The Average Net Worth For The Above Average Person
Everything is relative when it comes to money. If we all earn $1 million dollars a year and have $5 million in the bank at the age of 40, none of us are very wealthy given all our costs (housing, food, transportation, vacations) will be priced at levels that squeeze us to the very end. As such, we must first get an idea of what the real average net worth is in our respective countries, and then figure out the average net worth of the above average person!
According to CNN Money, the average net worth for the following ages are: $9,000 for ages 25-34, $52,000 for ages 35-44, $100,000 for ages 45-54, $180,000 for ages 55-64, and $232,000+ for 65+. Seems very low, but that’s because we use averages and a large age range.
The Above Average Person is loosely defined as:
1) A person who went to college and believes that grades do matter.
2) Does not spend more than they make because that would be irrational.
3) Saves for the future because they realize at some point they no longer are willing or able to work.
4) Largely depends on themselves, as opposed to mom and dad or the government.
5) Takes responsibility for their own actions when things go wrong and learns from the situation to make things better.
6) Has an open mind and is willing to look at the merits of both sides of an argument.
7) Welcomes constructive criticism and is not overly sensitive from friends, loved ones, and strangers in order to keep improving.
8) Has a healthy amount of self-esteem to be able to lead change and believe in themselves.
9) Understands the mental to physical connection in everything we do so that that a healthy mind corresponds with a healthy body.
10) Enjoys empowering themselves through learning, whether it be through books, personal finance blogs, magazines, seminars, continuing education and so forth.
11) Has little-to-no student loan debt due to scholarships and part-time work.
Now that we have a rough definition of what “above average” means, we can take a look at the tables I’ve constructed based on the tens of thousands of past comments by you and posts I’ve written to highlight the average net worth of the above average person.
THE ABOVE AVERAGE NET WORTH DECONSTRUCTED
First, we must highlight what the average tax-deferred retirement savings plan is for those in America. We’ll focus on the simple 401K system we have here where one can contribute $17,000 of their pre-tax income every year.
This chart can be used as a rough estimate for those with the RRSP plan in Canada, and retirement plans in Europe and Australia as well. In fact, any country that has any sort of tax-deferred retirement plan and social safety net program for retirement that has a GDP/capita of $30,000 or more can use the below chart as an aspirational guide. Remember, we are talking about the “above average person”.
FINANCIAL SAMURAI TAX DEFERRED (401K) SAVINGS GUIDE
| Age | Years Worked | Low End | High End |
| 22 | 0 | $0 | $0 |
| 23 | 1 | $8,000 | $17,000 |
| 24 | 2 | $25,000 | $35,000 |
| 25 | 3 | $42,000 | $60,000 |
| 30 | 8 | $127,000 | $182,000 |
| 35 | 13 | $215,000 | $331,000 |
| 40 | 18 | $300,000 | $521,000 |
| 45 | 23 | $383,000 | $764,000 |
| 50 | 28 | $468,000 | $1,075,000 |
| 55 | 33 | $553,000 | $1,470,000 |
| 60 | 38 | $638,000 | $1,974,000 |
| 65 | 43 | $723,000 | $2,618,000 |
The assumption here is that the above average person is able to start maxing out their tax-deferred retirement plan every year after the second full year of work, and continue on without fail until 65. The low and high end account for 0% to a relatively conservative 5% constant rate of return. Of course you can lose money and make much more if you are good and lucky.
This chart does not take into consideration any after-tax savings post 401K contribution. To understand what the average after-tax savings rate is post tax-deferred retirement contribution is a gargantuan task because there are too many assumptions that are debatable eg. income and after-tax savings rate post maximum pre-tax retirement contributions. That said, I’ll offer a base case guide anyway.
FINANCIAL SAMURAI AFTER-TAX SAVINGS GUIDE
| Age | Years Worked | Low End | High End |
| 22 | 0 | $0 | $0 |
| 23 | 1 | $5,000 | $10,000 |
| 24 | 2 | $10,000 | $20,000 |
| 25 | 3 | $15,000 | $35,000 |
| 30 | 8 | $50,000 | $85,000 |
| 35 | 13 | $100,000 | $130,000 |
| 40 | 18 | $125,000 | $200,000 |
| 45 | 23 | $150,000 | $250,000 |
| 50 | 28 | $175,000 | $300,000 |
| 55 | 33 | $200,000 | $350,000 |
| 60 | 38 | $225,000 | $400,000 |
| 65 | 43 | $250,000 | $500,000 |
The above chart assumes on the low end that one saves about $5,000 a year in after-tax income and around $10,000-$15,000 a year in after-tax income on the high-end after maxing out their tax-deferred retirement vehicle. I’ve tried to keep things as simple as possible, assuming no inflation and no investment returns. I also believe saving $5,000-$15,000 a year in after-tax income is very realistic for the above average person, and probably very easy for many who earn more than $85,000 per person. Finally, the chart should show you the power of consistency.
THE IMPORTANCE OF REAL ESTATE
A 2010 study showed that the average 2007 net worth of a homeowner is roughly $200,000, or 40X greater than the average renter’s net worth of $5,000. We can debate the merits of this study (done by a real estate association of course) all day long (demographic sampling, housing price changes, etc), but the point is, “above average” people generally all own homes and are wealthier, be it 2X wealthier or 40X wealthier than the average renter.
The return on rent is always -100%. You get a place to live and that’s that. There is never a positive return on an asset after a month, or 30 years of renting. A renter cannot pass on her paid off house to her kids or grandchildren. There is no asset accumulation at all. There is a reason why some 97% of millionaires are property owners.
The value of real estate varies across all the land and the world. It is very hard to make an assumption of what should be inputted as a result. According to the US Census bureau, the median home price in America is $221,800 while the average home price is $272,900. You can’t get anything livable in San Francisco, New York City, Los Angeles, and maybe even Washington DC and Boston for $250,000. But, you sure can in the mid west for $250,000.
Hence, let’s construct an equity value chart of something based on a range of $250,000-$500,000, with the assumption that upon retirement, you have your house paid off and can attribute this amount into your net worth, or the capitalized value of all rents you would pay if you did not own.
FINANCIAL SAMURAI HOME EQUITY PROGRESS GUIDE
| Age | Years Owned | Equity Build Progress (Low) | Equity Build Progress (High) |
| 28 | 1 | $3,500 | $7,500 |
| 30 | 3 | $12,000 | $23,000 |
| 35 | 5 | $20,000 | $40,000 |
| 40 | 10 | $45,000 | $95,000 |
| 45 | 15 | $85,000 | $150,000 |
| 50 | 20 | $110,000 | $215,000 |
| 55 | 25 | $150,000 | $300,000 |
| 60 | 30 | $190,000 | $390,000 |
| 65 | 35 | $250,000 | $500,000 |
| Total Home Equity | $250,000 | $500,000 |
I assume that the above average person buys a $250,000-$500,000 piece of property at 27. By the time they turn 28, they will have owned the property for 1 year and have paid down $3,500-$7,500 in principal on a $250,000-$400,000 loan. I conservatively assume a $250,000 no money down loan for the low end house, even though after 5 years of working, the low-end above average person should have around $25,000-$30,000 saved up in cash based on the after-tax savings charts above.
By the time a 27 year old pays off his or her mortgage in 30 years, s/he will be 57 years old with a place to live rent from for the rest of his/her life. That is the true value of the property, the rent saved for the remainder of the owner’s life. It can be calculated as the present value of those future rental payments, or simply the market value of the home. I assume zero price appreciation on the home to keep things conservative and no extra payments to accelerate the payoff either.
THE X FACTOR
So far, we’ve touched upon pre-tax savings, after-tax savings, investment returns of 0 for those savings to remain conservative, and real estate. You need to spend less than you earn for that inevitable day you no longer have an income. You also need to live somewhere, hence, you should own your property if you know you will be there for much longer than 5-10 years.
There’s something missing in all of this, and that something is what I call the X Factor. Above average people seem to always be thinking of new ways to build wealth. There is an optimism about them that no matter what happens, they can always find ways to make more money. It’s hard to quantify what that X Factor is for the average above average person, but it’s there somehow through music, writing, athletics, communication, entrepreneurship, hustling, and so much more.
The great thing about savings and real estate is that the process is highly automatic. If you implement the plan and wake up 10 years later, you will inevitably be worth much more provided you keep your job and your home. Given savings and building equity in your home over the next several decades is largely automatic, the X Factor comes out because you have so much more free time to do something else!
THE AVERAGE NET WORTH OF THE ABOVE AVERAGE PERSON
I have gone ahead and averaged the averages for pre-tax savings, post-tax savings, and real estate equity progress in the spreadsheet below. The pre and post tax savings can be invested however you see fit and is a topic of another post. Another thing to note is taxation, given pre-tax savings have to eventually be withdrawn and taxed. Again, these are rough estimates to give you an idea of the average net worth of the above average person.
| THE AVERAGE NET WORTH OF THE ABOVE AVERAGE PERSON | |||||
| Age | Yrs Worked | Avg Pre-Tax Savings | Avg Post-Tax Savings | Avg Property Equity | Avg Total Net Worth |
| 22 | 0 | $ - | $ - | $ - | $ - |
| 23 | 1 | $ 12,500 | $ 7,500 | $ - | $ 20,000 |
| 24 | 2 | $ 30,000 | $ 15,000 | $ - | $ 45,000 |
| 25 | 3 | $ 45,000 | $ 25,000 | $ - | $ 70,000 |
| 30 | 8 | $ 154,500 | $ 67,500 | $ 17,500 | $ 239,500 |
| 35 | 13 | $ 273,000 | $ 115,000 | $ 30,000 | $ 418,000 |
| 40 | 18 | $ 410,500 | $ 162,500 | $ 70,000 | $ 643,000 |
| 45 | 23 | $ 573,500 | $ 200,000 | $ 117,500 | $ 891,000 |
| 50 | 28 | $ 771,500 | $ 237,500 | $ 162,500 | $ 1,171,500 |
| 55 | 33 | $ 1,011,500 | $ 275,000 | $ 225,000 | $ 1,511,500 |
| 60 | 38 | $ 1,306,000 | $ 312,500 | $ 290,000 | $ 1,908,500 |
| 65 | 43 | $ 1,670,500 | $ 375,000 | $ 375,000 | $ 2,420,500 |
| Source: FinancialSamurai.com 2012 | |||||
There you have it! Based on my assumptions above, the average net worth of the above average 30 year old is around $240,000. By the time this person is 40, his/her net worth should climb to around $650,000 and all the way up to around $2,000,000 million by the age of 60.
