RPF0544-How_Much_Money_Do_You_Need_to_Earn_To_Live_the_Good_Life
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00:00:29.880 | Welcome to Radical Personal Finance, the show dedicated to providing you with the knowledge,
00:00:33.400 | skills, insight, and encouragement you need to live a rich and meaningful life now while
00:00:38.080 | building a plan for financial freedom in ten years or less.
00:00:41.840 | My name is Joshua Sheets and I am your host.
00:00:44.440 | Today I want to talk with you more about your income and give you some ideal targets for
00:00:50.440 | the type of income that you should target.
00:00:55.080 | I am embarrassed to hear about very capable people who aim low on their income.
00:01:10.320 | I understand it intellectually and emotionally.
00:01:14.160 | I especially understand it if you're working in a career you don't like or you're in
00:01:17.840 | a job you don't like.
00:01:19.240 | I've been there, done that.
00:01:21.600 | And I get that.
00:01:22.600 | And so there's a tendency to focus in and say, "Well, how can I lower my expenses
00:01:26.880 | as much as possible?"
00:01:28.880 | But over the years of Radical Personal Finance, I've done a series of shows trying to confront
00:01:32.160 | this problem, especially for young men, to say, "You should have ambition to increase
00:01:38.540 | your income."
00:01:41.040 | I tell you again, you should have ambition to increase your income.
00:01:49.400 | If you don't have ambition to increase your income, why not?
00:01:56.680 | There are a few mental problems that cause people not to have ambition to increase their
00:02:01.840 | income.
00:02:02.840 | Sometimes, people say, "Well, if I'm earning a lot of money, then I'm going to hurt other
00:02:05.840 | people."
00:02:06.840 | Well, if you're earning a lot of money by killing or raping or murdering or looting
00:02:11.040 | other people, because killing and murdering are the same thing, but you get the point,
00:02:16.360 | yes, that's kind of a problem.
00:02:18.600 | We don't want to do that.
00:02:20.480 | But if you're earning a lot of money by serving more people, that service is good.
00:02:32.080 | The people who serve me in my life and serve me well deserve to do well.
00:02:43.600 | I want the people that serve me to do well.
00:02:49.240 | I want the servant who provides food for me in a restaurant to earn a lot of money.
00:02:55.520 | I want that chef to earn a lot of money for that great dish that they created.
00:03:00.240 | I want that server who brought the food to my table and kept my water glass full.
00:03:05.760 | I want them to do well.
00:03:08.200 | I want everybody who serves me to prosper.
00:03:11.440 | I want my servant who cuts my grass to prosper.
00:03:15.920 | I want my servant who cleans my teeth to prosper.
00:03:20.480 | I want my servant who cracks my back to prosper.
00:03:26.600 | Because the more they prosper, the better service they'll give to me.
00:03:31.560 | You want me to prosper.
00:03:36.340 | Because the more I prosper, the better service I can provide to you.
00:03:43.960 | I'm very gratified.
00:03:44.960 | So many listeners have written to me over the years and said, "Joshua, we want to make
00:03:47.680 | sure you're still around in 10 years.
00:03:49.160 | We like what you're doing."
00:03:50.160 | Well, guess what?
00:03:51.160 | If I don't make a lot of money doing what I'm doing here for you on Radical Personal
00:03:55.800 | Finance, I ain't going to do it.
00:04:00.160 | Or at least I ain't going to do it the way that I'm doing it now.
00:04:03.920 | I made a lot of money as a financial planner.
00:04:06.280 | That path is easy.
00:04:08.000 | Rich people love to pay other servants to help them make more money.
00:04:13.560 | I would be very satisfied to go back to that business.
00:04:18.720 | Now I have a mission that goes beyond just simply working with one particular family,
00:04:22.740 | but I'll tell you what.
00:04:24.480 | I keep my tentacles connected.
00:04:27.400 | I keep my options open.
00:04:28.520 | I haven't burned all my bridges.
00:04:29.720 | I've burned a lot of them, but I haven't burned them all.
00:04:33.600 | Why?
00:04:35.200 | Because I want to prosper.
00:04:37.480 | I want to get rich, and I'm going to get rich through service.
00:04:44.600 | Now my personal plan, in case you're curious, my personal plan is to get rich by serving
00:04:48.620 | lots and lots of people, but I can also get rich by what I would do now if I were to go
00:04:53.840 | back in the financial planning industry.
00:04:55.160 | I would go and work for a single family or a small multifamily office, and I would get
00:04:59.560 | rich by serving one rich family.
00:05:03.720 | That's what I would do.
00:05:05.960 | It would fit me.
00:05:07.920 | So you should have an ambition to increase your income.
00:05:11.880 | It'll be good for you.
00:05:13.080 | It'll be good for the people that you serve.
00:05:14.480 | It'll be good for the people that you love.
00:05:17.280 | But very rarely do people sit down and figure out, "Well, how much income do I need to make
00:05:22.080 | to live the good life?"
00:05:24.140 | Very rarely do people sit down and actually set a target.
