My financial journey has looked nothing like this. Low wage earner (until recently), single parent, credit card debt (until 2021), minimum retirement contributions, but for the last 6 years put a small monthly 529 contribution and i have zero regrets of prioritizing that. Now in my late 40s with my larger income I'm playing retirement catch up and proud of how far I've come even when my life doesn't look like the "average" Manny & Mandy and never will.
Love the show. I would love to see Mannie's life as the average financial mutant. Meaning, he might not be at 20, but becomes a financial mutant later in his career (maybe use the average age of this channel's viewer). And before then, he was the average American with the average bad financial choices
Yes, I became obsessed with finance and investing/savings rate at 28 y/o. Before that i didn’t have much of a thought out plan, but thankfully I was still saving money. Investing was only 6% in 401k with 7% match, so 13% of my pay went into my 401K age 22-27. I def could’ve and should’ve been doing more! 😢
I’ve commented similar on your videos before but I want to give people hope, especially the YOUNG ones! These guys are talking the truth! I’ll be 44 this year. Married 19 years, 3 kids ranging from 5 to 16 and have been a single income household for nearly 7 years. Started investing at 20/21 years old. We had our 1st million invested when I was 38/39 and now we have a portfolio that cracked 2M about a month ago. Nothing fancy…. 100% mutual funds. Only debt we have is about 25K on the mortgage as we are not actively paying it faster. Plan is 5M portfolio at 55 and retire at that point. Start saving as much as you can early. It makes such a big difference! It’s so much fun watching your portfolio generate more than your salary every year. You can get there. Put in the work, stay the course.
I appreciate this encouragement. I'm 25 now and started the "messy middle" pretty early on, married at 22 and had our first kid this year. It's been rough, especially going down to one income after the baby. I haven't been able to invest any outside of my employer match these last 3 years, but we've been paying down high-moderate interest debt and working on paying off student loans and cashflowing education as able to build up my earning potential. I finished my master's this year and hope to be a CPA by next year. My wife's got 2 years left on her undergrad, but likely will only work part-time or remotely so she can stay home with the babies. Just hoping to start seeing the income grow so we can start making some real progress soon!
@@austintehguy sounds like you are on the right path! Once you pay that debt off, don’t get more! I owe nothing (and haven’t for over a decade) on anything but the mortgage. I owe about $15K on a $400K+ home. It’ll be paid off just in time to cash flow the oldest kids college (if needed). You got this!
In the messy middle right now. Marriage, new house, babies, stay at home spouse, new family vehicle, etc. Glad to see there’s light at the end of the tunnel/ 30s decade.
Stay strong! I felt the same way when I was in my 30s struggling through the messy middle. By my mid-40s, our house was paid off, our household income was through the roof and we didn't have a financial care in the world. The biggest keys to our success were dual incomes (once the kids reached school age) and avoiding lifestyle creep. You got this.
GREAT video! BTW guys Im 57 and already made the journey but the roadmap you laid our is remarkably close to what my experience was - if you are younger and watching this - pay attention to what they are saying and dont get discouraged/give up this financial road can seem impossibly hard at times - it gets better if you keep doing the right things. It's actually kinda funny, the numbers at the end of their presentation are shockingly accurate - our incomes were a bit higher so we got there a little sooner but great job guys - very accurate real life presentation. One thing they DIDNT mention - ONE WIFE/HUSBAND - be very very VERY sure of the person you marry, divorce can and will ruin the kind of retirement they presented, I have seen it happen with my college buddies - choose the spouse well and when times get tough WORK THROUGH THEM! don't just go for the easy option of divorce - it WILL devastate you financially.
I am 26 and I bumped into these guys as I was finishing up graduate school... very luck that the algorithm gave me Bo and Brian because I could be in a very VERY different place without them. Not that I am rushing to get to my 50s, but I am excited to see the outcome of following the basics that Bo and Brian have been preaching. Love these guys.
I would love if you guys could do one of these simulations with the US median houshold income of 75k. It would be nice to compare how low income/single earner households compare to high income households when dealing with the messy middle. Sort of a "How to pull yourself out of poverty" tutorial.
All of the assumptions they made in the scenario are actually pretty realistic and conservative with the exception of one. The average 5% raise year over year seems way too optimistic. I’d love to see which careers are actually providing that. A 2% to 3% raise with a cap is probably more based in reality
I think they get to 5% because it takes into consideration the occasional bonafide promotion that might get 10-15% a few times in a career to pull the normal 2-4% annual average up. In corporate America it’s not unusual to double or even quadruple your starting salary in 15 years or so. My wife literally quadrupled her white collar salary in 15 years, mine started higher but had slower progression but still ended up 2.5x more in 15 years… that’s more than 5% average.
Well pharmacy has other issues, but over the last 4 years (that’s all the data I personally have) I’m averaging about a 7% average annual raise. I have pharmacy friends only seeing 4% but they got higher starting offers which meant more money but a lower average raise.
Tell me about the messy middle. Last year I lost my job and had a second kid that same week. Then found out we needed to do an extensive roof replacement. And then needed a new clothes washer 🤣
That's nearly my same story, I'm about to turn 36. In my case we had to replace the roof last summer (2023), I lost my job January 2024, we have a baby due in mid May and we literally just ordered a new washer from Costco. I'm still unemployed so extra expenses are a problem right now.
@@BegravelseinBrussels you ARE on the clock, that's why there is a critical need for an emergency fund that is larger than an average American household, and then even the worst major housing expense can't derail you.
Fun idea and some good portions with the timeline of life events and how they translate to savings %. That compounding on the 5% annual salary increase really starts to distort things here IMO. Unless you're also applying like a 4-5% inflation expectation on their cost end as well (which I doubt)? GIving some real number assumptions like current monthly income minus current taxes and current living expenses as we move down the timeline would help this content hit a bit more.
Between 1/2019 and 1/2024 my husband and I went from having >$90k in debt (mostly SL) with a net worth of -$64k to having no debt and a net worth of >$100k between savings and investments. We spent our twenties being broke and I'll informed about money, but our thirties is by far much better now because of shows like The Money Guy Show. All things being equal despite a late start to the game we will still retire comfortably. So, for anyone who feels behind, you can do it!
This is one of my favorites from you guys. I'm early in the journey still but all the visuals, graphs, and high points here were great to see to get a picture of the 'real life journey' that lies ahead. I've been watching for years now and this was just a great one.
I would love to see you do this again with someone coming from a low-income background. The assumptions would be that they had no guidance for college so they didn't go to the best school or get the best degree and graduated with $20k in student loans. Starting pay $35k/yr, 3% raise per year (more common). Because they have no connections, it takes 2 years in each job to network into something that pays 10% more until they are making around $65k/yr. Then you can give them a promotion at another 10-20% after 5 years. HSA isn't an option because they have higher medical expenses due to ACEs (Adverse Childhood Experiences) which led to increased health issues. We can leave out the extended family begging for money but cost for one of their kids will likely be a little higher because ADHD or Depression is a high probability. Where would this family end up? What would they need to do differently to achieve a comfortable retirement if the numbers don't look good? What would the difference be if one parent picked up a side hustle for a couple of years? I would love to see you show what low-income people who found this channel later could reasonably expect. (I started my path to wealth building around 35, but to keep it more general, starting the low income couple right after college makes sense).
Your story is very similar to my story. The hosts’ example is really about 2 kids from middle-upper middle class who got married without any childhood hardship, trauma or student loans. Not everyone is so fortunate with their upbringings. Typical privileged white hosts who cannot see past their own world.
@@giainto5564 Not sure why race is relevant here - there's plenty of folks regardless of color who are either privileged or have had a less fortunate upbringing. I myself (25 y/o white male) was a child of divorce and grew up across split households. On one end I had a family with extreme anger issues and emotional dysfunction, and at the other I lived in a trailer house with parents in deep credit card debt. Only one step parent out of the 4 had any higher education, and one didn't even graduate high school. I got married at 22, both of us were making under $30k at our jobs, essentially minimum wage for our area. We worked our butts off through college and are paying off student loans with a newborn and a house now. Your background doesn't have to define you - you can make the choice to be different. I chose to be the first in my family to pursue not only an undergrad degree, but also to finish my graduate degree while working 40+ hours a week to support my family. I also chose to avoid all credit card debt, and to use tax refunds and bonuses to pay off auto loans. My kids will be better off than I was, and it will have nothing to do with the color of their skin, but rather the choices of their parents to be better than those before them.
