The_Secret_To_Building_More_Wealth
00:00:00.000 | Hello, it's Sam from Financial Samurai and in this episode I want to talk about the importance
00:00:05.060 | of working smarter, not harder, for financial independence.
00:00:10.720 | So one of the guest posts that I had recently published was called "My Secret to Retiring
00:00:15.660 | Early with Only 4 Million Net Worth and 2 Kids."
00:00:20.000 | So there are two trigger words here, "secret" and the word "only."
00:00:25.760 | And this has been complained about in the comments section multiple times.
00:00:31.000 | And I wanted to address this because yes, the word "secret" is a trigger word and "only"
00:00:36.360 | obviously is going to piss a lot of people off who don't have $4 million.
00:00:41.440 | But this is one man's perspective on how he was able to retire at 41 with about $4 million
00:00:46.760 | in net worth, a wife and two kids ages 5 and 8.
00:00:50.680 | And if you read the post, you'll discover that his "secret" was being able to marry
00:00:56.320 | well and to work with a partner who had the same ideals as him in terms of saving and
00:01:03.760 | investing and planning for the future.
00:01:06.560 | And she is going to continue to work, she's going to make at least $350,000 if not more
00:01:12.600 | once she becomes a partner at a law firm.
00:01:15.360 | And he is going to take a step back and spend more time with his children and relax.
00:01:21.400 | Now if you were to look at Juna, the guest poster, his financial situation, he was able
00:01:26.960 | to amass a net worth of $2.5 million.
00:01:29.680 | So can you retire early off $2.5 million at age 41?
00:01:34.560 | I would say you definitely can.
00:01:36.880 | They are technically not married.
00:01:38.760 | So he amassed $2.5 million, she has amassed $1.5 million which equals $4 million.
00:01:43.880 | But she's also two years younger than he is.
00:01:46.480 | And sooner or later, she's going to build an even greater net worth.
00:01:50.960 | So one of the main complaints is, why is Juna considered early retired when women who take
00:01:57.040 | off work to raise kids are considered stay at home mothers?
00:02:00.880 | That's a great point and that's a point that I've been bringing up in the past as well.
00:02:05.040 | Why are there some men in the personal finance sphere who just say they are early retirees
00:02:10.260 | when their wives continue to work, bring home the bacon, provide health care insurance,
00:02:16.080 | and that's security?
00:02:17.320 | Well, the reason why a lot of men say they are early retired is due to ego.
00:02:22.440 | Men have fragile egos.
00:02:23.640 | You can't tell, we all want to be puff puff the providers and we want to say we left on
00:02:30.680 | our terms and we are retired and we don't have to do anything.
00:02:34.120 | When in reality, taking care of kids is much harder than any day job that I've ever had
00:02:39.600 | and I worked in banking.
00:02:41.280 | We're talking for at least my family crying every day.
00:02:44.440 | You got to reason, you have to have patience, you have to have just so much concentration
00:02:49.840 | when taking care of young children because one look away could mean a disaster.
00:02:55.200 | So ego is the main reason why a lot of men say they are early retired even though they
00:03:00.120 | are full time stay at home fathers.
00:03:03.320 | Now let's turn the situation around.
00:03:05.720 | Why can't women say they are early retirees as well?
00:03:08.760 | I say women absolutely can if they want to.
00:03:12.320 | It's equality.
00:03:13.760 | Women can say they gave up their careers to be full time mothers and that's a great and
00:03:18.440 | important career.
00:03:20.240 | If you're a child, you obviously want to have more time with your parents than less.
00:03:25.480 | And so if someone can give up their career, especially if it's at the pinnacle of their
00:03:29.640 | career, Juna became a partner and he was a partner for three years until he said, "You
00:03:35.280 | know what?
00:03:36.280 | I've seen the pinnacle.
00:03:37.520 | I know what it's like to be a partner.
00:03:39.400 | I'm going to leave now and not have regrets because more money is not going to make me
00:03:44.240 | happier and more money is not going to make our family happier."
00:03:48.560 | So I was pleased that some commenters were able to recognize how difficult it was to
00:03:53.820 | walk away from a lucrative career and a prestigious career.
00:03:57.640 | You know, three years in as partner, maybe in 10 years, Juna will be making over a million
00:04:02.920 | dollars a year.
00:04:04.760 | And Juna had the courage and the foresight to plan ahead to walk away for the betterment
00:04:10.840 | of his family.
00:04:11.840 | And I think that should be respected.
00:04:13.680 | Everybody's got a different situation, but I think that's a very respectable move.
00:04:18.840 | We have been talking for a long time on Financial Samurai about how to balance the income, the
00:04:24.240 | net worth and happiness.
00:04:25.680 | At the end of the day, we want to be happy and we want to use money to make us happy
00:04:30.500 | and live the experiences that we want.
00:04:33.020 | So for Juna and his family, he thought $4 million combined, good enough.
00:04:39.480 | You know, I believe thanks to inflation, $3 plus million is the new millionaire threshold
00:04:46.000 | for living like a millionaire from 30 years ago.
00:04:50.360 | And in probably 10 years, $5 million is probably going to be the new $1 million.
00:04:54.400 | It's just what inflation does.
00:04:55.840 | It makes the cost of living more and more expensive.
00:04:58.720 | And we all know this in the year 2022 with the print at over 8.5%.
00:05:04.600 | Don't forget those I-bonds going to pay over 9%.
00:05:08.160 | That's something to check just FYI.
00:05:10.040 | But a $4 million net worth is broken down into about $1.2 million for the primary residence
00:05:15.160 | and $2.8 million in investable assets.
