house. Check this out. 21% of homeowners spend 30% or more and that's only half the story. That's homeowners. So that kind of already jades the stat right there is because we know a lot of younger people. You've, you've told us, hey, homeownership has gotten so expensive, I can't even get into homeownership. So then we ask the question, well, what percent for people who are in the rental side of things, are they spending over 30% and it's 50% of the population? Guys, we're in a bad situation where all the money is going towards consumption,
19:54 Brian Preston? that none is actually being saved for the future and that doesn't allow you to ever build your army of dollar bills.
20:00 Speaker 03 If you have 30% of your money going towards housing and 10% of your money going towards a car payment, you have high interest credit card debt, you can see that very, very quickly you are getting crowded out of having anything left over. So what should your goal be? How should you structure your 30s differently? We want you to be saving and investing 20 to 25% of your gross income and we want you to pay yourself first. If you can set it up so that your payments, your automated savings happens first thing, it's going to prevent you from trying to wait till the end of the month and save what's left over. In your 30s, 25% is no longer an aspirational goal. We would say if you are behind, it is an imperative goal that you need to be hitting.
20:44 Brian Preston? So let's give them some check numbers. What does it take to actually create a million dollars by age 65? For a 30 year old, it's $340 a month if you're starting from zero. Lump sum, 40, a little over $43,000 for 30.
20:57 Speaker 03 Pause there for a second. You know what's great about that number? You know, if you are 30 years old and you have saved $43,000, that means that you're already on track based on the work you've done to this point to be a millionaire by retirement. It's just worth noting that.
21:12 Brian Preston? Yeah, because it ties into our net worth goal of having one times your salary by the time you reach 30. By the time you're 35, 600. $106 a month if you're getting a little bit of a later start. That's like most Americans. Lump sum needed at that point is a little under $79,000. And for the 39-year-old quickly about to approach crossing into being 40, $943 a month are a little over $122,000 lump sum requirement.
21:38 Speaker 03 So if you're thinking about a checkpoint where you should be by the end of your 30s, by the end of this decade, we want your total portfolio value, the value of your investments to be roughly three times your annual gross income. If you can be at that place, if you can have your portfolio there, then you're going to be well on your way to starting your 40s in the right position.
22:00 Brian Preston? So you're saying basically come into the decade, one times your income. But if we've done this right, we'll come out of the decade at 39 to 40 at three times your income.
22:09 Speaker 03 That's exactly right.
22:09 Brian Preston? Great goal.
22:11 Speaker 00 Hey Spotify listeners. When you travel with American Airlines, you'll enjoy comfort and convenience at every altitude. Before takeoff, unwind in the Admiral's Club Lounge with curated self-serve offerings of hearty bites and refreshments. In flight, stay connected with high-speed Wi-Fi, sponsored by AT&T. Your journey is designed to feel easy from the moment you check in to the moment you arrive. No matter where you're going, American gets you there. Book now at aa.com.
22:36 Speaker 01 Cheers to fall savings at Whole Foods Market, home of higher ingredient standards. This Halloween, share chocolates and candies made without that spooky high fructose corn syrup. Throwing a party? Make it easy with a berry chantilly cake, ready to cook pizza, no antibiotics ever chicken wings, and sushi made fresh daily. Fall gatherings never tasted better. Save through November 3rd at Whole Foods Market.
23:04 Speaker 03 All right, Brian, let's talk about the 40s now because 40s are kind of interesting. It's sort of a tale of two stories. Either you've done what you're supposed to be doing and you're in the right spot, or you've not done what you're supposed to be doing and you have to start playing catch-up. Either way, one of the things that we want you to do in your 40s is we want you to get specific about your plan. We've given you all kinds of guidance around like save 25%. And follow this rule and do this, but as you get into your 40s, we want you to begin putting some teeth into, okay, this is what I personally am actually trying to accomplish with my dollars.
