The Truth About Building Wealth in Your 30s

0:00Your 30s is an incredibly important decade when it comes to building your wealth.

0:05Brian Preston:Brian, I am so excited to talk about our tips for the 30s because you're right. It is so important. It's full of so much potential, potential for growth and potential for mistakes. So we're going to go over the best advice we'd give people going through this messy middle decade so you can make sure you're on the right path. And while this content is geared toward our 30-year-olds, we think people of any age can take away some valuable lessons from this one. So buckle up.

0:41Brian Preston:So one of the things we want people in their 30s to recognize, and even though it might not feel this way, when it comes to being your 30s, time is still your most viable resource. I mean, we talk all the time about how in your 20s, it's the most viable resource, but that is still the truth, even for folks who are in their 30s. Well, this is what I worry about. You probably resemble this in a lot of ways, is that when you're in your 30s, we call it the messy middle. Oh, it's messy. And the reason is, is because you're short on time, you're short on money, because there's just a lot of things going on in your life.

1:12That's why we say it's so messy. You might be having more job commitments, but yet you're growing your family. There's just so much going on. I don't want people to miss out on the fact that this is such a powerful time to still unleash compounding growth.

1:25Brian Preston:And what I think is interesting, your 30s is this unique decade where when you start building wealth, it feels so slow. It feels like you're not really making any progress. You're not really making any traction. But then when it starts to move fast, it starts to move really fast. And I think for a lot of folks, that happens in the 30s. You have these two periods, this period where, man, I'm slowly, slowly building. And then you have this aha period where you say, holy cow, I can't believe what my dollars are actually doing for me. Well, I think it's better if we have an illustration. And I think about if we took somebody and we use the assumption, what if you made$100 ,000?

1:57And we always know for a 30-year-old, we try to tell you, hey, we want you to, the goal is to have one times your income. For somebody who is going to be at 40, we want you to have three times your income. So for a lot of you, you're like, wait a minute, okay, if I'm$100 ,000 at 30, I need to have$100 ,000. Okay, maybe I can make that work, but am I supposed to have$300 ,000? That seems like a pretty hard task to accomplish.

2:25Brian Preston:Well, if we think about the actual numbers, if you get to age 30 and you have$100 ,000 and your goal is to get to 3X buy, then before you even save another dollar, just that hard work that you did in your 20s, if we assume an 8 % rate of return, will grow your portfolio to$222 ,000 by the time you get to age 40. So without saving or investing anymore, just letting your$100 ,000 grow, your money is doing a lot of the heavy lifting for you. And then if you wanted to be able to make up that gap, just starting at age 30, you would only have to save$450 a month. If you actually do the math on a$100 ,000 income, that's like 5 % savings rate to get to that 3x.

3:08Brian Preston:It's just like we said, in the beginning, it feels so slow, but as the numbers get bigger and bigger, and as that snowball begins to go down the mountain, it gets faster and faster and faster. Well, that's why it's so important to do a content like this for a 30-something, because a lot of you guys, I'm worried, you're going to hear us say one times your income by 30. You're like, I didn't even start yet. It's okay. You still have a lot of time to make cover ground and even make up. And that's why we're always talking about, do you know what your wealth multiplier is? Because you can make your money work harder than you do with your back, your brain, and your hands, but you got to do something today to start this journey and make it as easy as possible.

3:48Brian Preston:Yeah, because it is an exciting thing, but this is also a cautionary tale. Do you recognize that at the beginning of your 30s, your wealth multiplier is 23. But if you wait all the way until age 39, by the end of your 30s, your wealth multiplier is only eight. Those are very, very different. So when it comes to what we think 30-year-olds should do, just do something. Just get started because even in this decade, a little bit can go a long way. Yeah. I mean, and look, you don't have to have it all figured out in a lot of ways. We already said a little goes a long way, but a lot of you, because I imagine, I know even myself, when I started investing, I was like, this seems way more complex than I even know where to go.

4:31I mean, I hear these guys talk about index funds. What is an index fund? And then I hear somebody else on social media talk about this. How do I even know what is the best course of action, how to even get into this wonderful world of personal finance?

