2024-07-18_Get_into_the_Top_20_percent
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00:00:26.400 | That's The Kim Commando Show, K-O-M-A-N-D-O. Welcome to Radical Personal Finance, a show
00:00:31.440 | dedicated to providing you with the knowledge, skills, insight, and encouragement you need to
00:00:34.960 | live a rich and meaningful life now, while building a plan for financial freedom in 10
00:00:38.560 | years or less. On today's podcast, we continue our Financial Goals That You Should Set series.
00:00:44.400 | I'm laying out for you a series of simple, tangible financial goals that each and every
00:00:51.200 | person should consider setting for himself or herself, which, if you set these goals,
00:00:56.640 | they will move you consistently, and in some cases, dramatically towards your goals.
00:01:02.320 | I'm making a special focus to make these things meaningful and yet doable. I want them to be
00:01:09.840 | accessible to all people, especially the young, especially those who aren't making a lot of money
00:01:15.600 | yet. I want you to systematically move down the pathway of wealth. The first goal, goal number
00:01:22.160 | one, was simply get a job. The second goal was live on half your income, spend half, save half.
00:01:29.120 | So far, by the way, that's probably the hardest one. But as I emphasized in that podcast, it's
00:01:34.000 | something that you can work towards systematically in a variety of different ways, even if your
00:01:39.040 | expenses were already high. Goal three was give away 10% of your income. And today, goal four,
00:01:44.880 | I want you to begin or build, from where you are, a job or a career that has potential in the
00:01:55.760 | fullness of time to help you to become a top 20% earner. I want you to build a plan that will
00:02:04.480 | eventually, could eventually, in the fullness of time, help you to be in the top 20% of income
00:02:11.360 | earners within your local area. Now, I'm going to define that very carefully and specifically,
00:02:16.960 | and I'll show you why this is such a big deal. But I actually want to begin with a slightly
00:02:21.440 | smaller goal. As we do that, though, I want to begin by talking about the concept of 80/20
00:02:27.760 | principle or the Pareto principle. Pareto principle takes its name from, I think, an Italian guy many
00:02:35.200 | years ago, who, as the lore goes, he was out in his garden studying his garden's pea plants. And
00:02:41.760 | he discovered that about 20% of his plants were responsible for 80% of his garden's pea production
00:02:48.400 | in a particular year. And so he started to count this and observe this. And he discovered that this
00:02:53.040 | principle held true year after year. And he started studying other factors, other kinds of examples,
00:02:58.960 | and found that it holds true in many places. Over the many years since this was first discovered,
00:03:04.160 | we continue to run into this basic principle of the universe. I don't know why it is. I'm
00:03:08.880 | not sure if anyone knows why it is. But it's just something that seems to accurately describe
00:03:13.520 | much of human life. Not perfectly, but it's pretty good. So you can pretty well guess,
00:03:19.520 | if you go into just about any company, you can pretty well guess that 20% of that company's
00:03:24.960 | employees account for 80% of the profits of that particular company's results. Or if you go into
00:03:32.160 | a company's customer and you try to figure out who's responsible for the complaints, you can
00:03:38.800 | discover that about 20% of the company's customers are responsible for about 80% of the complaints
00:03:44.720 | that the customer receives. And it's just a principle that seems to hold true everywhere
00:03:49.600 | we look. And it also seems to hold true with regard to income and wealth. If you go in a
00:03:55.120 | society and you look around, you'll find that about 20% of people in just about any society
00:04:01.440 | hold about 80% of that society's wealth. And if you look at income earners, 20% of a society,
00:04:09.360 | if the income earners account for about 80% of the society's wealth. In fact, we can look at this
00:04:15.440 | with regard to things like taxes. 20% of the taxpayers in the United States of America pay
00:04:20.880 | about 80% of the country's taxes. Now, there's not a precise number. It might be 25, 75. It might be
00:04:28.320 | 30, 70, 15, 85. It's just a basic truism that it holds out to be about 20%, 80%.
00:04:35.120 | Now what's remarkable is that this is a truism that seems to hold true even further. So let's
00:04:41.920 | go back to wealth as an example. The top 20% of wealthy people in a society hold about 80%
00:04:50.640 | of that society's wealth. Okay, so far so good. But what's interesting is within that top 20%,
00:04:57.360 | you actually wind up with the top 20% of the top 20% or the top 4% hold about 80% of the 80%.