00:05:26.560 | So I want to give you some goals today.
00:05:28.800 | I don't love to do this, but I've changed my mind.
00:05:31.720 | I used to say, "What are your goals?
00:05:33.400 | What are your goals?
00:05:34.400 | I'll just listen.
00:05:35.400 | I'll just listen.
00:05:36.400 | What are your goals?
00:05:37.400 | You tell me about them."
00:05:38.400 | But I've learned that a lot of people don't have goals, and it's useful to have goals.
00:05:41.320 | I've learned that a lot of people, especially young men, just kind of wander from one thing
00:05:46.000 | to another.
00:05:48.720 | Years ago, I worked with a young man who was thinking about getting married.
00:05:52.480 | He was not earning much money.
00:05:54.000 | I think at the time he was working as a valet.
00:05:56.720 | I sat down with him and I said, "Let's make a budget, and let's figure out how much money
00:06:01.000 | you need to earn to be able to support a family."
00:06:05.160 | Well that process opened his eyes.
00:06:08.480 | I want to talk to you about some different levels of income by talking with you about
00:06:14.680 | some different lifestyles that are available to you.
00:06:17.880 | Let's start with a minimum wage income.
00:06:21.160 | Now one of my favorite shows that I have ever done on Radical Personal Finance, and one
00:06:25.300 | of the more popular ones, is a show that I did called "How I Would Become a Millionaire
00:06:30.680 | Working a Minimum Wage Job at Walmart."
00:06:35.320 | If you haven't listened to it, you are underprivileged.
00:06:38.720 | I would recommend you go back and listen to episode 43 from August 15, 2014.
00:06:48.560 | August 15, 2014, I published that show.
00:06:51.600 | Number 43 is called "My Plan for How I Would Become a Millionaire with a Minimum Wage Job
00:06:56.160 | at Walmart."
00:06:58.240 | Very popular.
00:06:59.240 | I'm really proud of it.
00:07:00.240 | I think it was still a good show.
00:07:02.040 | But the very thing that I led with was saying the first thing I would do is not work a minimum
00:07:05.840 | wage job at Walmart, because the way you get rich is not by earning a minimum wage.
00:07:10.280 | But I showed how you could build wealth on a minimum wage job at Walmart if you were
00:07:14.040 | very careful.
00:07:15.040 | So let's break down that income.
00:07:17.000 | In the United States of America, the federal minimum wage is $7.25 per hour.
00:07:23.280 | Some states have higher minimum wages.
00:07:25.200 | Some cities have higher minimum wages.
00:07:27.600 | And I don't know of an area, although I bet they do exist, perhaps a very rural small
00:07:32.400 | town area, I don't know of an area in the United States where an employer could get
00:07:36.320 | a decent employee for a minimum wage.
00:07:38.900 | When I hire immigrant, non-skilled laborers here locally where I live in South Florida,
00:07:44.600 | the going rate right now is $12 an hour or $11 an hour if you're hiring at 11 a.m.
00:07:50.520 | But very rarely will an unskilled immigrant laborer work for less than $12 an hour where
00:07:56.160 | I live.
00:07:57.720 | $7.25 an hour if you work a 40-hour workweek.
00:08:01.760 | And at this level, you need to work 52 weeks per year.
00:08:03.880 | You probably need to do a lot more than 40 hours a week.
00:08:06.240 | But your gross wage on a minimum wage job would be $15,000 per year.
00:08:12.900 | So minimum wage, $7.25 an hour is $15,000 per year.
00:08:18.280 | Now at this particular level of income, you would pay $0 in taxes.
00:08:25.200 | Now of course you do have employment taxes.
00:08:27.840 | Remember that when you are working in a job in the United States of America, you pay employment
00:08:32.000 | taxes.
00:08:33.000 | The employee share of the employment taxes is 7.65% or $1,150 per year of that $15,000
00:08:42.880 | income.
00:08:44.120 | But at this level of income, you pay no federal income taxes.
00:08:47.960 | And I'm going to ignore the employment tax cost because that employment tax cost would
00:08:53.300 | be offset by other extant tax credits such as the earned income tax credit or perhaps
00:08:58.040 | various welfare benefits that you would be eligible for.
00:09:00.840 | So let's assume that you pay $0 in taxes.
00:09:05.080 | On a $15,000 budget, if your ambition is to give away 10% of your income, that means that
00:09:10.240 | you can give $1,500 per year to others who are in need.
00:09:17.200 | If your ambition is to save 10% of your income, on a $15,000 budget, you can save $1,500 per
00:09:24.340 | year.
00:09:26.120 | Between your giving and your saving, you've now allocated $3,000 of your budget and you
00:09:30.140 | are left with $12,000 per year, $1,000 per month to use to arrange your living expenses.
00:09:39.340 | Now if that budget, we take 30% of that budget and we allocate it towards housing, that means
00:09:45.060 | you can afford a $300 a month house or housing arrangement.