Of course some of you above average Financial Samurai readers will have a total net worth much higher than the chart. But then, I’d have to write another post entitled, “The Average Net Worth Of Financial Rockstars!”
Note: The figures in this post are per person, not per couple. Here is the average net worth for the above average married couple.
Recommended Actions For Increasing Your Net Worth
1) Manage Your Finances In One Place: The best thing you can do to grow your net worth is to get a handle on your finances by signing up with Personal Capital. They are a free online platform which aggregates all your financial accounts in one place so you can see where you can optimize. Before Personal Capital, I had to log into eight different systems to track 28 different accounts (brokerage, multiple banks, 401K, etc) to track my finances. Now, I can just log into Personal Capital to see how my stock accounts are doing, how my net worth is progressing, and where my spending is going. Their 401K Fee Analyzer tool is saving me over $1,000 a year in fees I had no idea I was paying. There is no better free platform out there that is helping me manage my money. The entire sign-up process takes less than a minute.
2) Refinance Your Mortgage: If you are a homeowner and you have not refinanced in the past year, I strongly suggest you check online to see what the latest rates are. There is seriously some serious mortgage interest savings to be had! I always check with Quicken Loans because they are fast, quick, and provide a no obligation real quote based on the input you provide. I recently refinanced to a 5/1 ARM for 2.625% in the Spring of 2012 after just refinancing in the fall of 2011 for 3.125% from 3.625%.
3) Check Your Credit Score: Check your credit score at least once a year given the risk of identity theft as well as the importance of having a good credit score when borrowing money, apply for a mortgage, and applying for a job. For over a year, I thought I had a 790ish credit score and was fine, until my mortgage refinance bank on day 80 of my refinance told me they could not go through due to a $8 late payment by my tenants from two years ago. My credit score was hit by 110 points to 680 and I could not get the lowest rate. I had to spend an extra 10 days fixing my score by contacting the utility company to write a “Clear Credit Letter” to get the bank to follow through. Check your credit score for free here at GoFreeCredit.com and protect yourself. The average credit score for rejected applicants is 729.
Regards,
Sam
I think the numbers here for the 20-somethings are pretty unrealistic, especially for the tax-deferred number. I definitely fit into your “above average” category (management consultant, graduated with honors from a top school, save actively, read up on finances), but there is no possible way that I could have hit these numbers. I’m 25, net worth of 32k, graduated with 5k loan debt I paid off in year 1, so basically I’ve saved 37K in 3.5 years, or a little over half your “average.”
Where I think the numbers deviate from reality is the tax-deferred savings numbers. When I first got out of school, I was only making 50k/year. While saving 8k in year 1 is a stretch but doable, saving 17k in year two as the LOW end (over 30% of my income – and that’s before the after-tax savings) is extremely unrealistic. I will max out those contributions when I can, but I think a tax-deferred rate of around 6-10% as the low end is a much more realistic number.
That said, I think the after-tax numbers are pretty spot on. I save about 7k/year through an ESPP, plus kick whatever I don’t spend every month over to savings for a total of about 8.5-9k/year. Those numbers are still a stretch but definitely doable.
I appreciate the effort that went into this, thank you.
[Reply]
Financial Samurai Reply:
November 8th, 2012 at 2:30 pm
No problem Mike. I saved 15K in my 401K in 1999, and I only had a base salary of $40,000 then AND lived in NYC. I shared a studio with a roommate.
It’s up to everybody to calculate their numbers and make their own savings plan. In the end, there’s nobody to congratulate or blame but ourselves.
[Reply]
Kent Reply:
December 7th, 2012 at 12:50 pm
This is an excellent site! I love the article and the tables provided. My suggestion is to refine the tables and make them look more like a curve. There will be smaller slopes (increases) when you start out and they get steeper after the third year until the the 10th to 15th year. Then income declines gradually. The reason why I am saying this is because when I first started working I had very little net worth. They were well below your chart. After the third year, then that was the time that my net worth exponentially increased.
I was curious to ask Financial Samurai about your comment on your first year’s 401K value of $15K in 1999. Can you give some clarity on that? I also lived in NYC and did investment banking – although I started in 2004. Most firms would only match 100% of the 6% of the Base Salary contribution. Six percent of $40K is $2.4K so if your employer matched that, that would be $4.8K. How did you get to that $15K? Was there a special one time bonus given? Or did you just put in a lot of money?
Another comment is that you (the readers) can have some variations or adjustments to the table as everyone has a different situation. Some people marry early, graduate late, or go to graduate schools with a high cost of tuition (IVY Leagues – business school, med school, others) so when they graduate they have accrued a high amounts of debt making their net worth tilt to the negative. So, don’t feel bad if you are on the lower end or below the line in the beginning or when you are just getting out of a huge life investment. The most important thing to remember is you are having an upward trend and improving your savings/investing accounts (i.e. living within your means). But having a goal written on paper that you can see and remind yourself daily can make the difference (I do this).
I have some friends who, after reaching their $1MM mark, changed their spending habits and attitude quite a bit. I think you can upgrade your life style to some degree. But it is important that you still be modest even though you can afford it. I have kids now and I want to make sure that they see me as being prudent and set a good example for them.
Cheers….
[Reply]
James D. Reply:
April 22nd, 2013 at 9:40 pm
I have a hard time believing that Samuri put 15K into the 401K in 1999. The tax deferred limits were not that high at that time. See the table below,
2006 $15,000
2005 $14,000
2004 $13,000
2003 $12,000
2002 $11,000
2001 $10,500
2000 $10,500
1999 $10,000
1998 $10,000
1997 $ 9,500
1996 $ 9,500
1995 $ 9,240″
[Reply]
Financial Samurai Reply:
April 22nd, 2013 at 9:50 pm
I had a half year work under my belt in 1999 – started in summer after graduation.
2000 was the first year I started maxing out my 401k.
I am a 24 year old who graduated in December 2011 with a computer science degree who has a little over $50K in combined cash and stock with no debt (paid off ~$20K in student loans.) Getting a raise soon that is going to push my salary above six 0′s, so I should do pretty well by the metrics in this article… albeit I have no money in a 401K or real estate (yet).
Anyway, thanks for the quality post. I will do my best to surpass the high-end “above average” individual going forward :)
[Reply]
Financial Samurai Reply:
November 10th, 2012 at 6:54 pm
Good luck Ryan! Hope you make it big and not let life’s temptations get in your way!
[Reply]
32 y, male, married (for 1 year). Combined household income (pre-tax, pre-401(k), $170K. Combined 401(k) $230K. Combined Roth, $55K. Liquid + Stock $80k. 3 rental property units (just acquired last year, so maybe %20-25 equity), $130K. So ~ net worth of $495K (divided by 2, ~$250K per person). On target, but income rise is very slow, so we’ll see how we stack up in 5-10 years.
[Reply]
Just stumbled on your website through Pinterest… WHY HAVE I NOT FOUND THIS BEFORE?!
I like the guidelines… And I would say that personally I’m “on mark”. Just turned 31, $150K annual salary, $140K in 401Ks/ IRAs, $70K in home equity, own my car outright, no CC debt, and $20K in savings = $230K total net worth, so pretty close to the target. Also just took out a cash-value whole life policy that I am overfunding so that I can lower my effective rate of taxation in retirement.
I think that the difference for me was I paid my way through both Undergrad and Grad, and so while I didn’t have the benefit of saving money during this time, I did manage to graduate without student loans. The long-term cost benefit to me was greater that way than savings during this period of time. Still, I’d like to have more…
Got married about 2 months ago, and unfortunately my husband hadn’t always made the same good financial decisions as me. He was “bullied” by his mom at the age of 23 to buy a house he couldn’t afford, was overpriced versus market, and was a forcl so needed a LOT of money to get into good condition – Tripple Whammy!!
We managed to sell his house earlier this year, and didn’t have to short sell it…. BARELY. But it didn’t help to recoup the $20K we had to pour into it to make it sellable (and I’m taking things like replacing wood rot, roof, necessary repairs, not stupid stuff like staging here) plus any of the down payment he put on it.
All things considered its better than it could have been… but it was definitely a hit. It did, however, allow me to convince him to let me take over our finances, which he was very happy to do. And he’s GREAT at working within a budget!
[Reply]
Financial Samurai Reply:
November 19th, 2012 at 1:16 pm
Wow, I’m on Pinterest? I can’t keep up
Welcome to my site and congrats on your financial progress! Sounds like your hubby is on board now and things are going well.
Spend some time looking around, subsribr and don’t get too offended by my opinionated posts!
Glad to have you.
Sam
[Reply]
Mark Reply:
April 23rd, 2013 at 9:25 am
Sometimes, a hit like your husband’s house may actually be a good thing. You broke even and learned a lot in the process… more than you can say for most college classes.
[Reply]
I’m in line with the Above Average savings plan. Hopefully, I’ll be above the “above average” soon.
This is a great website and much needed for the US, more than ever before. It’s very simplified.
I’m 26 years old, have a college degree, but job isnt great. However, I have 2 rental properties that cashflow $500/month and have about $30,000 equity in both. Also, have about $15K in Silver, and a little in stocks.
