Wealth Building Strategies by Net Worth Stages

Wealth building strategies vary significantly based on net worth, emphasizing tailored approaches for each financial stage.

### Wealth Building Strategies by Net Worth: A Step-by-Step Guide
* 💰  Building wealth requires different strategies based on your current net worth, and it's crucial to **focus on the right areas** at each stage of your financial journey.
* 📉  Many individuals start with a negative net worth, often due to student loans or other debts, but they possess the invaluable asset of **time**, allowing them to **pay off debts and build wealth gradually**.
* 🔑  To transition from a negative to a zero net worth, it's essential to focus on **paying down high-interest debt**, managing new debts wisely, **building assets**, and **ensuring against potential catastrophes**.
* 📈  Once reaching a net worth of zero, the goal is to **accumulate your first $100,000** by aggressively investing and saving at least **25% of your gross income**, while also taking advantage of **employer matches for retirement accounts**.
* 💸  As your net worth grows to between **$100,000 and $500,000**, reassess your financial habits, ensure you're **saving adequately**, and consider advanced planning strategies such as **asset allocation and tax strategies**.
* 🏠  Upon reaching the **$500,000 mark**, focus on **maintaining and growing your wealth** through disciplined saving and investing, while being mindful of **risk capacity and liquidity** to avoid lifestyle creep.
* 🌟  Finally, once you hit the million-dollar mark, continue employing the strategies that got you there, but also consider **new opportunities for accumulation**, such as real estate or business investments, while ensuring your financial future remains **secure**.

top wealth building strategies by net worth. BR. I am so excited about this because we know that in our financial journey, depending on where we are, the things that we focus on might be different. And I love it. Today, we're going to talk about those strategies, those focus areas, depending on where you are in your wealth building journey. Well, what I love about our channel is that we do try to give you the differentiation of when you're starting out. You're completely different than somebody who's been saving and investing for 20 plus years and is probably getting close to seven figures. So today, we're going to kind of lean into that a little bit extra and say, Hey, wherever you are, let us give you the strategies to think about in your section of the hunt towards your first million dollars. Now, in the strata that we're going to use today, we are going to exclude home equity. So we're really talking about your net worth outside of your home. But when you do your annual net worth statement, it's totally fine to include

your net worth in there, but for the purposes of today's show, we're talking about net worth. It's not just because you bought a house in a really solid, you know, cost of living area where the price of homes went up. This is based on where you are in your accumulation phase of building wealth over the long term. Don't miss the us. We're all about your home equity in your net worth, but it is one of those things. I just don't want you strutting around like George Jefferson just because you happen to buy a house at the right time. We got to make sure that you can actually have assets that are working for you. Remember, your money should work harder than you do, so we want to protect you by focusing on those investments. So let's dive right in. The very first strat we want to talk about is from a negative net worth to a zero net worth. And for many folks, this is sort of an inevitable starting point that when I come out, when I first start in my career, when I first enter into

adult life and add up all the things that I own, and I subtract all the things that I owe. It turns out to be a negative number, yeah. And I don't want to be scared. A lot of us come out of school with a little bit of student loan debt. You don't have a lot of assets, but guess what? You have the most valuable resource you could potentially ever want, something that your older peers will be jealous of. You have lots of time on your side, so it's okay to come out of debt with some debt. We just got to figure out how do we pay off this debt. Yeah, so the thing we want to think through is if we are negative, how do we get to zero? We're going to walk through. We got to pay down debt. We have to manage new debts well. We have to build our assets, and we want to make sure that we're ensuring against catastrophe. We're going to, if you can do these four things, then there's a really good chance you're

going to be able to move from a negative territory on the net worth scale up to the positive territory. Yeah, let's see how we can get people to zero as fast as possible. So, Bo, jump us off on this paying down debt because I mentioned student loans, but for some people, this might be consumer debt, might be credit card debt. How do we want to attack this? You have to figure out how do I start paying off high-interest debt 'cause we know that compound interest can be the eighth wonder of the world. It can be amazing when it comes to wealth building, but when it works against us, it can be devastating to our ability to build wealth. So, there's actually a great piece written by Daniel and Beyond Basics that actually walks through how to pay off high-interest debt. What are some ways that I can do this? He walks through methods like using the debt snowball or the debt avalanche. So, if you've not checked that out, you can go to moneyguy.com, Beyond-Dash Basics, and check that out too.