00:09:52.040 | If 10% of your income, which is a normal number, is dedicated towards utilities, you have $100
00:09:57.580 | a month available for utilities, water, electricity, phone, internet.
00:10:04.440 | If you allocate 15% of your budget toward transportation, that leaves you with $150
00:10:10.180 | per month for transportation.
00:10:14.500 | Car payment, gas, insurance, etc.
00:10:19.460 | If you allocate 15% of your income for food, you have $150 per month available for your
00:10:25.780 | food.
00:10:26.780 | 5% of your budget allocated towards health and medical expenses, that leaves you with
00:10:32.820 | $50 per month.
00:10:34.940 | If you set a 5% entertainment budget, you have $50 per month, which leaves you with
00:10:39.820 | 20% of your budget available for miscellaneous expenses, about $200 per month.
00:10:45.580 | Friends, that's doable for a single person who's very flexible or for a young person
00:10:53.780 | or an old person who has a strong family support network.
00:10:58.260 | It's not really doable for anybody else.
00:11:06.100 | My scorecard for this particular level of income is your giving potential is limited.
00:11:12.220 | If you give $1,500 per year over the course of a 40-year career, you'll be able to give
00:11:16.780 | away about $60,000.
00:11:19.060 | That's good, but I call that limited.
00:11:22.340 | Your wealth building potential, it's tough to build wealth.
00:11:26.820 | Doable but tough, and the potential is very limited.
00:11:32.400 | If you're investing $1,500 per year for 40 years at a 5% rate of return, you'll wind
00:11:37.520 | up with about $181,000 portfolio at the end of 40 years.
00:11:43.860 | It's not bad, but it certainly is limited.
00:11:47.500 | Your lifestyle potential on a minimum wage job is very limited.
00:11:52.460 | Again, it may be possible to support an individual, especially a very skilled individual who is
00:11:58.680 | very good at living on the fringes of society.
00:12:01.960 | But it's not possible to support a family on a minimum wage job.
00:12:08.780 | If you are unemployed, your first goal should be to become employed.
00:12:12.580 | You will become employed at a minimum wage level at the very least.
00:12:17.460 | But if you are working a minimum wage job, your first goal should be to stop working
00:12:23.860 | a minimum wage job and to start making more because it's limited.
00:12:31.440 | You're limited in your ability to give, you're limited in your ability to build wealth, and
00:12:35.460 | your lifestyle potential is very limited.
00:12:40.940 | Your target should be to move from a minimum wage job to a median wage job.
00:12:47.540 | Now, of course, the median, that term means that 50% of households earn more than that
00:12:55.940 | and 50% of households earn less than that.
00:12:58.960 | So when looking at something like income, the median wages or the median lifestyle is
00:13:03.920 | a very useful metric.
00:13:05.260 | It's more useful than the mean or average income or average level of expenses.
00:13:12.060 | In the United States of America in 2016, the US median wage was $59,039.
00:13:19.720 | You'll forgive me if I just call it $59,000 here among friends.
00:13:23.900 | At this level of income, your annual taxes would be about $9,000.
00:13:28.880 | You would have about $4,500 of employment taxes and about $4,500 of income taxes on
00:13:35.700 | a $59,000 per year job.
00:13:38.560 | That leaves you with $50,000 after taxes.
00:13:43.720 | Assume that you establish a 10% giving budget, that leaves you with the ability to give away
00:13:48.040 | $5,000 per year.
00:13:51.000 | You establish a 10% savings budget, that leaves you with the ability to save $5,000 per year.
00:13:57.200 | The remainder, $40,000 per year, is going to be allocated toward expenses.
00:14:01.880 | Well, 30% of that $40,000 for housing leaves you with a housing budget of $1,000 a month.
00:14:08.640 | 10% toward utilities leaves you with a utilities budget of $330 per month.
00:14:14.840 | 15% of your budget for transportation leaves you with $500 per month for transportation.
00:14:21.280 | 15% for food leaves you with $500 a month for food.
00:14:25.640 | 5% for health and medical is $160 a month.
00:14:29.560 | 5% for entertainment, $160 per month.
00:14:32.800 | And you have an additional 20% slush fund for miscellaneous expenses of $650 per month.
00:14:39.120 | Now think about those numbers, $1,000 a month for housing.
00:14:44.360 | In your area, you should be able to find a reasonable place to live that's safe and dry
00:14:52.640 | for $1,000 a month.
00:14:55.080 | $330 a month for utilities.
00:14:57.080 | In your area, you should be able to find a way to pay for electricity and water and internet
00:15:03.000 | or phone, cell phone, home phone, et cetera, for $330 a month.
00:15:09.160 | $500 a month for transportation, you should be able to arrange the purchase of a vehicle,
00:15:15.600 | insurance and fuel costs on $500 a month.
00:15:19.240 | $500 a month on food, you should be able to feed yourself and your family on $500 a month
00:15:24.400 | of food.
00:15:25.800 | Health and medical, $160 a month for dental expenses, vitamin supplements, gym, et cetera,
00:15:32.600 | doable.