2013, I plan to buy 2 more rental properties and lock interest rates below 4%.
Predictions for 2013 (see below)
1) I predict interest rates remaining below 4%.
2) I predict the Fed to double their Quantitative Easing from $35 Billion/Month to $70 Billion/Month. I see massive inflation continuing to rise with all the Quantitative Easing.
3) I predict single family home values begin to increase.
4) I predict the DOW to fall to ~8,000.
All the best,
Daniel
[Reply]
Financial Samurai Reply:
November 24th, 2012 at 3:52 pm
Daniel, what makes you think the DOW is going to fall 30% next year? Very pessimistic!
Care to bet? Ill spot you 1,000 points and say the Dow doesn’t even breach 9,000 for whatever amount you like!
Let me know!
Sam
[Reply]
John Reply:
December 10th, 2012 at 9:49 pm
Housing cannot go up much, if any, with Dow down 30% in same year. Markets are more correllated than that.
[Reply]
Financial Samurai Reply:
December 11th, 2012 at 2:14 am
You think the markets are going down 30%? Care to make a bet for 2013?
mike Reply:
April 30th, 2013 at 7:14 pm
Just happened on your site — quality stuff! BTW, I really hope you got some action on the Dow to 8,000! Hindsight is 20/20 but no way was it going down 30% this year!!!
My profile is a little different than those I’ve reviewed here so far, but here you go… Single, age 49, 401k 565K, DB lump sum pension value 440K, cash balance pension value 60K, Roth IRA 52K, Brokerage Account 94K, Unvested RS 72K, Checking 38K, Home Value 520K, Inv. Prop Value 350K… DEBT: Home 440K, Inv Prop 220K, Stud Loan 32K, 2xCars 30K… My lump sum value will close to double at age 50 based on early rtmt factors coming into play. What say you Samurai?
[Reply]
Financial Samurai Reply:
April 30th, 2013 at 7:28 pm
Unfortunately, I got no action from our bearish friends.
What is your net worth? Kind of hard to tell. It’s great you have a pension!
mike Reply:
May 15th, 2013 at 4:37 am
Too bad, the least they could have done is bet you lunch — that would have proved to be a good meal for you!
I would put my net worth at 1.4M. No doubt about it — great to have the combination of both the db and dc plans, but working 25 years for an oil company will do that for you! Unfortunately, like most companies, mine chose to shift away from the db plan back a few years ago, so they closed the plan to new hires and froze us legacy folks — no additional benefit for service but age still counted in the formula. Used to be when the plan was still open, that at age 50, your lump sum would basically double… Now, depending on what age you were when the plan was frozen, you see something less than doubling at age 50. The company partially made up for this by introducing a Cash Balance plan. While that doesn’t make up for the lost value in the legacy plan, it takes away some of the sting.
Rick Sampsell Reply:
May 19th, 2013 at 11:08 am
This is funny now!
[Reply]
Rick Sampsell Reply:
May 19th, 2013 at 11:09 am
That the dow will plumett below 8000,
Ricky Reply:
May 13th, 2013 at 3:17 pm
Interest rates can’t remain low, property values rise, and the Dow fall all at the same time. If property values rise, interest rates are generally low since buyers can afford to buy mortgages.
Some correction is definitely in order for stocks, but such is life and markets in general.
[Reply]
Great approach for those who continue to strive through competitive and comparable methods. Although my pre-tax contributions fall below the average, my post-tax savings exceeds your calculations.
Quick Bio:
Graduated 4 years ago with $12k outstanding auto loan and $15k outstanding student loans. Been working in the energy business like a dog ever since.
My approach, albeit fairly elementary, removes external risk that I’m currently unable to manage due to time restraints. I can’t control the market and flat out don’t have the time to research and monitor investments. My employer matches dollar-for-dollar 401k up to 5%, thus, I contribute 5%. I plan to increase in 2013 for tax purposes and historical fund performance. I would also like to preface this by stating that my approach is not for all ages but can be used to build the strong foundation many people are searching for.
Since I can’t control the market, I manage my net worth in a way that I can control 100% of exposure – manage spending habits and saving.
I wont see Apple/Google like returns in a savings account, but I can guarantee I wont see Circuit City like losses either.
I’m 25 years old, will earn a pre-tax 2012 income of $125k, have zero debt (credit cards, student loans, mortgage, auto), hold a 401k balance of $30,000, Roth IRA with $4,000, Investment Account with $400 and a savings account with $140,000. Total net worth of ~$175,000 ($100k above average according to your table).
My theory is many people in their 20′s and 30′s are swamped building the foundation for their career and don’t have time to properly manage investment accounts, real estate projects, etc. Unless luck falls on their side, they will likely see unfavorable results when attempting to invest with limited information (as did I). Go back to the days when mom & dad taught you to save – you can manage it every day by making smart decisions. The last thing a person starting their life needs is to lose hard earned money in the ever changing stock market.
Every good house is built on a strong foundation. I believe it is important to begin pre-tax investments early on in life, but leave the market play and real estate projects until you have a firm foundation. Don’t over leverage.
This approach also gives you the flexibility to make purchases, take vacations, etc, when you want, and without debt restrictions.
My apologies for the long post, but it is rare to find a group of individuals in one place striving to be above-average. Thought I would pass along my thoughts for those in their 20′s and early 30′s.
Cheers!
[Reply]
Financial Samurai Reply:
November 24th, 2012 at 11:51 pm
Good stuff! Can you share with us how you saved $140,000 in just four years out of college? I think it will be very helpful for all!
I’ve believe for the longest time that people have much more money than we think!
[Reply]
Energy in Savings Reply:
November 25th, 2012 at 1:56 pm
Started out making $47k a year, but lived like I was making $30k. Worked hard to earn promotions and although my salary has more than doubled, my spending has only slightly increased. I set monthly goals and track progress every week to ten days, adjusting each spending category as needed to meet end of month objectives.
For comparison, when you receive a promotion, don’t go out and buy a new car – keep driving the same vehicle and save the car payment. Saving an extra $500 per month may not seem like much, but that’s $30,000 over five years…over and above anything else you’re saving.
Earn $100k in salary, but live like you’re making $40k.
[Reply]
Financial Samurai Reply:
November 25th, 2012 at 2:24 pm
Great job! It is clear you are actively on top of your finances which is key.
mike Reply:
April 30th, 2013 at 7:32 pm
Just based on a quick read, looks like EiS is doing great, but I think the approach has a tremendous opportunity cost in terms of what he/she could have been earning based on even the most conservative investment plan (forget about exotic, highly risky investments) rather than actually losing money to inflation based on close to nothing in returns at the bank. The loss of the compounding effect of that conservative rate of return (again compared to next to nothing in the bank) is a silent killer in this case!!! That said, at 25 there is still time to put a great investment plan in place now and be looking pretty in 25 years! Start letting that money do some of the work for you — it works!
Ok I honestly thought I would blow away the stats on this, but after reading the levels I’m just not sure they are realistic for 20 something’s.
As a 27 year old working on wallstreet I make a salary of just a tad over 100k. (55k 1st year) When I graduated in 2008 I had savings of $300, but zero college debt. Stated otherwise, I was essentially starting from a point of zero savings. After 5 years of working, paying rent, living life, I’ve managed to save 113k total networth.
I think some of the “above average” started out with savings from mom and dad because I don’t see how some of these kids already have multiple rental properties at age 25? I guess I didn’t start out with a silver spoon, but managed to work up to a respectable net worth. I mean my avg friend my age doesn’t even have a qtr of what I saved, albeit, they the typical generational bum indicative of our culture today.
The point I’m making is the the curve is skewed that the above average person might already have some kind of networth or doesn’t live in NYC and is still pulling 100k salary. Obviously the above guidelines are just that, an estimated guideline, but perhaps I really don’t fit into the “above average” criterion.
At the end of the day I’m flushed with cashed, not assets, but I don’t know if that’s a good thing anymore. I day trade almost everyday so my networth also fluctuates anywhere from $500 to 15k daily. Biggest one day score was 18k. Worst same day loss was 14k.
[Reply]
Financial Samurai Reply:
November 25th, 2012 at 4:53 pm
John,
I definitely think folks with multiple rental properties in their early 20′s started out with a helping hand. It just is what it is when the bank of mom and dad can’t help but help their kids launch, especially if they have the means.
It’s much HARDER for someone in their 20′s to follow my savings guide, b/c we have more desires and less financial discipline when we are young. Things get much easier after you get all the spending on stuff out of the system. Finances get easier the older we get if we stick with our savings.
Definitely look to BUY SOME ASSETS such as real estate (click the link) with your cash as our cash is getting devalued quick.
Good luck!
Sam
[Reply]
Adam Reply:
February 14th, 2013 at 9:44 am
John, I had multiple rental properties in my early 20′s and am 34 years old and my brother and I own 70 apartments and a couple of houses. We are business partners. We did not get a dime from our parents. My older brother was in the Army and I was in the Navy so we both qualified for a VA loan with no down payment. While my friends were off buying cars and spending their money at the bar, both my brother and I started off with a triplex with no money down. I lived in the worst of the three apartments while I renovated and the other two tenants pretty much covered the mortgage at the time. I saved my pennies and bought my second triplex when I was 24 years old and 2 years out of college.
In 2011, my brother and I bought a total of 11 properties, in 2012, we bought 3 and we are in contract on 2 properties right now. I get over $1000/month in positive cash flow from the 2 triplexes that I bought back in 2001 and have substantial equity in both.
One thing I disagree with the author is on how often he refinanced his properties. I agree that 2.625% is a great rate, but 3.25% is also great and you only have the rate for 5 years. My rule of thumb is that I don’t refinance unless I can drop my rate by a full % point. This way, I feel like the cost to close the loan makes sense. Two each their own I guess. I do like skipping 2 months of payments when I close, but I don’t recommend refinancing unless you drop your rate a full 1%.