23:38 Brian Preston? Well, this money is actually turning into a lot of money at this point. So you better be paying attention to asset location. And if it gets to a certain level, we often talk about index target retirement funds, but once you cross over about a half a million dollars, tax location, like what's in different accounts, whether it's retirement, whether it's Roth, whether it's your after tax brokerage, that location matters for you. And you also should have a good idea of where you're trying to go and figuring out, are you ahead of the curve, behind the curve, right where you're supposed to be? This is exactly why we created the Know Your Number course and tool. It's because we want to give you some functionality to where you can figure out, hey, these are the variables that I'm trying to play with. So I can figure out if I'm ahead of the curve, behind the curve,
24:19 Brian Preston? with rate of return, savings rate, inflation, you name it, we put it in here. If you go to learn.moneyguy.com, we will help you figure out exactly where you are in this process.
24:29 Speaker 03 What's fantastic is once you have defined the finish line, once you defined what your number is, and you have an accurate understanding of where you are today, you can then reverse engineer into, okay, well, how much should I be saving? Do I still need to be saving 25%? Or am I out ahead of the curve? Or perhaps, maybe I'm not exactly where I need to be. So I need to be investing 25% or more to make up the difference. Because one of the truths that's happens in our 40s, a lot of folks reach your peak earning years. This is where your shovel might be the largest that it's going to be in your career. And while you may not still have the 88 time
25:10 Speaker 03 multiplier, you may not still be the billionaire of time that your 20 year old self was, in your 40s, your dollars still have a lot of juice.
25:17 Brian Preston? That's why we have the wealth multiplier. And look, without a doubt, you know, the prime time to start investing is in your 20s and even 30s. Cause we see that wealth multiplier for the 20 year old is 88, wealth multiplier for a 30 year old is 23, 40, it's still seven. But here's the thing, you just said something that I want people, if you get, if you're mad at yourself because you procrastinate. fascinated on saving and investing both said something really magical there is that the fact that these are your peak earning years turn that into fruit for your future self by actually starting to save and invest this is but you have to get serious more of the weight falls on your shoulder now this is we're past still compounding growth can do a lot for you but it's not easy
25:59 Brian Preston? street anymore so take it serious you still have enough time on the calendar to make the money work for you
26:05 Speaker 03 and then in your forties we want you to keep following the food you you've lived life at this point you've recognized that your financial life is not likely straight up and to the right there are fits and starts and setbacks and that's okay even if those things happen before this stage even those things happen in your 40s the financial order of operation should be your guide to let you know what you should do with your next dollar and if you can do that you can use it as your litmus test and you're going to put yourself in a position to not fall into some of the traps that we see people in their 40s fall into and the first trap that we see people a lot of folks do Brian is they just don't know where they are they have no idea where they stand from a financial standpoint
26:48 Brian Preston? well I mean this is this is bad we we've seen the stat one in four Americans have no idea how much they've even saved for retirement by the way I think a lot of times that's because they haven't saved enough
26:58 Speaker 03 that's right they don't want to know
27:00 Brian Preston? we see the stats and they stick their head in the sand they say it will get better I'll just let them know it will not get better because time is actually working against us at this point so you've got to start taking an active role of knowing what you own what you owe where you are and that's why we strongly encourage you guys if you're in your 40s don't be a rudderless ship because every one or two percent more or focused in on your direction the easier it's going to be to reach your goal and that's why you better be doing a net worth tool if you're not using a net worth statement every year to kind of use the dashboard as the CEO of your enterprise you're missing out and we've tried to give you several ways you do this if you go to money guy.com slash resource you can download a free version but if you're if
27:43 Brian Preston? you need a little more guided approach and I think somebody in their 40s definitely needs the dashboard view to kind of know Exactly where you are. This is not just a little habit that you're trying to set up. This is something where you're going to start making decisions off of this. I want you to go to learn.moneyguy.com so you can actually get the more powerful tool that we've created. So you can actually, this is the same one that we use for our net worth. So that you can actually take a more active role in the management of where your money's going.
