How to Be Wealthy in Your 20s, 30s, 40s, and 50s

0:28This episode is brought to you by Google Chrome. use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs. What does it really mean to be wealthy in 2025? The answer may actually surprise you. Brian, I am so excited about this because we know that everyone's financial journey looks a little bit different.

1:07And depending on where you are in your journey and your goals, your targets, and your milestones, they might all look a little bit different too. So today, we're going to look at each decade of your financial life and go over what you should focus on, the checkpoints to keep you on track, and the financial markers you can use to make sure you're right on track. Let's jump right in.

1:34So let's talk about how to be wealthy in your 20s, because this is the very beginning of the journey. You are coming out of the starting blocks. And in this age, at this phase, it's really about getting the behavior right. Guys, if I could get you excited about any decade, this is the opportunity when you're a billionaire of time to leverage and maximize every opportunity you can. Because it's kind of hard to screw it up if you do this right. So when we think about what wealthy looks like in the 20s, there is a wonderful quote by Benjamin Franklin, I think, that lays this out really well. Benjamin Franklin said, many a man thinks he is buying pleasure when he's really selling himself to it.

2:17Brian, how many folks early on in their journey have we seen fall into this exact trap? Well, I mean, we go through, most of us, our first 20 years, we feel like we're under the thumb of somebody else, whether it's your parents or something. So when you get out on your first time on your own, you want to unleash, you want to reward, you want to pay yourself back for all that discipline or whatever you perceive that you've been under. Guys, I want you to know this quote when I read it, many a man thinks he's buying pleasure. How many of us, whether it's going to buy in the new car right after we get out, get running up a consumer credit card debt because they were offering those all through college, only to find out later when you get a little more, an ounce of wisdom that you have now locked yourself, you sold yourself, your labor, your time, all because of these things that mean absolutely nothing to you.

3:09That's heavy. That's exactly right. And so true wealth in your 20s, it looks like living within your means. People that are actually wealthy, they recognize that using debt or borrowing money to buy items or experiences isn't actually freedom. It's entrapment. And don't mishear us. We have nothing wrong with you buying things that you can afford or having experiences that you can afford. But it's about doing the ones that you can afford. It's about living below your means, not at your means or even beyond your means. Create that margin in your life. But I'm not saying be a miser. I do want you to look back when you're in your 40s and 50s and say, man, life well lived in my 20s, but we're talking about bedazzle your basic life.

3:55You can do really incredible things that will create great blossoming memories without running up a bunch of debt. Another thing that being wealthy in your 20s looks like is it looks like getting out of debt or at least getting out of most of your debt. because we understand that there are a lot of debts, maybe student loans from your education, or maybe when you got your first car, you had to take on an auto loan. Some of those are necessities, but there are other types of debts, the credit card debts, the consumer debts, the store debts, those types of debts. In your 20s, if you wanna be truly wealthy, you have to get those off of your balance sheet because if you're paying interest, if you're throwing money away on past purchases, you are literally robbing from your future self's ability, to build wealth.

4:39Well, debt is an illusion to you because it looks like it's solving all of your problems that you have in your 20s is that it helps you pay for things when you're not making a lot of money. But guys, I'm here to tell you, if you don't get the behavior right, the discipline, it will be a bridge to nowhere. You are borrowing from your future self. So that's why when we talk about 23-8 with cars, when we talk about all the avoiding credit card debt if you can't pay it off monthly. We're trying to teach you that credit card and all that high interest debt is chainsaw dangerous. You got to protect yourself from what you just don't know in your 20s.

5:14And what's wonderful is if you can leave your 20s or you can get to the end of your 20s with no debt or only having low interest debt, you're going to be on fantastic financial footing to start beginning to build wealth in your 30s. And one of the things, this is a great thing that Warren Buffett said, he says, the best way to build wealth is to invest in yourself. So when we think about folks in their 20s that are actually wealthy, that are actually doing the right things, they're recognizing that one of the best things they can do is improve themselves, improve their skill set, improve their knowledge, improve the way that they make decisions.

