The Truth About Building Wealth in Your 30s

The Messy Middle – Your 30s Are Critical for Wealth Building (0:00)

Brian: Your 30s is an incredibly important decade when it comes to building your wealth.

Bo: Brian, I am so excited to talk about our tips for the 30s because you’re right, it is so important. It’s full of so much potential. Potential for growth and potential for mistakes. So, we’re going to go over the best advice we’d give people going through this messy middle decade so you can make sure you’re on the right path. And while this content is geared toward our 30-year-olds, we think people of any age can take away some valuable lessons from this one. So, buckle up.

Time Is Still Your Most Valuable Resource (0:41)

Bo: So, one of the things we want people in their 30s to recognize, even though it might not feel this way, when it comes to being in your 30s, time is still your most valuable resource. I mean, we talk all the time about how in your 20s it’s the most valuable resource, but that is still the truth even for folks who are in their 30s.

Brian: Bo, this is what I worry about. You probably resemble this in a lot of ways. When you’re in your 30s, we call it the messy middle. And the reason is because you’re short on time, you’re short on money because there’s just a lot of things going on in your life. That’s why we say it’s so messy. You might be having more job commitments, but yet you’re growing your family. There’s just so much going on. I don’t want people to miss out on the fact that this is such a powerful time to still unleash compounding growth.

Bo: And what I think is interesting, your 30s is this unique decade where when you start building wealth, it feels so slow. It feels like you’re not really making any progress. You’re not really making any traction. But then when it starts to move fast, it starts to move really fast. And I think for a lot of folks, that happens in the 30s. You have these two periods. This period where, man, I’m slowly slowly building. And then you have this aha period where you say, “Holy cow, I can’t believe what my dollars are actually doing for me.”

The Math Behind Building Wealth in Your 30s (1:51)

Brian: Well, I think it’s better if we have an illustration. And I think about if we took somebody and we use the assumption, what if you made $100,000? And we always know for a 30-year-old, we try to tell you, hey, we want you to—the goal is to have one times your income. For somebody who is going to be at 40, we want you to have three times your income. So for a lot of you, you’re like, “Wait a minute. Okay, if I’m $100,000 at 30, I need to have $100,000. Okay, maybe I can make that work. But I’m supposed to have $300,000? That seems like a pretty hard task to accomplish.”

Well, if we think about the actual numbers, if you get to age 30 and you have $100,000 and your goal is to get to 3x, then before you even save another dollar, just that hard work that you did in your 20s, if we assume an 8% rate of return will grow your portfolio to $222,000 by the time you get to age 40. So, without saving or investing anymore, just letting your $100,000 grow, your money is doing a lot of the heavy lifting for you. And then if you wanted to be able to make up that gap just starting at age 30, you would only have to save $450 a month. If you actually do the math on a $100,000 income, that’s like 5% savings rate to get to that 3x.

Bo: It’s just like we said in the beginning, it feels so slow. But as the numbers get bigger and bigger, and as that snowball begins to go down the mountain, it gets faster and faster and faster.

Brian: Well, that’s why it’s so important to do content like this for a 30-something because a lot of you guys—I’m worried you’re going to hear us say one times your income by 30 like I didn’t even start yet. It’s okay. You still have a lot of time to make up ground and even catch up. And that’s why we’re always talking about do you know what your wealth multiplier is because you can make your money work harder than you do with your back, your brain, and your hands. But you got to do something today to start this journey and make it as easy as possible.

Bo: Yeah. Because it is an exciting thing, but this is also a cautionary tale. Do you recognize that at the beginning of your 30s, your wealth multiplier is 23. But if you wait all the way until age 39, by the end of your 30s, your wealth multiplier is only eight. Those are very, very different. So when it comes to what we think 30 year olds should do, just do something. Just get started. Because even in this decade, a little bit can go a long way.

