How To Be Rich At EVERY AGE (hit these targets)

If you aren’t where you want to be in life, don’t worry, because you really shouldn’t be comparing yourself to other people. That’s downright delusional, but it’s probably the kind of thing you thought I’d say. This kind of thinking has led to schools giving out awards for just taking part. But I’ve got news for you. In life, you only get rewarded if you put in the hard work, and whether you like it or not, we’re all in a massive competition.

Age 18-24: Building the Foundation

Age 18 to 24 years old. According to the Survey of Consumer Finance conducted by the Federal Reserve, the average net worth of 18 to 24-year-olds is approximately $28,707. However, this figure is heavily skewed upwards, as the top 10% holds 70% of the wealth and the top 50% hold 98%. In fact, the median net worth of 18 to 24-year-olds is only about $8,216. For the purpose of this article, we’ll define rich as having a net worth 20% higher than the average. Therefore, if you want to be considered rich in this age bracket, you need a net worth of $34,448 or more. This doesn’t mean that you need to have this amount of money sitting in your bank account. Instead, it comes from adding up all of your assets and taking away your liabilities. So here are some targets I think you should hit if you’re serious about reaching this figure.

1. Create an Emergency Fund

First, you should create an emergency fund. Life is full of unexpected surprises. I know in my late teens, my car engine exploded, which was a nightmare. That’s why it’s important to have three to six months’ worth of spending saved up in an emergency fund. This will give you a bit of peace of mind and a financial safety net in case you ever need it.

2. Try to Avoid Bad Debt

Second, try to avoid bad debt. Of course, I understand student loans can sometimes be necessary if the job you’re pursuing requires a degree. So, this all depends on your individual circumstances.

3. Get a Credit Card

Third, get a credit card. A credit card can be a great tool for building your credit score and avoiding high interest rates, but it can also be a dangerous trap. Use it responsibly by paying off the balance in full each month.

4. Invest in Yourself

Fourth, invest in yourself. Your human capital is your greatest asset. Invest in yourself by developing your skills and knowledge. This will increase your earning potential, make you far more desirable in the workforce, and give you a better chance at success if you decide to start your own business.

5. Learn About the Stock Market

And fifth, learn about the stock market. The stock market can seem intimidating, but it’s actually a great way to build wealth over time. Open a brokerage account and start learning about investing. Many brokerage firms offer free stocks to new customers. The best I’ve found is Moomoo, who are giving away 15 free stocks each worth between $3 and $2,000. So, take advantage of these offers to start building your portfolio. I’ll leave some links down below where you can pick some up depending on where you are in the world.

So, overall, I’d rate this a three out of five on the difficulty scale. At this point, it’s all about setting a great foundation for your life. I honestly feel that great financial habits are made during this age bracket. If you haven’t done these things yet, then it’s not too late, but it can be harder to get back on track.

Age 25-29: Increasing Income & Taking Risks

25 to 29-year-olds. If we go back to the same study by the Federal Reserve, the average net worth of a 25 to 29-year-old is $49,388, and the median is even further behind at $7,512. This median net worth is actually lower than in the last age bracket. This could be due to many early 20-year-olds not understanding their finances and managing them correctly, causing the gap between the rich and the poor to grow. If you want to be considered rich between 25 and 29 years old, then you need to have a net worth of $59,265 or over by hitting the following milestones.

1. Save Up One Year’s Worth of Your Spending

First, save up one year’s worth of your spending. This should be easy to access in a case of an emergency, but it doesn’t have to all be in cash. My son Curtis likes to put some of his money into watches, as he can wear them when he wishes. These can easily be sold if he ever needs the cash.

2. Pay Off Student Loans

Second, if you have any student loans, pay them off. In fact, if you ended up getting into any bad debt, then make sure this is all paid off. This will be a huge weight off your shoulders, as these loans just bleed you dry.

3. Achieve a High Credit Score

Third, you should have a credit score of 750 or higher. A good credit score is important for getting approved for loans and credit cards with favorable terms. This is very easy to do over the course of about three years if you use your credit card correctly by paying your bills on time and keeping your credit utilization low.

4. Start Making Good Money

Fourth, you need to start making good money. I don’t mind how you do it. It could be from a high-paid job, a side hustle, or a business. I mean, nowadays, it’s so easy to set up a simple website and start making passive income online. Hostinger are great and give you everything you need for under $3 per month. You can even get a free domain with their annual plans. I’ll leave a link below with a 10% discount.

5. Invest 10-15% of Your Income

Fifth, you should be investing 10 to 15% of your income. This could be in absolutely anything, such as stocks, real estate, watches, businesses, or, dare I say it, crypto. You just have to pick the area you understand the most and run with it. Early on, don’t try to be too diversified. While you’re young, you can afford to take more risks, so find your specific area of interest and learn as much as you can about it.

6. Become Financially Independent

Sixth, you should be completely financially independent from your parents. I’m a big believer in staying at home for as long as you can, but you can only do this for so long.