5:50And it doesn't have to be something that goes out and racks up a bunch of debt. It doesn't have to be getting an advanced degree. I mean, it can be, but it's more about improving the decisions that you're making and making your future self make better decisions than your current self. Well, it's back to the, once again, the superpower of your twenties is you are a billionaire of time. Imagine if you take the power of compounding growth, but you can boost what you earn, your, you know, your disposable income available to you by a hundred dollars a month, a thousand dollars a month, These things, the exponential difference this will make in your life.

6:25So that's why if you can focus on, you know, what degree do you get? You know, is there extra certifications you can do? Is there some type of networking that's going to help you either sell more products or either get to know the right people that will put you in the right places? Get out there and learn. And even something as simple as watching the Money Guy show. So you leverage and maximize your understanding of personal finance and this tool of money. All these things are going to help you and help you build wealth better than your peers. And it's going to let you, your future self will have less and less regrets because you maximize this very important moment.

7:00Yeah. And as you are investing in yourself, one of the things that allows you to begin to do is it allows you begin to have a plan in place. It's so amazing, Brian. We talked to people in their mid to late twenties and we're like, Hey, what's your plan? Oh, I don't, I don't have a plan. I'm just kind of flying by the seat of my pants. I'm just trying to make the ends meet. If you really want to be wealthy in your 20s, you want to have a plan. You want to have goals that you've set. Okay, I want to be able to save at this rate. I want to be able to knock out this debt. I want to be able to have this net worth.

7:29I want to be able to make sure that I'm not just in a job. I'm actually in a career. And if you can begin to do those sorts of things, you're going to set yourself up for success. And what's great is in your 20s, it doesn't have to be super, super difficult. No, I like you. You just mentioned have a career. I also like the idea of, yes, you start disciplining. You live on less than you make. It's one thing to build up your cash to where you cover your highest deductible. You cover your emergency reserves, but also put that money to work. Your army of dollar bills is that much more powerful. You go look at our wealth multipliers in your 20s, so have a plan for what you're doing with every dollar that comes into your army of dollar bills.

8:08Yeah, with Steve Burkholder that says that if you're saving, you're succeeding. If you are living on less than you make, if you're putting some money aside, for the future, you're doing the thing that you ought to be doing. And we already said this in your twenties, saving does not have to be difficult because it only takes a little bit. It takes a very small amount. If you could just go look at your paycheck right now, whether you get paid weekly or monthly or bi-weekly, you just look at how much you're getting paid. I want you to just take that number, whatever hits your checking account and multiply it by 5%.

8:40It's a great starting spot. And just say, okay, if I can just save that 5 % and put it aside and not spend it, not consume it, and I can actually take it and save it and then invest it and put it to work for me, I then get to take advantage of. I get to capitalize on the wealth multiplier, which shows how powerful my dollars can be. Yeah, this is the thing. I think we take a lot of flack for people because we say we want you to be saving and investing 25 % of your money. In your 20s, that's completely aspirational. The reality is if you go look at some of the resources we have on our website that have done the math, 10 % can do tremendous things.

9:1715%, if you count your employer match on top of that, is going to change your future life. But the biggest thing, and Beau, you said it best, if you can just do something. So that 5%, that is going to move mountains for your future self. So don't sleep on the fact, go to moneyguy.com slash resources. Look at our wealth multipliers, play around with our calculators and all the things, you will leave and you'll think about money differently. You'll spend differently. You'll save differently. You'll invest. And I'm telling you, your future self will be the beneficiary. All right. So what does wealthy look like in your 20s?

9:51Well, wealthy looks like if by the end of your 20s, you can say these affirmative statements. Okay. I've got no consumer debt. Check. Okay. I've got a fully funded emergency reserve, which means I'm past step four of the financial order of operations check. And I've begun building and investing so that my total liquid portfolio is at least equal to one times my annual gross income. If you can say that by the end of your twenties, you are setting yourself up for a beautiful next decade in your thirties. Yeah. And when we talk about investable assets, we're talking about, Hey, that 401k with that free match from your employer.