You Don’t Need to Have It All Figured Out (4:15)

Brian: Yeah. I mean, and look, you don’t have to have it all figured out in a lot of ways. We already said a little goes a long way, but a lot of you—I imagine I know even myself when I started investing, I was like, “This seems way more complex than I even know where to go.” I mean, I hear these guys talk about index funds. What is an index fund? And then I hear somebody else on social media talk about this. How do I even know what is the best course of action? How to even get into this wonderful world of personal finance.

Bo: Well, we have you covered. If you are that person who doesn’t know, okay, where do I start? How do I do it? Or maybe I haven’t gotten started as early as I want, we have a great show for you to go check out called a beginner’s guide to investing. It’s not too late to start investing. You can start today. So, if you don’t know where to start or what to look at, go check out our beginner’s guide and that will give you the starting point of where you need to begin your journey.

Money Is Just a Tool – Don’t Forget to Live (5:07)

Brian: So, I feel like it’s important. We’ve just talked about compounding growth. We’ve talked about, you know, just putting something to work. But it is important. I always like to bring in the balance or the grounding fact that money is just a tool. And I do want to be careful because I know, as I already said, messy middle where you’re short on time, you’re short on money. We better be very deliberate. But we also want to make sure that when you look back as a 50-something year old, you don’t have regrets that maybe you squandered some great opportunities, not only to grow your money, but also to build awesome memories for you and your family.

Bo: Yeah. Wealth or the accumulation of money, it should never be the main goal. It should always be a side effect of trying to achieve the goals that you have. And so often people in our 30s, especially if you’re an achiever and you’re a hard charger, you get caught up in, okay, I want to hit that $100,000 milestone or I want to hit that million dollar milestone. And while those things can be helpful and they can be valuable, they are not the goals. They are literally just mile markers on your journey to the goals that you have. So you want to make sure that in your 30s, you take a specific time to find the balance.

Brian: Yeah. And this is what I was alluding to earlier. I don’t want you to have regrets when you get to be my age. I want you to bedazzle your basic life and what I mean by that is I want you to look back on your 20s, I want you to look back on your 30s and say yes that was a life well-lived as I balanced out not only growing my family growing my 401k but man I made some great blossoming memories. But don’t mishear me. I don’t want you to think that that means that you can go run up and put a Disney vacation on your credit card and think that it’s all going to turn out. I think that I’m just telling you be very deliberate with—there are things you can do without breaking the bank that still allow you to have incredible blossoming memories.

I mean a lot of this comes from—I even talk about it in Millionaire Mission where I went to Italy when I was you know in my late 20s early 30s for probably a sixth of the price of what everybody else did but yet I got to still do a lot of those key things in Venice and Florence and in Rome. It’s just I did it in a bedazzled basic way. I, you know, I glittered up my basic pair of jeans instead of doing this thing like a tuxedo.

Bo: I don’t know if that works. I’m just imagining you walking through Italy in glitter jeans. I think that sounds awesome. Another way that you can find your balance in your 30s is understand and know what it is that you value. So often we get caught in this cycle where we want to keep up with the Joneses. If driving the nicer, expensive, fancy car is not something that actually matters to you, don’t waste your money throwing it at that type of goal. Make sure you understand what are the things I want to do. What are the memories I want to create? What are the things I ultimately want my money to do and make sure the decisions you make align with that. They don’t actually turn into distractions that pull you away from those things that you actually value.

Begin With the End in Mind (8:02)

Brian: And then we always say begin with the end in mind. I love how these are all interconnected. And when you’re in your 30s, you can’t just go through life as a passive player. You do need to be taking control. And that’s why I say make the memories, bedazzle your basic. Know what actually brings you happiness because maybe you’re not a car person so you’re okay with just buying the vehicle to get you from A to B. And of course begin with the end in mind because Bo, you’ve already alluded to this earlier. I think a lot of people who are achievers or people who just, you know, are good at things, you just do what you think you’re supposed to be doing. And we’ve come across this. We do a show called Making a Millionaire. And I think about the fact that when Luke and Hannah were buying rental property, but they quickly realized, oh my gosh, this is going to get in the way of us doing family planning.