I am heavily considering taking a pay-cut to move into the financial industry and work my way to being a financial planner. Will be difficult, but I’m obsessed with finance as a hobby and the 3-10 years timeline will be much higher pay eventually! My wife and lots of my friends works in finance and so I have a leg-up in that I know exactly what I’m getting into.
My brother in law is a Mechanical Engineer with a PE. He went into the financial industry about 2.5 years ago. He's starting to see the benefits of the change now and will within the next year or two likely be making more than he was / would have been as an Engineer. I've been tempted to do it myself as well, but as someone in their mid thirties in the messy middle that income means a lot. Thinking about finding a way to start working part time towards financial advisor maybe dealing with West Coast clients so they're in the afternoon when I get off work.
Opportunities abound in any field, but, bear in mind, this industry didn’t even really exist before about 30 years ago. At least nowhere near its current form. What changed? Basically the mass adoption of the 401k and technology, i e. computers and the internet, online brokerages, financilization of everything etc. What do we know now, in aggregate, financial and investment advisors almost never beat the market for any appreciable time period. So, this industry is poised to be displaced by automation. That is not to say there won’t always be a need to assuage and hand hold the clientele, but what seems to be most common is that new entrants into the financial services and financial planning industry quickly become little more than glorified insurance salesmen. Why, because commissions on insurance products, think whole life and annuities, are huge. This activity becomes a major drain on investors accounts, with the vig going to companies who underwrite these products. So, the idea of being a “fiduciary” while simultaneously promoting bad insurance products or loaded mutual funds or frankly anything that pays a commission is an oxymoron. If you are considering going into this field, might I suggest specializing in tax work. You rarely find a financial advisor willing to dig into the tax weeds. Why? Because it is hard and because generally speaking, this work is best done by accountants which requires higher ed and rigor. If you can both provide financial advice and specific tax management, now you have a chance to really add value for a client. Just my two cents.
This was one of my favorite episodes. I would watch more of these with different sets of assumptions including below average income or major medical issues, and (of course) above average income.
This also gave me some peace of mind knowing that it can be ok to back down savings for things like buying a home and starting a family. One of my concerns was losing an income to take care of kids, but this showed me that is common and manageable.
Really enjoyed this episode, would love to see similar breakdowns like this with other alternative life events. What about a single income household through the stages of life? Great episode!
Really appreciate the breakdown.It's nice to see a full example of the FOO in action with all the ups and downs of life. Makes me a lot less anxious beginning the start of the messy middle.
I'm a real person here. Getting to be a millionaire is not hard. You just have to save consistently over a long period of time and avoid debt. Keep the investments simple, and don't panic when the economy crashes. I have been married for 29 years and am on the same page with my wife regarding our finances and goals. Our shared vision has been priceless on the journey We retired at 56 just a few months ago. Lastly, always keep learning by watching meaningful content on the Money Guy Show.
@@AnalyticalMenace yes but at a very small amount in a job that paid very little. It took many years to build up to 10%. At 31, had cancer and that derailed life for a few years. At the time, I did not expect to live this long. Learned about FIRE and 4% rule in 2017, and then ramped up saving
What?! They are a dual income family - they are married and both college educated. 100k income would assume that they stay at 50k salary each forever, which is ridiculous. Me and my partner are not long out of uni (a few years) and our combined income is already over 100k. So it is definitely attainable. Get a useful degree that has good earning potential. Marry with similar goals, so you’re dual income. And bang 150k+ income. It’s very realistic 😂
Overall, I think the idea of the video is very good. Life happens, savings rates change over time, etc. etc. etc. That being said, there is a lot to this comment. 5% yearly increases in your income is very realistic in your 20s and maybe even your 30s, but a single decline in income at 40 and then carrying that 5% all they way to 65 is not realistic at all. Even if both of these individuals had very stable jobs (a single job loss at 40 is extraordinarily stable in my opinion), it'd be much more realistic to hold the annual raises after 40 to equal the rate of inflation, or in a very optimistic scenario, something like 0.5% over inflation. Running this at 2% over inflation each year sets the whole thing off after 40.
First I love the content, been listening for years. But am I crazy,? Who gets a 5% raise every year? Is this a normal thing? Someone else please let me know.
I was concerned about the same thing, so I wanted to hunt down an answer. I am not a financial expert and don't have time to hunt down tons of research so take it with a grain of salt. I would love perspective from the money guys on why they choose 5%. I found a St. Louis Fed chart for nominal median household income and compared it to an expected 5% increase. There are a lot of stretches where the median income stays pretty close to 5%! But whenever there is an economic downturn it falls away pretty fast. If you zoom out over the course of a career it is way behind 5%. However, you will likely start your career below the median and end it above the median as you specialize and gain experience. This could potentially explain the discrepancy? It does imply to be a mutant you have to be in the right career fields and never coast professionally.
Average Wage Increase from the social security site gives an average increase of 3.7% per year. So as long as you go from below average start to above average finish, probably!
I just retired two months ago. Over a 38.5 year work career, I averaged 4.2% annually. Some years were really tight and barely 2% while other years I had a promotion and approached 9% or so. 5% might be a little high but certainly not way out.
The salary growth is a little aggressive but probably reasonable. If they are both making 50K a year at age 25 (better than the national household average but still doable) and have a 5% rate of nominal growth on that salary (beating inflation a bit) that would be 216K at age 55. Sounds incredible until you remember that it is really only about 90K when you adjust for the 3% rate of inflation.
I like these types of examples. A lot of it really is about setting yourself up properly when you're young in your 20s. By the time you get your 40s/50s you have all these funds accumulated across various accounts and realized you didn't do too bad and got through the messy middle ( for us children in childcare) relatively ok.
Everything is true , delay gratification, my older self appreciates it. As you get older you don’t feel like working , your health goes down late 50s and you just want to retire, save save save.
Do they know something we don't? These elites in tandem with the corrupt government will take this country to it's knees like the fall of Rome, My sympathy goes to anyone approaching retirement, you may have reasonable concerns over your pension and if it'll stretch to cover the rising cost of living, bad regulatory policies, bad energy and insane fiscal policies.
Thank you. This is helpful. Wanted to make a suggestion of changing the color of the stage to red or something in the timeline when you are talking about that time. It helps visualize which stage are you talking about better.
People need to strive to get to 2 million. If this same exact video was done 30 years ago, the title would be: "How Real People Achieve $500,000 in Savings"
@@giainto5564 My point was, inflation keeps moving the number higher. $1 million isn't enough anymore. People in their 20's are likely to need $2 million (if not more).
I'm sorry, but what career did "Manny" choose? Who is this employer that gives these regular raises? If you have assumptions, it would be nice to understand that those assumptions are based in something.
I'm not saying it's not possible. I'm asking for data to explain how one would accomplish this as a baseline. I've been successful, but the path that I traveled isn't available so I wouldn't consider what I did typical. I'm asking for data to backup the assumption.
@@kevinailes4374 that's fantastic. Is the path that you took still available? If it is still available, who's providing it? My reality. There's a value that provides my happiness. I am not thinking that what I did is simply attainable for everyone
@Kevin Ailes Did you delete your post? Because I didn't say it was impossible to replicate the Manny assumptions. I asked for the industry that it was possible. I am also in management and make budget decisions for employee pay. I'd love to give everyone a 5% or more raise every year, but that isn't going to happen in my industry and I couldn't roadmap a way that someone could get those types of raises for 40+ years. I want data and not assumptions. All models are wrong, some models are useful. This model, in my honest opinion, is lacking.
@@chrisgreen359 there were discussions about this in outher comments. The average raise is about 3,7% someone said without double checking. But the model is not applying to everyone, its applicable for very finance savvy people with lots of diciplin, and in this case imo its a valid assumption. The path they showed led to ~125tsd $ income per person, which is between the 75th and 90th percentile today. So the assumption 5% p.a. and a 20% raise one year lead to a 1/4 to 1/8 result. Fairly archieveable if you know what you are doing. Regarding your experience with salary planning, people with such a tragectory would probably a) not work in the same role and b) not at the same company for their whole career. They would take on more responisibility and switch jobs if they cannot get their raises. We are not talking about an everyon case, we are talking about an at least top 20% case.