see okay what should I do? How can I begin prioritizing getting out of this high debt? This is one that I often think about. Paying down debt is one of those things. A lot of your credit card debts and other things like that, they'll charge you greater than 20%. So how are you ever going to get ahead if you're paying twice what you hope to make out of the S&P 500? There's something to be taken away with that. We even have a rule bow that we talk about if you're talking specifically about credit cards. Credit card use completely okay, but to make this kind of rhyme out so you'll remember it. Credit card debt no way. Now don't mishear us. We like credit cards. We both use credit cards. But if you are carrying a balance month over month, you are doing it wrong. You might not be a credit card person. So that's a consumer side, but another debt that a lot of people fall into is auto loan debt. A lot of folks right now are buying

more car than they can afford. They're borrowing more money than they should, and they're getting themselves into a pretty awful financial situation. Now, we love paying cash for cars when you can, but if you're in the like negative to zero net worth, there's a really good chance that you are not going to be able to pay cash for a car. So, we want to give you the tools necessary so you can make that purchase. Well, that's why we actually have an entire car buying checklist out at moneyguy.com/resources that will walk you through the things that you need to know before you purchase that car so that you don't fall into that statistic of folks who are driving around their net worth state. Yeah, I mean, look, we say it, and it's worth repeating because I know that probably about 60% of you are new every month. We love the 238 rule. Remember, cash is king on paying for your car, but if you start like both of us did right out of school, we didn't have enough

money to go pay cash. We had to figure out what's a reasonable way to finance that first car that's going to allow us to get to our cuz. That's going to be the engine to our wealth-building force. So here's what 238 is. You'll put down 20% down. You'll also make sure you don't finance it longer than three years. You're going to pay it off within that three years. That's going to keep you in check so that you actually, because those payments are going to feel higher, because that's where the car companies, that's where the dealerships get you, is that they say, Hey, don't worry about just stretch it out, and you'll never own this car. But that gets your payments lower, but that also lets you buy bigger cars you actually can't afford, because we want you saving and investing. We also want to make sure that your payments don't exceed 8% of your gross income. And remember, we have some overlay rules on this, is that we want those payments, you got to have your

Investments exceeding what those monthly payments are. And if you're ever considering buying a luxury car, think about it. If you see anything that's sitting over in Europe and you say, I would look good in that. My neighbors would be impressed by that. You better be paying same as cash because 238 is where reliable transportation. This is, I'm talking about Corolla, not Land Cruiser. And look, there's a little bit of cold water. But if you're in this negative net worth, the zero, you should not even be considering luxury cars. It should not even be on your lexicon. So, okay, we got to start paying down debts. We also want to manage our new debts well. The next thing we have to do is we have to think about building assets. If we're trying to get from negative net worth to at least zero, we need to start working on the assets side of the column. And we actually have a tool that you can use. BR, we came up with a financial of operations. It's a nstep tried andr.

process to help you figure out what to do with your next dollar well. And when you're in that negative net worth and you're trying to get to zero, you need to focus on the early stages. You need to focus, Do I have my deductibles covered? Have I looked at all the deductibles that I have, whether it be my health insurance, auto insurance, homeowners insurance? Do I at least have enough saved up to cover the deductible if I were to have an event in one of those categories? If you can do that, you'll prevent yourself from falling into the ditch. Yeah, and by the way, with that highest deductible, make sure that you've got that in a high-yield savings account. Let's actually make some money on that, and then that gets you into a really big wealth builder. Look, a lot of you are saying, I know you guys are talking about saving and investing, but it's the credit cards, right? Because you, Brian, just told us it's 20-plus interest. But remember, your employer for a lot of you is offering you a

guaranteed 50% to 100% rate of return with your employer match. Don't sleep on that. That is a huge wealth-building opportunity. It's a chance for you to jump-start, and remember, it's typically only 3 to 6% of your compensation. We're just saying get the maximum match, and then we can move on to other things. And then step four, emergency fund. Cash is so important in the financial order of operations. It doesn't get one; it gets two steps in the financial W of operations because the highest deductible covered is step one, and then step four is that traditional emergency reserves with three to six months. And one of the things that an emergency reserve does is it begins to help you prevent yourself from being too far out on the risk spectrum to where you cannot control your future circumstances. Because one of the things you have to do if you are in that negative to zero net worth, you have to make sure that you are ensuring against catastrophe. Emergency fund is a great starting place, but it does not