So, overall, I’ll rate this a five out of five on the difficulty scale. At this point, it’s all about increasing your income and taking a few risks. This can be hard for a lot of people to do. They’re either too shy to ask for a raise or start their own business, but this is the time to do it. The fatal error people make is they’re focusing too much on saving and not enough on earning. I mean, you can save your way to being rich on a low wage, but you won’t get there very fast.

Age 30-39: Ramping Up & Managing Life Changes

30-year-olds. According to the study, the average net worth of 30-year-olds is $198,406, and the median is $45,315. This is when things really start ramping up. So, if we use the 20% rule, then if you want to be rich, you should be aiming for a net worth of $238,087 or more. I know this sounds like quite a lot. However, if you can just focus on hitting these milestones, then it should take care of itself.

1. Save Up Four Years’ Worth of Your Spending

First, save up four years’ worth of your spending. As I said before, this doesn’t have to be all held in cash. To be honest, this would be a bit silly. You want it invested in liquid assets.

2. Consider Buying a House

Second, consider buying a house for yourself. I’m quite against buying a personal property in the early days, but there is something to having your own house and not having to pay rent every month. It’ll also hopefully go up in value, which will add to your net worth over time.

3. Maximize Your Tax-Free Savings

Third, maximize your tax-free savings. Take advantage of tax-free savings accounts, such as 401(k)s, Roth IRAs, and ISAs in the UK. These accounts allow you to save money on taxes, which, trust me, really start to sting when you get into the higher earner brackets. So, make sure you save as much as you can from the taxman.

4. Invest 20% of Your Income

Fourth, invest 20% of your income. Now might be the time to become a little bit more diversified. It all depends on your risk tolerance. I know during my 30s, I was happy to accept a smaller return on my money, as I had a family and I didn’t want to risk their good standard of living. I could happily sleep on my mate’s couches, but I couldn’t expect my wife and kid to do that.

I’d rate this a three out of five on the difficulty scale. At this point, everything is in place, and it’s just down to how you manage it. The biggest risk here is letting changes in your life, like getting married and having kids, affect your progress.

Age 40-49: The Highest Earning Years

40 to 49-year-olds. Looking at the data, the average net worth for 40-year-olds is $692,597, and the median is $145,771. These years should be some of your highest earning. Your value is at its highest it’s ever been, and your investment should be starting to pay off nicely. If you want to be rich, then you should aim to have a net worth of over $831,116 and hit these milestones.

1. Save 10 Years’ Worth of Spending

First, you should have at least 10 years’ worth of spending saved in liquid investments. The 25x rule is a common way to figure out exactly how much you’ll need to retire and maintain the same standard of living. So, it’s definitely worth hitting this target. Otherwise, when it comes to retire, you might have to downgrade your lifestyle.

2. Get Your Mortgage Fully Paid Off

Second, get your mortgage fully paid off on your home. Now, I’m all for leveraging debt, but when it comes to your personal residence, it’s well worth getting it paid off and always knowing you won’t have to worry about making payments during your retirement.

3. Start Investing 30% of Your Income

Third, start investing 30% of your income. As I mentioned, you’re now in the golden years of making money, so you can afford to put a little bit more away. This will help accelerate you towards your retirement goal.

4. Plan for a Business Exit

Fourth, if you own a business, it’s a good idea to plan for an exit towards the end of your 40s. This will provide you with a substantial amount of money to invest. If you wait too long, that money may not have enough time to grow before you retire. Another option is to bring on a new CEO to run your business and guide it with your help. As you get older, you may not have the same level of energy, so this can be a wise decision for both you and the business.

I’d rate this a two out of five on the difficulty scale. By this point, you could be married with kids, so I can’t see there being too many lifestyle changes that will impact your financial goals.

Age 50+: Relaxing and Securing Your Wealth

50 years old plus. The Fed found that the average net worth of people in their 50s is $1,031,570. The median is $182,454. This is where you can start to really relax, because if you’ve hit all the milestones I’ve discussed, at this point, your money will be doing most of the work for you. In this age bracket, you should be aiming for a net worth of $1,237,884 or more if you want to be considered rich.

1. Have 25 Years’ Worth of Spending Saved

When you’re this age, you should have at least 25 years’ worth of spending saved in liquid assets. If you have this, then retirement should be a breeze.

2. Aim to Clear All Debt

Second, aim to clear all debt. And I do mean all debt. Even though good debt, such as low-interest mortgages, can help you build wealth earlier in life, it can become a burden in later years when you have a fixed income. Paying off debt reduces your monthly expenses, and it frees up cash flow for other priorities, such as travel and hobbies. It also provides peace of mind knowing that you don’t have to worry about making payments during retirement.

3. Make Sure to Have a Will

Third, make sure to have a will. You legally don’t need to have one, but if you’ve watched this far, then I’m willing to bet you’ll want some control over what happens to the money and property you’ve worked so hard to achieve.

4. Get Life Insurance

Fourth, get life insurance. This is especially true if you’re the main earner. It’s worth getting some kind of life insurance to carry your family through if you die. Look, I know we don’t like to talk about these things, but that’s exactly why we should consider it.

I’d rate this a one out of five on the difficulty scale. You’ve done all the hard work at this stage, and now it’s down to your investments to do the heavy lifting.