Also John, you are 27 years old with $113,000 in assets. If you get out of NYC, that is a great down payment on 2-3 rental properties.
[Reply]
Dang, I wish I’d started the game sooner. I just turned 29 this month. I have a stay at home spouse with our first 11 month old boy. We save alright. Have been dumping the company match % into 401k for a few months now that I’m eligible. Our net worth is around 23k. My salary is 68k, but 10 percent of all income goes to our church. I graduated college late but debt free in 2010 and got a high paying hourly job (for a new grad) at about 120k/yr for the first 7 months, and am now happy with the 68k as my first salary rate out of school (engineering), but hope to see those raises keep coming because I’m pushing 30 and am nowhere near average apparently. This must be putting my siblings into the “scum of the earth” category. They have very low salaries and don’t save much yet. (They are from NM, we live in Richmond for the time being.) By the way, my wife and I are looking to buy a house soon, but want to make sure we’ll be in the area for at least 3 years before we do. Wish we had more assets at this point, but it is what it is. We’re also afraid there may be another recession, and we don’t know what to invest in. I know inflation will be terrible, but there don’t seem to be any markets that jump out as “stable”. I’m not much of a risk taker. I just with the value of the dollar would stay the same.
[Reply]
Financial Samurai Reply:
December 1st, 2012 at 7:59 pm
Daniel,
Better late than never. If it doesn’t hurt a little to save, you are not saving enough imo. Don’t rely on the government, parents, or anybody to take care of you is a good way to think.
At least you have no debt! Your siblings aren’t scum of the earth, they are just going to have to work for their entire lifetimes.
Good luck!
Sam
[Reply]
I am 40yo with a networth of about $790k. I do not own a home am renting in a tier 1 metropolitan area for a rent of about $2k per month. When I look at the pre-tax/post-tax % split, I am below the low end on your pre-tax mostly due to not maxing out the 401k for many years but only contributing up to the employer match of 6%. My 401k is about 200k and an additional 40k in traditional IRA. Post-tax is in combination of mutual funds, stocks and CDs. Overall I feel I have been to risk averse up to this point and could have gone much more heavily in the stock market. At present including pre and post tax I have about 47% in stocks or mutual funds and rest in CDs or Savings. I feel I could have increased my wealth many fold, if I had invested more aggressively. My goal is to retire by 55 with at least $1.5MM networth.
[Reply]
Financial Samurai Reply:
December 1st, 2012 at 9:37 pm
$790,000 ain’t bad at all, especially since you are a renter. Do you not plan to ever buy? The benefit of homeownership, besides the tax deductions is the fact that once the home is paid off, you have a rent free place to live forever. All you have to pay for is maintenance and property taxes.
Real estate is my FAVORITE asset class to build long term wealth.
[Reply]
Ro Reply:
December 2nd, 2012 at 7:10 pm
Yes, I do plan to buy. We are a single income family of 4 (2 kids who are in elementary school). The average price of SFH in our area are $600k or higher in any decent school district and the breakeven time period for owning a home is around 8-9 years. I owned a home in the midwest for about 5 years and sold it at about a $15k loss because I had to move in a hurry. The experience left me uninterested in buying again in the event that we have to move again. I feel a certain degree of freedom renting. However, I realize that we have been here for almost 4 years now and if we were to stick around for another 4-5 I do realize that I would have made a mistake by not buying. However, we are too unsure if we will for me to take the leap. The low interest rates are very tempting though. Eventually we plan on moving to a metropolitan area that is tier 2 or tier 3 where SFH prices are in the 200-400 range. That is when we would make a decision to buy.
[Reply]
Financial Samurai Reply:
December 3rd, 2012 at 9:51 am
Gotcha. As you know, buying can be overrated due to the markets and to maintenance and property tax expenses.
Take your time! If you are getting squeezed on rent though, I would buy, especially if you think you’ll be there for 5+ years.
I’m 28, and I have only been working for less than three years. I only made 28 k in 2010; 55 in 2011 and will likely make 58 this year. I’ve been living at home, so I’ve saved 70 grand. I don’t have any other investments. I don’t have a full-time job, yet. I mostly do temp legal work. Even when I get one, it’s unlikely that I’ll make a SALARY of more than 100 k. I am going to inherit at least 2.5 million tax free from my father and at least 1.5 million from my mother via life insurance.
[Reply]
Enjoyed the post!
I wandered by after calculating my Net Worth just now – which at 28 is around $247k at the moment. Thankfully we have a generous match and profit share at my workplace which helps out quite a bit, and I’ve been diligently investing in Real Estate since I my wife was 20 and I was 21! We started with about $10k she had saved since she was a little girl and have always diligently reinvested in our rental business. I calculated our Internal Rate of Return at over 18% since beginning (a rough estimate) which seems pretty good! I’m hoping I can maintain that going forward – although at some point I’m sure it will become more difficult. I sense I’m in a zone right now though were we actually have increasing options / flexibility for investing that may even boost that rate in the short term. I should mention we both have rather modest incomes and lower opportunities in the workplace than we had hoped for when we graduated due to the dismal economy – but I think this article points to how ‘the X factor’ benefits those who work hard and keep their shoulder to the wheel… anyhow, thanks again!
[Reply]
Dustin Reply:
December 8th, 2012 at 9:47 am
Just for clarity: modest as in I make $46k and my wife makes $35k – and we made less to begin with. So remember: investing is a process, and starts slowly.
Just start!
[Reply]
Financial Samurai Reply:
December 8th, 2012 at 10:34 am
Congrats Dustin! Real estate is one of my FAVORITE investment asset classes for sure. Check out the post.
Good luck and hope you subscribe and stick around!
Sam
[Reply]
Shaun Reply:
January 23rd, 2013 at 7:26 pm
You started investing in real estate 7 years go when you were 21? So in 2006 you started buying real estate and are doing well? If you don’t mind me asking what did your balance sheet look like at the end of 2008? How far did your real estate investments pre 2008 go into the red and have they fully recovered yet?
[Reply]
I am 42. I have mid 250s in 401k/Roth IRA. I have close to $100k in bank. No debt. I am renting. I have real estate outside of the country worth $500k. I have become financially serious and have been contributing $27k towards retirement everyyear plus $6k into kids 529s. My goal is to hit $1million by 50 between 401k/IRA/Bank account. Wondering if you could offer any advise.
[Reply]
Great post. It’s also been awesome reading the comments.
Thought I’d contribute my numbers since it’s been so interesting to read about everyone else.
I’m 27. I’ve been working for six years in technology. Currently: cash $20K, 401k $137K, IRA $10K, stock $139K, home equity $248K & a boring old car valued at $12K. Comes out to $566K net worth.
I’ve been employed as a regular engineer at a couple large software companies. I’ve been fortunate to have been at a few that had good bumps in their stock prices while I was there. I also got decent returns by getting into the stock market near the bottom of the 2008-9 collapse. Parents also paid for my college where I got my computer science degree, so I started off with zero debt. Besides that, I’ve been saving and saving. Nothing fancy, I guess.
Looking forward to keeping up with this blog & its community! FS: I’m impressed by your financial achievements.
[Reply]
Sam,
Thanks for the interesting post. I enjoy reading this type of material as I work to convince myself about taking early retirement. I feel we are in a good position for me to be able to walk away from my job in a few years, but leaving behind the max earning years and options that a regular retirement would provide are proving tough.
I am 45 and married with no kids. My wife does not work. We have no debt, but also no real estate. I work as an expat in the oil business and have been overseas for the last 4+ years. Foreign service premiums in hardship locations have provided a nice boost to savings. We have about $1.2-M in my company 401-k and I have made Pre-tax After-tax contributions to the maximum extent permitted for the past ten years. The company match is 7% if I contribute 6% to the savings plan and offers a traditional defined benefits pension. If I retire at 55 (regular retirement at my company), I can take a lump sum pension payout, but would be required to take an annuity if I leave early. I have funded a non-deductible IRA since I was 24 and converted it to a Roth last year. Total IRA’s are worth about $110-k. I have accumulated about $1.31-M in a brokerage account. Total Net Worth is now in the neighborhood of $2.62-M and we are 70% in diversified equities. My goal to retire is $3.5-M with my pension annuity to kick in at 65. Our goal is to get to $3.5-M and retire in 2015, but this is highly dependent on the market returns. We intend to live overseas in a relatively low cost country and travel extensively in the future.
While most of my career as an engineer has been spent outside the top 10% of earners, I have been a diligent saver and believe in living well below our means and saving for the future. I owned two cars over a 20-year period. I owned one home and sold it before going overseas. The sale was at the market high and that equity was put into the market at the 2008/9 low – serendipity is good sometimes. Choosing a solid field of study, industry, and company has helped our situation out a great deal. I came out of college with a good education and no debt, but no assets or inheritances.
The best advice I can give to others is to start early, set short-term and long-term financial goals, track your spending and progress towards those goals, and adjust your spending and savings habits as necessary to stay on track. Your advice on deferred compensation, tracking your habits and progress, and real estate are all on the mark.
Thanks again for the interesting analysis – good work.
[Reply]
Financial Samurai Reply:
December 20th, 2012 at 12:00 pm
Hi Bob,
Nice to hear from you! No debt = freedom! Although, I do like to have a $1 million mortgage to maximize what the government allows us to deduct. It’s just accounting really.
Sounds like you will have no problem getting to $3.5 million in the next several years. Having a pension is sweet, and something most of us don’t have.
Enjoy life and hope you stick around and explore more of my site.