Bo: This is what happens with financial mutants. So, begin with the end in mind so you don’t run astray of your goals, your life, and having regrets at some point in the future.

You Don’t Have to Get It Perfect (8:57)

Bo: Now, one thing I love is we’re thinking about folks in the 30s. So often we talk about the messy middle and when you say that to someone who is either in that season or has lived through that, there’s this recognition, oh yeah, yeah, that sounds like me. And while we can all agree that it is a relatable and familiar feeling being in the messy middle, the great news is that there’s not one answer. There’s not one solution on how to handle it well. And as you’re going through this journey, you don’t have to get every single decision absolutely perfect. Your journey may not look the exact same as your neighbor’s journey. And that’s okay.

Brian: Well, this is where I’ll make a correlation that money and being a parent are very similar. You’re going to realize very quickly when you have kids that you don’t have it all figured out. And it’s kind of the same way with money. You don’t have to. I mean, look, I have written an entire book of all the mistakes I’ve made and try to share so you don’t make those mistakes for yourself. But I’m happily here to share also. It’s exactly what the headline we put. You don’t have to get it perfect. If you just line up enough good things, the power of money and the power of discipline is strong enough with compounding growth that it will do the heavy lift that you can be very imperfect and still come out on the other end and be very happy with what you create.

Bo: And so what we want you to do is we want you to give yourself some grace. Take a deep breath and recognize, you know what, maybe even though I’m not where I want to be or maybe I’m not where I could be had I made different decisions, perhaps you’re not actually behind. Did you know that according to Personal Capital right now, the average investor does not start investing until age 33. If you opened up a Roth in your 20s, if you started participating in your 401k, if you just started doing something, there is a really good chance that you are ahead of the curve already. And we know that when it comes to buying a home, the median first-time home buyer right now is 38 years old. So before you arrive at the conclusion, I’m behind, I’m behind, I’m behind, I need to catch up, take a deep breath and give yourself some grace. Again, your journey does not have to look exactly like someone else’s journey.

Personal Finance Is Personal (11:08)

Brian: Well, every—I mean, I say this all the time—personal finance is definitely personal. You know, we all have our own fingerprints. We all have our own personal finance journey. And we’ve seen this on Making a Millionaire. We’ve actually had guests who have turned out to be extremely successful in the long term, but they didn’t even start. And I think about the headline that’s here. Are we already too late? The truth about $250,000 saved by 42. Awesome. Because here’s the thing—they didn’t even start saving investing until they started getting some traction with their income that might resemble you. I’m just saying the part about being an active player in your own role of becoming the hero of your own story is taking control today. Don’t let another day—don’t procrastinate anymore. Do something today because more than likely, especially if you’re in your 30s, you still got lots of opportunity to grow this thing.

Bo: You have lots of opportunity. You need to recognize that there are a ton of mistruths that get applied to you at this stage. You got to be perfect. You got to be perfect. You got to be perfect. Well, another mistruth, and this is something that comes from a good intent. You know, we’ve designed the Financial Order of Operations. Brian, you hold the thing up for me. It’s a nine-step process telling you how you should make the next decision with your next dollar and how you progress through it. And so often folks think the Financial Order of Operations is this straight line. Well, I’m in step one and then I go to step two and then I go to step three and then I go to step four, so on and so forth. But in reality, when real life happens, the FOO isn’t actually a straight line. Yes, sometimes we’re moving up into the right, but then sometimes that unknown unknown happens. Maybe the car breaks down or maybe we have to pause because we want to have a family or we want to buy our first home or maybe there’s a job loss change. Just because your Financial Order of Operations is not in a straight line does not mean that you’re doing something wrong. It just means that you’re a real person that’s living a real life.