4:43Brian Preston:Well, we have you covered. If you are that person who doesn't know, okay, where do I start? How do I do it? Or maybe I haven't gotten started as early as I want. We have a great show for you to go check out called A Beginner's Guide to Investing. It's not too late to start investing. You can start today. So if you don't know where to start or what to look at, go check out our Beginner's Guide, and that will give you the starting point of where you need to begin your journey. So I feel like it's important. We've just talked about compounding growth. We've talked about just putting something to work, but it is important.

5:14I always like to bring in the balance or the grounding fact that money is just a tool. And I do want to be careful because I know, as I already said, messy middle where you're short on time, you're short on money. We better be very deliberate, but we also want to make sure that when you look back as a 50-something-year-old, you don't have regrets that maybe you squandered some great opportunities not only to grow your money, but also to build awesome memories for you and your family.

5:40Brian Preston:Yeah, wealth or the accumulation of money, it should never be the main goal. It should always be a side effect of trying to achieve the goals that you have. And so often, people in our 30s, especially if you're an achiever and you're a hard charger, you get caught up in, okay, I want to hit that$100 ,000 milestone. I want to hit that million-dollar milestone. And while those things can be helpful and they can be valuable, they are not the goals. They are literally just mile markers on your journey to the goals that you have. So you want to make sure that in your 30s, you take a specific time to find the balance.

6:16Yeah, and this is what I was alluding to earlier. I don't want you to have regrets when you get to be my age. Look, I want you to bedazzle your basic life. And what I mean by that is I want you to look back on your 20s. I want you to look back on your 30s and say, yes, that was a life well lived. As I balanced out not only growing my family, growing my 401k, but man, I made some great blossoming memories. But don't mishear me. I don't want you to think that that means that you can go run up and put a Disney vacation on your credit card and think that it's all going to turn out. I think that I'm just telling you, be very deliberate.

6:49There are things you can do without breaking the bank that still allow you to have incredible blossoming memories. I mean, a lot of this comes from, I even talk about it in Millionaire Mission, where I went to Italy when I was in my late 20s, early 30s for probably six of the price of what everybody else did. But yet I got to still do a lot of those key things in Venice and Florence and in Rome. It's just I did it in a bedazzled basic way. I glittered up my basic pair of jeans instead of doing this thing like a tuxedo. I don't know if that works.

7:25Brian Preston:I'm just imagining you walking through Italy in glitter jeans. I think that sounds awesome. Another way that you can find your balance in your 30s is understand and know what it is that you value. So often we get caught in this cycle where we want to keep up with the Joneses. if driving the nicer expensive fancy car is not something that actually matters to you, don't waste your money throwing it at that type of goal. Make sure you understand what are the things I want to do? What are the memories I want to create? What are the things I ultimately want my money to do? And make sure the decisions you make align with that, they don't actually turn into distractions that pull you away from those things that you actually value.

8:02And then we always say, begin with the end of mind. And I love how these are all interconnected. And when you're in your 30s. You can't just go through life as a passive player. You do need to be taking control. And that's why I say, make the memories of bedazzle your basic. Know what actually brings you happiness because maybe you're not a car person. So you're okay with just buying the vehicle to get you from A to B. And I guess, of course, begin with the end of mind because, Bo, you've already alluded to this earlier. I think a lot of people who are achievers or people who just are good at things, you do what you think you're supposed to be doing.

8:34And we've We've come across this. We do a show called Making a Millionaire. And I think about the fact that when Luke and Hannah were buying rental property, but they quickly realized, oh my gosh, this is going to get in the way of us doing family planning. This is what happens with Financial Mutants. So begin with the end in mind so you don't run astray of your goals, your life, and having regrets at some point in the future.

8:57Brian Preston:Now, one thing I love is we're thinking about folks in the 30s. So often we talk about the messy middle. And when you say that to someone who is either in that season or lived through that, there's this recognition, oh, yeah, yeah, that sounds like me. And while we can all agree that it is a relatable and familiar feeling being in the messy middle, the great news is that there's not one answer. There's not one solution on how to handle it well. And as you're going through this journey, you don't have to get every single decision absolutely perfect. Your journey may not look the exact same as your neighbor's journey, and that's okay.

9:37Well, this is where I'll make a correlation that money and being a parent are very similar. You're going to realize very quickly when you have kids that you don't have it all figured out. It's kind of the same way with money. You don't have to. I mean, look, I have written an entire book of all the mistakes I've made and try to share so you don't make those mistakes for yourself. But I'm happily here to share also, it's exactly what the headline we put. You don't have to get it perfect. If you just line up enough good things, the power of money and the power of discipline is strong enough with compounding growth that it will do the heavy lift that you can be very imperfect and still come out on the other end and be very happy with what you create.