Sam
[Reply]
Thanks for the post, FS. I worked two jobs after college, slept in living rooms, and bought one meal per day. I learned about investing on my free time, and used that to increase my net worth. For instance, I wrote an article recommending the purchase of common shares in Bank of America when it was trading for far less than it is today. My net worth exceeds the $70,000 that your table charts, but I still think your numbers are too optimistic. I don’t know many people in my age group with any net worth at all. Young people today have fallen on very hard times. The combination of high rents and low wages makes it very difficult for anyone to save or invest. I recently found a job in Lebanon that pays for my rent and offers a higher wage than I was able to earn in the US, so I have moved; but the civil war in neighboring Syria means I am taking on considerable risk to avoid the plight of my peers.
There is a war on young people today and I know that most of my friends and cousins will not have a bright future if it continues. Esquire has some interesting articles on the topic, for instance: http://www.esquire.com/features/young-people-in-the-recession-0412
Take care,
Colin
[Reply]
Financial Samurai Reply:
December 26th, 2012 at 8:46 am
Hi Colin,
Thanks for your thoughts. Congrats on your net worth. One of the things I’ve noticed is that people are much wealthier than the mass media portrays them to be. You are a perfect example.
It seems like we always know someone who is broke, but never ourselves. This is why I’m optimistic we are in better shape than depicted.
Who is waging the war against our youth? The elderly or the youth themselves?
Sam
[Reply]
I’m 35 and a bit shy of your above average category with a net worth of 184K. I got serious about finance when my son was born 3 years ago and have increased my net worth by 90K since then (gross combined income is $150K). My biggest concern is that I can’t afford to buy in my market (NYC) and am renting (approx. 20% of gross income). I am the chief bread winner (and mom), have a great schooling option in my neighborhood for my son, and loathe the idea of a long commute. I would appreciate your advice on my situation. I am proud of my financial turn around and am motivated to take it to the next (above average) level.
[Reply]
Financial Samurai Reply:
December 28th, 2012 at 11:22 am
Hi AF,
Power to you for being a mom and the chief bread winner! Not easy I can imagine. The NYC market seems to be like the SF market… heating up.
I am VERY bullish on real estate now, and we will kick ourselves for not buying today, 10 years from now. However, if you don’t have 20% for a DP and a 10% buffer after that, then I would keep on renting, saving, and investing. You don’t want the stress of putting everything you have in your house and then losing a source of income.
Sam
[Reply]
Yeah I am hooked. I love this website. I am now a loyal reader and just added you to my RSS reader. I can really appreciate the time you put into this article and many others on your site.
I work better with graphs. So I plotted your data.
http://www.haironfirepm.com/?attachment_id=2913
if that doesn’t work here is the direct link:
http://www.haironfirepm.com/wp-content/uploads/2012/12/FS-graph.png
Anyway I added my comments on the graph but here are the highlights.
I think your personal savings is a bit too front loaded. Your site, which I agree with, talks about going to a top end school and making >55K a year. That doesn’t come cheap and most recent grads from these schools don’t save nearly as much as I think you are pitching here. But you assumptions were logical and support your numbers.
I struggle with property as equity. This is because of my jaded view of being told during college / early grad years how great property investments are only going. As you can tell I am upside down (enough whining my fault). Regardless we agree it needs to be factored in and you are better off buying then renting. With that said I think you could do a better job tempering the language on property equity and treating it more as a type of liability not just an asset.
Well Done.
Roshan
[Reply]
I am turning 35 in 2013, Graduated in 2007 with PhD, worked as post-doc for 3.5yrs, not great salary now little better but still little low around $89K. got married 2 yrs back with a kid now. Have been trying to save for the past 6 yrs with and avg of 31 k/yr. Invested all the savings (~$190K) in real estate (not rental property) in a foreign country (as i am from another country). real estate value today is close to (~$270K) now. was eligible for 401 k only for the past 2 yrs with $25K in it. With single income in the family, i have to be very disciplined to even come close to this value. I do not know how to achieve the high end, so that i can retire by 45-50, may be have another kid and move to my home land.
[Reply]
Smart girl!@ Meredith
[Reply]
Thank you so much for this! I have been trying to figure out how on/off track I am for a mid-twenties person for so long. It doesn’t really mesh with me to compare myself with those I work with because most of them are in way more debt than I would tolerate and manage their finances in a way I would call irresponsible. Unfortunately I am not on track but it gives me something to work towards, and I’m only a off a bit. Roth 11K, 401k 18K, and personal savings 27K, and only 2k in debt thats interest free. Just need to beef up my retirement this year and next which was in the plans anyways and I’ll be at the 25yr old avg 1 year late not too bad I think. Again thank you for the work you put into this and I like your definition of an above average person.
[Reply]
I think this site shows how having rich parents makes you “above average”. I graduated in when I had just turned 22 had about 40k(not unusual) in student loan debt and 20k for the car I needed to go to work. Ive paid off pretty much all the debt by 28 but thats an extra 60k plus we’ll say 10k in interest. If you dont have that when you graduate cause your rents gifted you a car and loans you can afford to max the 401/invest in house downpayment and enjoy the compounding interest.
Im actually glad I was saddled with this debt cause otherwise I might have bought a house in 2007 (smirk that the study about houses sited prices at the top of the boom). Not that houses arent a good investment its just that many people are convinced its a sure thing no matter what its better than renting which its not.
Also. Im not sure how a roth doesnt get mentioned here in investment vehicles. I would argue that for somebody in there 20s not getting an employer match on their 401 its a way better investment choice. Plus you can pull your initial investment without penalties if something comes up so it can be safer than stocking it in a 401 in the event of you needing emergency funds.
[Reply]
Financial Samurai Reply:
January 6th, 2013 at 12:58 pm
If you have rich parents, then of course you have a likely chance of being above average if you have above average parents. How does your net worth compare to my charts?
I love real estate. Here’s my latest post on the subject. http://www.financialsamurai.com/2013/01/04/the-real-estate-investors-mindset/
[Reply]
Shaun Reply:
January 23rd, 2013 at 7:48 pm
Owning is definitely better than renting. Provided you didnt make that decision in late 2007.
I’m solidly behind your projections in net worth maybe by $100k. Although if you take the 60k in loans and give me the interest I paid on them instead of having it leave me I’m actually not all that far behind.
[Reply]
Interesting site. I wish I had come across it sooner.
I’m 44, married, 2 kids 12 and 8 yrs old. Combined net income from all sources is $270K/yr. My salary is $160K, wife’s part-time income is $60K, and we own four multi-family rental properties with good equity in them (I bought the last one in 2004) and they have appreciated significantly in value since. Net worth is approx. $1.4M.
We plan to retire within the next 10 years. Net worth goal is $3M. Net income stream from the rental properties is currently $50,000/yr. Once the property mortgages are paid off (the plan is within 5 years), the properties will produce $100,000/yr in net income. Our 401K savings are only $250K, mostly due to the fact that we had alot of debt in our earlier years and did not contribute the maximum amount until recently.
We are starting college savings plans for the kids (yes, it’s late), but expect that the bulk of their college will be paid for by scholarships or income from the rental properties.
The dilemma I’m facing is whether to follow the conservative path and plow the rental property earnings into paying off the mortgages, thus increasing my rental property income, or acquiring more properties. The trade off is that managing 4 properties is pretty tough with a full-time job, and adding more would require some major life changes. I’d also be open to selling all of the rental properties and putting the equity into one much larger property that can be professionally managed for me.
One note to the people just starting out: investment property is definately a way to go if you have the time to manage your properties effectively. That is key. If you are willing to take some risk at first and get your hands dirty, you can establish a good net worth builder with real estate.
[Reply]
Financial Samurai Reply:
January 8th, 2013 at 7:43 am
Hi Pete, welcome to Financial Samurai! How did you find me?
It sounds like you guys are doing fine, and since you have a 10 year horizon, there is plenty of time to kick yourself in higher gear. Id consider a property manager if it’s too hard to juggle.
I strongly recommend you visit this page to better track your finances for free. You are in the perfect scenario to take advantage.
Good luck and hope you sign up for my e-mail feed and keep in touch!
[Reply]
PeteinCt Reply:
January 9th, 2013 at 6:13 am
Thanks for the advice. I found you with a simple Google search for “net worth by age”.
I’ll stop in frequently to see your updates.
[Reply]
Wife and I just turned 34 and have 2 children living in the Pittsburgh area. We both started out making around 30k and in 12 years later now make around 65k per year each.
We have 215k in 401k, 55k in Roth IRA, paid for house worth 160k, and 380k in cash – total assets of 810k. Currently our net worth grows by 7-10k per month depending on the stock market (about 3k-4k in cash and 4k-6k in retirement accounts).
I believe the numbers you’ve come up with probably seem high to many people but they are very doable with the guidelines you’ve come up with. It just takes time and patience and living on less than you earn, dual income helps. Key is to get out of debt early. We had small student loans (12k) and new car loans when we graduated but paid them off quickly and then put everything against the mortgage. Once the mortgage was paid off we up’d retirement savings and now max out both roths and both 401k’s.
Great site!
[Reply]
I read all these posts about high salaries/contributions to 401ks and it makes me wonder if I’m really that bad or if all you people are really that good? I graduated college in May 2011 with a degree in accounting. Took a 23k/year job and now make 31k/year same company. I have 60k in student loan debt, I lease my car, have a rent payment and contribute the minimum 6% to my 401k to get the employer match. I work some weekend jobs for a little spending money. Am I doing something wrong or am I just “average”? I feel like I will never be able to reach those numbers. Thanks and great article!
[Reply]
Financial Samurai Reply:
January 10th, 2013 at 3:23 pm
Joe, you JUST started your career. The point is you have a frame of reference and a target. The beginning is ALWAYS hard. Takes a lot of sacrifice and long hours. But trust me when I tell you that if you keep it up for 10 years, you will feel incredibly free. Please spend some time to look around my site and subscribe over e-mail. I think you will be able to benefit a lot!