Love examples like this. Only non realistic thing is the 5% annual increases. This can happen some years as a top contributor but chances are won't happen every year. As someone in HR, I've worked in a lot of industries and it just isn't realistic at least not long term.
The bar charts look like they don’t return to max the 401k after the Roth/HSA. I’m preparing for step 6 and was already thinking about going to a brokerage account to help liquidity/accessibility. This presentation makes it seem more attractive.
If you hit 25% savings rate before maxing 401k, TMG considers Step 6 complete and you can proceed to Step 7. Then in Step 7, you can decide if brokerage makes more sense than giving up tax advantaged money. That’s probably what you’re seeing.
Dang, this is honestly great for me to hear. As I'm approaching the messy middle, a lot of things are terrifying, and I find myself stressed about how to do everything correctly. I know I probably could have given myself permission to do those things, getting the validation that it's even the *correct* thing to do, helps a lot.
Ugh starting these two at zero dollars, while leaving thier children with a starting salary of debt is everything I hate about financial planners. No conflict in interest in the 1% + Assets under management fees that you collect on the that 4 million dollar portfolio 😢
They didnt have to, they even said that, my life went pretty close to the example and I could be done at 57 if I wanted to roll the dice on sequence of returns risk but Ill probably wait until 60.
@@mlsasd6494 There are some expenses that you cant cut without radically altering your financial life - usually running costs on properties acquired and other assets that have to be maintained (taxes - insurances - upkeep etc.) and you are correct - anyone can retire if they don't spend any money...
Soo many people actually believe that the only way to build financial wealth is from a get rich quick scheme. And because of that, soo many people actually believe that it is not obtainable. This is because of all the lies that they have been told. It's sad.
Amazing video and appreciate so much those visuals defining the hypothetical savings rate year to year! Life happens especially during the messy middle so really appreciate that defined out here guys :)
Guys, I listened to this podcast instead of watching. It would have been nice to have mentioned what their net worth was at the end of each decade for the listeners.
I'm not sure if anything would change, but what would it look like for someone in VHCOL area where buying is a multiple times more expensive than renting? does it make sense to be an aggressive saver, hit FI number while renting, then liquidate / save to buy a house in cash or large down payment closer to retirement?
As someone who went full real estate bro in 2018 and saw 3 houses go up in value nah social media style hyped up investing videos have set me up to be a millionaire without really trying from this point out. Buying using a primary residence loan (ie no/low down) and renting them out after however long the bank says (mine said 6 months) worked out great when everything went up in value with covid. We had a townhouse go from $52.5k purchase price to $112k doing absolutely nothing; it rents for $1200 and it’s hoa plus mortgage is $485. We’re in the process of buying a fourth home now and paying it down while we rate to refi when rates go down someday and then it’ll be a rental too.
Can you share these same scenarios with someone starting over at 42? Life events take place at this age. I.e divorce all savings and strategies including retirements plummeted
(Brian’s Troll here) Many “real people” make less than the median and are living paycheck to paycheck. Brian and Boe seam disconnected from the economy, there systematic wealth structure is mostly for these with incomes greater than the median
I don't think they're disconnected, they're trying to educate people on how the best way to reach a goal. They understand that it's not always gonna work the same way it's gonna take longer to get to that 25% goal but that's just it it should be the goal for anyone that wants to build wealth. I think compared to a lot of other financial content creators, they're the most rooted and down to earth and realistic they know it's not gonna work the exact way they say it should.
Most “real people” aren’t financial mutants. They’ve said in other videos getting above the median income is about where you start to escape subsistence living and have some surplus to grow wealth. Still a fair bit of people making 6 digits that can benefit from this content.
*Hard truth incoming…* Brian and Bo are not talking to the average person that is bad with money, saddled with debt and make financially poor choices. They are not talking to the people that are comfortable and lazy. They are talking to financial mutants, so the nerds that are really interested in personal finance, hard workers, love spreadsheets, organised etc. Those people are the ones that are grinders, the ones that will work hard and sacrifice to get to where they want. Often times, it’s these kind of people that end up *high income earners* because of their drive. That’s their audience.
21:09 it's funny because I'm in the messy middle with my two year old but I'm turning 40 this year. Hard to see the savings rate go down when I was maxing it out for years 😢😂
Great content HOWEVER 5% raise YoY is not realistic. Same for a 20% raise in 20s start at 50k. INSTEAD - do 3% merit YoY to the 75k median. Otherwise your foundation is off and rest of numbers distorted.
It’s very realistic. I’ve received a 15-20% raise every year since I was 23 and I’m 27 now. With all due respect, if you don’t get at least a 5% raise, it’s time for a change of job.
@@ericmarquez2287 3.5% is the national average. It's totally realistic to expect 5% raises during *some* of your career, but no way does the typical person keep getting 5% FOR 40 YEARS. And all due respect, there's no way your company continues 15-20% every year. You'll be making half a million per year in about 10 years! Give it another few years and your salary will be $1 million!
If these guys have income that is Roth IRA eligible throughout their whole careers, why are they focusing so much on taxable brokerage accounts starting in their 40s and beyond? Wouldn't they be better off maxing out their 401ks?
@@stevenewsome5306 They don't need a bridge account though because they retire at 65. They would only need a bridge account if they were retiring early before 59 1/2. Also, I'm not saying that they shouldn't invest in a taxable brokerage account at all. I'm just asking why they aren't maxing out their 401ks first. The 2 of them could put in a combined $46,000 into 401ks which would make up a much higher percentage than around 5% of their savings. Even if their plan was to pay taxes now and only pay capital gains taxes in the future, they'd be better off putting that money into a Roth 401k.
I did it the old fashioned way and didn't follow any social media get rich quickn scheme. I personally built an import business specifically working with consumer products from Mexico. That's right we are smuggling herion
i hope someone can give me some clarity on this. i live in florida, and we have a very high hurricane deductible. it is over 30,000. i guess that that is our highest deductible. it's not like it is 1000 for a car insurance deductible. so, i basically just have our 6 month emergency fund of 36,000, and make that our dual hurricane deductible and emergency fund. curious about peoples thoughts about not fully funding the emergency fund, and a separate hurricane deductible, bc of the extremely high deductible.
Why did he start the HSA before age 26? Many young people will have access to parental policies still. Did they never upgrade their home? I also noticed that in the 50s and 60s, they're not putting very much in the 401k and are putting lots in the taxable brokerage. Why? It looks like they're getting a match and then putting the rest in the brokerage account.
As you get closer to retirement, one strategy is to have multiple buckets to optimize taxes. Taxable brokerage accounts are taxed as capital gains and not income (like an IRA) so they’re more favorable tax wise (not as favorable as a Roth and you don’t get as much up front savings on taxes as an Ira) but they’re awesome to have in your buckets preparing for retirement and tax strategy! Also, you can access them whenever you want and don’t have to wait til 59.5 so if you retire earlier, it’s also handy to have.
@jessymadsen2699 yes, indeed that's true. But it seems excessive. They could have optimized more of the tax savings in the 401k, or if they had enough pre-tax they could have done more in a Roth 401k. The flexibility of the brokerage is very nice, it just seemed unusually high in comparison to the tax-advantaged accounts, especially since they didn't retire early.
Silly question, maybe…. What do the families with kids do during summer break concerning work, and who watches their kids? My wife is considering returning to the workforce, and I don't have an answer for the month or two of no school for my daughter.
Summer camp. We are a two income family and we also send our child to camp during winter and spring break. Our parents are not able to and/or not interested in helping out. If you have good mom/dad friends, maybe share the load? During spring break, Family 1 agrees to take off a day and watch all the kids, then family 2 returns the favor for day 2, etc etc. some camps are very expensive but there are also more affordable ones. Check out youth sports clubs or the Y
@@kp67113 Thanks, great ideas! We have a year to figure it out, and I recall, as a child, going to a babysitter until I was old enough to watch my siblings.
I was so confused what the names were listening on the audio only podcast. At first I thought it was Manny and Matty. Then I thought maybe it was Mandy and Matty, then i thought ut was either that or Manny and Maddie which I've now confirmed in the slides. Must be the southern accents.
