Chapters
Shownotes Transcript
Your greatest wealth building tool is not winning the lottery or hoping your rich uncle with no legitimate heirs meets an untimely death. No, it's not happening. Your greatest wealth building tool is your income. You know, from like working and stuff. And I know some of you don't think you make enough right now to do things like save up an emergency fund or invest or buy a house. But as the saying goes, it's not the size of your paycheck that matters. It's how you use it.
No one says that. And that's why today we're looking at America's average income by age and talking about how you can use your greatest wealth building tool to its fullest potential. And speaking of potential, this YouTube channel has the potential to hit half a million subscribers this year, and it would mean the world if you would be one of them. So hit the subscribe button for more content like this and while you're at it, hit the like button too. Okay, let's take a look at the average individual income in America by age.
On average, 25-year-olds are making about $48,000 a year, 35-year-olds are making about $73,000, and our 45-, 55-, and 65-year-olds are raking in about $82,000 a year. Now, the obvious trend I want to point out here is that your income usually increases as your career progresses and then levels off near retirement.
Now, some people think this means they can't or shouldn't do things like invest in their 401k until they've ascended a few rungs on the old corporate ladder. But that logic crumbles like a gluten-free muffin when you realize that time is one of the essential ingredients in building wealth. So your goal is to start investing ASAP. But there's two prerequisites here. Number one, all of your consumer debt is paid off. And two, you've got an emergency fund of three to six months of expenses saved. All right, we clear on that? Capisce? Roll Tide.
Now, when you saw those income averages, you may have thought they felt a little off. Averages can sometimes be misleading since they include every single data point from the devastatingly low to the unrealistically high. So let's use a little thing called percentiles to break down all this income data a little better. First up, the 25th percentile.
What that means is 25% of the population makes less than this income and 75% of the population makes more than this income. So 25-year-olds in the 25th percentile are making about $25,000 per year. 35-year-olds make about $30,000 a year. 45-year-olds make $32,000. 55-year-olds bring in $33,000. And finally, 65-year-olds make $35,000.
Now, if you're in this camp, don't panic. And whatever you do, don't income shame yourself. All right? I hate to go full Brene Brown on you, but how much you make and data about how much everyone else makes does not define your self-worth. In fact, you are priceless. You are made in the image of God, and that's all that matters. And I believe that.
Now, the thing I want to highlight here is that if your income is on par with these numbers and your household has no other income, then everything you make is probably going toward essential expenses right now, like housing, transportation, food, clothing, and keeping up with your minimum debt payments if you have them. In this situation, that's the right move. You got to survive before you can thrive.
I'm sorry, I got lost in a train of thought. I just saw that goodness I just heard. But your next best step is figuring out how to create some margin in your budget so that you can put a little money toward your future each month instead of needing your entire paycheck just to get through this week. Now, obviously, you can't cut a whole bunch of expenses here since everything is going toward the essentials. So that means we've got to find a way to boost the other side.
Your income. I know, revolutionary life hacks here. So maybe it's time to consider a side hustle, even if it's temporary, while you get your career off the ground or pay off a pesky car loan. Maybe it's time to ask about a growth plan at your current job. Or you could try shopping around for a new job entirely.
Just promise me that you'll have an income-boosting brainstorm and get yourself some margin because this one is a tough place to be. All right, moving on to the 50th percentile. Now, for all my math nerds, this is also known as the median, which means 50% of people make more, 50% make less. So for the 50th percentile, 25-year-olds,
$40,000, 35-year-olds, $53,000. 45-year-olds, it's $55,000. 55-year-olds, $62,000. And finally, for the 65-year-olds in the 50th percentile, $60,000. Now, don't underestimate this percentile just because it's mid. All right, you don't have to make six figures to crush your major financial goals like paying off debt, saving for a rainy day, or building wealth for retirement.
In fact, a nationwide study of millionaires with more than 10,000 participants found that two of the top five careers among these net worth millionaires were teachers and accountants. And here's another encouraging stat from that study. One out of three millionaires never had a six-figure household income. And teachers, I gotta say, you deserve better. And accountants, I feel like you guys are, you're doing fine. You don't need encouragement. What did we ever do to you?