00:05:08.000 | So the top 4% of a society should hold about 64% of the society's wealth. And then the top 20%
00:05:17.440 | of the top 4% should hold about 80% of the 80% of the 80%. So 80% of 64% winds up being about 51%,
00:05:27.920 | which is why in most societies, the top 1% seem to hold about 50% of the society's wealth.
00:05:35.520 | And there's going to be slight variations of that, but it somewhat holds true.
00:05:39.520 | So we can look at society in this way and we can look around and try to think about, well,
00:05:45.520 | are these static categories or are these movable? Do these change? And what is interesting is while
00:05:51.600 | this does describe, especially with wealth, somewhat statically what various people hold
00:05:57.120 | in terms of wealth, it's not the case with income. We know from US income tax data over the years
00:06:03.120 | that while we certainly know that the top 20% of taxpayers pay 80% of the taxes, people actually
00:06:08.640 | wander in and out of that top 20% consistently. And what's more important is simply if we look
00:06:14.240 | around, we can understand that while it may not be easy to get into the top 20%, it's extremely
00:06:20.320 | doable to get into the top 20%. That there are many ways to do that.
00:06:25.440 | So I now want to talk about the actual numbers, but in doing so, I want to define a couple of
00:06:30.560 | statistical terms for those who may be unfamiliar. We're talking about averages here, and there are
00:06:36.800 | a variety of ways that we discuss averages. The most common way, when you first learn to average
00:06:42.000 | numbers together when you were in elementary school, was to take what we call the mean.
00:06:48.160 | The mean is the arithmetic average of a data set. So you take all the different numbers, let's say
00:06:53.040 | you have five different numbers and you add them all up together and you divide by five, that gives
00:06:57.360 | you the mean or the average. Usually in the English language, when we say what's the average,
00:07:02.560 | we usually refer to the mean statistical term to mean average. Now there are other terms that could
00:07:10.720 | also be used under the idea of average. The most common ones would be the median and the mode.
00:07:17.520 | The median is the middle value when a data set is ordered across in range from lowest to highest.
00:07:27.920 | And then the mode is the most frequently occurring value. For our purposes, the median wage is
00:07:34.800 | usually what we are going to talk about and the basic average that we're going to draw everything
00:07:40.720 | from because it's the most useful. Let me give you an example. Let's say that we have a sample
00:07:47.040 | set of five people. In this five people, we have earner number one earns $15,000,
00:07:53.360 | person number two earns $47,000, person three $58,000, person four $72,000,
00:08:03.600 | and person five $489,000. So we have one very low earner, one extremely high earner,
00:08:12.160 | and then three people in that middle space. If you take the mean average of those five numbers,
00:08:18.240 | $15,000, $47,000, $58,000, $72,000, and $489,000, then your mean average would be $136,200.
00:08:28.320 | So you can see that if I described to you that the average earnings of these five people is $136,000,
00:08:34.720 | while that is correct and true, it wouldn't accurately represent how the group would feel
00:08:42.240 | because you would have four people who all felt pretty poor, and you would have one person who
00:08:46.960 | could say, "All right, that makes sense." If we take the median calculation, we just simply take
00:08:52.000 | the middle number. Again, our five numbers were at $15,000, $47,000, $58,000, $72,000, and $489,000,
00:08:58.960 | so our median number is $58,000. That would feel if I said the average of this group or the median
00:09:06.480 | is about $58,000, then most people in that group would feel, "All right, that makes a lot of sense."
00:09:11.920 | The outlier, the only person who would say, "Wow," is the very high earner.
00:09:17.920 | The idea here is this is the usefulness of talking about median wages as they describe
00:09:23.680 | fairly accurately a society because they diminish the impact of the very low numbers and the very
00:09:29.920 | high numbers, and they concentrate us on the middle numbers. So whenever we talk about wages
00:09:35.200 | or earnings, we're always going to use a median number because that'll reflect on, we know that
00:09:40.320 | 50% of the population earns more than this and 50% of the population earns less than this.