Do you all give your employees a 5% raise per year? I've never worked for anyone who had a standard raise higher than 2% with the merit raise being 3%. You should also mention that either Manny had well off parents that paid for his college or qualified for a huge scholarship. He also got a great job at 22.
I haven't read the fine print on the offer. But I'd be willing to wager that they have language in place that will, over time, benefit their business rather than you. Probably through hidden wealth management fees. Just my guess, I don't know for fact.
Because the Robinhood match is only 3% of your contribution, I would argue it moves the needle in your financial life about as much as using a cash back credit card. Which is to say, not very much. Certainly get that benefit if you already have a Robinhood Gold subscription and think it's valuable, but imo, the juice is not worth the squeeze.
Every comment replying to this so far is wrong lol. Goes to show why you shouldn’t trust the youtube comments for your financial education. For those wondering, Robinhood is offering a 3% match for ALL transfers and contributions to their Roth IRA. The benefit to Robinhood for doing this is that you have to keep your money there for 5 years, and you need to buy one year of Gold ($60). If you have a substantial amount of money at another brokerage it can be thousands of free dollars.
How the hell did they start at $50k? Teachers in my cities weren’t starting at $50k until 2020. And the average wage 20-29 is $15.39 which is isn’t $50k annually. So they are beyond the norm and well into well off before everyone else. Stopped watching about halfway through because these presumptions are too close to the ideal and not the reality.
the 75th percentile of 25 year olds earns 60k so assuming they started at 50k at 22 they got a yearly increase of 6%. From that i would say its safe to assume that 1/4 americans earns 50k at 22, not such an outrageous assumption imo. Beyond the norm sure, but "the norm" is not financially literate.
20% raise at age 29!?! That’s not typical 😮. That changes the numbers drastically when compounding over decades. Also 5% annual raise is unheard of. Usually 2-3%
I mean, it certainly isn't the norm but it isn't unheard of. I've always got raises between 5%-20%/yr at every job I've had (Got a 15% raise at the start of this year.) Granted I work for a Swiss company, not an American company, so that's probably why.
@@GreedyBeanieyou nailed it when you said it’s not the norm. It’s definitely not the norm. But yes, you could find corner cases I’m sure where it’s happened.
got a 25% raise at 23 (position change), friend of mine got a 20% or 45% hourly raise (40 hours to 35 hours per week) at 27.If you are good at what you are doing you should not aim for "typcial" and if you are educated enough at 18 to make education choices to lead to good job opportunities and diciplined enough to be good with finances you are probably good at what you are doing.
@@mlsasd6494it’s always possible to find someone that fits a scenario. Also the lower your starting pay the easier it is to get a higher raise based on percentage.
Example seems a little too optimistic. No one I knew got a real job until later 20s and none could start saving much until after 30. Very rare to get two financial mutants too.
Yeah for sure. I think the only way to make that work is one person making as much as both here, and potentially lots of money from older generations. Maybe I missed it, but these guys stayed in their starter home.
These examples are great if life is completely linear and no bumps along the way. But what about major setbacks like illness even after covered by insurance, divorce, etc.?
Is there any merit to continuing to use 20-3-8 even if you have the cash to buy flat out? Say I'm going to buy a car for $20k and can finance at 5%. I have that amount in an HYSA, AND that amount in a Brokerage account. It seems like 5% is a small price to pay for the potential growth of that money in a Brokerage account. I'd argue it's still the best to pay 20% out of the emergency fund and finance the rest.
If you say you finance for 5% and assume a 8% return you have an arbitrage of 3% but you increase your risk portfolio, If you are willing to accept that risk its "free" money
Without a spreadsheet showing assumptions per year on costs and salary (for example: saying 50k with 5% increase per year without a ceiling is rather optimistic), this is all just pie in the sky talk. Nice content, but the numbers are what matter and without more context it is just wishful thinking.
I have $1.4M in my 401k at age 46 starting in 2000. I actually have posted my milestone before in comments to show the ups and downs of the past 23 years. I can share that with you as a real life example if interested.
@@NewGuy2024 I am not sure why or how your finances have anything to do with the video., I was stating that the content of the video (Manny and Maddie) would be a lot more interesting if it was accompanied with actual numbers. The assumptions of salary and costs vary dramatically state to state, so all I was saying is that this general ideal example is just fluff without numbers to support it. Spoiler: If you just follow the FOO you win, but content is more interesting when seeing the numbers behind the logic.
You are thinking like an employee - you have 2 choices in todays economy if you want to make serious money, A. Change jobs every 3-5 yrs for a higher paying company (assuming you are in an in demand job description - I wasnt) or B. Start your own thing (which is what I did at 32), work your ass off for 25 yrs and boom - youre a multi millionaire with many options - and yes it is just that easy - if you have the balls to do it.
![ILLSLICK - KILLSHOT REMIX [FULL VERSION]](http://i.ytimg.com/vi/RIK8RrqIAzE/mqdefault.jpg)
My financial journey has looked nothing like this. Low wage earner (until recently), single parent, credit card debt (until 2021), minimum retirement contributions, but for the last 6 years put a small monthly 529 contribution and i have zero regrets of prioritizing that. Now in my late 40s with my larger income I'm playing retirement catch up and proud of how far I've come even when my life doesn't look like the "average" Manny & Mandy and never will.
Well done, manny and Mandy are kind of the ideal, but we all have different stories! Better late than never!
Manny and Mandy are far from average. This is just an ideal scenario. Most people are not this diligent or ideal.
Love the show. I would love to see Mannie's life as the average financial mutant. Meaning, he might not be at 20, but becomes a financial mutant later in his career (maybe use the average age of this channel's viewer). And before then, he was the average American with the average bad financial choices
Great idea. I started paying attention to finances around age 27.
and a more realistic annual percentage raise of 2-3%
Yes, I became obsessed with finance and investing/savings rate at 28 y/o. Before that i didn’t have much of a thought out plan, but thankfully I was still saving money. Investing was only 6% in 401k with 7% match, so 13% of my pay went into my 401K age 22-27. I def could’ve and should’ve been doing more! 😢
Yes, 100% . I want to see mutants with less perfect starting points
@@MightandMagic88exactly. I know very few people who make over $150k and I’m in my 50’s.
I would have liked to see student loans included as something to pay in the 20s/30s.
I’ve commented similar on your videos before but I want to give people hope, especially the YOUNG ones! These guys are talking the truth! I’ll be 44 this year. Married 19 years, 3 kids ranging from 5 to 16 and have been a single income household for nearly 7 years. Started investing at 20/21 years old. We had our 1st million invested when I was 38/39 and now we have a portfolio that cracked 2M about a month ago. Nothing fancy…. 100% mutual funds. Only debt we have is about 25K on the mortgage as we are not actively paying it faster. Plan is 5M portfolio at 55 and retire at that point. Start saving as much as you can early. It makes such a big difference! It’s so much fun watching your portfolio generate more than your salary every year. You can get there. Put in the work, stay the course.
I appreciate this encouragement. I'm 25 now and started the "messy middle" pretty early on, married at 22 and had our first kid this year. It's been rough, especially going down to one income after the baby. I haven't been able to invest any outside of my employer match these last 3 years, but we've been paying down high-moderate interest debt and working on paying off student loans and cashflowing education as able to build up my earning potential. I finished my master's this year and hope to be a CPA by next year. My wife's got 2 years left on her undergrad, but likely will only work part-time or remotely so she can stay home with the babies. Just hoping to start seeing the income grow so we can start making some real progress soon!
@@austintehguy sounds like you are on the right path! Once you pay that debt off, don’t get more! I owe nothing (and haven’t for over a decade) on anything but the mortgage. I owe about $15K on a $400K+ home. It’ll be paid off just in time to cash flow the oldest kids college (if needed). You got this!
@@danielgeorges3048 Appreciate that - wish you and your family all the best!
In the messy middle right now. Marriage, new house, babies, stay at home spouse, new family vehicle, etc. Glad to see there’s light at the end of the tunnel/ 30s decade.
You got this!!
You and me both brother
Stay strong! I felt the same way when I was in my 30s struggling through the messy middle. By my mid-40s, our house was paid off, our household income was through the roof and we didn't have a financial care in the world.
The biggest keys to our success were dual incomes (once the kids reached school age) and avoiding lifestyle creep.