[Reply]
Her Every Cent Counts Reply:
January 12th, 2013 at 7:19 pm
Exactly. If you graduated in 2011 you are doing FINE! I graduated in 2005 and for the first year I made about $10k and the second year I made $25k. I’m 8 years out now and have $200k in networth. Yes, I moved jobs a few times and got significant increases in pay (make sure you do that as moving jobs helps you increase pay – staying at the same job you won’t have the same kind of lift in salary) – but it’s definitely do able and you’re well on your way to success. The only thing I’d recommend (though it’s probably too late) is not leasing your car and instead buying a car 5-6 years old that is checked out before you buy it and considering of good quality. I spent $8k on my car when I got out of college with cash up front and it was the best decision of my financial life. It’s been good to me (on it’s last legs now at 200k miles) and I never had debt to pay it off.
[Reply]
Financial Samurai Reply:
January 12th, 2013 at 9:56 pm
Wow! Going from earning just $10k and 25k your first two years to building a net worth of $200k is impressive! If you haven’t written a detailed post on how you did it, I’m sure it would be a hit. Actually, I read the 4th link in your about me page. Nice work.
I hear you on the car buying thing. In fact, I have the 1/10 rule for car buying rule I encourage everyone to follow. http://www.financialsamurai.com/2012/10/06/the-110th-rule-for-car-buying-everyone-must-follow/
Joe Reply:
January 15th, 2013 at 2:30 pm
I previously had a 20 year old car which i drove into the ground (sold it for $1,000). It got me thru high school and college. My commute is roughly 50 miles a day and it is a great peace of mind knowing that my car is not going to fall apart on the way to work (and if it does it will be repaired at no cost). My old car was breaking down about twice a year with the average expense of $750/breakdown. The lease I have is $220/month so I’m only spending $1,100 more per year on a car (not including free oil changes and tune ups). Plus there was nothing due at signing.
I’m 23 forgot to mention that.
[Reply]
Thanks,
Good article. 35 yo male: 250 in savings/cash trading account; 250 in retirement. The 250 includes sep, roth, 401k and hsa. About half of the retirement is after tax (e.g. roth, hsa).
Tips to others: live under your means, start a biz and stay aware from greedy women!
I disagree with your negative article about a roth….it depends on many factors, one also being your income when you retire and what the tax brackets will be at that time. I converted some money to the roth for some of the obvious reasons, but also for the less obvious: a self-directed ira that I am planning for in the future.
Also, another creative way to save for retirement is an HSA…I don’t ever take money out of the HSA…even for medical, I am treating that as another retirement vehicle as are many: http://www.freemoneyfinance.com/2008/08/using-your-heal.html
[Reply]
I’ve lived the life of the “above average” person. Started saving/investing when I was a busboy at 16 years old. Always lived below my means whether I made $22,000 a year or $200,000. Saved first, invested conservatively, but consistantly in all markets. I am now 49 and have a net worth of over 2 million. Does that make me a financial “rock star”?
[Reply]
This chart was quite useful, albeit a little upsetting. I didn’t have access to a 401k until two years ago at the age of 27, so I don’t have $180k in my 401k (just a measly $37k.) I do have a total of ~$180k in networth at the age of 29, plus $20k in purchased stock options (so theoretically $200k in networth.) My goal has always been $250k by 30. However, I’ve been able to do this because I rent. One thing you should take into consideration is how cheap it is to rent if you are willing to have roommates. I’ll admit it sucks from time to time, but today I pay $650 in rent and if I were to own, even a crappy studio apartment, it would be at least double that, and I’d have HOA fees and tax on top of it, plus the cost to fix everything that goes wrong. I can’t see how owning would make any sense when in my area that average cost of a one bedroom is $650,000. I’ve been toying with the idea about renting forever — more cash to invest — but at some point if I have kids I might want to own, not for financial reasons, but for stability for my kids. If you’re single and in your 20s, renting is really the best option, unless you can buy a triplex and rent out some of the units to make your lost money back.
[Reply]
Financial Samurai Reply:
January 12th, 2013 at 7:22 pm
Admirable of you to rent and live with roommates to save and invest. After 3 years of working, I got sick of living with roommates and decided to buy. Fortunately, it worked out 9.5 years later and build about 450k in wealth over this time period.
To each their own I say.
I think the next 5-10 years is really going to be good for property owners.
See this post. http://www.financialsamurai.com/2012/10/16/real-estate-is-my-favorite-investment-asset-class/
Sam
[Reply]
Samurai – just found your website, very informative. Couple adds from me on your “Recommended Actions For Increasing Your Net Worth” – “Bet on Yourself” and “Be Mobile”
Bet on Yourself – Strive and get that top MBA, or get your CFA, or whatever to propel you to the next level. Those items will yield a poor return if you dont do anything with it but if you are willing to “bet” (invest money) on yourself, you will do very well. But sounds like most of the people here are doing exactly that! My personal example – I graduated at age 29 with an MBA from a top 5 school along with an negative $50k net worth! But it doubled my comp and I took off from there, all because I bet on myself and knew I would succeed even though the near term financials were a drag.
Be Mobile – in my opinion, if you buy a home when you are under 30 you are nuts. NOT because a house can lose value, but rather because the mentality it creates when propelling your career. Maybe you bought a place in Atlanta and no longer “look around” to other cities for job opportunities because you feel “settled”. This reluctance really limits people. My example – I lived in 4 different states during the first 7 years after undergrad because I kept looking for the next big opportunity and nothing was going to hold me back, which lead to my success today.
So where am I today? $5mm net worth at age 38. Time of your life, huh kid? (quote from my favorite movie)
JG
[Reply]
This model doesn’t really work well for me. I’m a young doctor starting out in residency, I spent my whole life in school so that puts me about 250K in debt when I finished medical school last year. I’m 27, my income is 48K as a resident, no 401K or other benefits and will see very little growth over the next three years. I have a car but that’s about my only asset in value. My income strategy has been to take advantage of loan forgiveness and make minimum payments, I weighed this against making higher loan payments and living on a tight budget but really high loan payments when your pre-tax income is 1/5th of your principal debt isn’t much.
Once I graduate my income will grow to around 300K a year, which will afford me more investment opportunities rather than merely holding down living expenses and loan payments. In the meantime, I’m probably going to cap my Roth IRA and spend the remainder on a few stocks that I find promising.
I’ll call it the catch-up model for doctors who should have done something else with their life rather than spending 8 years accumulating debt :)
[Reply]
Financial Samurai Reply:
January 31st, 2013 at 12:17 am
Hi Mate, makes sense. This is why I provide a “years worked” column as well. With your future earnings power, you should do great provided you worked enough years. Good luck!
[Reply]
I am a 46 y.o. married male with $236K in retirement accounts, $900K in liquid investments (extremely conservatively invested – about $250K in index funds, $250K in bond funds and $400K in moneymarkets) and $100K in illiquid private company security. I make $280 +15% bonus but I work in a volatile industry where the job is always uncertain. I pay about $2500/month in rent (houses in my neighborhood exceed $1M, and I just had my first kid, but the schools in my area are pretty crap despite the high cost of housing. I max my 401K which is 80/20 stocks to bonds, but overall I just don’t trust the market.
Any thoughts as to how to transition to a more aggressive investment stance and whether it makes sense to buy rather than rent?
[Reply]
Financial Samurai Reply:
February 8th, 2013 at 7:54 am
Johnny,
With your income, it must feel great to only pay $2,500 in rent. I’m a big advocate of ownership at income above $200,000. I also fear renting because it provides no return and leaves nothing to the kids.
Here are a couple articles you might like:
http://www.financialsamurai.com/2013/01/04/the-real-estate-investors-mindset/
http://www.financialsamurai.com/2013/01/28/the-proper-asset-allocation-of-stocks-and-bonds-by-age/
Sam
[Reply]
Great post! Really enjoyed reading up on this article and the comments. Although after reading some of your personal stories and comments I feel slightly inadequate!
I am a 24 year old living and working in Shanghai as a design instructor. This is my first full time post graduation and I make only about 30k a year from my full time position and 9k from freelance work at a publishing company. I have a total of 6,000 in savings and my student loan debt total is about 13k which is reasonable from what I hear (compared to other fashion design students).
I do plan on going back for a business degree within the next three years.
My parents own property both in the US, paid my first years tuition in full, and I attained scholarships which peeled of the bulk of my tuition costs.
Just wondering what else I could do to make make a smarter investment for my future especially since I will be going back to school. Any suggestions? Especially since I am clearly on the low end of the savings guide.
Thanks,
[Reply]
Question on this? How would you translate these numbers for a married couple? Would your analysis assume two married 30 year old’s would have a net worth of ~479k? What if it was a one income home? Just curious on your thoughts.
[Reply]
FinancialSamurai,
I am a 25 year old making approximately $200k annually. Combined household this year should be ~$240k. My income has increased greatly since entering the workforce, $51k to $$57k to $88k to $135k to $200k. It looks like income will continue to increase for the next 2-3 years and will end up averaging between $250-300k annually for 5-10 years thereafter. My wife and I have a current combined net worth of just over $100k and I’m wondering what your recommendations are for investing extra cash. I’ll max my 401(k) this year and am also participating in ESPP. My wife contributes to employer match in 401(k) and has contributed to a Roth IRA for about 6 years. AGI this year will put us over the Roth IRA limit and other than our mortgage we have little debt. We just bought our first house in the DC area for about $550k and are interested in both real estate and the stock market. Thoughts on how to keep up with your “Above Average” charts and where to invest?