Brian: Well, and I’m here to remind people just like we have false narratives in our head that make you think that the Financial Order of Operations is this orderly walk up and then life has a sense of humor. I want you to take a deep breath. I mean, look, your journey is going to be unique and there’s going to be good things that happen, there’s going to be bad things that are going to happen. Don’t be so hard on yourself because I’m telling you the good news is there is enough positive stuff working in your favor. If you’ll just start doing small little decisions that are putting you in the right direction, it’s going to be okay. So, you don’t have to—it’s back to that whole perfection thing and everything else. Don’t put so much pressure on yourself that you create anxiety. Just try to figure out if there’s a small decision today that you can really make that is going to put yourself in better ground to have success in the future.

You Are Not Invincible (13:54)

Bo: Now, Brian, we’ve been very kind. We’ve been saying, “Hey, give yourself some grace. Hey, take a deep breath. Hey, it’s okay.” That was the kind Money Guy. Now, we’re going to come over to the other side because there is some accountability. And one of the things that we see happen so often in the 30s is that people at this decade are neither—they’re not exactly young like 20 year olds, but they’re not exactly older like 50 year olds. They’re in this unique in between and they haven’t quite yet realized even in your 30s you are not invincible.

Brian: Yeah. I mean this is one I think in your 20s you get away with it a little bit that you know I’m going to live forever. I can make crazy wild decisions. But now in your 30s, more than likely it’s not even just you anymore. Now you might have kids, you might have a spouse. These type of things start making you realize you better start lining up the intersection of not only maximizing opportunities, but where do you fall on the risk spectrum with your life as well? And unfortunately, I’m just going to go and tell you the cold hard truth. Most Americans are not giving this the focus that they should. And why can I say that with confidence? Because the percentage of American adults without life insurance is almost like a coin flip. It’s 48% today.

Bo: So how many Americans, Brian, probably have someone depending on them for income. So it’s probably a much higher percentage than 48%.

Brian: I mean disability insurance is 82%. It basically means one to two people out of 10 are going to have disability insurance. Even though you’re much more likely to become—look, we’re all going to die, but during working years, you’re much more likely to become disabled than you are to be killed or die unexpectedly. So, it’s crazy that disability insurance is so low. Full emergency fund. We already told you that Financial Order of Operations, things are going to come at you on a Tuesday out of the blue at 2 p.m. that you’re not expecting. Yeah, only—it’s the minority that have a fully funded emergency fund because 54% don’t have it fully funded.

Bo: It’s unbelievable. And then 60% of Americans right now don’t have any estate documents, any sort of will, any sort of trust in place. So again, these are people that think, okay, you know what, estate planning or insurance or protecting myself from risk, that’s an old person’s game. No, no, no. That is a you person’s game. If you are in that stage, you need to make sure that you are taking steps to protect yourself. And one of the very first ones, Brian, it’s why we put it on Financial Order of Operations is to fully fund your emergency fund. If you are working and you are in the accumulation phase and you are building your assets, we want you to have somewhere between 3 months to six months of living expenses in liquid cash. If you’re in financial independence or nearing retirement, we might even want to see that number grow to 12 to 18 months of living expenses so that when the unknown unknown comes your way, it does not derail your entire financial life.

Protect Yourself With Emergency Reserves (16:48)

Brian: Well, you think about all the things when we’re talking about risk, you cut to the bone, cut to the quick, you know, all these things we talk about in life when you’re talking about boo-boos or getting hurt. This is what your cash reserves is. It is the margin on your life that keeps you from having to make desperate decisions. If I could give you anything that’s going to protect you is make sure you’re keeping enough buffer in your life so that you never—no matter what life throws at you, you’re just not caught in that just horrible debilitating situation where you just don’t know how you’re going to come up with the bucks to get you out of it. That’s why emergency reserve is such a powerful thing that of our nine steps to the Financial Order of Operations, it’s actually two of the steps. It’s steps one and steps four. So, don’t sleep on the fact that you need to actually have emergency funds. It will actually keep you from making desperate decisions and also help you even if you’re a financial mutant and you’re like, I just don’t need to have emergency reserves because I want to maximize every dollar I have. I’m telling you, money and cash, an emergency fund, a well-funded emergency fund can also be a long-term wealth builder because when you have money when others don’t, that is a superpower. So, don’t sleep on the fully funded emergency fund.