negate the need for insurance. So, you need to work through some health, some insurance basics. Do you have appropriate health insurance? Do you have adequate car insurance? If you're a renter, do you have a renter's policy? If you own a home, are you accurately pro- are you adequately protecting that asset? If someone else depends on your income, or if you solely depend on your income, do you have disability insurance? And if there are people that are depending on you to be here for their well-being, do you have life insurance in place? Do you have a will in place? Just because early on your focus should be on trying to get from negative to zero does not mean that you cannot focus on these things. Does not mean that these are not things that you should be putting resources towards. Well, think, and this is a trap for people who are in this struggle situation of trying to get to zero. They're like, Look, I don't have anything, so I'm going to cut the corner off and not even really do insurance, whether

it's health insurance, whether it's car insurance. Don't do that because look what you if you go look at why people file bankruptcy and other things. A lot of times, it's big catastrophic life events happen, things that you don't foresee coming your way. The good news is there's ways to ensure those big risks that are out there. So don't cut the corner off thinking, Hey, why do I want to pay a little bit of this towards insurance premiums when that might be what gets me out of credit card debt or that's what pays us off. Don't skip that step because this is what's going to keep your financial life out of the ditch, is by ensuring some of these big risks that are sitting out there. Okay, Bri, that was going from a negative net worth to a zero. Now let's talk about the fun side, the other side of that equation. Let's talk about the second strata. What about net worth from 0 to $100,000? What are the wealth strategies we ought to be

focusing on now. First of all, congratulations. Once you get to zero, meaning you don't actually owe, you know, you have money. Hopefully, you're living on less than you make. You don't have a ton of credit card debt. You're already doing better than the 12% of the population that is pretty much stuck in some form of debt, whether it's student loan debt, whether it's credit card debt. You're already doing better than that group of people. But now, we've got to get you to that bowling point, which is we've got to try to work on getting you to your first $100,000. So, what are the things that we ought to focus on when it comes to getting to a 100? Well, the first is you got to finish your financial cleanup. If you do still have lingering high debt, get that knocked out ASAP, and then build your emergency fund. So, again, you won't find yourself getting back into that. You want to build that foundation so that you can keep yourself

out of debt, and so that way you can begin focusing on the number one primary thing that you should be focused on. Yeah, we like to say start aggressively investing now. Look, don't mishear us. We want you not just going out there and speculating where you're out there buying whatever the latest and greatest trend that you hear that you can't miss making money on. That's not what we're talking about in the beginning when we're trying to get you to your first $100,000. Your savings rate is so much more important than even the investment you're choosing. So I want you to be as aggressive as possible with what you can put towards the future, and our goal is we want you saving 25% of your gross income for the future. But if all you can do is 10%, that's great. See how you can move to 11% next year. If you're at 15%, awesome. What can we do to get to 20%? Because as you begin saving, as you begin

to increase your savings rate. You get to move along in the financial order of operations. When you think about putting your dollars to work, where do you put them? We've already talked about we want you to be getting that employer match. It is free money. It's 100% rate of return. You can't miss out on that. Well, then you knock out that high-in debt. You've got your emergency fund covered. Now you get into the fun stuff. Now you get to look at the accounts where you can actually get your army dollar bills working for you. Yeah, I mean, I get excited when somebody tells me, Hey, I'm at the point where I've got a good emergency fund. Where do I need to start investing? I love introducing people to Roth accounts, whether it's your Roth employer plan, whether it's your Roth IRA. Get in there and take advantage of this tax-free growth opportunity. Because if you do this early, often enough, there's a good chance you could be a seven-figure tax-free millionaire. And that's super exciting. So get that Ro IR. Get that

health savings account and don't skip out on step six, which allows you to load up that employer plan too. Now, here's what's interesting: these are all so exciting and so fun, and we have a lot of fervor when we just start first funding these accounts, but in reality, it might feel slow at first. You might feel like, Oh gosh, I've been doing this for a year, and I'm just not going anywhere. The numbers aren't getting big. The accounts aren't huge. Man, is this even worth it? Should I even do it? Take a deep breath. That's normal. It is supposed to feel slow at first because what's interesting is when you can apply time over this discipline, the story gets super, super exciting. Yeah, so let's talk about that first $100,000. This is something that I think is interesting. If you're just deliberate with your monthly savings, meaning you're going to save $10,000 annually, which I know, but go with us for this illustration, you'll see what we're