00:09:46.000 | So currently, as I understand it, for the first quarter of 2024, the median wages in the United
00:09:51.680 | States are just under $60,000, $59,228, something like that. Middle number is $60,000. I'm just
00:10:00.160 | going to round that to $60,000. So back to your financial goals. The first thing I would encourage
00:10:05.760 | you to do is to calculate your annual wages against the median number and say, "Am I higher
00:10:13.760 | than $60,000 or lower than $60,000?" If your annual wages are lower than $60,000, you now know
00:10:22.080 | that you are in the bottom half of society with regard to overall earnings. If your wages are
00:10:28.400 | higher than $60,000, then you know that you're in the top half of society with regard to earnings.
00:10:35.600 | This is the first goal that you should have. The very first goal should be to go from the bottom
00:10:41.440 | half to the top half. You should calculate your own achievement of that goal based upon the actual
00:10:48.720 | data that the government produces of actual earnings of real workers. The reason for this
00:10:54.560 | is it's difficult to figure out how you're doing when you're simply comparing yourself to other
00:10:59.760 | people without actually knowing the details of their life. If you're sitting around and looking
00:11:03.680 | at other people's consumption patterns or how much money other people seem or don't seem to have,
00:11:08.560 | and you're trying to compare yourself to them, then you will have a hard time knowing how you're
00:11:14.320 | doing because everyone handles money differently. But you can be confident that if you are in the
00:11:19.840 | top half of income earners, then while that doesn't mean your life is necessarily going to be
00:11:26.000 | easy, you can be confident that you're going to be able to do just fine. You're going to be able
00:11:30.960 | to live. You're not going to starve this month. Now, I said your goal should be to go from the
00:11:36.400 | bottom half of society to the top half of society with regard to income. Why can I state that goal
00:11:42.880 | confidently and say that everybody should set this? After all, we're not all above average.
00:11:47.440 | That is true. We're not all above average. Most of us are probably pretty average. But we're talking
00:11:55.040 | here about behavior. And if we look at that number of $60,000, what I would say to you is almost
00:12:03.200 | anyone who's not uniquely handicapped in some way, especially disabled, facing some unique
00:12:10.000 | situationally difficult thing, almost anyone can cross from the bottom half of society's earnings
00:12:17.200 | to the top half of society's earnings just simply by hard work. And by hard work, I mean hard and
00:12:24.400 | long work. Let's back into the numbers. Let's assume we're trying to get to $60,000 of annual
00:12:30.240 | earnings. So we divide $60,000 by 52 weeks and we get a weekly earnings amount of $1,153. Let's
00:12:38.640 | assume that you work a lot. You work 80 hours a week. You have two jobs, which is doable as long
00:12:45.120 | as you're working six or seven days a week. Not easy, but it's doable. That means that your average
00:12:51.360 | earnings need to be $14.42 an hour. So if your hourly rate is $14.42 an hour, which is very close
00:13:05.280 | to the starting wage in many kind of leading economies. If you're in a small town, a very
00:13:11.520 | rural area, low cost of living area, then you're not going to start at $14 an hour. But if you're
00:13:17.440 | down in most places, I see lots of signs about $15 just starting wage at just random straightforward
00:13:25.760 | jobs, many times $12, $11. Even though federal minimum wage in the United States is $7.25,
00:13:31.840 | that's not really a relevant number anymore. It's just a number that happens to be out there.
00:13:39.200 | Real starting wages are probably pretty close to $15 an hour in most leading sectors of the market.
00:13:45.680 | So technically, you could cross over that number in earnings based upon working two jobs. I don't
00:13:55.600 | want you to work two jobs. So I want you to set, first of all, an hourly goal that would allow you
00:14:00.000 | to earn one job and cross over that. So if you don't have any earnings right now, or you have
00:14:05.360 | your first job because you've accomplished goal number one, I want you to take $60,000 per year.
00:14:10.400 | I want you to divide that by 52 weeks per year. So that's again, $1,153 per week and divide that
00:14:16.080 | by $40 per hour. And that gives you an hourly wage of $28.84. So my goal for you is that to begin
00:14:26.240 | with, you have a job potential or career potential that could lead to your earning $30 an hour.
