EP218: How Rich Are You REALLY?
Do you actually know your net worth?
Orrrr better question – do you know your net worth potential? 🤔
Many people don’t!
The truth is that the actual numbers we’re sharing mayyyy surprise you, because your net worth could potentially be higher than you think.
And here’s why we think you should know…
This info could be a real game-changer for you and your financial future.
It’s NOT too late to adjust your strategies for growing wealth.
In fact, we’d say it’s the perrrrfect time to make some changes. 👌
The goal of all this net worth talk is to show you what’s truly possible when you focus on earning maximum income while exerting minimal effort.
Aaaand yes. We’re also sharing our FAVE strategy for doing just that.
Here’s to getting to the bottom of your net worth to raise it sky-high. 🥂
IN JUST 3 MINUTES OR LESS TODAY, YOU’LL LEARN ⏬ :
- Today, we delve into the concept of net worth, unveiling both average and median figures sourced from the Federal Reserve’s data.
- As we learn about wealth distribution across age groups and foresee a substantial transfer of assets to the younger generations, you’ll find a key focus on the significance of reshaping your views on work to reach your maximum earning potential.
- The ultimate goal is to encourage you to reassess your approach to wealth accumulation, aiming for increased financial gains with minimal effort.
How Rich Are You REALLY?
Here’s a fun thought starter to kick us off today: have you ever thought about what your net worth should be? 👀
Yikes, talk about a heavy topic!
Now listen, we don’t want this to be a comparison thing, or one of those Instagram post moments showing you where you should be at in life by a certain time. But the reality is that numbers talk, and Americans on average have a net worth of more than you might think.
But what’s good, what’s bad, and what’s just average?
And if you are above average, does that mean that you’re part of the elite 1%? You might not be in the ranks of Warren Buffet and Jeff Bezos, but surely that means you’re doing something right – right?
The good news is that there is a chance that you too can make it to the 1%. 🤓🤓
We came across a pretty interesting article recently that we will link in the show notes that shows an exact breakdown by generation of what it actually takes to get to the top 1%.
We think this type of analysis is pretty eye-opening, and we hope that it will encourage you to make some pretty drastic changes to your wealth growth plan and trajectory.
In today’s episode, we are going to break down wealth distribution across generations, offering insights and practical tips to elevate your financial standing.
We’ll even explore the “Rule of 100,” shared by Jesse Itzler, the rapper-turned-multimillionaire, to help crack into the top 1% while talking about generational wealth and actionable advice from Jesse’s journey to financial success. 😌😌
So, get this: spending just 18 minutes a day on something you’re passionate about—your business, finance, playing the piano, or even karate—adds up to 100 hours a year. And guess what?
According to Jesse Itzler, that’s your ticket to joining the top 1% in that field worldwide within a year.
Pretty mind-blowing, right? And the best part is, it’s incredibly doable.
Now, let’s dive into this idea a bit more, especially when it comes to your finances.
You know, we’re not huge fans of measuring wealth solely through net worth, but hey, for today’s purposes, let’s roll with it for now.
Picture your finances as a fruit basket—it’s a simple analogy but bear with us. In this basket, you’ve got your apples 🍏, oranges 🍊, bananas 🍌, all your assets—your money, investments, property, the whole nine yards.
Now, let’s say you’ve borrowed a few fruits from a neighbor—maybe a couple of lemons 🍋 and a grapefruit.
These borrowed fruits?
They’re your debts and liabilities.
Now your net worth is going to be the result of counting all your fruits in that basket and then subtracting what you owe to your neighbor.
If your fruit count is higher than what you owe, voila, you’ve got a positive net worth.
But if your borrowed fruits outweigh what’s in your basket 🧺, well, that’s a negative net worth situation.
It’s basically tallying up what you have versus what you owe, kind of like a fruit inventory in a basket.
We love our friends over at Nerdwallet, so here’s the official definition according to them 👉 “Net worth is what you own minus what you owe. Using a net worth calculator, you can determine yours by deducting the value of all your liabilities (such as credit card debt and student loans) from the value of all your assets (including your home and the money in your retirement accounts).”
Seems pretty simple, right?
Maybe, maybe not. But we bet you’re wondering where you fall into the mix.
You see, the Federal Reserve Board releases a fun little report every three years, and it’s a doozy—it’s called the Survey of Consumer Finances.
The latest edition, hot off the press in October 2023, is jam-packed with data straight from 2022. Ready to dive into the nitty-gritty? Let’s do it.
Believe it or not, the average net worth of U.S. households is a whopping $1.06 million! Yeah, seriously.
But hold up before you start thinking you’re way off track here, that jaw-dropping number is sky-high because the uber-rich are totally throwing off the balance.
Let’s get real. For an accurate snapshot of where the typical American stands, you need to focus on the median net worth—the middle ground, not the outliers. And that number? A much more down-to-earth $192,900. Feels a lot more relatable, right? So, take a breather—that’s the real standard for where most people sit financially.
Net Worth Breakdown by Age Group
Keep in mind here that there’s no magic formula; your net worth is a sum affected by a bunch of things—your education, age, your income, and more. And not only that, but the numbers for both median and average net worth differ across various age groups.
So if you’re under 35, the median net worth hovers around $39,000, while the average sits at $183,500. 💲
You see, when we look at people’s earnings, the average income can easily get thrown off by a few big earners.
Imagine one person making a million bucks while everyone else is just getting by—that seriously skews the average. But the median? That’s where things get real. It cuts through the extremes, giving you the true picture of what most people actually earn, without those flashy high earners.
Put simply, median income is the straightforward, no-fuss number that tells the true story.
➡️ There’s also a noticeable spike in median net worth for those slightly above 35, hitting around $135,000.
But things really peak in terms of net worth when people reach about 65 to 75 years old. That’s the sweet spot—the pinnacle of someone’s earning potential, which might surprise you. And interestingly, these statistics align with the baby boomers hitting this age range.
And guess what? Boomers are hailed as the wealthiest bunch among the different generational cohorts. As a side note just for fun, it’s worth noting that Visual Capitalist predicts that Millennials and Gen Z will inherit a staggering $84 trillion from their boomer parents and grandparents by 2045.
So if you haven’t hit the median net worth for your age group yet, don’t lose hope, you can easily make the changes you need to get you there.
But first, you’ll have to shift your perspective on work.
Currently, you might have a career, but your finances don’t necessarily align with it, and that needs to change now.
Here’s what we’re getting at: your physical and mental capacity limits the amount of work you can handle each day, but your money doesn’t have the same constraints. 😘😘
If managed wisely, your money can be invested and grow independently, without requiring constant input from you.
This is what we refer to as owning assets.
For us, at the core of our successful investment strategy lies 🏢 multifamily apartments, which have proven to be our primary source of financial growth.
Over the past five years, we’ve consistently utilized these properties to increase our net worth by more than tenfold, and we anticipate this trend to persist and even accelerate in the years to come.
The reason why we chose to focus on multifamily apartments is because of this idea of maximum effort-to-result leverage.
Essentially, it means that we invest a comparatively modest amount of effort and resources to yield a maximum output.
This strategic approach allows us to optimize our returns efficiently, making the most out of our investments.
It’s a game where achieving significant results with minimal input is key, and multifamily apartments have proven to be the ideal avenue for us to play and win.
What’s yours going to be? 😌😌