say what we're sharing here and making a reasonable 8% per year. A lot of people are surprised to see, yes, it's going to take 7 years and 5 months just to get to $100,000, just to get to $100,000, and that's even with a very aggressive savings rate. But here's the thing I need people to understand. I understand a lot of life is going to happen in that seven years. It's because, more than likely, that's enough time that you're going to have an economic downturn. There's a lot of things. There's going to be elections during those periods. There's going to be lots of things where every night you're come home and something's going to whisper in your ear, Hey, I know you're buying every month. I know you're investing, and I know you have this automatic millionaire thing going on if you just stay the course, but why don't you quit? And it happens all the time. I've had neighbors where they know what I do for a living. They see the

excitement that we create. And they'll come to me and they'll say, Hey, can you help me set up an account with a Fidelity, a Vanguard, and get this started? Then they'll come to me 3 months later and say, Brian, that was the dumbest thing ever because that thing can lose money. I'm telling you, do not get sidetracked in this first $100,000. It is the journey. This is so simple, but it is not easy because life is going to be out there with all these distractions. Always be buying is your friend, but then what's the rest of the story? So we said it might take you, if you were to start at 30, it might take you 7 years and 5 months to build up to $100,000. But if you can stay the course and you can continue to save $10,000 a year and you can make, on average, 8%, by the time you get to retirement, by the time you get to age 65.

In the last six months of your investing, your portfolio will have grown by 100,000. What took you seven years and five months to do in the beginning, by the end of your journey, only takes 6 months if you can put in the time, if you can stay the course. So don't. It's going to feel slow. It's going to feel hard. Keep plugging forward, and your future self will thank you. It is all about, in the beginning, those small decisions so you can build that great big beautiful tomorrow. So get through the slow part, but yes, every month is going to feel like a task, a journey to get there. But if you will do this and get to that critical mass, that launch point, and that's what our bowling point, as I like to say, and not saying very well, you will get to a point where your money can work harder than you can with your back, your brain, and even your hands. Now here's what you need to do also at this stage. Make sure you stay out of credit.

card debt. You got out of that high debt. Don't allow yourself, when life gets tough, to fall back into that trap. And then, as you get into this positive net worth territory, you probably are doing things like making large decisions, like buying a home. So, even when you make a large decision like that, make sure you're doing it in a responsible manner. We actually have a rule when it comes to home buying: before you purchase your first home, make sure that your timeline is you can be there for at least 5 to 7 years. When it comes to putting it on down payment, you don't have to do 20% down. It's okay for your first house. It's okay for your first house if you only do a 3 to 5% down payment. And then, you want to make sure that you keep all of your housing costs under 25% of your gross income. If you can do that, if you can get into a home that way, there's a really good chance you're not going to derail

your financial life and be house retirement poor by doing it the wrong way. Yeah, so make sure you go out there money.com resources, check out some of these home buying guides, these other portals that we've set up to be tools for you because this is going to help you too. You can actually have a chance to build wealth outside of just your home equity. Nothing wrong with building home equity, by the way. It's just that when it comes to your money working harder for you, we need that money to be accessible and something you can use. And that's why investing really is important in this journey. Okay, BR. Now let's talk about the next strata. We're talking about folks who have a net worth between $100,000 and $500,000, excluding the equity in your primary residence. Now this is pretty exciting. As soon as you get to $100,000, that puts you in the top half of the population in the United States when you look at saving and investing. Yeah, if you're starting to see these numbers on your

net worth statement. You're getting to the boiling point. You're seeing the fruits of your labor begin to pay off because you got to $100,000, and now you've given it enough time to compound. So, there's a really good chance that you have mastered or are starting to master the behaviors around wealth building. Now the question is, how do I keep it going? How do I continue moving the ball forward on my wealth-building journey? So, how do we get you from 100,000 to 500,000? The first thing, now look, in the beginning when we tell people we want them to save and invest 25% of their gross income, it is aspirational because anything is better than nothing. But I do think once you're starting to get to these traction points, really hold yourself accountable. Are you saving and investing 25%? There's lots of distractions out there, but put your money to work because it's that important. And then as your assets do reach this boiling point or do reach