You got this.
GREAT video! BTW guys Im 57 and already made the journey but the roadmap you laid our is remarkably close to what my experience was - if you are younger and watching this - pay attention to what they are saying and dont get discouraged/give up
this financial road can seem impossibly hard at times - it gets better if you keep doing the right things. It's actually kinda funny, the numbers at the end of their presentation are shockingly accurate - our incomes were a bit higher so we got there a little sooner but great job guys - very accurate real life presentation. One thing they DIDNT mention - ONE WIFE/HUSBAND - be very very VERY sure of the person you marry, divorce can and will ruin the kind of retirement they presented, I have seen it happen with my college buddies - choose the spouse well and when times get tough WORK THROUGH THEM! don't just go for the easy option of divorce - it WILL devastate you financially.
I am 26 and I bumped into these guys as I was finishing up graduate school... very luck that the algorithm gave me Bo and Brian because I could be in a very VERY different place without them. Not that I am rushing to get to my 50s, but I am excited to see the outcome of following the basics that Bo and Brian have been preaching. Love these guys.
I would love if you guys could do one of these simulations with the US median houshold income of 75k. It would be nice to compare how low income/single earner households compare to high income households when dealing with the messy middle. Sort of a "How to pull yourself out of poverty" tutorial.
You’re basically talking about the early steps of the FOO being stretched over a longer period of time
All of the assumptions they made in the scenario are actually pretty realistic and conservative with the exception of one. The average 5% raise year over year seems way too optimistic. I’d love to see which careers are actually providing that. A 2% to 3% raise with a cap is probably more based in reality
I think they get to 5% because it takes into consideration the occasional bonafide promotion that might get 10-15% a few times in a career to pull the normal 2-4% annual average up. In corporate America it’s not unusual to double or even quadruple your starting salary in 15 years or so. My wife literally quadrupled her white collar salary in 15 years, mine started higher but had slower progression but still ended up 2.5x more in 15 years… that’s more than 5% average.
Well pharmacy has other issues, but over the last 4 years (that’s all the data I personally have) I’m averaging about a 7% average annual raise. I have pharmacy friends only seeing 4% but they got higher starting offers which meant more money but a lower average raise.
Most people I know only get a 2-3% raise annually
Tell me about the messy middle. Last year I lost my job and had a second kid that same week. Then found out we needed to do an extensive roof replacement. And then needed a new clothes washer 🤣
Sounds about right 😂. Not all messy middles are the same but they usually rhyme.
woof that sucks man.... prayers and hard work blessings for ya! you'll be back on your feet in no time at all!
That's nearly my same story, I'm about to turn 36. In my case we had to replace the roof last summer (2023), I lost my job January 2024, we have a baby due in mid May and we literally just ordered a new washer from Costco. I'm still unemployed so extra expenses are a problem right now.
We've been in our house six years with no major issues; I've recently started feeling like I'm on the clock for a major house expense...
@@BegravelseinBrussels you ARE on the clock, that's why there is a critical need for an emergency fund that is larger than an average American household, and then even the worst major housing expense can't derail you.
27, been watching you guys for 5 years, this is by far my favorite episode you have ever put together. Life of the mutant sounded pretty solid to me!
Fun idea and some good portions with the timeline of life events and how they translate to savings %. That compounding on the 5% annual salary increase really starts to distort things here IMO. Unless you're also applying like a 4-5% inflation expectation on their cost end as well (which I doubt)? GIving some real number assumptions like current monthly income minus current taxes and current living expenses as we move down the timeline would help this content hit a bit more.
Between 1/2019 and 1/2024 my husband and I went from having >$90k in debt (mostly SL) with a net worth of -$64k to having no debt and a net worth of >$100k between savings and investments. We spent our twenties being broke and I'll informed about money, but our thirties is by far much better now because of shows like The Money Guy Show. All things being equal despite a late start to the game we will still retire comfortably. So, for anyone who feels behind, you can do it!
This is one of my favorites from you guys. I'm early in the journey still but all the visuals, graphs, and high points here were great to see to get a picture of the 'real life journey' that lies ahead. I've been watching for years now and this was just a great one.
This is one of the best shows that you have done. Really proves the point with simple math and discipline that normal people can build mass wealth.
Favorite episode so far. Answers many of the miscellaneous questions you guys receive daily and makes it tangible.
I would love to see you do this again with someone coming from a low-income background. The assumptions would be that they had no guidance for college so they didn't go to the best school or get the best degree and graduated with $20k in student loans. Starting pay $35k/yr, 3% raise per year (more common). Because they have no connections, it takes 2 years in each job to network into something that pays 10% more until they are making around $65k/yr. Then you can give them a promotion at another 10-20% after 5 years. HSA isn't an option because they have higher medical expenses due to ACEs (Adverse Childhood Experiences) which led to increased health issues. We can leave out the extended family begging for money but cost for one of their kids will likely be a little higher because ADHD or Depression is a high probability. Where would this family end up? What would they need to do differently to achieve a comfortable retirement if the numbers don't look good? What would the difference be if one parent picked up a side hustle for a couple of years? I would love to see you show what low-income people who found this channel later could reasonably expect. (I started my path to wealth building around 35, but to keep it more general, starting the low income couple right after college makes sense).
Your story is very similar to my story. The hosts’ example is really about 2 kids from middle-upper middle class who got married without any childhood hardship, trauma or student loans. Not everyone is so fortunate with their upbringings. Typical privileged white hosts who cannot see past their own world.
@@giainto5564 Not sure why race is relevant here - there's plenty of folks regardless of color who are either privileged or have had a less fortunate upbringing. I myself (25 y/o white male) was a child of divorce and grew up across split households. On one end I had a family with extreme anger issues and emotional dysfunction, and at the other I lived in a trailer house with parents in deep credit card debt. Only one step parent out of the 4 had any higher education, and one didn't even graduate high school. I got married at 22, both of us were making under $30k at our jobs, essentially minimum wage for our area. We worked our butts off through college and are paying off student loans with a newborn and a house now.
Your background doesn't have to define you - you can make the choice to be different. I chose to be the first in my family to pursue not only an undergrad degree, but also to finish my graduate degree while working 40+ hours a week to support my family. I also chose to avoid all credit card debt, and to use tax refunds and bonuses to pay off auto loans. My kids will be better off than I was, and it will have nothing to do with the color of their skin, but rather the choices of their parents to be better than those before them.
Long time Money Guy viewer and this is probably my favorite video yet. Thank you Money Guy Team!
I am heavily considering taking a pay-cut to move into the financial industry and work my way to being a financial planner. Will be difficult, but I’m obsessed with finance as a hobby and the 3-10 years timeline will be much higher pay eventually! My wife and lots of my friends works in finance and so I have a leg-up in that I know exactly what I’m getting into.
My brother in law is a Mechanical Engineer with a PE. He went into the financial industry about 2.5 years ago. He's starting to see the benefits of the change now and will within the next year or two likely be making more than he was / would have been as an Engineer. I've been tempted to do it myself as well, but as someone in their mid thirties in the messy middle that income means a lot. Thinking about finding a way to start working part time towards financial advisor maybe dealing with West Coast clients so they're in the afternoon when I get off work.
Opportunities abound in any field, but, bear in mind, this industry didn’t even really exist before about 30 years ago. At least nowhere near its current form. What changed? Basically the mass adoption of the 401k and technology, i e. computers and the internet, online brokerages, financilization of everything etc. What do we know now, in aggregate, financial and investment advisors almost never beat the market for any appreciable time period. So, this industry is poised to be displaced by automation. That is not to say there won’t always be a need to assuage and hand hold the clientele, but what seems to be most common is that new entrants into the financial services and financial planning industry quickly become little more than glorified insurance salesmen. Why, because commissions on insurance products, think whole life and annuities, are huge. This activity becomes a major drain on investors accounts, with the vig going to companies who underwrite these products. So, the idea of being a “fiduciary” while simultaneously promoting bad insurance products or loaded mutual funds or frankly anything that pays a commission is an oxymoron.
If you are considering going into this field, might I suggest specializing in tax work. You rarely find a financial advisor willing to dig into the tax weeds. Why? Because it is hard and because generally speaking, this work is best done by accountants which requires higher ed and rigor. If you can both provide financial advice and specific tax management, now you have a chance to really add value for a client. Just my two cents.