Check Your Insurance Coverage (17:58)

Bo: So, that’s a great way to protect yourself. Another way you can protect yourself is to check and recheck and reassess your insurance. Brian, we already acknowledged 48% of Americans do not have life insurance. 82% of Americans do not have disability insurance. We literally had a guest on Making a Millionaire that does not have any health insurance. If you are doing that, you are too far out on the risk spectrum. So, make sure you’re checking your coverages to make sure that you have appropriate coverage in place. And then make sure that you recheck them because just because you had life insurance when you were 22 years old and had your first baby does not mean that’s the same amount of coverage that you need now that you’re 38 years old with three kids. So, make sure that you reassess and make sure the coverage you have in place is appropriate to protect you from the unknown unknowns out there.

Brian: And this goes without saying. Look, don’t under protect yourself. This goes beyond protect yourself. If you have a tricycle motor, if you’ve decided you’re going to—you have children here, you got to have a will because—and look, if you say, “Look, the reason I don’t have a will is because my spouse and I can’t decide on who would actually take the kids if something happens to both of us.” If you are having that hard of a decision while you’re here on the planet and everybody can talk to each other and you’re all above ground, how do you think that conversation is going to go when no one’s here? So, don’t sleep on this. This is one of those things we pick on people all the time. We find out you have kids and you don’t have a will, you’re doing it wrong. Make sure you update or make a will and it reflects your desires, especially if you have children.

Life Gets More Complicated (19:30)

Bo: Okay, Brian. So, we’ve been talking about in this decade, get started, do something. We’ve said it’s okay, take a breath, give yourself some grace, but make sure you’re not missing out. So, we’ve talked about some things that you can do. Now, we want to shift and talk about something that’s sort of a truth. And this is a truth that I think most people recognize, specifically in the decade of their 30s, is that as you move through this decade, and as you move through life, it only tends to get more and more complicated, whether you want it to or not.

Brian: Yeah. Look, this is where you start to sound like an old person is when you look back at your younger self and go, “What was I doing with all my time?” Because it is serious. As you start recognizing, man, there’s a lot of stuff that’s riding on your shoulders and as you create more and more success, we often say creating wealth is relatively simple, but it’s not necessarily easy. It’s actually hard. And then as you start making traction points and you start making things happen for you and making good decisions, your life is going to go from simple to complicated rather quickly. Not because you’re trying to make it complicated. It’s just success creates more complication. So, we’ve tried to come up with ways, hey, if this is going to naturally be a side effect of success, what can we do to protect you?

And we came up with why not as you get older and you start thinking about all the tax returns because I’ve even said this, Bo, when I was a brand new freshly minted CPA—or you weren’t a CPA right out of college, but the first few years I was doing tax preparation, I used to look at people’s tax returns and go, it must be so cool that they have all these tax schedules. It must be so cool if you have worked three jobs and you have all these 401ks all over the place. And then I think about, you know, you start buying houses, you do college planning, all of this stuff—just by living life is going to make yourself feel so complicated. What do we do to get ourselves out of it? Bo, the first thing is keep it simple.