00:15:33.600 | Entertainment, $160 a month, adequate.
00:15:35.760 | Gives you $2,000 a year to spend on a family vacation or various entertainment options
00:15:40.760 | if that's what you want to do.
00:15:41.760 | And an additional $8,000 per year or $650 a month for miscellaneous expenses.
00:15:47.640 | Here's how I rate this particular level of income.
00:15:51.040 | Giving potential is effective.
00:15:52.560 | If you give away $5,000 per year for 40 years, you'll give away $200,000.
00:15:57.640 | Wealth building potential, I call that moderate.
00:16:00.280 | If you invest $5,000 per year for 40 years at a 5% mean rate of return, you'll wind
00:16:06.280 | up with $600,000 in your portfolio after 40 years.
00:16:10.560 | Lifestyle potential, I call it adequate.
00:16:13.160 | It's possible to support a family at this particular level of income.
00:16:17.560 | And with wise spending choices, I believe you could live in reasonable comfort.
00:16:23.960 | Wouldn't call it luxury, but I would call it reasonable comfort.
00:16:28.920 | The more skillful you are in allocating money and in managing expenses, the better.
00:16:36.380 | But lifestyle potential here is adequate.
00:16:40.000 | So if you are on a minimum wage job, you should target moving to a median wage job.
00:16:48.680 | Now your next target is to move to the top 20% of income earners.
00:16:53.320 | I'm convinced that every one of you listening to this show can move into the top 20% of
00:16:59.160 | income earners.
00:17:00.160 | I don't believe that everybody in society can move into the top 20% of income earners
00:17:05.480 | because obviously, mathematically, if everyone in society moved, it just wouldn't work.
00:17:11.240 | But more importantly is not everybody in society has adequate cognitive ability.
00:17:16.060 | Not everyone has adequate skills.
00:17:18.280 | Not everyone has just adequate physical ability to actually produce enough value to move into
00:17:23.200 | the top 20% of income.
00:17:26.360 | But I speak at a very high level, at the very least college if not master's degree level
00:17:32.120 | with my vocabulary, the concepts, the way that I speak, et cetera.
00:17:36.840 | And so if you're listening to my voice now and if you're understanding what I'm saying,
00:17:41.200 | if you're grasping at least the basis of these concepts, you have sufficient cognitive ability
00:17:47.960 | and sufficient motivation and sufficient vocabulary, sufficient practical tools to move into the
00:17:59.080 | top 20% of income earners.
00:18:02.560 | In the United States, if you look at the total level of income, according to the 2016 reports
00:18:10.400 | from census.gov, the 80th percentile limit of income is $121,018.
00:18:20.920 | So if you want to move into the top 20% of income, you should target $121,000 per year
00:18:29.920 | as your annual income.
00:18:33.720 | Now why is this important?
00:18:37.360 | Because the top 20% of income earners earn 80% of the money.
00:18:44.920 | Most things in life seem to be distributed according to a Pareto distribution, 20/80.
00:18:51.160 | So the top 20% of income earners actually earn 80% of the money available.
00:18:59.480 | Whereas the bottom 80% of income earners earn only 20% of the money available.
00:19:07.400 | Picture flows of revenue and income like a giant river.
00:19:13.200 | There are some people that go into that river with a little tiny teaspoon.
00:19:17.660 | There are some people that take a bucket.
00:19:20.600 | And there are some people that build a pipeline.
00:19:24.800 | I think you could imagine that if there are some people with a teaspoon and some people
00:19:30.120 | with a pipeline taking water out of that river, now you can see why 20% of the income earners
00:19:37.360 | earn 80% of the income.
00:19:41.840 | Now the cool thing about it is nobody has to take a teaspoon.
00:19:48.040 | Nobody has to take a pipeline.
00:19:51.440 | Some people come to the river with their teaspoon, they dip out a little bit of water, they put
00:19:55.160 | it in their mouth and they go away.
00:19:57.920 | Some people come to the river with a teaspoon, they dip out a little water, they fill their
00:20:00.800 | mouth and they start filling up buckets.
00:20:03.000 | And they take those buckets, they sell it to other people that didn't want to walk to
00:20:05.600 | the river with their teaspoon.
00:20:07.640 | They make a profit, they come back and they put more money in the buckets, they keep selling
00:20:10.560 | the buckets to other people.
00:20:11.960 | Then when they have enough money, they build a pipeline.
00:20:14.240 | That's how money works.
00:20:16.800 | The cool thing about it is those options are available to you.
00:20:20.740 | But you got to start that process.
00:20:23.000 | You take your teaspoon to the river, you slake your thirst, that's what we've talked about
00:20:26.880 | with minimum wage jobs, and you start tucking away water to sell to other people.
00:20:32.340 | You rent out your money.
00:20:34.340 | That's called investing.
00:20:35.820 | You rent out your money to other people who want to use that money.
00:20:39.760 | That's how you build wealth.
00:20:41.120 | You develop your skills, you invest in your own tools.