10:16Brian Preston:And so what we want you to do is we want you to give yourself some grace. Take a deep breath and recognize, you know what, maybe even though I'm not where I want to be or maybe I'm not where I could be had I made different decisions, perhaps you're not actually behind. did you know that according to Personal Capital right now, the average investor does not start investing until age 33? If you opened up a Roth in your 20s, if you started participating in your 401k, if you just started doing something, there is a really good chance that you are ahead of the curve already. And we know that when it comes to buying a home, the median first-time home buyer right now is 38-year-old.

10:55Brian Preston:So before you arrive at the conclusion, I'm behind, I'm behind, I'm behind, I need to catch up, take a deep breath, and give yourself some grace. Again, your journey does not have to look exactly like someone else's journey. I say this all the time, is that personal finance is definitely personal. We all have our own fingerprints. We all have our own personal finance journey. We've seen this on Making a Millionaire. We've actually had guests who have turned out to be extremely successful in the long term, but they didn't even start. I think about the headline that's here. Are we already too late?

11:28The truth about$250 ,000 saved by 42. Because here's the thing is that they didn't even start saving investing until they started getting some traction with their income. That might resemble you. I'm just saying the part about being an active player in your own role of becoming the hero of your own story is taking control today. Don't let another day, don't procrastinate anymore. Do something today because more than likely, especially if you're in your 30s, you still got lots of opportunity to grow this thing.

12:00Brian Preston:You have lots of opportunity. You need to recognize that there are a ton of mistruths that get applied to you at this stage. You got to be perfect. You got to be perfect. You got to be perfect. Well, another mistruth, and this is something that comes from a good intent. We've designed the financial order of operations. Brian, will you hold the thing up for me? It's a nine-step process telling you how you should make the next decision with your next dollar and how you progress through it. And so often folks think the financial order of operations is this straight line. Well, I'm in step one and then I go to step two and then I go to step three and then I go to step four, so on and so forth.

12:34Brian Preston:But in reality, when real life happens, the foo isn't actually a straight line. Yes, sometimes we're moving up and to the right, but then sometimes that unknown unknown happens. Maybe the car breaks down or maybe we have to pause because we want to have a family or we want to buy our first home, or maybe there's a job loss change. Just because your financial order of operations is not in a straight line does not mean that you're doing something wrong. It just means that you're a real person that's living a real life. Well, and I'm here to remind people, just like we have false narratives in our head that make you think that the financial order of operations is this orderly walk up and then life has a sense of humor, I want you to take a deep breath.

13:17I mean, look, your journey is going to be unique and there's going to be good things that happen. There's going to be bad things that are going to happen. Don't be so hard on yourself is because I'm telling you the good news is there is enough positive stuff working in your favor. If you'll just start doing small little decisions that are putting you in the right direction, it's going to be okay. So you don't have to, it's back to that whole perfection thing and everything else. Don't put so much pressure on yourself that you create anxiety. Just try to figure out if there's a small decision today that you can really make that is going to put yourself in better ground to have success in the future.

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14:47Brian Preston:Brian, we've been very kind. We've been saying, hey, give yourself some grace. Hey, take a deep breath. Hey, it's okay. That was the kind money guy. Now we're going to come over to the other side because there is some accountability. And one of the things that we see happen so often in the 30s is that people at this decade are neither. They're not exactly young like 20-year-olds, but they're not exactly older like 50-year-olds. they're in this unique in-between and they haven't quite yet realized even in your 30s you are not invincible yeah i mean this is one i think in your 20s you get away with it a little bit that you you know i'm gonna live forever i can make crazy wild decisions but now in your 30s more than likely it's not even just you anymore now you might have kids you might have a spouse these type of things start making you realize you better start lining up the intersection of not only maximizing opportunities, but where do you fall on the risk spectrum with your life as well?

15:45And unfortunately, I'm just going to go and tell you the cold, hard truth. Most Americans are not giving this the focus that they should. And why can I say that with confidence? It's because the percentage of American adults without life insurance is almost like a coin flip. It's 48 % according to USA Today.