10:26We're talking about that Roth IRA. We're talking about all those investment accounts that will be your army of dollar bills that make it where you don't have to continue to work with your back, your brain, or your hands forever. All right, so let's talk about, Brian, now the 30s. How to be wealthy in the 30s. For most folks, this is where the messy middle begins to grab you. You have a thousand different obligations pulling you in a thousand different directions. There are a thousand different ways that you can use your money, and there are a thousand different things competing for your priorities.

10:58So that's why in the 30s, in the 20s, you had to learn behavior. In the 30s, you have to master behavior because you have all of these different things pulling you in all of these different directions. Warren Buffett said it best. He said, if you don't find a way, specifically in your 30s, specifically in the messy middle, to make money while you sleep, then you're going to work until you die. And this is the thing. When we were talking about the 20s earlier, I was like, it's hard to screw this up because you're a billionaire of time. But here's the good news. Most people, unfortunately, don't hear that.

11:31They don't get motivated in their 20s or they're just limited on resources. So it never happens. But it happens for most Americans in their late 30s. That's right. I'm here to tell you, if you can discover this in your early 30s, guys, you still have a tremendous wealth multiplier. We're talking about for a 30-year-old, every dollar that comes into your army of dollar bills has a 23 times multiple opportunity. Don't sleep on this because this is what's going to make your life easier. So you're not having to work for the man or work where you trade your time. We want you to have options for the future.

12:08Okay, so when we think about in the 30s what wealthy looks like. Well, it actually looks like actually investing. In your 20s, we said it was aspirational. You just got to start somewhere. Start with that 5 % of your take-home pay. Start with$100 a month. Start doing something. But by the time you get to your 30s, it's a little more prescriptive. In your 30s, we want you actually saving and investing 25 % of your gross income. And we want you to have this mindset that, okay, the thing I'm going to focus on is how much I'm saving and putting it to work. and I'm going to save and I'm going to put it to work and then I'm going to wait.

12:43And Charlie Munger says that the big money is not in the buying and the selling. It's not in the trading. But when it comes to building wealth as an investor, the big money is actually in the waiting. Yeah, I would add, if I could give Charlie one little asterisk, I'd say, and being consistent. Love it. Because guys, think about this. This is the part where so many of you will get inspired to watch our content. and you might fund your Roth one year. And that Roth, especially if you use one of our wealth multipliers, it's going to grow into something spectacular. But if you can just keep waiting, not letting the market emotions, whether the market's getting beat up or whether there's volatility or there's crazy political stuff going on or geopolitical things, you're going to be cool as a cucumber.

13:29You're just going to keep investing. You're going to keep waiting, and you're going to be consistent with your behavior, and I'm telling you, magical things will happen to you in the long term. And it feels like early on when you just started, it feels like it's inching along. It's inching along, inching along, inching along. Until you look back and you say, holy cow, I cannot believe how much ground I've covered. If you don't believe us, think about this. Let's say that you have an income of$50 ,000 a year and you're in your 30s. We've already said, hey, when you're in your 30s, you need to be saving 25 % of your gross income.

14:01So if I have a 25 % savings rate, that means that I'm going to be saving$12 ,500 every year. That's how much I should be adding to my army of dollar bills. Well, do you recognize that in your 30s, if you can just build up your portfolio value slowly and consistently over time to where once it is worth$156 ,000, If you can just earn an 8 % rate of return in any given year, that$156 ,000 will have grown by$12 ,500. You've literally built a pot of money, built an army of dollar bills that can add more to it on an annual basis than your savings. Your money is actually saving harder than you do. This is what a lot of people see as they work through the messy middle of their 30s.