28:08 Speaker 03 Another trap, Brian, that we see people in their 40s fall into is that for some reason, they arrive at this conclusion that now I gotta take a huge risk. Maybe I didn't make all the decisions I was supposed to. Maybe I bought too much car. Maybe I bought too much house. Maybe my savings rate wasn't where it was supposed to be. And so now I need that home run. I need to hit that grand slam. I need to do that thing that's going to right all of the wrongs. And oftentimes, people in their 40s get involved in stuff they have no business getting involved with, with the goal and idea that it's going to help them to catch up. Just recognize this, even if you're behind in your 40s and you're not exactly where you should be, you have enough time that you can still build it back without having to hit a home run,
28:52 Speaker 03 without having to figure out something that no one else has figured out. You can exercise the three ingredients of wealth creation in your 40s and still put yourself in a fantastic spot by the time it's time to retire.
29:05 Brian Preston? A lot of times that high income can become a curse because if you make enough money to become like an accredited investor, you lose a lot of the safety stuff.
29:14 Speaker 03 That's right.
29:14 Brian Preston? Don't think that you have to follow that trap. A lot of times the index funds and the things that got you there are still going to be extremely successful for you going forward. Don't feel like you have to get into that sexy sizzle of this is what rich people do. There's probably huge risks that you might not need. And the next thing I see people fall into, Bo, and we just had a call on one of our live streams in with this, is putting too much money in the kids' accounts first before they've even funded retirement. We had a six-figure 529 question and you can't help but ask yourself, I hope if they had that much money in the 529 that they fully funded their retirement. And this is kind of like when you get on the airplane and the flight attendant gets up there with the safety briefing and says, hey, make sure if you're sitting next to that child that you put on your safety mask first.
29:58 Brian Preston? Before you put it on your child's because you're not gonna do anybody any good if you save them, but you're way gone. So it's the same way with your own financial life. Make sure you're doing what you need to and then let it be in step eight of the financial order of operations before you start really taking care of the kids.
30:14 Speaker 03 But a lot of people are doing this. We know that right now 56% of Americans said that given the choice, they would choose to save for their kids' college instead of their own retirement. Well, when your student gets to college, there are gonna be scholarships, there's gonna be grants, they can work, do it. There are ways they can pay for it. When you get to retirement, there's not gonna be anyone there to help subsidize or give you an outlet. It is on you. So make sure you are prioritizing that in the right order. So as you move through this decade, what are your goals or what things should be thinking about? Again, you should have assessed where am I in my journey and what is my appropriate savings rate? If I'm not saving the way that I have been, maybe I need to increase that to 25%.
30:58 Speaker 03 Maybe even at this stage, 25% isn't enough. You need to understand what do I need to be saving to get to the place that I want to be when I get to retirement?
31:08 Brian Preston? All right, let's throw some numbers at them. Let's tell them what the goals are to reach million dollar status by the time you're 65. Starting at age 40, a little over $1,000 a month. That's right, we went from 88 at 20 to now $1,052 a month. Lump sum, a little over $136,000. For a 45-year-old, $1,806 a month or a little under a quarter of a million, $224,000. For a 49-year-old, $2,812 a month. That seems like a ton, but good news. This is peak earning years for most people out there. So you probably, if you're going to have a chance of being able to save $3,000 a month,
31:48 Brian Preston? it's going to be in your late 40s. So let's make good with that and the lump sum needed would be $322,000.
31:54 Speaker 03 A thing I want to remind you is in your 20s, in your 30s, it's a great idea. Hey, I want to be a millionaire. What would be required to get me there? By the time you get to your 40s, it should be less about what does it take to be a millionaire? And it should be more about what is my number? What am I working towards? So maybe I need another million dollars. That would mean increasing at age 40, your savings by a thousand dollars per month or at 49, buy an extra $3,000 per month. We want you to be able to hone in on how you can impact your savings rate that way because by the time you finish this decade, by the end of your 40s, we want you to have almost six and a half times, 6.4 times your annual gross income saved in your
32:37 Speaker 03 portfolio. If you can do that, you are well on your way to financial independence.