[Reply]
I am a 58 years old PhD , married with two grown children. Retired from State Government with a pension of $ 54,000 a year with medical at age 55. Started working again 2 years ago ~ $ 75,000/yr and we bought another house (our final) for 138k which is now supposed to be valued at 165k , we owe 100k and I am making double morgage payments. No other debt except normal bills. We have about $ 180,000 in savings. Some regrets about taking on too much risk at times, and since 2008, way too little risk, with our investments “but” took care of our son and daughters educations. Always felt I could keep pulling rabbits out of my hat but lately have been nervious about a sustainable future for no other reason than that I am starting to own my age. From your perspective, how do we look financially at this point? Are there obvious things we should do to further secure our future? Thank You in advance for your response.
[Reply]
Financial Samurai Reply:
March 5th, 2013 at 2:58 pm
Hi There,
First of all, you are doing great because you have a $54,000 a year pension for life! All you got to do is take your expected life expectancy age (e.g. 85 for example), subtract from your current age of 58 = 27, multiply by $54,000 + COLA, and you’ve got your capitalized value right there. Or you can take $54,000 and divide by 3% to get $1.8 million as a rough estimate.
To minimize regret and stay on top of your finances, I recommend you sign up with the free wealth management online tool, Personal Capital. I’ve aggregated all my accounts so I can get an idea of where my money is going and where I need to adjust my assets. Personal Capital tracks your net worth and gives you a bird’s eye view of your finances to make better decisions. The tool is already saving me over $1,000/year in portfolio fees from my 401k I had no idea I was paying thanks to its “401k Fee Analyzer” tool you can run once you’ve linked your 401k account. It’s free, secure, and easy to sign up.
Good luck!
Sam
[Reply]
These numbers seem a bit high to me. I’m 29 and make $65k in Los Angeles now. I had a net worth of NEGATIVE – $32k at 22, right out of college, and have been very frugal and diligent with my savings since then. I currently have $170k net worth, mostly in after-tax accounts (Roth IRAs, mutual funds, etc…). Living in Los Angeles makes it difficult, however I am looking at putting $100k of my savings on a down payment for a condo, as I do plan to stay here for the next 3 – 5 years. I save about 50% of my income each month… I can’t imagine how people could save more.
[Reply]
Hi samurai, Great site by the way just found it. Will be learning a lot.
Im, 21 and make 30k in California been working since 15, dropped out of highschool jr yr. Bought a house at 19, (have excellent credit, down/closing cost was 3500, had 12k in the bank at the time, mortg pay 610) selling it for 60k profit. I have 2k in bank, 8k in stocks, no credit card payments, do have car payments. My plan is to buy property again, but day trade as my daily job. I will quit my job, go to online school, and get federal financial aid to pay for school and my expenses. My smal business will easily keep me at 24k a year. I learned I need a college degree if Im going to make it to that million by 30.
My question to you samurai, is what would be a 21 year olds best move, after selling this house, to be the super above average rockstar? My plan in 2 months is take 40k and trade. Hopefully net 35% yearly on that 40k. My gains are crazy when I actually have the time to day trade, have 10% daily gains on 5k. I think thats where I should take this big lump sum i’m about to make. What do you think Samurai?
Thanks Financial Samurai, best Believe Ill be reading every single one of these blogs. Knowing all of it is helping me to my financial future. :-)
[Reply]
Financial Samurai Reply:
March 9th, 2013 at 7:30 am
Hi Paul,
I like your enthusiasm. Is there any chance of you going back to school to get your degree? Perhaps go part time to have a backup?
I’ve day traded plenty of times before and if you do it long enough, I’ve found the losses even out the wins. Trading a $5,000 portfolio is different from trading a $40k portfolio due to risk loss pain.
I’d start trading a smaller portfolio of $20,000 and see how you do for 3 months and then move on while have a steady afternoon or night job.
Best,
Sam
[Reply]
Hi,
You have a great site with interesting comments!
I just wanted to say that accruing a high net worth is definitely doable! I am a 32 y.o. female who worked making mid 30′s for 6 years in insurance after college. That whole time, my husband was “climbing” the ladder but didn’t make more than $56k when he left his job 2 years ago.
While we were being severely undervalued ;) we were amassing rental properties (duplexes), fixing them up, flipping them and putting the money towards more. We did everything ourselves and one property at a time. We even rested for about a year before continuing. We never took a honeymoon or vacation but still managed to have a great quality of life.
Our family, on both sides who are serious consumers of luxury goods, think we are low income because we still live in a 2bed, 1 ba house but long story short, my husband started a business (online) from home at the same time I decided to stay at home as a Mom and go to school part-time. Our net worth before the sale of his business, I know this today because we just did our financial statements to apply for the apartment building, was $1.2M.
I am actually taking a break packing for our first vacation together since getting married 6 years ago! We are going to about 4 different golf courses and stay at some awesome (priceline purchased) hotels.
I just want to say that it’s part luck, part visualizing and staying with your plan from day 1 but also being flexible and knowing that you are the only one who is going to look out for you because money is energy and everyone else will take it if you let them!
Good luck to everyone out there!
[Reply]
Going into college I had saved up around 15k in mutual funds from gifts and summer jobs (yard work, retail). While in school I worked part time for 12-15 $/hr for 4 years and full time during the summer. During that time I lived in an office basement owned by my dad and he didn’t charge me rent utilities or internet. School was basically free because of the work-study tax breaks at the time. I graduated in 7 years but was able to save about 30k altogether by the time I finished and bought a duplex through a short sale using an FHA loan once I was hired full-time(started at 67k). I rehabbed it and it has appreciated a lot. My net worth is now ~240k with about 2/3s in the duplex.
I’d say that real estate is where it’s at for those that are not geniuses (like me). It’s relatively easy to understand and doesn’t take much skill. I knew nothing about fixing houses before I started but learned as I went. It’s almost as if the government knows this and wants to give the opportunity to grow wealth to the common man. 3.5% down for FHA loans make it incredibly affordable to most people with jobs. It’s also a great investment due to inflation and if you get a multi family house it’s like getting a single loan for 2 places.
I find it hard to see how someone can have a net worth of 80k after 3 years of working. That’s saving 26k a year. I save 24k a year and am very frugal.
[Reply]
Financial Samurai Reply:
March 15th, 2013 at 10:51 pm
It’s hard, but it’s doable. With the help of a rising market, things get even better. Did you enjoy school hence the 7 years? I wished I did a 5th year, but I was anxious to graduate and start a career.
[Reply]
Absolutely right on real estate Sam. I’ve made life 10x harder for myself by not buying for one reason or another (wasn’t always a wrong decision, sometimes it wasn’t possible due to starting a business etc).
US property looks a screaming bargain right now. All US readers should buy ASAP if they haven’t already, especially if outside of the few slightly bubbly markets (e.g. Washington, New York).
[Reply]
Financial Samurai Reply:
March 16th, 2013 at 6:48 am
Great to hear from you mate. It’s been at least a year!
US property does look like a screaming by especially from a Londoner’s eyes. Rents have been rising strongly in my US describable cities and now prices are following suit. I’m tempted to sell one primary rental prospect to simplify my life, but should probably hold on for the next 5-10 years.
Hope all is well!
[Reply]
21y, graduating from college, have a job lined up for me when I’m done. 50k salary starting, here in Canada. Should I look for rental place or should I go into real estate and buy a house. And for saving and tfsa accounts, and RRSP, what should. Be the percentage of income allocated to those areas.
[Reply]
42 years old. 12 years ago, I was a newly divorced, single mom bringing in $2000/mo, including child support. Luckily, I left the divorce with no debt other than a mortgage on a starter home that I was living in. The mortgage was $535/mo, which was cheaper than rent on a small apartment. I was pretty much starting over – the only difference was that I was able to build equity in a home (we only put $8000 down on it, so it didn’t have much equity at the time of the divorce) instead of paying rent. Four years later, I built a house and rented out the one I was living in. The rent on that house covered the mortgage on my new house, so out of pocket housing costs were essentially the same as it had been. Three years later, I refinanced my house, pulled out cash and bought another rental property. Four years after that, I refinanced the original house and pulled out cash to purchase another rental property. Currently, the income from the three rentals covers all four mortgages and all are on 15 year notes. So, by age 57, all will be paid off. My current net worth is $440,000. Once the properties are paid off, it will increase to $750,000 (assuming the values of the property remain at current levels). Sure, it could be less, but it could be substantially higher. I plan to continue working, though, until I hit a net worth of $1,000,000 (which shouldn’t take long since the properties will all be mortgage-free by then). Then, will quit work and live solely off of the rental income. My daughter should inherit about $1,000,000 when I die and four properties. And, I’m still working the same job I was 12 years ago. It is all about starting early, making wise decisions, and not wasting money on unnecessary items, especially late fees, bounced check fees, high credit-card interest, etc. Those can really hurt you in the long run. That $35 bounced check fee may not seem like much now, but when you look at what that $35 could have earned over the years or saved you in interest had it been applied to something else, it can be substantial.
[Reply]
I’m not really sure where all the people on this site come from. My husband and I make a combine income of about 60k. We just bought a house with nothing down thanks to the VA loan. Because the government sells a pack of lies to the kids in the military, we have 60k in student loans. We’re lucky to pay the minimum to get the loans paid in 10 years and our mortgage. Where is everyone finding jobs where they are making 50k+ a year while under 30?!
[Reply]
Anyone who thinks these numbers are unrealistic is simply doing it wrong. I started out making 43k and now make mid 50′s, just turned 30 years old a week ago and have a networth of $375k and should pay off my house by the end of next year.
The only thing holding you back… is you. The key to having “above average” networth or savings is controlling and prioritizing your spending. I don’t live like a miser, I travel abroad every year for several weeks, I kayak and go rafting, mountain bike, go backpacking. But I stay in hostels, I ALWAYS buy used equipment at a fraction of the cost and most of make a profit when I sell it. The reason more people don’t have high networths is because they don’t want to cut out all the “little crap” they spend money on: coffee in the morning, going out to lunch, going out to dinner, going to a movie, buying that thing you will never use, letting your food spoil, having to pay interest on your credit card… congrats, there goes your earnings.