Follow your passions.
This was one of my favorite episodes. I would watch more of these with different sets of assumptions including below average income or major medical issues, and (of course) above average income.
This also gave me some peace of mind knowing that it can be ok to back down savings for things like buying a home and starting a family. One of my concerns was losing an income to take care of kids, but this showed me that is common and manageable.
Really enjoyed this episode, would love to see similar breakdowns like this with other alternative life events. What about a single income household through the stages of life? Great episode!
Really appreciate the breakdown.It's nice to see a full example of the FOO in action with all the ups and downs of life. Makes me a lot less anxious beginning the start of the messy middle.
Bo "is so excited about it", and we love it!
I'm a real person here. Getting to be a millionaire is not hard. You just have to save consistently over a long period of time and avoid debt. Keep the investments simple, and don't panic when the economy crashes. I have been married for 29 years and am on the same page with my wife regarding our finances and goals. Our shared vision has been priceless on the journey
We retired at 56 just a few months ago. Lastly, always keep learning by watching meaningful content on the Money Guy Show.
You are so absolutely correct about having a spouse that shares that vision. I am lucky because my wife is also a money saver and not a big spender.
I'm assuming you started your savings and investing journey at 20 something though, huh?
@@AnalyticalMenace yes but at a very small amount in a job that paid very little. It took many years to build up to 10%. At 31, had cancer and that derailed life for a few years. At the time, I did not expect to live this long. Learned about FIRE and 4% rule in 2017, and then ramped up saving
to make it more realistic, Manny raise/ year should be at 2/3% not 5% & cap income at 100K. More than 150K is not attainable for many of us
What?! They are a dual income family - they are married and both college educated. 100k income would assume that they stay at 50k salary each forever, which is ridiculous. Me and my partner are not long out of uni (a few years) and our combined income is already over 100k. So it is definitely attainable. Get a useful degree that has good earning potential. Marry with similar goals, so you’re dual income. And bang 150k+ income. It’s very realistic 😂
Overall, I think the idea of the video is very good. Life happens, savings rates change over time, etc. etc. etc. That being said, there is a lot to this comment. 5% yearly increases in your income is very realistic in your 20s and maybe even your 30s, but a single decline in income at 40 and then carrying that 5% all they way to 65 is not realistic at all. Even if both of these individuals had very stable jobs (a single job loss at 40 is extraordinarily stable in my opinion), it'd be much more realistic to hold the annual raises after 40 to equal the rate of inflation, or in a very optimistic scenario, something like 0.5% over inflation. Running this at 2% over inflation each year sets the whole thing off after 40.
I wish my parents’ 529 for me had had more impact - by the time I got to school, tuition was so insane that it barely accounted for 25% of it.
First I love the content, been listening for years. But am I crazy,? Who gets a 5% raise every year? Is this a normal thing? Someone else please let me know.
Pretty sure it’s spreading out the promotion raises on average
I was concerned about the same thing, so I wanted to hunt down an answer. I am not a financial expert and don't have time to hunt down tons of research so take it with a grain of salt. I would love perspective from the money guys on why they choose 5%.
I found a St. Louis Fed chart for nominal median household income and compared it to an expected 5% increase. There are a lot of stretches where the median income stays pretty close to 5%! But whenever there is an economic downturn it falls away pretty fast. If you zoom out over the course of a career it is way behind 5%.
However, you will likely start your career below the median and end it above the median as you specialize and gain experience. This could potentially explain the discrepancy? It does imply to be a mutant you have to be in the right career fields and never coast professionally.
Average Wage Increase from the social security site gives an average increase of 3.7% per year. So as long as you go from below average start to above average finish, probably!
I just retired two months ago. Over a 38.5 year work career, I averaged 4.2% annually. Some years were really tight and barely 2% while other years I had a promotion and approached 9% or so. 5% might be a little high but certainly not way out.
In the 28 years I have been working, from my first job out of college to now, I have averaged about 7%, with promotions and job jumoing.
Did Manny have any student loans when he graduated?
Probably below 7% interest and paid off in 10 years. So the year he loses that payment his wife is at home.
They would have mentioned it, so no.
@@abetterlivedlife as long as those student debt were in their budget there would have been no need to mention it.
Based on the FOO, why didn't they max their 401k and roth ira before putting so much into a taxable brokerage account?
The salary growth is a little aggressive but probably reasonable. If they are both making 50K a year at age 25 (better than the national household average but still doable) and have a 5% rate of nominal growth on that salary (beating inflation a bit) that would be 216K at age 55. Sounds incredible until you remember that it is really only about 90K when you adjust for the 3% rate of inflation.
I like these types of examples. A lot of it really is about setting yourself up properly when you're young in your 20s. By the time you get your 40s/50s you have all these funds accumulated across various accounts and realized you didn't do too bad and got through the messy middle ( for us children in childcare) relatively ok.
Everything is true , delay gratification, my older self appreciates it. As you get older you don’t feel like working , your health goes down late 50s and you just want to retire, save save save.
Wow nice case study. I see a huge amount of content you can make along these lines.
And 50K at 22 is very rare for the majority
If you are dedicated and make informed education decisions its a fair assumption imo.
@@mlsasd6494really. Two kids out of college and already 60k plus and working with young people.
It would be awesome to see a "FOO vs. baby steps case study" episode.
This was a good episode. I’ve watched it twice already!
"I'm so excited about this..." Again?!?! 😂. You guys rock
Bo is like a human version of a golden retriever. Always excited about something 😂
Long time listener / watcher and this is one of your most helpful videos yet!
People just have to work harder and smarter with a team and escape the slavery
Do they know something we don't? These elites in tandem with the corrupt government will take this country to it's knees like the fall of Rome, My sympathy goes to anyone approaching retirement, you may have reasonable concerns over your pension and if it'll stretch to cover the rising cost of living, bad regulatory policies, bad energy and insane fiscal policies.
@@LeeParkchu How does that help in anyway?, I’m not being rude but what do you think?
Most people miss it but the secret to retiring comfortably is finding a way to make returns while your money works for you
I’m in the messy middle and the amount of expensive things that are happening is just insane.
Thank you. This is helpful. Wanted to make a suggestion of changing the color of the stage to red or something in the timeline when you are talking about that time. It helps visualize which stage are you talking about better.
People need to strive to get to 2 million. If this same exact video was done 30 years ago, the title would be: "How Real People Achieve $500,000 in Savings"
Do you have $2 million? Do you even have $1 million?
@@giainto5564 My point was, inflation keeps moving the number higher. $1 million isn't enough anymore. People in their 20's are likely to need $2 million (if not more).
I'm sorry, but what career did "Manny" choose? Who is this employer that gives these regular raises? If you have assumptions, it would be nice to understand that those assumptions are based in something.
I am 60 and just retired. Looks pretty similar to mine. Electrical engineer.
I'm not saying it's not possible. I'm asking for data to explain how one would accomplish this as a baseline. I've been successful, but the path that I traveled isn't available so I wouldn't consider what I did typical.
I'm asking for data to backup the assumption.
@@kevinailes4374 that's fantastic. Is the path that you took still available? If it is still available, who's providing it?
My reality. There's a value that provides my happiness. I am not thinking that what I did is simply attainable for everyone
@Kevin Ailes
Did you delete your post?
Because I didn't say it was impossible to replicate the Manny assumptions. I asked for the industry that it was possible.
I am also in management and make budget decisions for employee pay. I'd love to give everyone a 5% or more raise every year, but that isn't going to happen in my industry and I couldn't roadmap a way that someone could get those types of raises for 40+ years.
I want data and not assumptions. All models are wrong, some models are useful. This model, in my honest opinion, is lacking.
@@chrisgreen359 there were discussions about this in outher comments. The average raise is about 3,7% someone said without double checking. But the model is not applying to everyone, its applicable for very finance savvy people with lots of diciplin, and in this case imo its a valid assumption. The path they showed led to ~125tsd $ income per person, which is between the 75th and 90th percentile today. So the assumption 5% p.a. and a 20% raise one year lead to a 1/4 to 1/8 result. Fairly archieveable if you know what you are doing.