00:05:18.280 | Those investable assets, according to the Post, generates about $60,000 to occasionally
00:05:23.500 | up to $120,000.
00:05:25.740 | And they have a lifestyle that requires $160,000 a year for their ideal lifestyle.
00:05:32.600 | So $160,000 a year means you got to make about $200,000 a year gross.
00:05:38.160 | Therefore, only one of them can retire early.
00:05:41.400 | And the fact of the matter is his wife doesn't want to retire early because she wants to
00:05:45.400 | see what it's like to become a partner as well.
00:05:48.680 | And then maybe after two, three years, she might think, "Oh, I know what being a partner
00:05:52.880 | is like, making more money is like, the prestige is like the status."
00:05:57.040 | And maybe she'll join Juna in early retirement.
00:06:00.360 | But she's not going to quit before she gets to that pinnacle.
00:06:04.560 | Otherwise, she's going to have that regret.
00:06:06.760 | So in my circumstance, I tried to become a managing director.
00:06:10.120 | But after one year, I decided, "I tried.
00:06:13.400 | I'm out of here."
00:06:14.400 | At least I tried.
00:06:15.440 | But if I didn't even try, if I wasn't even up for promotion to managing director after
00:06:19.220 | three years of director, then I would always be wondering, "Okay, what if I did try and
00:06:23.840 | I could have got to MD and then my life would have been better?"
00:06:27.120 | I don't think it would have been.
00:06:28.200 | I would have had more stress and more responsibility, albeit having a bigger bonus at the end of
00:06:32.880 | the year.
00:06:34.320 | But at least I tried.
00:06:35.320 | And I think this is what everybody has to contend with.
00:06:38.680 | If you don't try to get to the top of your career or whatever it is you're doing, will
00:06:43.520 | you regret it?
00:06:45.120 | And for me, the answer was yes, I would regret it.
00:06:47.920 | For Juna, the answer is no because he achieved it.
00:06:51.640 | And for his wife, it probably is yes, she'll regret it if she left early.
00:06:56.160 | And besides, they've got two young kids and they're just staggering their early retirement.
00:07:02.200 | Now I want to focus on the word secret, his secret to retiring early.
00:07:06.940 | A lot of us were focused on saving, investing, making right choices, and then going from
00:07:14.040 | there.
00:07:15.040 | We have like this heroistic individualism.
00:07:17.560 | I don't know what you say, what it's called, but we just focus on ourselves.
00:07:21.200 | In America, it's like independence, individualism.
00:07:24.400 | But what I think this message is saying, this post is saying, is the secret is to actually
00:07:30.560 | find someone who shares your same ideals.
00:07:34.640 | Life is so much easier when you have someone who believes in what you believe and has the
00:07:40.400 | same goals.
00:07:42.060 | So maybe instead of spending so much time reading and listening about personal finance,
00:07:48.000 | how to invest, how to get richer, asset allocation, and so forth, we should spend more time developing
00:07:54.260 | relationships, really key relationships, obviously, with our significant other, but also with
00:08:01.340 | those in our network, building a strong network that can pull us ahead when we fall or when
00:08:06.860 | we want more opportunity.
00:08:09.040 | One commenter said, "The secret in this case wasn't some money investment management insight
00:08:14.020 | that I think a lot of us hoped for.
00:08:16.660 | The secret was partnering with a rich person who was cool with you working but making no
00:08:20.820 | income."
00:08:21.820 | Now, if you read the post, you will have learned that Juna and his wife met in law school when
00:08:27.480 | they were both broke and in debt.
00:08:29.700 | So back then, they didn't know what their future held.
00:08:33.820 | Maybe they could have dropped law altogether like many, many lawyers do after 5, 10 years.
00:08:40.200 | Maybe they could have just changed professions and become social workers.
00:08:43.100 | You just don't know.
00:08:44.680 | But you got to make an investment.
00:08:46.600 | And the good thing about relationships is that you can nurture your relationship to
00:08:50.600 | improve it.
00:08:51.600 | You can whisper sweet nothings during pillow talk or you can encourage them to do better
00:08:57.680 | or you can pick them up when they're down.
00:08:59.900 | You can do a lot of things to improve a relationship.
00:09:01.800 | Whereas if you're a passive investor in a stock, you're just going to hope that management
00:09:06.640 | has their head on straight and they do the right thing.
00:09:09.480 | I have a feeling a lot of us, if we use percentages, are around, let's say, 80% focused on how
00:09:17.320 | to optimize our finances and maybe 20% on how to improve our relationships with our
00:09:23.620 | significant others and other people in our network.
00:09:26.640 | I think that percentage change or difference is too much.
00:09:30.520 | I think we should probably move in more towards 50/50 or 60% money, 40% relationships.
00:09:38.600 | And if you don't have someone, if you're single, you should probably spend more than
00:09:43.040 | 50% of your time trying to find someone to partner with.
00:09:47.360 | Because again, partnering with someone who you love just makes life so much better and
00:09:52.640 | so much easier.
00:09:53.880 | And just think about the simple situation of, let's say, splitting rent costs.
00:09:58.040 | There's a $1,500 one bedroom or two bedroom.
00:10:02.640 | It's $1,500 if it's just you, but it's $750 if you split it equally and you like to share
00:10:07.760 | that space with someone.
00:10:08.760 | It's just that much easier.
00:10:10.640 | So in conclusion, please try to nurture your relationships, your existing relationships,
00:10:16.160 | and your future relationships.
00:10:17.840 | I think they'll do a lot to help you build wealth and happiness over time.
00:10:22.840 | Thanks so much everyone for listening.
00:10:24.340 | If you liked this episode, I'd love a positive review and share it around.