00:20:44.560 | You take your teaspoon, you rent somebody else's bucket, you fill it with water, you
00:20:48.440 | take that bucket and you sell it to them.
00:20:50.600 | Then you buy a teaspoon from somebody else, so you have two teaspoons now, so you can
00:20:53.760 | fill your bucket twice as fast.
00:20:56.000 | Then you sell that bucket and you come back and you buy a little cup.
00:20:59.200 | You take the cup and you put it into the bucket and you sell your bucket now about five times
00:21:02.520 | as fast.
00:21:03.700 | That's how money works.
00:21:05.840 | That's how wealth building works.
00:21:08.880 | You take what you have, your physical ability to dip water out of the river, you take whatever
00:21:14.520 | tools are at your disposal and you figure out how to use those tools to sell to other
00:21:19.120 | people, sell the product to other people who are either too lazy or too rich to go and
00:21:24.160 | get their own water.
00:21:27.320 | And then in time, you expand your capacity and your capability.
00:21:32.080 | So you, because you are listening to this, you've already demonstrated sufficient motivation,
00:21:37.800 | sufficient cognitive ability to move from the bottom 80% of income earners to the top
00:21:43.760 | 20% of income earners in time.
00:21:47.360 | It takes time to fill a bucket with a teaspoon.
00:21:50.860 | It takes time to go and sell that water.
00:21:54.600 | Takes time to fill a bucket with a cup.
00:21:56.960 | Takes time to sell that water.
00:21:59.360 | It takes time to fill a bucket with a hose and sell that water.
00:22:03.660 | It takes time to buy more buckets, takes time to buy a truck, and it takes time and money
00:22:07.920 | to build a pipeline.
00:22:11.460 | But it's doable.
00:22:14.100 | Top 20% of income, $121,000 per year.
00:22:16.940 | At this level of earnings, your taxes would be about $21,000 per year.
00:22:21.960 | Of course, you would have $9,000 of employment taxes.
00:22:26.320 | Here we're still near the Social Security wage base, so still about 7.65% for employment
00:22:31.080 | taxes.
00:22:32.680 | And your income taxes, if we assume that you save about $10,000 in an IRA or qualified
00:22:37.360 | plan, a loose estimate of your income taxes here would be about $12,000 per year.
00:22:42.520 | So on $121,000 income, you're going to pay $21,000 in taxes.
00:22:48.920 | You set aside 10% of your income for giving to others who are in need.
00:22:52.240 | That's $10,000 per year.
00:22:55.000 | You save 10% of your income.
00:22:56.940 | That's $10,000 per year.
00:22:59.600 | The remaining 80% of your income is allocated towards expenses.
00:23:02.960 | That gives you a budget of $80,000 per year.
00:23:05.760 | 30% of that goes to housing, $2,000 a month.
00:23:11.280 | As I go through these numbers, think about your area and what's available in your area.
00:23:15.920 | What kind of house can you rent for $2,000 per month?
00:23:20.120 | 10% goes towards utilities, $650 per month.
00:23:24.480 | Is that adequate for the utilities in your area for a $2,000 a month house?
00:23:29.520 | 15% goes to transportation.
00:23:32.080 | That gives you a budget of $1,000 a month between cars, car payment, insurance, gas,
00:23:40.480 | et cetera.
00:23:42.360 | 15% is allocated towards food.
00:23:44.500 | That gives you a food budget of $1,000 a month.
00:23:47.180 | You're starting to move out of basic and into luxury.
00:23:51.440 | You can afford the fancier cuts of meat.
00:23:53.880 | You can afford more organic produce.
00:23:57.060 | You can afford a little bit more eating out, a fine restaurant from that time to time.
00:24:02.120 | Health and medical at 5%, that's $330 a month.
00:24:05.820 | You can afford some better nutritional supplements.
00:24:08.720 | You can afford a higher quality medical practitioner.
00:24:12.860 | You can afford to be on the chiropractor's normal monthly plan.
00:24:16.880 | 5% is allocated towards entertainment.
00:24:19.280 | That gives you a budget of $4,000 per year or $330 per month.
00:24:25.200 | We still have a 20% miscellaneous expense slush fund.
00:24:29.120 | Comes out to about $1,300 per month.
00:24:33.000 | My scorecard on this level of income.
00:24:35.200 | Giving potential is effective.
00:24:37.160 | $10,000 given per year over 40 years is almost half a million dollars, $400,000 given away.
00:24:44.040 | Wealth building potential, effective.
00:24:46.400 | $10,000 per year invested over 40 years at a 5% rate of return equals a portfolio value
00:24:52.000 | of $1.2 million.
00:24:56.160 | And your lifestyle potential here is excellent.
00:25:00.000 | It's possible for you to support a family in comfort.
00:25:03.400 | You're able to consume the higher grade products and services.
00:25:07.300 | And there's plenty of wiggle room, especially if you're a skilled spender.
00:25:12.000 | I've known a lot of people with $121,000 income who don't feel rich, but that's because they
00:25:18.200 | were mediocre spenders.