14:53That's exactly right. That was the thing I was going to draw attention to is that this happens. Typically, you've been doing this enough that you catch traction in your 30s that not only is your good discipline and your savings behavior and investments working for you, but now your army of dollars are really getting to the point that they're doubling your efforts. And guys, that's the part that's amazing. But it's not just the investing. It's also because let me go and tell you, a lot of you get, like I said, motivated, inspired by this, but you're going to set it and forget it. That's right. On what you made when you were 25 or 28 years old.

15:30But then now you're 35 years old and you got six promotions and you're making a completely different way. But yet your consumption is completely different. You're saving and investing never changed, even though your income went way up. But your consumption has gotten way out ahead of your skis. And that's why there's a great quote from Morgan Housel. He says, when most people say they want to be a millionaire, what they might actually mean is that I would like to spend a million dollars. And unfortunately, that is literally the exact opposite of being a millionaire. Spending a million dollars and having a million dollars are polar opposites.

16:10So when you think about what wealth looks like in your 30s, it's about saving and investing and controlling the consumption behavior and controlling the mindset of how you think about money. I do think it's so interesting. I love Morgan's quote there is because I know in my own journey, there was something razzle dazzle or blingier about your 20s. You're looking at watch brands. You're looking at people's cars. but there is something as you actually start discovering and building your own wealth, your desires and the way you look at stuff is different. And that's why when I always talk about, when we're talking about the idea of mastering the behaviors and mindset, I want you to know for wealthy people, this is why Morgan was hitting on this, is that typical millionaires don't think about this from consumption.

16:59They think about the fact that owning assets that work for you, that's that quiet, stealthy part of your net worth statement, the wealth part that's working for you behind the scenes, that's not very bodacious or loud with what it does, versus in your 20s and even other parts of your life, stuff that looks rich, it's different. I'm just telling you, trust me on this, it's better to be rich than to look rich. And we've done so much content on how people who started off being so blingy and showing off, but as they get richer and richer, the poorer they look. And you can tell the needle of what they in their own brains perceive as just trophies of building wealth and success.

17:42It's going to change on you. So don't fall into the consumption trap. Think about how you can build that stealth wealth on the net worth statement that much sooner. Yeah, you already said it, Brian. There's this entire mindset shift. In your 30s, wealthy people think differently. Wealthy people understand that it's not just about how much money you bank, although making more money is most often a good thing. It's about how much you get to keep, how much you turn that income into real wealth. Wealthy people recognize the importance of value. They may spend a little bit more money for higher quality goods, but they're not wasting it on show.

18:21They're not wasting it on flash. Wealthy people in their 30s, they recognize lifestyle creep. They understand that lifestyle creep doesn't have to be a bad thing. It can be a natural process on our financial journey so long as we keep it in check. And wealthy people value having liquidity, having cash, making sure that they keep their risks covered. In your 30s, your mindset ought to be shifting to where the way that you first thought about money when you were 20s or maybe when you even before you got on your own is different than the way you now think about it as you've begun to build your own wealth.

18:59So let's kind of go through this checklist just like we did earlier. In your 30s, by the end of your 30s, we want you to have a savings rate, a savings and investment rate of 25 % of your gross income. We want you to be thinking about using cash for large purchases. You don't have to use debt anymore. In the beginning, you know, in your 20s, you might to use 23.8 to pay for your first car to get you from point A to point B to get to your JOB so you could trade your labor for wages that turn into that margin that turns into investments. But by the time you're in your, by the end of your 30s, we want you paying cash for those things.

19:35We want you to own your life. And then I hope as you close out your 30s that you'll have a portfolio of investable assets. You can include the 401k, your Roth IRAs, all your after-tax accounts. that's three times your annual income. That's a good goal. I love it. All right, Brian, let's talk about now. So good, so good, so good. New summer arrivals are at Nordstrom Rack Stores now. Get ready to save big with up to 60 % off brands like Rag & Bone, Levi's, Adidas, and Free People. Join the Nordic Club to unlock exclusive discounts, shop new arrivals first, and more. Plus, buy online and pick up at your favorite rack store for free.