Regarding your experience with salary planning, people with such a tragectory would probably a) not work in the same role and b) not at the same company for their whole career. They would take on more responisibility and switch jobs if they cannot get their raises. We are not talking about an everyon case, we are talking about an at least top 20% case.
I see the starter home in the messy middle at 32, but where in the timeline is the forever home?
Love examples like this. Only non realistic thing is the 5% annual increases. This can happen some years as a top contributor but chances are won't happen every year. As someone in HR, I've worked in a lot of industries and it just isn't realistic at least not long term.
Two key things. Don't make the bankers wealth and OT is the best side gig.
This was some amazing content for late 20s/30s worried about all the curveballs to come!
The bar charts look like they don’t return to max the 401k after the Roth/HSA. I’m preparing for step 6 and was already thinking about going to a brokerage account to help liquidity/accessibility. This presentation makes it seem more attractive.
If you hit 25% savings rate before maxing 401k, TMG considers Step 6 complete and you can proceed to Step 7. Then in Step 7, you can decide if brokerage makes more sense than giving up tax advantaged money. That’s probably what you’re seeing.
@@cooldude2648 if you look at the slide they’re only at about 15%
This is my favorite money guy video I have ever seen!
Dang, this is honestly great for me to hear. As I'm approaching the messy middle, a lot of things are terrifying, and I find myself stressed about how to do everything correctly. I know I probably could have given myself permission to do those things, getting the validation that it's even the *correct* thing to do, helps a lot.
I did not receive a 5% pay raise working for the federal government. Most people get less than 5% raises as raises do not keep up with inflation
This is awesome, something that should be taught in High School
Ugh starting these two at zero dollars, while leaving thier children with a starting salary of debt is everything I hate about financial planners. No conflict in interest in the 1% + Assets under management fees that you collect on the that 4 million dollar portfolio 😢
we dont know if they started at 0? Student loan payments could just have been budgeted for which is manageable if he starts with 15% savings rate.
I gotta tell ya, if life went THAT WELL for me and I had to wait until 65 to retire I'd be a little upset.
They didnt have to, they even said that, my life went pretty close to the example and I could be done at 57 if I wanted to roll the dice on sequence of returns risk but Ill probably wait until 60.
they are able to spend 150tsd $ in retirement. They could have just cut their expenses and retire earlier.
@@mlsasd6494 There are some expenses that you cant cut without radically altering your financial life - usually running costs on properties acquired and other assets that have to be maintained (taxes - insurances - upkeep etc.) and you are correct - anyone can retire if they don't spend any money...
Great show. Would have liked to see manny’s budget when single, couples budget when married at different decades.
Soo many people actually believe that the only way to build financial wealth is from a get rich quick scheme. And because of that, soo many people actually believe that it is not obtainable. This is because of all the lies that they have been told. It's sad.
Amazing video and appreciate so much those visuals defining the hypothetical savings rate year to year! Life happens especially during the messy middle so really appreciate that defined out here guys :)
Guys, I listened to this podcast instead of watching. It would have been nice to have mentioned what their net worth was at the end of each decade for the listeners.
I'm not sure if anything would change, but what would it look like for someone in VHCOL area where buying is a multiple times more expensive than renting?
does it make sense to be an aggressive saver, hit FI number while renting, then liquidate / save to buy a house in cash or large down payment closer to retirement?
As someone who went full real estate bro in 2018 and saw 3 houses go up in value nah social media style hyped up investing videos have set me up to be a millionaire without really trying from this point out. Buying using a primary residence loan (ie no/low down) and renting them out after however long the bank says (mine said 6 months) worked out great when everything went up in value with covid. We had a townhouse go from $52.5k purchase price to $112k doing absolutely nothing; it rents for $1200 and it’s hoa plus mortgage is $485. We’re in the process of buying a fourth home now and paying it down while we rate to refi when rates go down someday and then it’ll be a rental too.
Can you share these same scenarios with someone starting over at 42? Life events take place at this age. I.e divorce all savings and strategies including retirements plummeted
(Brian’s Troll here) Many “real people” make less than the median and are living paycheck to paycheck. Brian and Boe seam disconnected from the economy, there systematic wealth structure is mostly for these with incomes greater than the median
I don't think they're disconnected, they're trying to educate people on how the best way to reach a goal. They understand that it's not always gonna work the same way it's gonna take longer to get to that 25% goal but that's just it it should be the goal for anyone that wants to build wealth. I think compared to a lot of other financial content creators, they're the most rooted and down to earth and realistic they know it's not gonna work the exact way they say it should.
The median means 50% percentile. So half the population will be below the line and half will be above the line.
Not sure why that is an unfair
You can do it in one sentence: you need to make more or spend less. Usually both. Hard to do a 40 minute show on that.
Most “real people” aren’t financial mutants. They’ve said in other videos getting above the median income is about where you start to escape subsistence living and have some surplus to grow wealth. Still a fair bit of people making 6 digits that can benefit from this content.
*Hard truth incoming…*
Brian and Bo are not talking to the average person that is bad with money, saddled with debt and make financially poor choices. They are not talking to the people that are comfortable and lazy. They are talking to financial mutants, so the nerds that are really interested in personal finance, hard workers, love spreadsheets, organised etc. Those people are the ones that are grinders, the ones that will work hard and sacrifice to get to where they want. Often times, it’s these kind of people that end up *high income earners* because of their drive. That’s their audience.
Next model: Manny is the mutant and Maddie has been on the Dave Ramsey plan since 18.
21:09 it's funny because I'm in the messy middle with my two year old but I'm turning 40 this year. Hard to see the savings rate go down when I was maxing it out for years 😢😂
Why would you wait until 65 if you have $3 million years earlier?
Great content HOWEVER 5% raise YoY is not realistic. Same for a 20% raise in 20s start at 50k. INSTEAD - do 3% merit YoY to the 75k median. Otherwise your foundation is off and rest of numbers distorted.
I also did a double take when they said 5% every year. That sounds AMAZING! I agree more like 3%/yr with a bigger promotion once or twice per decade
I agree. Both of them starting at $50k a year in their 20s. That's a household income of $100k starting out. 5% raise consistently -is not typical.
It’s very realistic. I’ve received a 15-20% raise every year since I was 23 and I’m 27 now. With all due respect, if you don’t get at least a 5% raise, it’s time for a change of job.
@@ericmarquez2287 3.5% is the national average. It's totally realistic to expect 5% raises during *some* of your career, but no way does the typical person keep getting 5% FOR 40 YEARS. And all due respect, there's no way your company continues 15-20% every year. You'll be making half a million per year in about 10 years! Give it another few years and your salary will be $1 million!
I believe 5% would be close to an average, I typically get about 8% yoy.
If these guys have income that is Roth IRA eligible throughout their whole careers, why are they focusing so much on taxable brokerage accounts starting in their 40s and beyond? Wouldn't they be better off maxing out their 401ks?
The taxable brokerage acts as a bridge to be used until you can take money out of Roth or 401k
@@stevenewsome5306 They don't need a bridge account though because they retire at 65. They would only need a bridge account if they were retiring early before 59 1/2. Also, I'm not saying that they shouldn't invest in a taxable brokerage account at all. I'm just asking why they aren't maxing out their 401ks first. The 2 of them could put in a combined $46,000 into 401ks which would make up a much higher percentage than around 5% of their savings. Even if their plan was to pay taxes now and only pay capital gains taxes in the future, they'd be better off putting that money into a Roth 401k.
Someone is really excited!
Love the money guys. Lots of assumptions made in this one 😅
I did it the old fashioned way and didn't follow any social media get rich quickn scheme. I personally built an import business specifically working with consumer products from Mexico. That's right we are smuggling herion
i hope someone can give me some clarity on this. i live in florida, and we have a very high hurricane deductible. it is over 30,000. i guess that that is our highest deductible. it's not like it is 1000 for a car insurance deductible. so, i basically just have our 6 month emergency fund of 36,000, and make that our dual hurricane deductible and emergency fund. curious about peoples thoughts about not fully funding the emergency fund, and a separate hurricane deductible, bc of the extremely high deductible.
Why did he start the HSA before age 26? Many young people will have access to parental policies still.
Did they never upgrade their home?
I also noticed that in the 50s and 60s, they're not putting very much in the 401k and are putting lots in the taxable brokerage. Why? It looks like they're getting a match and then putting the rest in the brokerage account.