32:42 Brian Preston? All right, let's close this thing out with something that I resemble. That's for the 50s and beyond. And by the way, I look nothing like.
32:48 Speaker 03 No, no, I thought this was a self portrait, they said of you and Colonel Sanders mixed together.
32:53 Brian Preston? But let's jump right into these tips is, but guys, if you don't have a plan for landing your retirement airplane, you are missing out. This is one of those things. You've got to be stress testing. You've got to be figuring out, you've got to be, there's a lot of variables that are going to be changing in your life. It can be a smooth landing or it can be a crash landing. You get to choose this. And here's the reality of it. I think a lot of you get to your 50s and beyond and you say, hey, I know I've done pretty good at saving and building this wealth. I've been listening to y'all's content, but I've only done this once and I just don't know where my blind spots, I don't know where things are going. I don't know what variables I should be considering.
33:34 Brian Preston? That's okay. This is why I can give you so much free advice for all these years is because our day job is, is that we actually help people all across the country make these decisions and you don't have to be the only person making these decisions. We've done this hundreds, if you take the whole firm, thousands of times for retirees. So you can know where the blind spots, know what you just don't know and make sure you don't fall in any traps that are sitting out there as you approach this increasingly powerful and important threshold of your financial life.
34:04 Speaker 03 People ask it all the time. Hey, why haven't you guys built a financial order of operations for retirement or for decumulation? And the answer is the financial order of operations is a great general guide for accumulation. How do I build my assets? How do I get to financial independence? Once you get there, the art of being able to live off of those dollars and have them sustain you for the rest of your life is very individualistic and very specialized. And so that's why there's not a one size fits all. So you want to make sure that you measure two, three, four, five times before you make that decision. It's why we think that taking the relationship to the next level could make a lot of sense. Another thing that I want people in their 50s to focus on is,
34:45 Speaker 03 we talk a lot about money and a lot about finances, a lot about the dollars, but it does you no good at all to have a huge pot of money saved up when you get to the age that you can actually use it to live the life you've already dreamed of, and you are not healthy enough to enjoy it. Make sure that you recognize that health is wealth. And so taking care of your body, taking care of your mind, doing the things necessary so that you can enjoy the rest of your life is just as important as building up the dollars in your 20s, 30s, and 40s.
35:18 Brian Preston? And then I want people to think outside of, you know, so much is spent on the saving lifestyle. You know, you spend decades, but there needs to be thought of what's next. If you think about your next endeavor, what do you actually do for fun? What do you plan on doing once you leave the workforce? These are things, guys, that you need to be spending some time being very intentional on what your hobbies, what the goals, where you're hoping your money will take you. Because if it's just a dollar amount is your goal, I think you're gonna find that that's quite empty. So you've got to actually do some preparation, figuring out what is the next thing I'm going to do. And that's another thing. We spend a lot of time of that when we work with clients all across the country. This is another thing we try to help them hone in on what that hobby, what the activities
36:02 Brian Preston? are going to be, that still give them the happiness and the fulfillment when you get out of the bed, that you're doing your own little part to be excited about this world.
36:09 Speaker 03 When we think about traps that people see in their 50s, one of the traps we see in their 50s is very similar to something we saw in the 40s. And this is the way that it goes. Man, I didn't quite end up where I thought I was gonna end up. I didn't save the way I thought to. I spent more than I thought. And so now I'm in the position, I gotta make up for lost. Time. I gotta do something to get the ball across the finish line. There must be something else out there. There must be some magic pill I've not taken yet. And they begin looking for some sort of speculative, crazy, over leveraged, over risked type investment. As a means to bridge a gap that should not be there. Don't let yourself fall into that trap in the 50s.