00:25:22.500 | All they know how to do is write checks and swipe cards and not how to get a good value
00:25:25.740 | for their money.
00:25:27.220 | You can fix that, and we'll fix that another time when I talk to you about a decreased
00:25:31.140 | expenses course in the future.
00:25:36.060 | Your target at the minimum should be to move into the top 20% of your occupation of income
00:25:42.620 | earners.
00:25:43.620 | I bet if you will analyze your industry, the top 20% of income earners earn at least $121,000
00:25:52.700 | per year.
00:25:54.060 | I've known a lot of guys in the trades, blue collar trades, who've earned $120,000 a year.
00:26:02.580 | There are some occupations that are, of course, tilted higher, in which case the top 20% of
00:26:07.980 | that occupation is much higher.
00:26:09.860 | But on the whole, $121,000 a year is top 20%.
00:26:14.140 | You should set that as a target and make a plan to achieve it quickly.
00:26:22.160 | Give me a 15-year-old young man with good cognitive ability, strong work ethic, basic
00:26:33.780 | social skills, and strong personal ethics.
00:26:40.160 | All of those are important.
00:26:41.160 | Again, I repeat, good cognitive ability.
00:26:45.120 | You have to be able to process abstract concepts.
00:26:48.920 | If you're in an industry where you can't process the abstract concepts of your industry, move
00:26:53.180 | to one where you can.
00:26:56.520 | But give me a 15-year-old man with good cognitive ability, personal skills, personal interaction
00:27:03.800 | skills, a good work ethic, and personal integrity and personal ethics.
00:27:13.680 | He's not going to steal from his boss.
00:27:17.080 | He's not going to be ripping off his boss because he's hanging out on Facebook on the
00:27:20.320 | clock.
00:27:22.560 | Give me a 15-year-old young man or woman and give me the industry, and in five to 10 years,
00:27:30.600 | we can go from minimum wage to top 20% of $120,000.
00:27:37.760 | I can do it in the trades, and so can you.
00:27:43.680 | If you're not in the trades, there are many options for you.
00:27:47.800 | What else should you target as a goal?
00:27:49.600 | Well, I think you should move into the top 5%.
00:27:54.760 | In a parade of distribution, the 20/80 continues to function.
00:28:00.320 | So if you look at an analysis of income earners in the United States of America, the top 20%
00:28:06.000 | of income earners earn 80% of the total income, but in the top 20%, the same case exists.
00:28:22.280 | So in the top 20%, the top 20% of the top 20% earn 80% of the top 20% of income, or
00:28:30.680 | about 64% of total income.
00:28:34.480 | And then the top 20% of the top 20% of the top 20% earn 80%, et cetera, and it goes on,
00:28:40.240 | which is why if you work the numbers, I can't remember the latest analysis, you wind up
00:28:44.480 | with a dozen.
00:28:46.280 | You wind up with a couple hundred people in the world that own, what is it, 30%, 40% of
00:28:49.960 | all the assets, or you wind up with a couple of dozen who own 20% of all the assets.
00:28:54.440 | You wind up with this.
00:28:55.440 | It's the same Pareto principle on and on.
00:28:59.520 | I don't know if everybody can go from the bottom 80% to the top 20.
00:29:04.080 | No, sorry, let me rephrase.
00:29:05.520 | I believe that you, not everybody can go from the bottom 80% to the top 20%, but you can.
00:29:12.200 | I don't know if you can go from the bottom 80% of the top 20% into the top 20% of the
00:29:19.200 | top 20%, which is basically the top 4% or 5%, but I think you can.
00:29:25.560 | I don't know if you should make it your ambition to go higher.
00:29:28.560 | I personally don't have any ambition to be the number one person in my field.
00:29:32.840 | I used to set that as a goal.
00:29:34.520 | When I was a financial planner, I would run the numbers and I would figure out what it
00:29:37.400 | meant to be the top, the very top, but the price was always too high.
00:29:43.880 | When I calculated what would be necessary in order for me to achieve that, I decided
00:29:47.880 | that the juice wasn't worth the squeeze.
00:29:49.600 | The price was too high.
00:29:50.600 | So you can't fake it.
00:29:52.360 | You can't get there by accident.
00:29:54.360 | The people who are at the very top have sacrificed other areas of their life, and I came to the
00:29:59.440 | realization that I wasn't willing to sacrifice like they did.
00:30:03.160 | Wasn't worth it.
00:30:05.300 | But moving into the top 5% total is probably doable and is probably adequate for most people.
00:30:13.040 | Now in the United States, the 95th percentile of income is $225,251 according to the 2016
00:30:21.240 | census data.
00:30:22.240 | It wasn't the 2016 census, but from the census bureaus where I'm citing and sourcing my figures.
00:30:29.000 | So let's call it $225,000 per year.
00:30:32.760 | I think you should set as your target to earn $225,000 per year in your occupation.
00:30:40.120 | Now what will that buy you?
00:30:43.680 | Well at a $225,000 income, you'll pay about $50,000 per year in taxes.