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20:54We talked about 20s was mastering behavior. And then we said that 30s was sort of this mindset shift. Well, 40s is often this fork in the road moment. You're either catching up and figuring out where you're behind or this is the part where you get to take your foot off the gas. But you're beginning to recognize, And the 30s was a mindset shift around money. Well, in your 40s, there's a mindset shift around life. And you begin to think about things a little bit differently. You recognize that people often define being rich as having money. But those that are truly wealthy, and this is according to Margaret Bonanno, being wealthy is actually about having time.

21:37Oh, man. You know, you're talking to somebody who's in their 50s now. You made it through this decade of the 40s. This is the thing. Coming out the other side of it, I'm telling you guys, in your 40s, you're going to become so sentimental, and you're going to realize that Margaret was on to something. I think when you're younger and you're trying to conquer the world, you're thinking, man, wouldn't it be nice when I owned the Rolex? Wouldn't it be nice when I drive that fancy car? But no, what you're going to think about when you get in your 40s is, man, how do I actually wake up in the morning and I get to do things on my terms?

22:10How do I have the flexibility? How do I own my time? This does not need to be something you just start thinking about in your 40s, but it's going to become something that, like we said, fork in the road moment. If you started early enough, these are celebration moments. You're like, holy cow, all that hard work of investing in the army of dollar bills has paid off. However, if you deferred and you procrastinated, it's going to be a wake-up call like no other wake-up call. You're like, I got to get to work. And the good news is we're going to keep creating content that reaches you no matter where you are in that journey.

22:43And what's great is in your 40s, you may not be at the place where you're going to own your time just yet, but you're beginning to recognize that you do want to own your time and why you want to own your time and what you want to fill your time is. You're going to start recognizing that, yes, money is a tool and it's something that allows me to accomplish my goals, but I also have other goals. A lot of folks in your 40s, this is a formative time where now you're even begin to interact with your loved ones in such a way where there are implications to the way that you communicate and the way you model money and finances and decision making to your children.

23:23It was Bruce Lee that said, instead of buying your children all the things you never had, you should teach them all the things that you were never taught. It took you learning through your 20s and 30s and 40s to figure out what money was and how it worked. Well, imagine if you can distill those decades of education you received and pass that on to your child before they start out on their journey. Well, I always think about, you know, we've seen the data in our millionaire survey. We've seen it in The Millionaire Next Door and others where 75 % to 80 % of millionaires are typically first generation.

23:58generation guys for that stat to even exist that means that wealth gets crushed in second and third generation don't sleep on that instead of you like like bruce lee had been to the top of the mountain and figured out once he was starting to to make money was man i need to probably so i don't fall into my kids don't fall in the trap of consumption and all the things that the typical american and falls in. How do I pay this forward? So educate your children. It doesn't have to be that way. I mean, you get your kids, you can just like, I remember the first time I got my daughter saving and investing was when she was 15 years old, started doing the first jobs in the neighborhood, babysitting.

24:41And then she started working at Chick-fil-A later after that. And I was able to prime the pump, a new dollar for dollar matching to fund custodial Roth IRAs and other things. And I'm still bearing the fruit, the dividends from that education that she got when she was 15 years of age. And now fast forward seven years later, those assets are real. And that's what I'm telling you guys. And that behavior is real. So I'm hoping that second generation for my family doesn't fall into the traps to create that stat that 80 % of millionaires are first generation. I want my daughter to be the exception to that 50 to 70 % that fall off in second, third generation.

25:19I want that to be done. Again, we're talking about how in the 40s, it's about this mindset around how do I own my time and what do I use my time doing and what are the things that really matter to me? One of those things might be educating your children. And then what you recognize is you begin to move through this stage. And as you begin to recognize that having wealth behind you unlocks some new things, you get to recognize that wealth is not just about having a lot of money. It's about having a lot of options. And so at this stage of your 40s, if you've been doing the things that you're supposed to have been doing, you've been building wealth the way that you should be building wealth, by the time you get to the end of this decade, you are able to begin thinking about funding some of those abundance goals, some of those things outside of just strictly financial independence.