The point is you can build significant wealth at this median income level. And it starts by recognizing that you do have margin. How can I know? How can I tell? Because you're probably spending money on non-essentials like Starbucks runs and viral Amazon buys. So if you want to make faster progress toward your money goals, your best next step is to comb through that budget and look for places to cut expenses. Where can you spare a few dollars to make it rain on your financial future? Now, if you don't already have a budget, make one. I've
I promise you'll feel like you've moved up a few income percentiles as soon as you do this. Plus, it's really easy with the EveryDollar budgeting app. You can get started for free by going to everydollar.com/george or click the link in the description below. Okay, next up, we've got the 75th percentile.
meaning 75% of people make less and 25% of people make more than this. So the 25-year-olds at this level are bringing in about $57,000. 35-year-olds, about $85,000. 45-year-olds are at $95,000. And our 55- and 65-year-old friends are hovering around $100,000.
Now, if you're in this percentile, that budget margin should be getting nice and spacious. So it's time to start dreaming bigger. I mean, why not max out that 401k? Why not pay off that mortgage? I promise that if you pick one financial goal and you stay focused, your progress will be so inspiring, you'll never have to listen to Stronger by Kelly Clarkson again. You'll only listen to it like I do for fun. Love Kelly. Kelly, have me on your show if you're watching. Great show. Big fan.
No, it's a no for me, dog. Now, if you're not sure which financial goal to tackle first, I highly recommend using the same financial game plan that took me from a negative net worth to a net worth millionaire. It lays out a clear path for building wealth and prioritizes everything into seven simple steps. And if you want more info, click the link in the description below.
Okay, last but not least, the 90th percentile income earners, or as some people call them, Enneagram 3s, aka the high achievers, which makes me think of online bank Laurel Road, one of the sponsors of today's video. If you want to achieve a high interest rate for your savings, be sure to check out their high yield savings account. They're offering 5.15% APY right now. And with a rate like that compounding your cash stash, you'll be enjoying your own overachiever's high in no time.
all without sacrificing a single drop of blood, sweat, or tears, which is how I prefer it. Plus, their accounts have no minimum balance, no monthly maintenance fees, and you can rest easy knowing your deposits are FDIC-insured. So if you want your savings to work as hard as you do, go to laurelroad.com slash george or click the link in the description to get started. Equally as impressive is Delete.me, another sponsor of today's video. Think of them as the Don Dish soap of personal data.
And boy, do you need it. You've been spilling your personal data like a punctured oil tanker in the internet Atlantic for years now. And that's why Delete.me is standing by to swoop in and clean up your data mess before the bad guys get their hands on it and try to use it against you. They find and remove your personal data all over the web to save you time and spare you the fraud.
So help protect yourself from the risks of online scams and other tomfoolery and check out Delete.me today. And right now you can get 20% off any of their plans by going to join delete.me.com/george or just click the link in the description. All right, back to the moment you've been waiting for, the 90th percentile income folks. 25 year olds in this group make about $82,000. 35 year olds make $135,000. 45 year olds bring in $150,000.
55-year-olds make $163,000, and at 65, we're looking at a whopping $157,000. Now, if you're bringing home this much bacon, congratulations. That is a Ron Swanson amount of bacon. Give me all the bacon and eggs you have. But also, with great power comes great responsibility.
And here's what I mean. If you're doing the right things with that income, your wealth building momentum will be off the charts. And momentum is the best feeling ever. Just look at those guys in the 1993 masterpiece, Cool Runnings. They had momentum. But here's the problem. It's also really easy to let lifestyle creep slow you down and steal the incredible opportunity you have to set you and your family up for financial success. And I know you think you would never waste your income on creep of any variety.
But the data says 45% of people earning over $100,000 annually are still living paycheck to paycheck. So how do you avoid that fate or turn things around if that's already you? Well, you got to go back to the basics. You have to make and stick to a budget. Figure out where your money's been going and start giving every dollar a job again.
Learn to live on less than you make, and as you make more, don't inflate your lifestyle much, and instead, use that extra income to build wealth and be more generous. Now, I hope you worked your way up the percentile chart, not as a flex or comparison, but because I want you to live your best financial life with as much money margin as possible. Oh, and if you love seeing this income breakdown by age, then this video about how much you should have in your 401k by age will be a real treat. I'll link it in the description as well. Thanks for watching. We'll see you next time.