As you get closer to retirement, one strategy is to have multiple buckets to optimize taxes. Taxable brokerage accounts are taxed as capital gains and not income (like an IRA) so they’re more favorable tax wise (not as favorable as a Roth and you don’t get as much up front savings on taxes as an Ira) but they’re awesome to have in your buckets preparing for retirement and tax strategy! Also, you can access them whenever you want and don’t have to wait til 59.5 so if you retire earlier, it’s also handy to have.
@jessymadsen2699 yes, indeed that's true. But it seems excessive. They could have optimized more of the tax savings in the 401k, or if they had enough pre-tax they could have done more in a Roth 401k. The flexibility of the brokerage is very nice, it just seemed unusually high in comparison to the tax-advantaged accounts, especially since they didn't retire early.
Are we really celebrating retiring at age 65?
That was a beautiful show
Tell me Bryan wrote the title, without telling me Bryan wrote the title. 😂
Silly question, maybe…. What do the families with kids do during summer break concerning work, and who watches their kids? My wife is considering returning to the workforce, and I don't have an answer for the month or two of no school for my daughter.
Summer camp. We are a two income family and we also send our child to camp during winter and spring break. Our parents are not able to and/or not interested in helping out. If you have good mom/dad friends, maybe share the load? During spring break, Family 1 agrees to take off a day and watch all the kids, then family 2 returns the favor for day 2, etc etc. some camps are very expensive but there are also more affordable ones. Check out youth sports clubs or the Y
Also if your workplace offers FSA you can pay for camp through the FSA if both parents work
@@kp67113 Thanks, great ideas! We have a year to figure it out, and I recall, as a child, going to a babysitter until I was old enough to watch my siblings.
I was so confused what the names were listening on the audio only podcast. At first I thought it was Manny and Matty. Then I thought maybe it was Mandy and Matty, then i thought ut was either that or Manny and Maddie which I've now confirmed in the slides. Must be the southern accents.
Do you all give your employees a 5% raise per year? I've never worked for anyone who had a standard raise higher than 2% with the merit raise being 3%. You should also mention that either Manny had well off parents that paid for his college or qualified for a huge scholarship. He also got a great job at 22.
If you are good at waht you are doing you should not aim for what everyone gets. Getting 5% yearly probably includes position and employer changes.
real people retiring at 65???? geez why so damn far away?
What do the money guys think about Robinhood’s 3% IRA match, does that count as “free money” for step 2, or just a sweetener for step 6ish?
I haven't read the fine print on the offer. But I'd be willing to wager that they have language in place that will, over time, benefit their business rather than you. Probably through hidden wealth management fees. Just my guess, I don't know for fact.
Because the Robinhood match is only 3% of your contribution, I would argue it moves the needle in your financial life about as much as using a cash back credit card. Which is to say, not very much. Certainly get that benefit if you already have a Robinhood Gold subscription and think it's valuable, but imo, the juice is not worth the squeeze.
Robinhood is a taxable brokerage account and should be more focused in step 7 hyper-accumulation unless you’re planning for FIRE
@@Yugiboii Robinhood is very actively advertising their new retirement accounts, with matches.
Every comment replying to this so far is wrong lol. Goes to show why you shouldn’t trust the youtube comments for your financial education.
For those wondering, Robinhood is offering a 3% match for ALL transfers and contributions to their Roth IRA. The benefit to Robinhood for doing this is that you have to keep your money there for 5 years, and you need to buy one year of Gold ($60). If you have a substantial amount of money at another brokerage it can be thousands of free dollars.
How the hell did they start at $50k? Teachers in my cities weren’t starting at $50k until 2020. And the average wage 20-29 is $15.39 which is isn’t $50k annually. So they are beyond the norm and well into well off before everyone else. Stopped watching about halfway through because these presumptions are too close to the ideal and not the reality.
the 75th percentile of 25 year olds earns 60k so assuming they started at 50k at 22 they got a yearly increase of 6%. From that i would say its safe to assume that 1/4 americans earns 50k at 22, not such an outrageous assumption imo. Beyond the norm sure, but "the norm" is not financially literate.
20% raise at age 29!?! That’s not typical 😮. That changes the numbers drastically when compounding over decades. Also 5% annual raise is unheard of. Usually 2-3%
I mean, it certainly isn't the norm but it isn't unheard of. I've always got raises between 5%-20%/yr at every job I've had (Got a 15% raise at the start of this year.) Granted I work for a Swiss company, not an American company, so that's probably why.
@@GreedyBeanieyou nailed it when you said it’s not the norm. It’s definitely not the norm. But yes, you could find corner cases I’m sure where it’s happened.
got a 25% raise at 23 (position change), friend of mine got a 20% or 45% hourly raise (40 hours to 35 hours per week) at 27.If you are good at what you are doing you should not aim for "typcial" and if you are educated enough at 18 to make education choices to lead to good job opportunities and diciplined enough to be good with finances you are probably good at what you are doing.
@@mlsasd6494it’s always possible to find someone that fits a scenario. Also the lower your starting pay the easier it is to get a higher raise based on percentage.
Example seems a little too optimistic. No one I knew got a real job until later 20s and none could start saving much until after 30. Very rare to get two financial mutants too.
I'm fairly sure I saw the right guy drive a Porsche and run a detailing business.
So in the end, I get to live just as frugally as I had my entire life
Challenge: How about an example with 1 income and more children, 4, 6 8? 😁
Yeah for sure. I think the only way to make that work is one person making as much as both here, and potentially lots of money from older generations.
Maybe I missed it, but these guys stayed in their starter home.
So many people have student loans. Seems weird to not include them in these simulations.
*didn't get divorced and have to cut all that in half somewhere
❤❤❤
These examples are great if life is completely linear and no bumps along the way. But what about major setbacks like illness even after covered by insurance, divorce, etc.?
I love your videos, I hate how you continue to give Manny a 5% annual raise like clockwork in these examples.
I got married at 20 and have three kids now at 27…. In doing the messy middle before these fictional characters got married.
I think I’ve had the messiest middle of anyone lol.
Best return on investment i get is putting so dinosaur juice in my car and driving to my wagie slavery. Tiny outlay for huge gains. 😂
What about 5% inflation per year 😊😮
They assumed 3%, which is the historic average. We’ll get back to that over the next 5 years or so.
Where’s the divorce and second marriage? Or the path for singles?
Is there any merit to continuing to use 20-3-8 even if you have the cash to buy flat out?
Say I'm going to buy a car for $20k and can finance at 5%. I have that amount in an HYSA, AND that amount in a Brokerage account. It seems like 5% is a small price to pay for the potential growth of that money in a Brokerage account.
I'd argue it's still the best to pay 20% out of the emergency fund and finance the rest.
If you say you finance for 5% and assume a 8% return you have an arbitrage of 3% but you increase your risk portfolio, If you are willing to accept that risk its "free" money
Without a spreadsheet showing assumptions per year on costs and salary (for example: saying 50k with 5% increase per year without a ceiling is rather optimistic), this is all just pie in the sky talk. Nice content, but the numbers are what matter and without more context it is just wishful thinking.
I have $1.4M in my 401k at age 46 starting in 2000. I actually have posted my milestone before in comments to show the ups and downs of the past 23 years. I can share that with you as a real life example if interested.
@@NewGuy2024 I am not sure why or how your finances have anything to do with the video., I was stating that the content of the video (Manny and Maddie) would be a lot more interesting if it was accompanied with actual numbers. The assumptions of salary and costs vary dramatically state to state, so all I was saying is that this general ideal example is just fluff without numbers to support it. Spoiler: If you just follow the FOO you win, but content is more interesting when seeing the numbers behind the logic.
@@rlig5932 Gotcha. I believe some of their previous videos about this same topic do include numbers.
You are thinking like an employee - you have 2 choices in todays economy if you want to make serious money, A. Change jobs every 3-5 yrs for a higher paying company (assuming you are in an in demand job description - I wasnt) or B. Start your own thing (which is what I did at 32), work your ass off for 25 yrs and boom - youre a multi millionaire with many options - and yes it is just that easy - if you have the balls to do it.
@@NewGuy2024share it with me. I would like to see it
Sounds like they worked too long.
Is Bo excited? 👇
He sure is