- If you aren't where you want to be in life, don't worry
because you really shouldn't be comparing yourself
to other people.
That's downright delusional,
but it's probably the kind of thing you thought I'd say.
This kind of thinking
has led to schools giving out awards for just taking part.
But I've got news for you.
In life, you only get rewarded if you put in the hard work,
and whether you like it or not,
we're all in a massive competition.
So if you aren't interested in playing,
go and watch a Mr. Beast video instead.
Age 18 to 24 years old.
According to the survey of consumer finance
conducted by the Federal Reserve,
the average net worth of 18 to 24-year olds
is approximately $28,707.
However, this figure is heavily skewed upwards
as the top 10% holds 70% of the wealth,
and the top 50% hold 98%.
In fact, the median net worth of 18 to 24-year olds
is only about $8,216.
For the purpose of this video,
we'll define rich as having a net worth of 20% higher
than the average.
Therefore, if you want to be considered rich
in this age bracket,
you need a net worth of $34,448, or more.
This doesn't mean
that you need to have this amount of money
sitting in your bank account.
Instead, it comes from adding up all of your assets,
and taking away your liabilities.
So here are some targets I think you should hear
if you are serious about reaching this figure.
First, you should create an emergency fund.
Life is full of unexpected surprises.
I know in my late teens,
my car engine exploded, which was a nightmare.
That's why it's important
to have three to six months worth of spending saved up
in an emergency fund.
This will give you a bit of peace of mind,
and a financial safety net in case you ever need it.
Second, try to avoid bad debt.
Of course, I understand student loans
can sometimes be necessary
if the job you are pursuing requires a degree.
So this all depends on your individual circumstances.
Third, get a credit card.
A credit card can be a great tool
for building your credit score
and avoiding high interest rates,
but it can also be a dangerous trap.
Use it responsibly
by paying off the balance in full each month.
Fourth, invest in yourself.
Your human capital is your greatest asset.
Invest in yourself by developing your skills and knowledge.
This will increase your earning potential,
make you far more desirable in the workforce,
and give you a better chance at success
if you decide to start your own business.
And fifth, learn about the stock market.
The stock market can seem intimidating,
but it's actually a great way to build wealth over time.
Open a brokerage account,
and start learning about investing.
Many brokerage firms offer free stocks to new customers.
The best I found is moomoo
who have given away 15 free stocks
each worth between three and $2,000.
So take advantage of these offers
to start building your portfolio.
I'll leave some links down below
where you can pick some up
depending on where you are in the world.
So overall, I'd rate this a three out of five
on the difficulty scale.
At this point,
it's all about setting a great foundation for your life.
I honestly feel that great financial habits
are made during this age bracket.
If you haven't done these things yet,
then it's not too late,
but it can be harder to get back on track.
25 to 29-year olds.
If we go back to the same study by the Federal Reserve,
the average net worth of a 25 to 29-year old is $49,388,
and the median is even further behind at $7,512.
This median net worth is actually lower
than in the last age bracket.
This could be due to many early 20-year olds
not understanding their finances and managing them correctly
causing the gap between the rich and the poor to grow.
If you want to be considered rich
between 25 and 29-years old,
then you need to have a net worth of $59,265, or over,
by hitting the following milestones.
First, save up one-year's worth of your spending.
This should be easy to access in the case of an emergency,
but it doesn't have to all be in cash.
My son, Curtis, likes to put some of his money into watches
as he can wear them when he wishes.
These can easily be sold if he ever needs the cash.
Second, if you have any student loans, pay them off.
In fact, if you ended up getting into any bad debt,
then make sure this is all paid off.
This will be a huge weight off your shoulders
as these loans just bleed you dry.
Third, you should have a credit score of 750, or higher.
A good credit score is important
for getting approved for loans and credit cards
with favorable terms.
This is very easy to do over the course of about three years
if you use your credit card correctly
by paying your bills on time,
and keeping your credit utilization low.
Fourth, you need to start making good money.
I don't mind how you do it.
It could be from a high-paid job,
a side hustle, or a business.
I mean, nowadays, it's so easy to set up a simple website,
and start making passive income online.
Hostinger are great,
and give you everything you need for under $3 per month.
You can even get a free domain with their annual plans.
I'll leave a link below with a 10% discount.
Fifth, you should be investing 10 to 15% of your income.
This could be in absolutely anything
such as stocks, real estate, watches, businesses,
or dare I say it, crypto.
You just have to pick the area you understand the most,
and run with it.
Early on, don't try to be too diversified.
While you are young, you can afford to take more risk.
So find your specific area of interest,
and learn as much as you can about it.
Six, you should be completely financially independent
from your parents.
I'm a big believer in staying at home
for as long as you can,
but you can only do this for so long.
So overall, our rate is a five out five
on a difficulty scale.
At this point, it's all about increasing your income
and taking a few risks.
This can be hard for a lot of people to do.