36:52 Speaker 03 It is not a magic bullet to make up for lost time, nor is it that thing to take a lifetime of solid, steady savings, solid, steady, sound financial decisions. And then risk it all because you're trying to shoot for the moon.
37:05 Brian Preston? And another one is just keeping debt around. Look, guys, we talk about financial freedom and that word freedom is just. It's something, it's good for the soul. I think when you hear that, but are you really free if you're still indebted? If you, if you have obligations sitting out there, that's not freedom to me. So I, I want to encourage you, even if it's low interest mortgage debt. I'm hoping you're creating a plan by using our financial order of operations to figure out how you even get to step nine. Where it doesn't matter if it's a low interest debt, if you can be completely debt free. There is some, something magical that happens when you don't owe anybody and you control your time, you control your resources. That's where we want you to be.
37:46 Speaker 03 So what should your goal in your 50s be? Well, it's, it's a mix of both qualitative and quantitative qualitative. What is my next endeavor? What's the next stage that I'm moving into? And then it's also quantitative. What steps do I need to be taking to finish this last chapter well? And begin the next chapter well, if you can start to define that sort of figure out what that looks like. There's a really good chance you're going to set yourself up for a very happy financial independence era.
38:17 Brian Preston? This is also the last stop with the next one is keeping, you know, look, we say save and invest 25% of your gross income. But at this stage, 50 and beyond, it needs to be more, you know, specific to your financial life. Don't skip out on that step of actually figuring out where you at. Are you behind the curve, ahead of the curve, or right where you're supposed to be? Cause it might be more than 25. Good news, you're still in good earning years before you cross that threshold of retirement, but just don't sleep on this last chance to really let your army of dollars do magical things for you.
38:49 Speaker 03 What's crazy is that even though you might not sell the time aside, think about this, if you're a 50-year-old and you've saved up $351,000, that sum of money has put you on track to be a millionaire by 65. If you're 55 years old and you've saved up $523,000, you're on your way to millionaire status. And if you're 59 years old, you've saved almost $700,000, even just that $700,000, if you can let it work for the next six years, has the ability to turn into a million dollars. It's not 88 times over like it was back at 20, but there is still an opportunity for your dollars to grow, for you to end up in the spot that you want to be in. And if you're thinking about true financial independence
39:34 Speaker 03 and what your benchmark should be by the time you get to the end of your 50s, we want your goal to be to have 13.7 times your annual gross income saved in your investment portfolio. If you can do that, financial independence is likely right around the corner.
39:50 Brian Preston? Well, you can, you can do quick math and realize, hey, we've already told you peak earning years is somewhere between that 48 to 52, and then you multiply that by close to 14. This is a large sum of money we're talking about if you're doing this right. Guys, I, I, I know we talked to, we've already pulled the work with us slide, but it really is the reality of that you've probably have quickly seen that your simple financial life has now gotten much more complex, but yet you're still going along for the simplicity of what's the best way to manage is how do I can get as few moving parts as possible? We're here to help out on that. And I love creating this type of content because we essentially are bowling it down to the, the key things that you need to know about money
40:32 Brian Preston? by each decade that you walk through, so you can maximize those tips that we shared, avoid the traps, but then also know exactly what those goals are. And we'll keep creating this type of content. But in the meantime, if you're younger and you watch the entire show, go download some of our free stuff. Moneyguy.com/resources will be your friend to help you accelerate and take that relationship to the next level in the not-too-distant future. I'm your host, Brian, joined by Bo, Money Guy team, out.
41:03 Speaker 03 The Money Guy Show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance 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, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice. All investments involve a degree of risk, including the risk of loss.
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42:07 Speaker 05 It's getting chilly outside, but you know what that means?
42:13 Speaker 05 It's time to cozy up with Panera Bread. Let's get toasty, cheesy. Oh, hello broccoli cheddar soup in a red bowl. How about melty? Okay, Chipotle Chicken Avo Melt. It's dipping bread and soupy goodness season. Oh yeah, we are so back. It's Panera season. Order now.
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