00:14:36.240 | Notice that I'm focusing on potential. Notice that I'm emphasizing that you should see a pathway
00:14:43.360 | forward to this. The idea is you may not be earning $30 per hour today. You may be earning
00:14:50.960 | $12 per hour, and that's fine. But what you need to do is you need to take the job that you're
00:14:56.240 | doing right now, the company that you're working for right now, the career or industry that you're
00:15:01.360 | engaged in, and you need to look around and you need to figure out, are there people who started
00:15:09.760 | where I am right now and who are now earning $30 an hour or more? Top half wages versus bottom half
00:15:19.120 | wages. If you can see those people, and if you can see a pathway from where you are right now
00:15:27.280 | to where you would be in the future, and you could see that if I keep working this and I show up on
00:15:33.520 | time and I do what I'm told and I keep my nose out of trouble and I get this certification or pass
00:15:39.520 | these training courses or whatever it is that I need to do, develop these skills, then I could
00:15:43.440 | be earning $30 an hour. You know you're on the right track. And this is why I want you to set
00:15:48.480 | this goal, because I need you to be thinking about the things that you would be doing towards that
00:15:53.120 | goal. So many people, especially young people, take a job and they say, "Hey, I'm doing great.
00:16:00.160 | After all, I'm young. I'm single. I'm making $16 an hour. This is fantastic. Life is great. I can
00:16:07.280 | spend with abandon. I can live well. I'm doing great." But they may be working in something
00:16:14.800 | where there is no future potential. And then you reach that adulting stage of life where you want
00:16:23.120 | to get married, you want to start having children, and you face adult-level expenses, and yet you
00:16:28.320 | don't have an adult-level income. You're kind of stuck in that other world. So you need to be
00:16:33.520 | setting a goal of moving to the top half of wages versus the bottom half of wages. Because as long
00:16:39.840 | as you're in the top half of wages, while it may not be that you're getting rich fast and you have
00:16:46.320 | all kinds of disposable extra money, you can still live an adult lifestyle. You're going to be frugal,
00:16:53.760 | but you can still do fine. You're going to be doing well. And so you need to have a plan,
00:16:59.760 | have a design, have a scheme that's going to get you into the top half of income earners.
00:17:07.760 | I could sit here and off the top of my head list a dozen jobs or careers that are available to
00:17:14.080 | practically anyone, anyone who has few felonies, if any, anyone who could pass a drug test,
00:17:21.680 | anyone who's physically able and able to show up and work hard during the time that he's on the
00:17:26.960 | clock that can get you into the top 50%. You can get to the top 50% just by hard work and being
00:17:34.160 | reasonably sociable, reasonably dependable, reasonably reliable. But this should be your
00:17:40.640 | first goal. Top 50%. Get over the median wage threshold and have a plan to do that. And ideally,
00:17:48.560 | I would love it if your plan were no more than five years. I can see this. There's not an 18-year-old
00:17:55.200 | out there or a 16-year-old out there that I can't have you over the median wage with some plan
00:18:02.320 | by the age of 20. It's totally doable in, well, excuse me, 18 to 20 is fewer than the five years
00:18:08.080 | I said. Four or five years, five years. Give me 18 to 23, I can have you over the median wage. Give
00:18:13.040 | me 16 to 21, we can do that. There's lots of ways to do that. Even if you're not especially smart,
00:18:18.560 | especially gifted, especially good looking, whatever the special things are, you can do
00:18:23.360 | this with hard work and with basic character. Now, most of my audience is past that. And I want to
00:18:31.120 | mention that, though, because this would be the first goal. Top bottom half to top half. But I
00:18:35.840 | really do now want to focus you on the top 20%. And I want you to have career potential to get
00:18:43.920 | into the top 20%. So what does that mean? Well, in the United States, to get into the top 20%
00:18:50.800 | of income earners in the United States, the number would be about $130,500. We're just going to call
00:18:57.600 | it 130,000, slightly more, $130,000 per year. So the real goal that after you've crossed from the
00:19:05.840 | bottom to the top, the real goal that I want you to set is $130,000 per year. Let's break that down
00:19:13.360 | into weekly wages. First, $130,000 divided by 52 weeks per year means a weekly wage of $2,500 per
00:19:22.720 | week. If we're going to divide that into a 40-hour work week, that's an hourly rate of $62 per hour.