16:04Brian Preston:And then how many Americans, Brian, probably have someone depending on them for income. So it's probably a much higher percentage than 48%. I mean, disability insurance is 82%. It basically means one to two people out of 10 are going to have disability insurance, even though you're much more likely to become, look, we're all going to die. But during working years, you're much more likely to become disabled than you are to be killed or die unexpectedly. So it's crazy that disability insurance is so low. Full emergency fund. We already told you that financial order of operations, things are going to come at you on a Tuesday out of the blue at 2 p.m.

16:39that you're not expecting, yet only, you know, it's the minority that have a fully funded emergency fund because 54 % don't have it fully funded.

16:48Brian Preston:It's unbelievable. And then 60 % of Americans right now don't have any estate documents, any sort of will, any sort of trust in place. So again, these are people that think, okay, you know what? Estate planning or insurance or protecting myself from risk, that's an old person's game. No, no, no. That is a you person's game. If you are in that stage, you need to make sure that you are taking steps to protect yourself. And one of the very first ones, it's why we put it on financial order of operations, is to fully fund your emergency fund. If you are working and you are in the accumulation phase and you are building your assets, we want you to have somewhere between three months to six months of living expenses and liquid cash.

17:28Brian Preston:if you're in financial independence or nearing retirement, we might even want to see that number grow to 12 to 18 months of living expenses so that when the unknown unknown comes your way, it does not derail your entire financial life. Well, you think about all the things when we're talking about risk, cut to the bone, cut to the quick, you know, all these things we talk about in life when you're talking about boo-boos or getting hurt, this is what your cash reserves is. It is the margin on your life that keeps you from having to make desperate decisions if I could give you anything that's going to protect you is make sure you're keeping enough buffer in your life so that you never, no matter what life throws at you, you're just not caught in that just horrible debilitating situation where you just don't know how you're going to come up with the bucks to get you out of it.

18:16That's why emergency reserves is such a powerful thing that of our nine steps to the financial order of operations, it's actually two of the steps. It's steps one and steps four. So don't sleep on the fact that you need to actually have emergency funds. It will actually keep you from making desperate decisions and also help you, even if you're a financial mutant and you're like, I just don't need to have emergency insurance because I want to maximize every dollar I have. I'm telling you, money and cash, an emergency fund, a well-funded emergency fund, can also be a long-term wealth builder because when you have money when others don't, that is a superpower.

18:48So don't sleep on the fully funded emergency fund.

18:51Brian Preston:So that's a great way to protect yourself. Another way that you can protect yourself is to check and recheck and reassess your insurance. Brian, we already acknowledged 48 % of Americans do not have life insurance. 82 % of Americans do not have disability insurance. We literally had a guest on making a matter that does not have any health insurance. If you are doing that, you are too far out on the risk spectrum. So make sure you're checking your coverages to make sure that you have appropriate coverage in place, and then make sure that you recheck them. Because just because you had life insurance when you were 22 years old and had your first baby does not mean that's the same amount of covers that you need now that you're 38 years old with three kids.

19:29Brian Preston:So make sure that you reassess and make sure the coverage you have in place is appropriate to protect you from the unknown unknowns out there. And then this goes without saying, look, under protect yourself. This goes beyond protect yourself. If you have a tricycle motor, if you've decided you're going to, and you have children here, you got to have a will because, and look, if you say, look, the reason I don't have a will is because I don't, my spouse and I can't decide on who would actually take the kids if something happens to both of us. If you are having that hard of a decision while you're here on the planet and everybody can talk to each other and you're all above ground, how do you think that conversation is going to go when no one's here?

20:10So don't sleep on this. This is one of those things we pick on people all the time. We find out you have kids and you don't have a will. You're doing it wrong. Make sure you update or make a will, and it reflects your desires, especially if you have children.

20:23Brian Preston:Okay, Brian. So we've been talking about in this decade, get started, do something. We've said it's okay, take a breath, give yourself some grace, but make sure you're not missing out. So we've talked about some things that you can do. Now we want to shift and talk about something that's sort of a truth, and this is a truth that I think most people recognize, specifically in the decade of their 30s, is that as you move through this decade and as you move through life, it only tends to get more and more complicated, whether you want it to or not. Yeah. Look, this is where you start to sound like an old person is when you look back at your younger self and go, what was I doing with all my time?