This critical mass, there's a good chance that you might begin thinking through some advanced planning ideas. Maybe early on in your journey, you were using a target retirement fund, which is great. You pick the year you want to retire and how much you want to save, and that's it. But as your assets get larger, it may make sense for you to move from more of a generalized plan to more of a specific plan where you are looking at things like asset allocation. How do I spread my assets across different asset classes? Or maybe I want to look at asset location. Okay, what types of accounts between tax-free and tax-deferred and after-tax do I hold what types of investments? And do I have any unique timeline constraints? Are there things that I am beginning to bump up against like retirement or like big expenses that I know are coming my way that I need to begin planning for? Think about you think that you are just by choice choosing to be part of the FIRE movement or the FINE movement where you're going to retire early. You need to take that

into account. You also might have a unique thing in your career. Maybe you're a pilot or you work for the FAA as, you know, as an air traffic controller. There are some mandatory retirement dates you need to be aware of and plan accordingly. So, understand that time is an important consideration in whatever your planning is. And then the other thing that you ought to be thinking through is you want to reassess your insurance needs at this stage. As you go from zero net worth to $500,000 net worth, there's a really good chance your life has dramatically changed. Maybe your family looks different, maybe your marital situation looks different, maybe your kids are different ages. Do you still have appropriate life insurance in place? Is the health insurance that you're choosing at Open Enrollment every year the one that makes the most sense for you? Do you have an umbrella policy in place? Are you updating your beneficiary designations? Are you updating your Wills? Are you actually looking at those things? It's very, very easy at this stage to get

comfortable to rest on your laurels and forget to prioritize the things that need to be prioritized. Nobody wants to talk about their death or the potential for their death. You'd also don't want to have those hard conversations with your significant other about, Hey, who's going to take care of the kids if something happens to one of us or both of us? So don't skip those steps. I know it's an uncomfortable conversation, but you are getting to be, you know, you have more and more assets. These conversations are going to get harder and harder if you don't go ahead and make the steps to start making those decisions today so that your money actually has a purpose beyond even you. Okay, Brian, if we were talking about from $100,000 of net worth excluding home equity to $500,000 excluding home equity, it's like getting close to and reaching the boiling point. Then this next strata, I think, is officially in the boiling point. I think this is where escape velocity exists for most folks. This is

when your net worth outside of your home is somewhere between $500,000 (half a million dollars) and then seven-figure land (a million-dollar total net worth) yeah and we're being hard on you here I will tell you I'll go ahead and share with you this puts you in the top you know 21% of the public and remember because we're being so conservative we're not even en counting the home equity but in a lot of the cases these people are likely millionaires when they look at their total net worth but we're kind of getting excited about the fact that you have at least $500,000 of your army of dollar bills that are now have the potential to work for you harder than you can with your back your brain your hands so how do we maximize this and make sure that you're doing everything you should yeah one of the things that's so exciting is that the bigger the numbers get the bigger the numbers get let me show you what we mean by that if you're a 30-year-old and

you're saving $10,000 a year, and you can make 8% annually on your investments. It'll take you about 20 years to get from zero to $500,000. So, you've been working for a long time to get this money moving in that direction, and it is no small feat. But this, again, is where it starts to get exciting. This is where momentum begins to be your friend because what took you 20 years to accomplish in the beginning of your journey, by the time you start closing in on retirement at age 65, in only three and a half years, you can add $500,000. What took 20 years in the beginning only takes three and a half years. Think this is the law of numbers that at 65, this good behavior is rewarded with right under $2 million. It's $1,911,000. So, when you say that yes, the last fun $500,000 took 3 years 7 months, it's because this thing is cooking. I mean it. And this is why it is

so slow in the beginning that you'll start doubting why am I doing this. But if you can just stay the course, you will be rewarded. And then you get to the point, and this is why I always say it's so unfair when you're in your 20s and 30s. You're like, I don't know why I'm going through this, 'cause life is mean. You have the messy Middle where you're short on time, you're short on money, but if you stay the course, you're going to get in your 40s. And guys, you're going to live the life you've dreamed of because now your money is going to start doing all that hard work. Your vacations are going to get a little bit better. You're going to be able to make life decisions 'cause you're on your time that much sooner. This is why we stay the course in our 20s and 30s. You still bedazzle your basic life, so you're not living a miser life. You're living that Financial mutant life, but don't skip this step. So how do

we do it. How do we stay the course? How do we begin moving from that $500,000 net worth or wherever we are towards that $1 million net worth? Well, I think the first thing is you have to make an assessment. Am I in the make wealth phase of my journey or am I in the maintained wealth phase of my journey? 'Cause those two phases are very, very different when it comes to wealth building. Well, yeah, you look at risk completely differently. You know, when you're in the make wealth, you obviously should balance the risk-reward, even when you look at debt payments and so forth, because you're like, Hey, what's the incremental decision difference of if I go get this in my 401k versus prepaying my mortgage or other things that are out there? However, once you're in the maintain wealth stage, this is the part where you say, Hey, it's not just about maximizing every dollar that comes into my command. It's also so how do I drisk my portfolio so that there's nothing that can derail all this hard.