00:19:29.680 | This is a goal that everybody should set. It's not a goal that everybody can achieve
00:19:38.960 | within a very short period of time. I would say many people can achieve this fairly quickly.
00:19:47.040 | If you combine hard work with knowledge, study, skill acquisition, credentialization,
00:19:54.640 | good connections, moving for work where work is needed, you can absolutely achieve this.
00:20:00.240 | But when you get to the top 20%, it's very hard to get into the top 20% by pure physical effort.
00:20:06.880 | There are many, many people who work hard at hard demanding jobs that will never be able to get into
00:20:14.080 | the top 20%. You can get to the top 50% by physically demanding effort, many hours. It's
00:20:18.960 | hard to get to the top 20%. You have to develop skills that the marketplace values. And that's
00:20:25.600 | why I want you to set this goal. I want you to start thinking about developing economically
00:20:30.800 | valuable skills, specific skills and abilities that the market is willing to pay you for.
00:20:36.080 | These are skills and abilities that you're going to have to pay for first in their acquisition.
00:20:42.720 | There are three basic pathways that you can use to acquire the kinds of skills and abilities that
00:20:49.440 | are going to lead you to being able to get into the top 20%. Or better than saying that three
00:20:56.560 | pathways, although there are, there's basically three gates. And you have to go through some of
00:21:01.520 | these gates, but you can't get there without going through the gate. So the first pathway
00:21:08.160 | or the first gate that you have to go through is the pathway of experience. Experience can be one
00:21:15.440 | on the job. There are many people in the world, many craftsmen who started off as a junior
00:21:20.080 | apprentice and went to work and showed up every single day and they did their job. They did what
00:21:25.680 | their boss told them and 30 years on into their career, they're now a top 20% earner. You can find
00:21:31.280 | this all over in the skilled trades of many, many people who have gone through this pathway. Earning
00:21:38.240 | $130,000 a year in the skilled trades is not common, but it's also not uncommon for those
00:21:44.960 | who have 30 years of experience. And so you can get to the top 20% the long way through on-the-job
00:21:54.400 | experience. Time in most things will lead to seniority, which affects pay scale. It leads to
00:22:02.880 | advancement in rank just by the fact that this guy has been showing up at the factory every
00:22:07.840 | single day. He's got to build those skills. It does lead to top 20% earnings. So if you see a
00:22:14.560 | pathway in your current career that if I just keep doing this and I do this for 30 years, I can get
00:22:19.520 | into the top 20%, then that's good. That's okay. Now the challenge is the 30 years, because a lot
00:22:26.000 | of times that 30 years means that the money comes when it's not quite as useful as it would have
00:22:31.040 | been if it had come faster. So you get out and you start your job at 20 years old when you get
00:22:36.240 | out of high school and get a job and you're a union worker and there's certainly with overtime
00:22:41.360 | and with full experience and cost of living raises, I can get into that top 20% when I'm
00:22:47.280 | 50 years old. Yeah, but you're raising your children in your 30s and your 40s when that's
00:22:51.840 | when you need more money. And it's okay because even if you can, like we said, if you're top
00:22:56.880 | median, excuse me, in the top 50%, then you can afford to raise your children. And then at the
00:23:02.320 | back of your career, when you're 50 years old and you're earning top 20% wages, as long as you keep
00:23:06.880 | your expenses down, you'll be able to fill up your retirement accounts. You'll be able to build
00:23:10.880 | wealth very quickly. People on this pathway and most pathways tend to build a lot of wealth quickly
00:23:16.880 | in their 50s because they've gotten their expensive years behind them and just through
00:23:21.600 | pure experience, they're at the top edge of the earning scale. So that's the first pathway that
00:23:27.600 | you can go down is the gate of experience, long-time perspective. Now, the second gate
00:23:34.480 | that you can go through is the gate of education. And let me quickly tell you the third gate because
00:23:41.040 | I'm going to contrast the second and the third. The second gate of education, I mean, based upon
00:23:46.480 | what you know, and you can know that in any way. Gate number three is paying for education
00:23:54.960 | and credentialization. The idea is education is something that you can gain usually for time and
00:24:01.360 | effort invested, but not for money. Gate number three includes education, but here I'm talking
00:24:07.680 | about paying for education with money. So you have to have money to go through gate number three.