Keep It Simple – Invest the Boring Way (21:33)

Bo: Just try to keep it simple. Far too often in this decade, we feel like we have to seek out complexity and we have to make it more difficult than it is. But there are a number of things that you can do to keep your financial life simple. And a really easy one is just investing the boring way. Don’t think that just because now maybe your income has increased or maybe now because you have some wealth, your net worth statement’s gotten larger that all of a sudden I need to start doing the complicated stuff. I need to go start doing real estate investing or I need to start buying private placements or I need to start doing illiquid holdings. No, the same thing that you’ve done for the last 10, 15, 19 years is the same thing that you can do for the next 10, 15, 19, 30 years. You don’t have to make it complicated. So, if you’re buying low-cost index funds, maybe you’re at the stage where you’re using a target retirement index fund. That’s okay. Remember, your most valuable resource at this stage is likely still your time. Focus on the things that matter like your savings rate and how much you’re putting to work. And don’t get lost in the craziness and the busyness of making it more complicated.

Brian: Well, I think about the times we already call this the messy middle because you’re short on time, you’re short on money. So, why in the world would you go do a behavior that’s going to already assume you have all this time in the world to do things when I just told you if you have kids and you have a spouse, you don’t have time to be chasing stock picks and all these other things. So, let’s go ahead and automate this process. Invest the boring way. Buy index funds. Don’t get busy doing nothing. And that leads to because a lot of you after—by the time you’re in your 30s, you’re probably not on your first job anymore. You might have worked two maybe even three jobs at this point. Don’t leave those 401ks behind because you know what those 401ks if you’re leaving retirement accounts at old employers that means at some point you’re going to have to call and have an uncomfortable conversation with your old employer’s custodian or the HR department. Let’s go ahead and figure out and have a deliberate process so it also doesn’t look like a quilt work of time where when you finally one day hire a financial advisor and they look back and go oh wow so in 2015 you were investing in this, you know in 2021 you were investing in this. Let’s consolidate those accounts and a lot of you like oh my gosh here they go they’ve already come up with another complex thing that I don’t even know what I should do. Don’t worry, we got you covered. Go to moneyguy.com/resources and we even have a deliverable called Got an Old 401k and we give you actually a decision matrix that will help you walk through that decision process.

Know When to Ask for Help (24:08)

Bo: Yeah, we want you to make sure that you’re making the best decisions possible. But the fact of the matter is likely in your 30s, we’ve already described that it’s going to get more complicated whether you seek it out or not. And you are not invincible even though you may think that you are. So, one of the best ways that you can keep it simple and make sure that you’re not missing out on this age and at this stage is know when to ask for help. Know when it actually does make sense to consider getting a second set of eyes, a co-pilot to come alongside you to make sure you’re making the right decisions.

Brian: Well, I think that’s where people get confused about how we work though because they’re like, “Wait a minute. How can you guys just show up and give away so much free advice?” I’m like because God this is the greatest job in the world. If I do what I’m supposed to and I tell you how money works and I give you the things that I wish that somebody had given me when I was 22, 23 years of age or 32 to 35 years of age. If I do this right and load you up with the advice your life through being successful is going to get more and more complex. And unfortunately, knowing how money works and knowing how complexity and knowing how personal finance and how personal it is, I recognize that you will at some point realize, oh my gosh, I have reached that point that these guys keep talking about—my tax returns complicated. I have all this money out there that’s—I need somebody to be my co-pilot because it’s gotten so much close to seven figures. I don’t want to make a $100,000 mistake.

We’re gonna leave the porch light on for you. And that’s why I love the abundance cycle is because it lets us give you free advice. Love on you with the side effect that if we do this right, it’s going to confirm to you, hey, these guys are on to something because look at all the success it’s created. But also, these guys since they’ve been there, done that, you only get one retirement, one chance to go through it. Why not hire somebody who’s done this hundreds, quickly approaching thousands of times so that you can do it and be the best version of yourself and not have any blind spots, not fall into the traps that make you have to write a New York Times bestselling book of all the mistakes you’ve made. You too can become a client of Abound Wealth. Thank you so much, guys. Go to moneyguy.com/resources if you’re starting out or if you are at that point, go to become a client. I’m your host, Brian Preston. Mr. Bo Hanson, Money Guy Team out.