Your attitude has a lot to do with being above or below average. Below average people make excuses for their results, above average people look for solutions. Which are you?
[Reply]
35 yo single male, annual income $160K (140K salary, 20K stock dividends), have $410K in stocks, $10K in savings, $240K in retirement accounts, so I’m in good shape based on your table. Targeting net worth growth per year of $100K (assumes conservative 3% asset appreciation), would like to retire with $2 million by 45. For better or worse I’ve always been 95%+ long equities as I just can’t stomach having a lot of cash sitting in the bank earning 0.1% interest. I didn’t crack the $100K net worth mark until I was 30, but thankfully b/t raises, prudent investing (I stick mostly to large cap blue chips with 3.5%+ dividends) and keeping my costs in check (I pay $900/mo for a cozy 1/1 apt and drive a 10 year old car), I’ve seen nice asset growth the last few years.
I think cost containment is a biggie, it takes a lot of discipline to not fall into the lifestyle trap when your assets increase (especially when your peers are living large), why drive a 10 year old Camry when you can easily afford a new BMW5? I have basically the same annual budget now than I did 10 years ago when my annual income was half as much, and is a big reason why I’ve been able to rapidly grow assets the last few years as I’ve been able to put that excess income into investments.
The one asset class I’m light on in Real Estate, I’m impressed how many of you have gotten into RE at such an early age, obviously this is a place where you can make a lot of money since RE is a leveraged asset so if prices go up, your returns are enormous if u only put 20% down. I’m a content renter, and since I’m single I don’t need much space, but I’m considering buying a single family house and renting it out (looking at Las Vegas), if anyone can point me to a website listing all the things first time buyers/landlords should be focusing on I’d really appreciate it.
[Reply]
Financial Samurai Reply:
April 11th, 2013 at 9:35 am
You are crushing it! Nice job! Here’s a post I wrote that you’ll like: Recommended Net Worth Allocation By Age And Work Experience with some further links to relevant articles on real estate.
Were you 90%+ in equities during the 2008-2010 time period? If so, did you simply hang on and buy more? I started this site then as a way to deal with the economic crisis.
I also recommend you sign up with Personal Capital to get a good holistic view on your money with your kind of assets. Check out my overview post here.
Good luck and welcome to my site!
Best,
Sam
[Reply]
Retireby45 Reply:
April 11th, 2013 at 10:34 am
Thanks for the real estate links, I’ll definitely check out Personal Capital, looks great, much more elegant solution to tracking my various accounts than doing it all in Excel.
Yeah I was full throttle in equities when the market collapsed so didn’t have much free capital to buy when it hit bottom, but I held on to my positions and plowed almost every excess dollar I’ve made in the market since then.
I really didn’t get serious about my finances until my late 20s (didn’t max out my 401K until I was 29), hopefully more 20-somethings (or even teens) find this site and heed your advice, since the earlier you focus on money, the sooner you’ll be able to hit your retirement bogey.
Keep up the good work!
[Reply]
Financial Samurai Reply:
April 11th, 2013 at 11:45 am
No prob. I did all my financial tracking through an excel spreadsheet as well until I found Personal Capital. Free and easy to use and I met up with several of them here in SF. They’ve got new product rollout a this year too so I’m excited.
I just turned 40. My Excel sheet today says my net worth is $644,00, which is almost exactly what is estimated in the chart above. So there’s one data point.
[Reply]
I agree that your numbers especially for pre-30 year olds are next to impossible. In order to generate $17500 in home equity within the first two years of ownership (with no appreciation and assuming a 30 year fixed at 3.25%), the original mortgage would have to be $400,000. This is a long ways off of $200-250K which you assumed. For a 30 year old to afford that size mortgage, fully fund a 401K, save ~$10,000 in after tax dollars, and actually live, they would have to earn at least $100,000. I’m not saying it is impossible, but few 30 year olds make that much, and many that do live in places where they couldn’t buy a garage for $400K. I’m looking at it from a single person’s perspective so a couple with dual incomes would be a different story.
[Reply]
Wow all I have is a 52000/ year job and live with my parents, have one daughter and just paid 7000 to a divorce lawyer and have no savings. My ex husband got the house in the divorce. I must really be behind in saving. I’m 30 years old.
[Reply]
Drinking wine at home this nice Friday afternoon, as I work 4 hours on Friday and 9 hours the other 4. Came across your website and it seems like interesting, real world practical number crunching advice.
I’m 48 years old, married with two kids – 9 an 13. Wife works too. Combined annual family income is $200K. Zero debt and we buy everything in cash, although we use credit card for the gift points.
My assets are: $250K in 529 plan for kids, $650K home, $60K cash, $80K Roth, $210K tax free investments, $140K 401 plan, $200K 457 plan. Net worth is $690K excluding the 529 plan as that will pay for 8 years of college expenses in CA for the kids, and excluding the house as it does not give me returns.
My yearly savings and net worth total returns are estimated at $100K per year. I plan to retire at 62 latest. Will have pension of $90K annually. I estimate I will have net worth at least $2 million by 62.
How am I doing? Any advice?
[Reply]
What a great site, great niche. Nothing like this online. Well done. I am always trying to find out how I’m doing. I’m 34 years age. I got 245,000 in cash. I own one rental that I owe 379,000 that is worth 375,000. I’m renting at a loss of 500 a month based on me not paying any property tax for the first 5 years. Got a penalty on back tax that runs out next year of 315.00 a month. Once thats paid the rent i get will cover the mortage. Always wondering if I should bail or hang on. I rent with my girlfriend right now . Income bounces from year to year 80,000 grand to pre tax 280,000 ( small business owner) have no debt, own my car out right and have no money invested in any stocks, retirement. This year I will make 290,000 pre tax. Have little baby on the way. Any advice would be awesome. As I have no idea.
[Reply]
Financial Samurai Reply:
May 4th, 2013 at 5:45 pm
Hi James,
Nice to hear from you! Did you find my site on Google? Great job accumulating a nice chunk of cash. Is it possible for you and the GF to move into our rental instead? If not, that’s fine. I would try and hold on to the rental as long as possible, especially if it no longer bleeds cash. Things are getting better.
I would open up a SEP 401k or IRA to shelter some cash and built that tax-free retirement nut. You can potentially save and shelter up to 50K a year tax free. I’d also sign up with Personal Capital, a free wealth management tool that will help you track your net worth and help keep you on financial track. It’s a great way to stay on top of your finances.
Cheers,
Sam
[Reply]
Hi Sam,
I agree with others who have stated this is a great site – I’ve been reading PF blogs for about a year now and was looking for more in depth articles instead of the surface-level stuff that PF bloggers seem to duplicate over time. You have really unique articles in comparison and for that I’m glad I stumbled across Financial Samurai!
I, too, just wanted to share my personal net worth because I’ve been so interested in reading about others. Fortunately, my parents were able to cover 100% of my college expenses that weren’t covered by scholarship dollars. This was all a result of my father’s hard work in a lucrative career and my mother’s frugal management of our household. It is a gift that I vow to return to my future children one day. That being said, I have no debt, which I understand is uncommon at 23.
I have been working for two years as a communications/organizational change contractor at a large insurance corporation, grossing 45K per year. I currently have 6.8K in my 401K, 4.6K in a Roth IRA, and 5.4K in a high-yield savings account. It looks like my savings are matching up with your chart, however, I have flip flopped the pre-tax and post-tax savings goals. (The reason being that I’m saving up for a property down payment.) Regardless, I will have a net worth of 20K in July, a month shy of my 24th birthday. Keep in mind, this is without debt and after two years of working, so I don’t know if I can keep up with your chart goals next year without reducing my lifestyle or getting a promotion/pay increase (working on it though!)
[Reply]
Financial Samurai Reply:
May 7th, 2013 at 2:42 pm
Hi G$, welcome to my site. That’s great you graduated debt free. Don’t waste the golden opportunity to pursue your dreams without an anchor!
I’m glad you’re focusing on buying a property. I recommend you read the the following two articles:
http://www.financialsamurai.com/2013/01/04/the-real-estate-investors-mindset/
http://www.financialsamurai.com/2013/02/11/recommended-net-worth-allocation-mix-by-age-and-work-experience/
Good luck and hope to hear from you more on my site.
Best,
Sam
[Reply]
Like the articles on this site – including the opinionated stuff – while my gut feel doesn’t match your estimates, I don’t have the financial brain-muscle to argue :) I happened on this site because I was refinancing my 5/1 ARM to a 30-yr fixed and was not sure if I was making the right decision. While I may not live in this house for more than 10-12 yrs, I hope to keep it as a rental after I move out, hence the 30-yr fixed. Thought I’d add my data-point to the set.
My stats:
Age 38 : Pre-tax savings – 200K, Post-tax – 100K, Real estate equity – ~600K
Living in CA explains the above skew :) Though I’m a bit concerned about it, given our earthquakes !
Anyway, thanks for the article – was getting tired of ‘average numbers’ since they seemed quite unrealistic for me (living in place like CA Bay area – can’t rely on national averages for anything !)
[Reply]
Financial Samurai Reply:
May 10th, 2013 at 11:02 am
Hi SP,
Welcome to my site! Hope you stay on and share your thoughts on future posts.
Your stats look pretty good to me. I recommend signing up with Personal Capital with that kind of money. It’s free and helps you keep track of everything in one place. I’d run your portfolios through their Investment tab which highlights how much in fees you probably had no idea you are paying. I ran mine through the 401k Fee Analyzer and found I was paying $1,700 a year! I signed up in 2012 and it has been awesome, and a relief in retirement as I go about doing my own stuff.
Don’t be concerned about earthquakes. Be concerned about annual storms our brothers face on the East Coast!
Best,
Sam
[Reply]
Great read….great discussion…keep up the good work…
[Reply]