00:24:13.120 | Let's go back to gate number two. If you want to speed up the process of the long-time horizon,
00:24:20.000 | you need to educate yourself in skills that are going to be useful to the marketplace,
00:24:26.320 | and you need to do that fairly quickly. This requires effort. So this is the gate of effort.
00:24:33.120 | Gate number one is the gate of time. Gate number two is the gate of effort.
00:24:37.360 | Effort is something that is available to all people, but that most people are not willing to
00:24:42.640 | do. Today, educational resources are basically free in the world. Most things you need to know
00:24:50.160 | to do something well are available free on the internet. If they're not free on the internet,
00:24:54.320 | they're probably available free at the library. With those two resources, you can find any bit of
00:24:59.680 | information that you need. So you can find the books, you can find the tutorials, you can find
00:25:04.080 | the classes, you can find the instructions, you can find those things, and you can exercise effort
00:25:10.480 | in order to build skills that are going to make you better, faster, more effective.
00:25:15.120 | And so this gate of effort is something that can help you to not have to just rely on gate number
00:25:22.160 | one of time and move you faster. In any business or career, there are always people who go up the
00:25:30.240 | pay scale faster because they build the necessary knowledge and skills to go faster. So that's what
00:25:37.040 | you want to push on is push, if at all possible, on effort. Now, the third gate is the gate of
00:25:42.880 | money. Money is where you spend money in order to acquire the skills or the access that leads to the
00:25:51.840 | long-term, much higher earnings. So money usually, at this stage of your career, usually is spent
00:26:00.000 | most effectively on tuition payments to buy classes of some kind. Those classes can be blue
00:26:06.880 | collar, it can be welding classes and certification for plumbing work, it could be taking exams so
00:26:12.640 | that you can get certain licenses. Those classes will help you to move forward, but you have to
00:26:17.760 | have the money for those classes. The more common expression is some form of formal college degree.
00:26:24.320 | Formal college degree is basically a pay gate. If you can pay the money for it and put forth the
00:26:29.040 | effort to get through it, then you'll come out and the pathway into the top 20% for most college
00:26:34.240 | graduates is much straighter than it is for those who aren't college graduates. So this is why I put
00:26:41.840 | step two or goal two first. Somebody who gets a job has income. Somebody who is spending 50% of
00:26:48.720 | his income has savings. And now those savings can be used to purchase the kinds of classes and
00:26:56.320 | credentials that will help you to move faster towards your goal of getting into the top 20%
00:27:01.120 | of earners. And so that should be your goal. You set the goal of saying, I want to earn $130,000
00:27:09.840 | per year under current numbers in the United States, or I want to earn $62 an hour. So what
00:27:16.560 | kinds of jobs or careers do I know of that are around me that could, in the fullness of time,
00:27:24.320 | lead me to me being in the top 20% of earners? By the way, you get to define the fullness of time.
00:27:30.240 | I would say doing it in a decade should be very reasonable. So if you're 20 years old
00:27:36.320 | and you're looking at age 30, 10 years, you can do a lot. You can put forth a lot of effort. You
00:27:41.680 | got 10 years of experience. And if you can pay money to get yourself the necessary credentials
00:27:47.280 | and knowledge that will help you move faster, you can do it in 10 years. So 10 years is, I think,
00:27:52.240 | a very reasonable goal for a lot of people. If you are a person of less capacity or less
00:27:58.720 | self-confidence, do it in 15 years. Totally fine. But you're going to be happy if you wake up at 35
00:28:05.120 | or 45 and you're in the top 20%. That's a really good goal. So set that goal and create a pathway
00:28:11.920 | for yourself to it. Anybody with a little bit of motivation, a little bit of hard work,
00:28:18.320 | can lay out a plan to get into the top 20% of earners. Now, as I start to close, I want to
00:28:25.360 | simply encourage you that once you reach that goal, the top 20%, once you reach that goal,
00:28:32.080 | then I think it's reasonable to set one more goal, to try to be in the top 4% of earners.
