Next up, we've got a question from E-money. I knew you would laugh at that. Okay, you talk about 20 to 25 being aspirational in your 20s sometimes, right? 20 to 25 savings rate is what they're referring to. Then the messy middle happens, and the 30s seem like it would be even harder to get to this. He says, are most people able to increase their savings rate throughout their 30s? What do you think?
Well, this is where we talk about the latte effect, which is one of those things sitting out there, Rebie, with the coffees. I want you to be disciplined with the way you spend every dollar that comes into your possession. But the messy middles are where the lambo effect or you think about the housing, the cars, those type of big decisions have a huge impact on the messy middle. And because especially, there's a movement to only do 15-year mortgages and only do you know you have to put down 20 percent and all this stuff and you're like, "Wow, how in the heck do you do it?" That's why we've tried to have grace in our guidance and the fact that that first home that you're buying in your early 30s, it's okay if you only put down three to five percent. That's what I mean. I walked around and talked to all of our financial advisors here, and I said, "Tell me what you did," and I asked myself what I did, and we eat our own cooking here. I want to be very transparent because I would be a hypocrite if we did something different. Take advantage of some of those flexibility things. I think it's okay to only put down three to five percent on that first house. I think it's okay to do a 30-year mortgage. You can still pay it off in 10 years if you want to or 15 years. There's nothing that says you just could pay a little bit higher of an interest rate. And with interest rates being as high as they are, I understand that's a pressure, but also think about it from a cash flow perspective as well. I really like that you say keep your housing at 25% of your gross income. Yeah, that kind of changed my perspective.
Then it was like, "Oh, and you can put four percent down and still get real estate in the messy middle," because he's right. It does get kind of tricky as things start to pull on your pockets, if you will. There are so many things that will be coming, pulling against you. That's why earlier we had a question on when did I finally feel comfortable financially. It wasn't until my 40s, and I think that's probably, I hesitate to say that so easily because people will be like, "Well, heck, if I can't feel comfortable until I cross the 40-mark, I'll be an old person at that point." No, you realize from 20 to 40s, yes, that is a fun period of time, but it's also such a crucial time from building the foundation of your financial assets. If you take that 20-year period and compare it to your life expectancy, guys, we're really asking for you to prioritize being good with money for about 20 percent of your life. If you could really be disciplined, live on less than you make, think very deliberately about every decision you make, especially the big ones on the cars, the houses, but even lifestyle, I think you'll see that you can do this. I mean, that's that. I've realized e-money a lot of people think I'm a little tone-deaf, but I walk the walk. I mean, I know what it's like to come out of college with no money. I also know what it's like to have a great paying job in my 20s, but because my dad passed away, I started my first venture by myself. I went out on my own, and my income went from six figures to seventeen thousand dollars a year. I know what it's like to go from plenty to broke to pretty good to broke and then build something pretty spectacular in the background. That's the part I just want to make sure I get, share that wisdom with you.
Now, I just know how powerful the 20s and 30s are, and I know I'm asking a lot. It's no different than a personal trainer who, when you're cussing and saying you're tired of sweating and don't want to do it, says, "No, we're gonna do a circuit this time, and you'll see how far that heart can go." That's exactly what I'm trying to do with E Money. I'm trying to stretch you while the money is so valuable from an exponential compounding side that you don't miss it. Even with our wealthy clients, when we do our annual survey of impact from them and ask, "What's something you wish you could tell your younger self?" they always say, "I wish I'd saved more." These are successful people, but it just shows that this is something a lot of people have this regret, and I just want to make sure I'm giving you the right guidance so you do it right and you're very purposeful with every dollar that comes into your possession.
Yeah, that's really good, and I'm in the messy middle. I do think it's difficult to get to that saving percentage sometimes, but I like having the goal and I like hearing the motivation because you're totally right that now is the time to do it. Because I'm only going to be 30 once, and then my wealth multiplier is going to go down. And it doesn't have to be all or nothing. I think that next time you get a pay raise, if you get a 6% pay raise, why can't you prioritize three or four percent of that to go towards advancing your savings and investment? It doesn't have to be if you're a five or six percent because that's what your employer told you you had to do, and you want to be at 20. Then, next year, when you get a pay raise, you can't take that to ten percent and then 15. You're right that when you're in your 20s, it's aspirational, but in your 30s, it's something that definitely should be a priority. That's because if you saw the drop in compounding, meaning what is the opportunity for every dollar, what they can become, it will motivate you. Go to moneyguy.com/resources
and look at our Wealth Multiplier
. There's a reason we talk about a dollar for a 20-year-old having the potential to become $88 by 65. That same dollar, by the time you reach 30, it's only $23. That means there was almost a four-fold reduction in what that money could become because that 10 years between 20 and 30 was very valuable. But $23 is still incredible versus $7 at 40. That's another third divided by three almost on how much we reduced just because we took away that component of time.
So that's why we prioritize your 20s and 30s. Get-rich money is right there, but it won't feel like you're building wealth. You've got to let it grow under the surface, reaching that boiling point. Water doesn't look like it's doing anything until it reaches 100 degrees Celsius or 212 degrees Fahrenheit. But I'm telling you, there's a lot of stuff going on under the surface. So do all the actions you have to in your 20s and 30s so it actually works for you. Yeah, Brian's been there, I'm there now, and I've just been struck more and more with how it is possible and how I really do think people get caught up in lifestyle creep. Because I see myself inching there, like how much is the bigger house, and I'm like, why would I do that? Then I'm going to undo all of the progress that I make, so I'm going to have to allocate a bunch more money to a house. It's silly, a little bit silly, because there are a lot of smart people that are trying to create products that you only have to spend 100-200 more, right, to have that luxurious lifestyle that you think everybody really wants to see you have.