They're either too shy to ask for a raise,
or start their own business,
but this is the time to do it.
The fatal error people make
is they're focusing too much on saving,
and not enough on earning.
I mean, you can save your way to being rich on a low wage,
but you won't get there very fast.
30-year olds.
According to the study,
the average net worth of 30-year olds $198,406,
and the median is $45,315.
This is when things really start ramping up.
So if we use the 20% rule, then if you want to be rich,
you should be aiming for a net worth of $238,087, or more.
I know this sounds like quite a lot,
however, if you can just focus on hitting these milestones,
then it should take care of itself.
First, save up four-years worth of your spending.
As I said before, this doesn't have to be all held in cash.
To be honest, this would be a bit silly.
You want it invested in liquid assets.
Second, consider buying a house for yourself.
I'm quite against buying a personal property
in the early days,
but there is something to having your own house,
and not having to pay rent every month.
It'll also, hopefully, go up in value,
which will add to your net worth over time.
Third, maximize your tax-free savings.
Take advantage of tax-free savings accounts
such as 401Ks, Roth IRAs, and ISAs in the UK.
These accounts allow you to save money on taxes,
which, trust me, really start to sting
when you get into the higher-owner brackets.
So make sure you save as much as you can from the tax man.
Fourth, invest 20% of your income.
Now might be the time
to become a little bit more diversified.
It all depends on your risk tolerance.
I know during my thirties,
I was happy to accept a smaller return on my money
as I had a family,
and I didn't wanna risk their good standard of living.
I could happily sleep on my mates couches,
but I couldn't expect my wife and kid to do that.
I'd rate this a three out of five on the difficulty scale.
At this point, everything is in place,
and it's just down to how you manage it.
The biggest risk here is letting changes in your life,
like getting married and having kids,
affect your progress.
40 to 49-year olds.
Looking at the data,
the average net worth of 40-year olds is $692,597,
and the median is $145,771.
These years should be some of your highest earning.
Your value is at its highest it's ever been,
and your investments should be starting to pay off nicely.
If you want to be rich,
then you should aim to have a net worth of over $831,116,
and hit these milestones.
First, you should have at least 10-years worth of spending
saved in liquid investments.
The 25x rule is a common way
to figure out exactly how much you'll need to retire,
and maintain the same standard of living.
So it's definitely worth hitting this target.
Otherwise, when it comes to retire,
you might have to downgrade your lifestyle.
Second, get your mortgage fully paid off on your home.
Now, I'm all for leveraging debt,
but when it comes to your personal residence,
it's well worth getting it paid off,
and always knowing you won't have to worry
about making payments during your retirement.
Third, start investing 30% of your income.
As I mentioned,
you are now in the golden years of making money,
so you can afford to put a little bit more away.
This will help accelerate you towards your retirement goal.
Fourth, if you own a business,
it's a good idea to plan for an exit
towards the end of your forties.
This will provide you
with a substantial amount of money to invest.
If you wait too long, that money may not have
enough time to grow before you retire.
Another option is to bring on a new CEO to run your business
and guide it with your help.
As you get older, you may not have the same level of energy,
so this can be a wise decision
for both you and the business.
I'd rate this a two outta five on a difficulty scale.
By this point, you could be married with kids,
so I can't see there being too many lifestyle changes
that will impact your financial goals.
50-years old, plus.
The Fed found that the average net worth
of people in their fifties is $1,031,570.
The median is $182,454.
This is where you can start to really relax
because if you've hit all the milestones I've discussed,
at this point,
your money will be doing most of the work for you.
In this age bracket,
you should be aiming for a net worth of $1,237,884, or more,
if you want to be considered rich.
When you are this age,
you should have at least 25-years worth of spending
saved in liquid assets.
If you have this, then retirement should be a breeze.
Second, aim to clear all debt, and I do mean all debt.
Even though good debt, such as low-interest mortgages
can help you build wealth earlier in life,
it can become a burden in later years
when you have a fixed income.
Paying off debt reduces your monthly expenses,
and it frees up cash flow for other priorities
such as travel and hobbies.
It also provides peace of mind
knowing that you don't have to worry
about making monthly payments during retirement.
Third, make sure to have a Will.
You legally don't need to have one,
but if you've watched this far,
then I'm willing to bet you'll want some control
over what happens to the money and property
you've worked so hard to achieve.
Fourth, get life insurance.
This is especially true if you are the main earner.
It's worth getting some kind of life insurance
to carry your family through if you die.
Look, I know we don't like to talk about these things,
but that's exactly why we should consider it.
I'd rate this a one out of five on the difficulty scale.
You've done all the hard work at this stage.
Now it's down to your investments to do the heavy lifting.
If you wanna know the seven things you shouldn't buy
if you want to be rich,
then I'm gonna leave that video right up there,
but don't click on it just yet.
Make sure to subscribe if you want to grow your wealth.
Okay, I'll see you over there.