00:30:50.780 | Your employment taxes would be about $11,150.
00:30:55.080 | We would max out the social security wage base, a total social security tax of $7,886
00:31:01.580 | and the Medicare tax of $3,262, or a total employment tax of $11,150.
00:31:08.800 | By the way, if these numbers are making your head spin and you want to see them written,
00:31:12.280 | I am speaking to you very loosely from a module in the Increase Income course.
00:31:18.520 | Arsenalfinance.com/increaseincome on sale right now.
00:31:21.980 | Talk to you about that in a moment when I'm done.
00:31:23.940 | But I'm reading to you from a module.
00:31:25.580 | All of this is written down.
00:31:26.580 | All of this is part of your notes in that particular module.
00:31:29.840 | My presentation in that module is much tighter, more edited.
00:31:33.780 | This particular presentation I'm giving to you now is more free form, but this is one
00:31:37.600 | of the modules in that course with all the numbers.
00:31:41.860 | So employment taxes on a $225,000 per year salary would be just over 11 grand and your
00:31:47.380 | income taxes would be about $39,000.
00:31:50.040 | That's just a loose estimate.
00:31:51.260 | I'm assuming $20,000 in qualified plan contributions and two dependents.
00:31:55.100 | For a total taxes of about $50,000 per year.
00:31:57.940 | That leaves you with $175,000 available after taxes.
00:32:03.420 | Assume that you give 10% of your income away.
00:32:05.740 | That leaves you with $17,500 per year in your giving budget.
00:32:11.260 | Now here in your savings, let's bump it up from that standard 10% number we've been
00:32:17.120 | using to 20%.
00:32:20.000 | After all, at this level of earnings, significantly increased savings should easily be available
00:32:27.000 | without sacrificing lifestyle.
00:32:30.220 | So let's move up your savings from 10% to 20%.
00:32:33.140 | That's a total of $35,000 per year saved.
00:32:38.240 | We're left with 70% for expenses or $122,500 per year.
00:32:43.640 | Let's call it 10 grand a month.
00:32:45.820 | If 30% of that is allocated towards housing, we've got $3,000 a month.
00:32:51.280 | What kind of house can you rent in your town for $3,000 a month?
00:32:56.080 | If 10% is for utilities, we've got $1,000 per month.
00:33:00.620 | Can you meet all of your utility needs in abundance on $1,000 a month for a $3,000 house?
00:33:07.480 | If 15% is allocated toward transportation, we've got $1,500 a month.
00:33:14.180 | Can you meet your transportation needs in luxury on $1,500 a month?
00:33:19.000 | 15% is allocated towards food, that's $1,500 a month.
00:33:24.060 | Can you meet your nutrient needs in luxury on $1,500 a month?
00:33:31.760 | Health and medical 5%, $500 a month.
00:33:35.040 | Entertainment 5%, and we're left with a 20% or $2,000 a month miscellaneous expense slush
00:33:42.400 | fund for other expenses.
00:33:46.480 | How do I rate this particular level of income?
00:33:48.200 | Well, giving potential is excellent.
00:33:51.160 | If you give away $17,500 per year for 40 years, you would give away $700,000, three-quarters
00:33:58.120 | of a million dollars.
00:34:01.080 | I would rate here your wealth-building potential as excellent.
00:34:05.680 | If you invest $35,000 per year for 40 years at a 5% interest rate, you would wind up with
00:34:12.260 | a portfolio value of $4.2 million.
00:34:15.640 | I call that excellent.
00:34:18.040 | And your lifestyle potential here is excellent.
00:34:21.960 | It's possible for you to support family and even extended family in luxury and comfort.
00:34:29.120 | You'll be able to consume the highest grades of products and services.
00:34:33.440 | There's plenty of monthly surplus for spontaneous expenditures and adventures.
00:34:42.000 | This is the land of abundance.
00:34:49.620 | The land of abundance is found in the top 5%.
00:34:53.980 | Excellent giving potential, excellent wealth-building potential, and excellent lifestyle potential.
00:35:02.860 | So in conclusion, the best way for you to be able to give a lot of money away, to become
00:35:09.000 | enormously wealthy, and to enjoy a rich and rewarding lifestyle every year of your career
00:35:15.740 | is for you to build a high income.
00:35:17.660 | A high income allows you to do all of these well.
00:35:24.620 | So target the top 5% of income earners for your personal income.
00:35:30.560 | Target $225,000 per year.
00:35:36.740 | You don't have to earn $225,000 per year in order to live well.
00:35:43.220 | I give this to you as a goal and to stimulate your thinking.
00:35:47.460 | As I've shown, minimum wage is meager, median wage is adequate, top 20% is good, and top
00:35:55.500 | 5% is excellent.
00:35:58.380 | If you'll set these as a goal, you'll be open to the ways to get there.
00:36:02.980 | Again, I emphasize, I didn't use the top 1%.
00:36:08.340 | Sometimes you got to sell your soul to the devil to get into the top 1%.
00:36:12.900 | Sometimes you got to live at the office to get into the top 1%.