work all these assets that have been built up, so I don't make silly decisions or stupid decisions that kind of knock this whole thing away and keep me from staying wealthy. It's not about how much you make; it's about how much you get to keep over the long term. Another thing that you might begin doing in this phase is you might be considering more advanced tax strategies. If you've not started that yet, this might be backdoor WTH contributions, or maybe some sort of Roth conversions, or maybe through your employer you have mega backdoor opportunities, or you want to start looking at that after-tax account that's now getting larger. Should I start thinking about capital gain avoidance strategies, or should I look at loss harvesting, or are there ways I should do charitable planning with appreciated assets? As your portfolio gets bigger, as the numbers in general get bigger, some of these advanced strategies might be more valuable to you than they may have been 10 years prior in your wealth. This is a good conversation I always have with people, is that because when you're

talking about the get wealthy versus stay wealthy behaviors. A lot of people who get wealthy, they did it through risk. You know, I think about my entrepreneurs, I think about my Real Estate Investors, they think they're cowboys. I mean, they can handle whatever comes their way, but I've always had to have that hard conversation that says, Hey, look, you have done a great job of Building Wealth, but now we have to start thinking about this a little differently and risk capacity. Because every, I think most people, we think in terms of risk tolerance, meaning how much can you emotionally handle before you say uncle and you actually head for the exits on it. That's what happens when you do your first Investment Portfolio. You know, the person who's helping you out with that or you're doing a 401k enrollment meeting, they'll talk about risk tolerance. But I tell you, once you get into that maintain or stay wealthy phase, there's a different risk element. It's called risk capacity. And what we mean by that is, is that yes, you might have the tolerance to

ride through any Wild Thing from an emot standpoint. However, you might be to the age now that you don't have the time for the money to actually recover. It's easy to talk about recovery in the 20s, 30s, and 40s because you have decades before you actually need these assets to live off of. When you get closer to retirement or actually are in retirement, it might take you six or seven years to recover everything that you might have lost in the next economic downturn. That is a problem, and that's why risk capacity is just as important in your planning as risk tolerance is. Another facet of that same coin, as you think about risk and the things that could take you off track as you're moving towards 1 million, is reconsidering your cash position. Am I actually holding enough liquidity so that I can do the things that I want to do? We see far too often folks will get to a million dollars of net worth outside of their home, which is an incredible feat to get.

to but they are not liquid at all, meaning if they want to go buy a new car, they need to replace something at the house, they have to go borrow money to do that. So, as you're moving from 500,000 to 1 million, you may just want to assess your liquidity needs. Do I have liquid capital available and ready should I need to access it in the near to intermediate term? Um, I'll be the cold water here. Lifestyle creep? No, this, you know, this is one that I think I want you to be honest with yourself about your lifestyle inflation. I think it was when you're getting close to the seven-figure mark, um, you're going to start feeling better 'cause you do start to see those quarterly reports where now your assets are moving faster than even your savings rate, and you'll be like, Well, now I can kick it up and not, and maybe I tell you that's why we have to know your number course and other things that we're always trying to educate people, but you got to do the homework to

actually know are you ahead of the curve on this is because what I worry about is people feeling like hey I'm at the point where I've built up you know $600,000 in assets maybe I can afford a nicer home yeah I can move the goalpost again you can just because you can doesn't mean you should I would I would really encourage you spend some time knowing what makes you happy what makes you tick even without Financial Resources involved like what actually makes you happy so that you can kind of once you understand that you won't be susceptible to somebody Whispering Your Ear hey you ought to get the super nice car you ought to get the bigger house now may maybe some of these luxuries are a good thing for you but I don't want you to do it at the expense of your future self so make sure you measure twice cut want on these big decisions if I'm hearing you say this BR there's nothing wrong with lifestyle creep or lifestyle inflation so long as it's not robbing from your

future self. It's an okay thing to have happen, and that's so important, even as we get into this next strata, because the next strata is the exciting one. It's the one that gets all the headlines, it's the one that gets the press. This is when your net worth, excluding your primary residence, gets into seven-figure land. You are now officially a millionaire in terms of the wealth that you've built to this point. Yeah, this one puts you, I mean, once you have this, you're in the top 12% of ried air up here. Yeah, and by the way, if you go into liquid net worth, this number gets even, it gets below 5%. So, that's an incredible thing when we talk about this, and I know there are some naysayers out there. They'll look at this and they'll say, Hey, we just came through a big inflationary period. You guys are still talking about a million. We've moved on from that, but now we're at 3 million, we're at 5 million, 10.