00:28:38.880 | I don't think this is as open to as many people as I would like it to be. I have a never-ending
00:28:46.080 | confidence and belief in you and your ability to eventually achieve this. But I also acknowledge
00:28:50.720 | that statistically speaking, not everybody or most people can't be in the top 4%. Just doesn't
00:28:56.640 | happen that way. That's not how the numbers work. But I think that by setting a goal of 4%,
00:29:02.320 | that it's going to stimulate your creativity. Under current numbers, to be the top 4% of income
00:29:08.480 | earners in the United States, you need an annual income of about $250,000. $250,000 gets you in the
00:29:15.120 | top 4%. If you have a high degree of self-confidence, then make some kind of career
00:29:22.160 | plan that allows you to have the potential of earning top 4% numbers or $250,000 a year,
00:29:29.440 | again, in the fullness of time. Have a 20-year career plan, a 30-year career plan that gets you
00:29:35.920 | to top 4%. This won't be available to everybody, but it really is doable for most people with
00:29:44.240 | planning. If you have normal or above average, again, work ethic, intelligence,
00:29:51.040 | self-discipline, and self-confidence, this 4%, top 4% is largely a matter of a good plan
00:30:00.960 | and a disciplined focus on the plan over time. It's not magic. When we get to the very top
00:30:07.120 | numbers, the top 1%, the top half a percent, the top 0.1%, then achieving those kinds of numbers
00:30:16.000 | requires unusual synchronicity of events. It requires you to be in the right career at the
00:30:24.000 | right time when external market conditions really make it pay off. It requires your company to be
00:30:29.120 | the one company out of 1,000 competitors that hits, and all your competitors were worthy and
00:30:34.400 | effective, but your company was the one that got bought out for a bazillion dollars.
00:30:38.880 | So the very highest level of results are hard to predict. And because they're hard to predict,
00:30:47.280 | I can't tell you how to do them. You can work towards them, but I can't just say,
00:30:52.240 | "I can't sit down and make a plan for everyone." But when we're at the $250,000 number, again,
00:30:57.360 | that top 4% number, we're still within the realm where this is totally plannable.
00:31:03.280 | It doesn't have to be serendipitous. It's totally plannable. It's choosing a good career
00:31:08.880 | that produces work that is highly valued in the marketplace. It is a matter of you engaging in
00:31:16.080 | that, passing all of the gates necessary to establish yourself in that career, and then
00:31:22.240 | sticking to it for the sufficient amount of time until you just simply make it step by step.
00:31:28.960 | So you can do this with predictability at the top 4%. Top 1% number of earners in the
00:31:36.160 | United States is $600,000 currently, about $600,000, and then from there on up.
00:31:41.600 | I would say that maybe for significantly above average, people of significantly above average
00:31:49.680 | ability, you can just plan your way to top 1%. And so keep planning your way as far as you can,
00:31:56.400 | and then prepare yourself to take advantage of market opportunity when it presents yourself.
00:32:00.560 | But that's about as high as you could probably plan without relying on taking advantage of all
00:32:05.520 | of the breaks that you're offered in the fullness of time. So let's go back and review. First and
00:32:11.040 | foremost, you had to get a job. Second, I want you to spend half your income and control your
00:32:18.080 | expenses so that you have money available. And what I was really earmarking is goal three of
00:32:22.960 | giving money away. And once you have that money available to buy your way into a pathway that
00:32:29.600 | allows you to earn a top 20% income. And so that's why it's so important that from the very beginning,
00:32:35.760 | you spend half, save half, so that you can buy your way onto the fast track. And here in today's
00:32:41.440 | goal, begin with getting from bottom half to top half, doable for anybody with those conditions
00:32:50.080 | that I described. But create a plan that in the fullness of time moves you into the top 20%.
