From Zero to $2.9 Million Net Worth: The Power of Compounding!
7 real life financial journeys: individuals and couples in their 20s, 30s, 40s and 50s
Exploring the Hidden Aspects of Wealth
Welcome to this week's newsletter, where we show you real numbers from real people and get a glimpse into their personal finances. This edition focuses on a range of inspiring and educational net worth stories. We've highlighted individuals and couples in their 20s, 30s, 40s, and 50s, each with unique financial journeys and insights. Whether it's about tackling debt, investing wisely, or the power of compounding, each story offers valuable takeaways that could help guide your own financial journey. Enjoy these real-life experiences and the wisdom they impart!
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In their 20s:
$1,800 net worth - A 23 year-old health promotion coordinator earning $59,200/year in Boston after recently graduating from college. Her accumulated net worth is 33rd percentile for her age group. Her net worth consists of $750 in retirement, $4,850 in checking/savings less $2,800 remaining in student loans. This interview discusses her financial background and how you has been aggressively paying down her student loans. She grew up in a family that was financially comfortable but didn't have in-depth discussions about money or future financial planning. She began working at age 16, mostly to have spending money and save for college, and has been financially independent since moving out of the dorms at age 19. Her family and her boyfriend's family provide a safety net if needed. "I left school with $22,000 in loans, due to my parents paying for half of my undergrad and grad school, using savings from working in high school and school, and scholarships.
TAKE-AWAY: The importance of prioritizing debt repayment and starting to invest early. Setting financial goals and working diligently towards them can lead to significant milestones, like becoming debt-free and investment at an early age.
$63,800 net worth - Alex and Caleb, a married 27 years old couple, with one young child & 2 foster children, are navigating their financial lives with differing perspectives. Caleb seems keen on improving their financial situation, pushing Alex to reconsider her job and elevate their income. Alex, however, is more cautious with spending and finds more comfort in saving money, even struggling with the idea of "fun money" dedicated to personal enjoyment. They have an accumulated net worth that is 62nd percentile for their age group. Majority of their net worth is in retirement 69%, home equity 21% and cash/savings 3%. Their attitudes toward money trace back to their childhood. Alex grew up as a missionary's daughter, where money was not considered personal and was often fundraised. Her father's tendency to impulsively spend money on hobbies he eventually abandoned instilled in Alex a lack of trust in herself when it comes to spending money. She fears starting something and not seeing it through, much like her father. "I avoid money because it gives me anxiety. I don't want to have the responsibility because I can't trust myself with money."
TAKE-AWAY: The importance of financial education from a young age and the need to consciously work on our relationship with money to overcome ingrained beliefs.
$78,000 net worth - a 24-year-old with nursing degree recently graduated with a nursing degree and shifted to contract work in the nursing field. Switching from regular nursing to contract nursing increased his earnings from $55K to $135K/year. He now has an accumulated net worth that is 82nd percentile for his age group. He is planning to move into a converted space in his girlfriend's parents' house, while renting out both units of his owned duplex. This move is expected to add a new income stream through rental earnings while significantly cutting down on their cost of living. Through increased savings and reduced expenses will accelerate savings toward financial goals. "I need to hit 100k in liquid investments. Reaching the six-figure mark is a must for this year... I am much closer to it now and my expenses will be going down so there's no reason why I shouldn't be able to hit it…"
TAKE-AWAY: Striving for the first $100K in savings can be a challenging but rewarding milestone. It requires discipline, strategic decision-making, and sometimes making significant lifestyle changes. However, once this initial goal is achieved, the power of compounding can accelerate wealth growth, making subsequent milestones easier to reach.
$185,000 net worth - a 29 year old that graduated with $100K of student loans. He moved from the midwest to Seattle for a job offer, earning enough to save and payoff his student loans. His compensation after graduating was $43K, then $80K when he first moved and is now $180K after several promotions. His accumulated net worth is 81st percentile for his age group. Majority of his net worth is in investments and cash (57% retirement, 12% taxable brokerage, and 23% in cash). “My goal is to see my net worth grow to about $250K by my 31st birthday next June. I also hope to be debt free by this time next year so I can get serious about buying my first house.”
TAKE-AWAY: Start tracking your net worth as soon as possible. Even if you have a good salary, it's essential to learn how to manage your money. Invest wisely, for example in S&P500 ETFs, and use any additional income, like bonuses or inheritances, to pay down debts. Set clear financial goals for yourself, such as increasing your net worth or becoming debt-free by a certain date.
In their 30s:
$2,355,000 net worth - A 34-year-old software engineer in the finance industry ($135K/yr) and his wife is a 31-year-old management consultant ($255K/yr) live in the suburbs of a MCOL city. They have an accumulated net worth that is 98th percentile for their age group. Their net worth composition consists of 43% in taxable brokerage, 27% in retirement accounts, 15% in home equity, and 13% in checking/savings accounts. This long-form interview covers topics such as their personal background, earning, saving, investing strategies, their journey to wealth accumulation, future plans, and some advice for others. “Every millionaire interview says this because it’s true: marry well. If your spouse doesn’t have the discipline to become wealthy, you probably won’t become wealthy. Also, your day is always better if you marry your best friend.”
TAKE-AWAY: The importance of choosing a partner who shares your financial goals and discipline, which is a crucial factor in wealth building. Making a wise choice in a life partner not only impacts your daily happiness but also your financial future.
In their 40s:
$372,700 net worth - A 40-year-old registered nurse living in San Francisco, who made $310,000 last year through a base rate of $114/hour and a lot of voluntary overtime. She has no guaranteed hours and her work schedule can be flexible. Her accumulated net worth is 71st percentile for her age group. Her net worth composition consists of 60% in retirement accounts and 36% in cash/savings. She is in the process of buying a condo which will more than double her monthly expenses. “I was totally broke and wrecked my credit in my 20s. I’ve obviously turned things around financially but I know I could have done better with saving early on.”
TAKE-AWAY: The importance of managing personal debt responsibly. She was warned about the danger of credit card debt from an early age, which influenced her own financial habits. She also demonstrates the value of saving and investing for the future.
In their 50s:
$2,898,206 net worth - A late 50s computer programmer living, married with 1 child, lives in California earning low $200s annually. 21 years of net worth details on NetworthShare.com starting with a $78,000 net worth in October 2003. He has an accumulated net worth that is 90th percentile for his age group. The largest portion of his net worth ~50% is in retirement accounts, 30% is in taxable brokerage, and 20% is in home equity. “The one thing that I must stress to all, especially to younger savers, is that hardest journey is from zero to 1 million, it takes the longest. But, for 2+ million, if you look at any profile here on this site, you will see that the journey to the next million(s) is much faster and just goes exponential. That my friends is compounding!”
TAKE-AWAY: Consistent saving and investing over a long period of time can lead to substantial growth in net worth. Why do humans struggle to understand the exponential effects of compounding?
What is the meaning behind Ten Wilsons?
The $100,000 bill is the highest denomination ever issued by the U.S. Federal Government. Woodrow Wilson is the president on the $100,000 bill.
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