million. I can tell you, you realize we've done all this content where we show you this gets easier and easier 'cause once it gets to a certain critical mass, the money grows upon itself. I can tell you this: as soon as you get to your first million, that second million happens that much F. It's very quick. The third, fourth, fifth, you don't get to 5 million without a million first. You don't get to 10 million without that first million. Don't sleep on this, and also don't let somebody tell you, Hey, just because the goal has moved to 3 million, don't worry about this or give up. You can do this. Another common fallacy, and we see this all the time, is that someone assumes that, Okay, now that I've gotten to a million, I need to do something different. I need to change something about how I'm Brian. I played baseball growing up, right? And I had coaches that would always say, We get to the tournament, we get to playoffs, we get to State, we get to whatever it is.

and we would get their playing ball a certain way. We had a certain strategy. We did it a certain way. And he would always say to us, Boys, don't forget to dance with the one that brought you. Don't forget the thing that got you to where you are. Don't assume that just because you are here now, you have to do something different. And so often, we see people do that. So often, they think, Because now I have a million, I've got to do something more aggressive, more risky, more sophisticated, more fill-in-the-blank. That's not the case. It's okay to continue building wealth the boring way, even when the numbers get big. Yeah, and by the way, just because you reach millionaire status, especially liquid millionaire status, don't let somebody try to sell you on some doctor deal because it's sexier, has a sizzle. This is what other rich people do. You know, we deal with a lot of millionaires. There's nothing wrong with that boring, low-cost index fund. There's nothing wrong with

that risk-adjusted, you know, low-cost portfolio that you're dealing with. There's nothing wrong with, you know, just thinking about basic tax planning, not getting into something so sophisticated that it's really spinning your head. You're like, This is so complex. I don't even understand what we're doing anymore. You can actually be successful with a lot of the same behaviors that got you to that seven-figure. None of that changes: living on less than you make, thinking about risk, focusing on the things that you can control, like taxes, focusing on your behavior, how much I'm saving, am I still putting my money to work. Those things are still great. But even considering that reaching 1 million could mean it's time to start adding stuff, not changing what you're doing, but as you get to that phase, as you get to that stage of your wealth-building journey, there might be some things that you want to consider. Like early on, you're focused on accumulate, accumulate, accumulate, build, build, build, build. As the assets get bigger and as you start to move into that place, now you're

beginning to think about the Finish Line. What does the finish line look like? What am I actually working towards? Yeah, are you ahead of the curve, behind the curve, or right where you need to be? 'Cause this is where I don't want you to be: that Financial Miser, where your loved ones are saying, Why do we still stay this way? Why are we doing it this way? And it's actually taking away from the happiness or the memory-building opportunity. So, actually do the work of knowing: are you ahead of the curve? Because then maybe you can pull back a little bit on what your savings rate or your investment rate, maybe live a little bit more, but don't skip the step of actually doing the work of knowing your number. And that's why we actually created that course and the tool at learn.money.com. Yeah, this is a great thing. If you can define what you want your future life to look like, you can put this into the tool, and it will actually tell you, Okay, what's required for me to get from where I am now to

where I want to be in the future, and it defines that finish line for you. Another thing that you can start thinking about is, as you start to reach this seven-figure land, as your net worth grows above $1 million. Now you can begin focusing not just on the make wealth or the get wealthy behaviors, but now you get to focus on the maintain wealth or the stay wealthy behaviors. And those are, at this stage, just as important as the make wealth behaviors were early on in your journey. Yeah, there's nothing wrong with when you're in the stay wealthy phase to risk your life, and then that might even make sense to pay down low-interest debt. Nothing wrong with that. It also might mean that you have this glide path or understanding that your portfolio is going to be a little bit more conservative so that that risk capacity issue doesn't come up and bite you because you just don't have as much time to wait for recovery. And then don't forget, I always amaze, you know, more than likely this is your first journey into