00:32:55.360 | And then once you reach that target, the top 20% of the top 20% or the top 4%. When you reach this,
00:33:04.320 | you will know many people who are making a lot more than you. And you will look around and you'll
00:33:11.040 | say, I'm just dissatisfied because so and so are in so much more than I do. And I wish I was doing
00:33:16.560 | what that person does. That's normal, because you're comparing yourself to your peers. But
00:33:20.320 | don't ever forget that you are in the very rarefied air at the top of society. And so
00:33:27.680 | you'll start to take it for granted. Everyone does. Don't take it for granted. And that's one
00:33:33.920 | final hope that I had for today's show is that to accomplish the idea of simply saying,
00:33:38.880 | don't take this stuff for granted. Focus on getting yourself to the top levels and appreciate
00:33:44.800 | that once I'm there, life is good. Now, one final comment. Go back. Let's assume that you make top
00:33:51.680 | 20%. Why this number? Do you remember what I said about spend half, save half? The reason it's so
00:33:59.440 | important to focus on getting into the top 20% is that you will still be able to live well
00:34:08.560 | and save half your income. And the saving half your income is the fast track to enormous wealth.
00:34:15.280 | Remember, median wages, bottom 50%, top 50% in the United States, about $60,000. At $60,000,
00:34:23.680 | if you have children and a few just normal deductions, you don't pay much tax in the
00:34:29.200 | United States. If you're earning $130,000 per year, you're going to be paying some tax now.
00:34:35.920 | But assume that you spend half, save half. $130,000 a year of earnings, you're going to spend
00:34:43.280 | $65,000 a year, save $65,000. But of course, there's going to be some taxes. Call it $10,000
00:34:50.560 | of tax. Now, you're to the point where you can spend $60,000 and you can save $60,000. And since
00:34:58.080 | we know that median wages are about $60,000, then you're going to be in a wonderful position
00:35:04.960 | to live a normal lifestyle, to be able to afford all of the normal things that
00:35:10.320 | most people in society can afford and still save 50% of your income. That's what's so powerful
00:35:17.120 | about targeting the top 20%. That's what's so powerful about always focusing on increasing
00:35:22.720 | your income. As you do this systematically, it allows you to save a lot and live well.
00:35:33.040 | Now, if you could go to that final level, that top 4%, well, it's a top 4% income earner,
00:35:39.040 | about $250,000. We're going to have some taxes, so pull off $20,000, $30,000 of taxes.
00:35:45.120 | You're left with a lifestyle. If you save half, spend half, you're left with the lifestyle of a
00:35:52.800 | top 20% consumer. $250,000 divided by two, $125,000 to spending, $225,000 towards saving
00:36:00.640 | and giving. That leaves us with $125,000 minus taxes, pull off $20,000 for taxes, we've got $105,000.
00:36:07.280 | We're similar in lifestyle to just a standard top 20% earner who's not really saving much money.
00:36:14.720 | When you get to the top 20%, those people save money. You're living at a top 20% lifestyle,
00:36:20.800 | but you're saving 50% of your income. That is the fast track that allows you to, as I stated before,
00:36:29.040 | be financially independent within 20 years or so, and yet also be able to dramatically impact
00:36:36.000 | the world. I hope that this is as inspiring to you as it always has been to me. Take this as a
00:36:43.280 | series of steps and map out a pathway that works for you based upon where you live, the opportunities
00:36:49.760 | that are available to you, the culture that you're involved in, the education that you have, the
00:36:54.000 | opportunities that you can see in front of you. First goal, get over the median wage, get into
00:37:01.040 | the top 50%. Next, the real goal, get into the top 20%. Everyone can do that who's listening to my
00:37:08.160 | voice. Then the stretch goal, get into the top 20% of the top 20% or the top 4%. That's the sweet
00:37:17.360 | spot. If you can go higher, go higher, but that's the sweet spot. Give yourself as long as you need,
00:37:23.760 | 20 years is perfectly fine, 30 years is okay, but make certain that you're working in a job or a
00:37:31.840 | career that can result in you being at that earning capacity in the fullness of time.
00:37:37.600 | It is enormously frustrating for an intelligent, capable man to be working in a job that is simply
00:37:47.920 | capped, that he'll never make a lot more money because the job that he chose, the career that
00:37:56.160 | he chose is capped at this relatively modest number. You can't get there overnight, but what
00:38:04.000 | you can do is make certain that you're working in a job or a career where you can see that pathway
00:38:10.480 | of advancement. If you can see that pathway of advancement and you can know that in the fullness
00:38:15.040 | of time, I can be at top 20 or top 4%, then you're going to be confident that you can achieve all of
00:38:22.080 | your other goals. That's why this is such a powerful goal. Thank you for listening. I'll
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