00:36:15.340 | I don't think that's a good plan.
00:36:20.300 | But you can live well on 5% because of the money that comes in, and you can find a position
00:36:29.300 | in the top 5% that gives you enough income to live well.
00:36:41.220 | If you'd like my help in working with you to create a plan for you, I'd love for you
00:36:50.260 | to join the Radical Personal Finance Increase Income course that I have open right now.
00:36:56.900 | The launch window here is open for a total of four weeks.
00:37:01.820 | Today is Thursday, May 10, and registration for this course will be open until Wednesday,
00:37:09.620 | June 6.
00:37:10.860 | However, if you buy today, you will save money.
00:37:16.060 | Each week that goes by, I'm increasing the cost of the course by $100.
00:37:21.620 | So you are still, right now, if you're listening to this, you are still in the cheapest opening
00:37:27.260 | price.
00:37:28.260 | The opening price right now is $395 for the course, and it will be $395 until Tuesday,
00:37:34.860 | end of day, Tuesday, May 15.
00:37:40.740 | What are you going to get in the course?
00:37:41.740 | Well, there's 104 video lessons that I've prepared using concepts like these to try
00:37:46.820 | to give you an abundance of ideas that you can apply to your own situation.
00:37:54.780 | In addition, there are weekly and sometimes bi-weekly conference calls where you can speak
00:37:59.340 | to me and to other students, and we will personally work with you to help you apply ideas to your
00:38:04.620 | own situation.
00:38:07.140 | There's guidance on things that you can put into place in your current career.
00:38:11.780 | There's guidance on how to switch to a new career.
00:38:13.500 | If you look at your career and say, "I can't earn $225,000 on my career," well, you might
00:38:18.220 | need to change.
00:38:20.340 | But you can take what you love about that career and move it into something else or
00:38:24.820 | split your time.
00:38:31.000 | In addition, there are...
00:38:32.500 | It's a comment section, and I'm interacting heavily during the first 12 weeks of the course.
00:38:37.220 | I'm interacting heavily with you there in the comments, answering every question, interacting
00:38:41.380 | with you on all of the details to try to give you customized support.
00:38:45.900 | And then depending on your questions, if there's something that you have a question on that
00:38:48.300 | I haven't hit well in the videos, the 104 lessons that are already there, I may make
00:38:52.460 | a custom video for you.
00:38:55.460 | So I'd love for you to join me.
00:38:56.460 | If this has been inspiring to you, I'd love for you to join me.
00:38:58.340 | Now I want you to think about this for a moment.
00:39:01.260 | Let's pretend for a moment that I could serve you effectively in this area.
00:39:07.120 | Pretend that I could help you to develop strategies and ideas that will help you increase your
00:39:11.660 | income.
00:39:15.460 | Pretend that we could increase your income by 10%.
00:39:20.340 | Calculate in your head what a 10% increase in income would be for you in the next year
00:39:26.380 | or two.
00:39:31.060 | Would it be worth investing a measly 395 bucks to increase your income by 10%?
00:39:40.460 | What about 50%?
00:39:42.140 | What about 100%?
00:39:45.020 | My hope is that your investment in this course will return to you untold multiples throughout
00:39:50.100 | your lifetime.
00:39:52.200 | Because if we can move you from these lower levels of income into the upper levels of
00:39:56.820 | income, that'll do powerful things for you, for your family, for your wealth, for your
00:40:03.740 | community.
00:40:06.180 | So if you're interested, I'd love for you to come by radicalpersonalfinance.com/increaseincome.
00:40:10.320 | Come by soon.
00:40:11.320 | Save money.
00:40:12.320 | I'd like you to get a good deal.
00:40:13.320 | Come by any time between now and May 15.
00:40:17.100 | The price is $395.
00:40:18.100 | If you come by after May 15, it'll be higher.
00:40:22.100 | 495 is the next bracket.
00:40:24.260 | Come by and sign up.
00:40:25.700 | 30-day money-back guarantee.
00:40:27.620 | If you're in the course, all the videos are there.
00:40:29.380 | You can watch them now.
00:40:30.380 | You can join the first three weeks of calls.
00:40:32.100 | 30-day money-back guarantee.
00:40:33.500 | If for any reason in the first 30 days you look at the course and you say, "This isn't
00:40:36.340 | for me.
00:40:37.340 | Not learning thing.
00:40:38.340 | Not helpful."
00:40:39.340 | Whatever reason.
00:40:40.340 | You don't even have to give me a reason.
00:40:41.340 | Send me an email.
00:40:42.340 | 100% refund.
00:40:43.340 | No fees.
00:40:44.340 | No expenses.
00:40:45.340 | None of that nonsense.
00:40:46.340 | 100% refund for you.
00:40:47.340 | Come by radicalpersonalfinance.com/increaseincome.
00:40:49.280 | Sign up today.
00:40:50.280 | Again, radicalpersonalfinance.com/increaseincome.
00:40:51.280 | And I'll see you inside the course.
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