building seven-figure status and you don't have a lot of blind spots. You have people selling you on stuff and you just like, I just don't know what I don't know, or you're busy because you are a successful person, so there's a lot of obligations that go into that. There's nothing wrong with bringing in somebody, taking the relationship to the next level. I would ask you, Hey, remember the abundance cycle? Who planted the seeds? Who taught you to learn to apply these concepts of good financial management and helped you grow to the level that you are? I'd love for you to pay it back to us through the abundance cycle. Go check us out at work with us. You can go to money.com. You know we have all kind of, or even aboundwealth.com. We have great resources for you. And then one of the other things, again, as you get to this stage, as you have a million-dollar net worth outside of your home, you may begin at this stage thinking about new accumulation opportunities. Is this the

time when I want to get into real estate, or do I want to think about starting a business, or investing in a small business. But you need to make sure that you measure two, three, four times before you do this because, again, you're not changing the strategies that got you to where you are; you're just recognizing that in addition to what I am doing, maybe now there are other things I could be doing as well. Yeah, we love creating this type of content. I'd encourage you all throughout the show. We've shared this, but I'll put it out there even more: money.com resources. We'd also love to subscribe to us, whatever media that you're watching, whether it's podcast, whether it's YouTube. Just give us a follow because we love to load you up with free content. The biggest thing when you think about what true wealth is, it's being able to spend your time focusing on doing what you want on your terms. That doesn't happen by accident; you have to be very deliberate. So, take control of your finances today. I'm your host, Brian.

Preston, Mr. Bo Hansen, money guy, team out.

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Starting with a negative net worth is common, especially for recent graduates with student loan debt, but time is a valuable resource for building wealth.

To move from a negative to a zero net worth, it's essential to pay down high-interest debt, manage new debts, build assets, and ensure against financial catastrophes.

Strategies for paying off debt include the debt snowball and debt avalanche methods, while also emphasizing the importance of avoiding carrying a credit card balance month to month.

Strategies for Building Wealth from a Negative Net Worth to $100,000

To finance a first car, aim for a 20% down payment and a maximum three-year loan, with payments not exceeding 8% of your gross income.

Focus on building assets and covering deductibles to transition from a negative to a zero net worth.

Take advantage of employer matches for retirement savings and prioritize establishing an emergency fund and adequate insurance coverage to mitigate risks.

To achieve your first $100,000, focus on finishing financial cleanup, eliminating high debt, and building an emergency fund.

Aggressively save for the future, aiming for 25% of your gross income, and take advantage of employer matches and Roth accounts for tax-free growth.

Stay disciplined and consistent with your savings and investments, as it may take over seven years to reach your goal, but staying the course is key to long-term success.

Building Wealth: From $100,000 to $500,000

Growing your portfolio takes time, but consistent effort can lead to significant growth in just six months.

Avoiding credit card debt and making responsible large purchases, like a home, are crucial for maintaining a positive net worth.

As you reach $100,000 in net worth, hold yourself accountable for saving and investing 25% of your gross income and consider advanced planning strategies for asset allocation and location.

Planning for Financial Growth: From $100,000 to $500,000 Net Worth

As you transition from a net worth of $100,000 to $500,000, it's crucial to reassess your insurance needs and update important documents like wills and beneficiary designations.

This stage is significant for building momentum, as the effort to grow your wealth will pay off more quickly in the later years.

Staying the course in your 20s and 30s is essential, as it sets the foundation for a more comfortable life and financial independence in your 40s and beyond.

Moving from $500,000 to $1 Million Net Worth

Assess whether you're in the make wealth or maintain wealth phase, as they require different strategies.

In the maintain wealth phase, focus on risk capacity and advanced tax strategies to protect and grow your assets.

Reassess your cash position and be mindful of lifestyle creep as you approach the $1 million mark.

Building wealth is a gradual process, and lifestyle changes should not come at the expense of your future self.

Reaching a net worth of a million dollars places you in the top 12% of earners, and this critical mass can lead to faster wealth accumulation.

It's important to stick to the same successful behaviors that got you to a million, rather than making drastic changes, while also considering the addition of new strategies as your wealth grows.

Understanding your financial finish line is crucial for achieving happiness and memory-building opportunities.

As your net worth grows above $1 million, it's important to shift focus from making wealth to maintaining it.

Consider new accumulation opportunities, but be deliberate in your decisions, and take control of your finances for true wealth.