Are You Richer Than Your Friends? (This Data Might Surprise You!) 

My buddy just got out of the military and recieved his back pay. He immediately bought the newest 2024 truck. 😔 i tried to convince him to watch you guys but no luck. I just put another $500 into my Roth IRA though 😎👍making my dollar bills work for me.

We are going to be doomed if Bo’s not excited for an episode

The wierdest realization was that my income was of the lower side of my friends, but I’m the wealthiest of them all by far. I was the only one that had any investing account other than 401k. One of my friends had a majority of his money in a savings account collecting less than .1% over a decade. Others spent more on going out to eat, brewery’s/bars, or multiple vacations in a year.

I have a co-worker that considers his 401k as his emergency fund. Some people really lack financial literacy.

Our friends all drive new cars, renovate their homes every 5 years, go on lavish vacations, etc. Then you talk to them, and they are all broke! My one friend refinanced his home to go on a vacation and make a down payment on a Tesla. We are in the top 2% of income earners, and I drive an old minivan.

You know, I gotta admit I just love this channel I found it not all that long ago, but everything from vibes to advice is just top notch. I can't thank y'all enough.

I work with multiple individuals all with identical incomes. it is interesting too see the ones with a 300k+ house, a 60k car, credit debt etc while others live in 150k houses, drive 8k cars, and no credit debt.

Thanks team for this video. I really needed this to realign myself. I live in the SF Bay Area and being surrounded by Teslas and BMWs, I always feel like I'm the poorest house in the richest area. But I make good money, my car is paid, my house is within my means, and I'm a financial mutant. I might not be the shiniest now, but in 30ish years, I'll be retired and retired well. Thanks again~

I have a few friends that make a ton more than me. They aren’t as focused on saving like my family is. Trying to be on track to pay off my house in 10 years from now (even if we never receive another pay raise). Found a way to live below our means while also truly living: concerts, travel, spending time with people

Most of the people I know, that are my age, still think 401ks aren’t worth it because they “want their money now”! I’m 26 years old.

3:38 the math would actually make sense to be over 100%. The people who make over 500k also would be lumped in with the people who make over 100k and over 50k

LOL 20% of households make $1M??? Holy crap, people genuinely have no clue. It explains a lot though.

Purely because I'm the only one in my close circle who budgets on a monthly basis, I am by far the richest of my three closest friends. We're all in our late 20s with comically low investments. I own a condo on a 30 year mortgage with about 40k equity as of last month, have 5k in savings and investments, own 2 garbage but paid off cars, and my only consumer debt is 27.8k in Student Loans. My net worth last month was 24k heavily weighed in the house. None of my friends have a 0 or higher net worth.

1:13:05 Not a huge fan of Dave Ramsey but I've always loved his response to this. "Tell them, my finances are not a democracy. You don't get a vote."

Avoiding a car payment made me so much money

Don't gamble with the emergency fund, dont place it in the tax free wrapper because that has restrictions. As long as you have a savings account that pays interest on it until it needs spending it is doing its job. Set forget, spend, replenish then leave until needed again.

That roth emergency fund question may have involved a Canadian who did not fully understand the difference between a TFSA and roth IRA. The TFSA is a phenomenal emergency vehicle if you still have contribution room.

I feel I am more wealthy than many/most people around me. I say wealthy because I want to include things like; a self of accomplishment, reduction in overall stress and anxiety about potential events that may occur, and an overall feeling that my financial wellbeing is/will be just fine in the end. by the way, I really enjoy listening to your podcasts (sadly I don't get to your RU-vid videos much). From someone who is just getting their RIA/Financial Planning practice off the ground, I look to firms like yours for inspiration. Keep up the good work.

On a level, it scares me that I am well off compared to most of my friends and neighbors. I look around and realize how above their means most people are living. I don’t generally talk about finances outside of my peer group at work, but we have a few friends who are not financially competent even though they think they are. There is a lot of living for today with no 10y, 20y, or any sort long term plan. When the music stops is a terrifying thought.

Thanks for the nuanced answer on the whole life insurance. My friends family was encouraged to get one before he became an adult since he was high risk for a med condition (and I believe they can't deny minors based on medical conditions). He declined and now is unfortunately unable to get life insurance

thanks for leaving the live stream up!

Currently 23, at 18 i joined the Marine Corps. Initially put 10% of my base pay into a tsp roth ira with a 5% percent match and 1% agency match. For the first 3 years my funds were conservative. In 2022, I swapped 80 funds into the aggressive C fund and boosted to 25% along with the matches. This is putting 1100 a month into my ira and 300 into other personal investments. Very fortunate to have learned this young through the military and i am still active duty only debt is my car that is a year from paying off. Watching your channel definitely has helped me manage my money.

I loved this Q&A.... and we need more Rebie!

There's nothing more dangerous than comparing yourself to the "average person" when it comes to your financial health. It may give you a false sense of security and pride in your current position. Don't lose sight of the fact that the average statistics for debt, income and net worth typically include *EVERYONE* (welfare recipients, unemployed/underemployed individuals, non-working spouses, elderly people on fixed income, etc). It's also not very fruitful to compare yourself against your friends and peers because they may not have the same financial goals and drive as you. Set your own goals and compare performance against that.

hoping you can get Ramit Sethi on your show!

3:45 Sorry I think you got confused.. those numbers are not stupider to stay below 100% when summed, because the categories are not mutually exclusive A person that earns 1M a year is going to also earn more than 50k a year

I genuinely feel that this channel has changed the trajectory of the life of my family. We've always been financially okay, making a great joint income with an affordable mortgage and no other debt. But after finding this show, my curiosity for personal finances has exploded. We have made so many changes in our finances over the past 2 years that shifted us from "doing fine" to majorly setting ourselves up for success in our mid 50s with early retirement/next endeavor (Currently husband and I are 31). Thank you so much for your channel and providing this education to your audience! It's literally changing lives! 🎉

People in the survey were mixing net worth with income.

Yes, by far. But most of them don’t know by how much and I like it that way.

11/10 video editing today! Love the video graphics give the editor a raise!

I'm wealthier than most of my friends, yeah. My wife and I both work and have no kids. Most of our friends are single income households with children. Our friends were met in the workplace so we all know what we make.

Roth capacity is limited, and as soon as you draw down that $6500 to cover an emergency, or whatever amount, you’ve just permanently lost that amount of your Roth capacity’. It’s similar to time in that respect.

A $4k engagement ring bought 25 years ago was a lot of money. I'm sure $4k bought a really nice ring

That ship course explanation was a d@mn wisdom diamond….good analogy!!!

Being live may be the reason for the comment, but I don't understand the comment about > 100%. - To make > 100k, you also make > 50k; so, people should necessarily be counted more than once. After that, I am also surprised at how high people think the %'s are for 500k +

I love the show guys and I am so much better with retirement now because of channels like yours.

If roughly 1/3rd of households are $100k in earnings it makes me think that some places have extreme cost of living.

3:45 I'm a newer viewer so excuse the criticism. But at this point I yelled "no you're bad a math!" because this type of survey doesn't have to add to 100%... you could say 99% of people make over $1 a year, and 63% make over $50,000. Both can be true, but you're well over 100%. You could take a measure increasing every $5 from 0-$1m and have a total percentage in the 5 or 6 digits!

Regarding Roth 401(k) contributions, its not all or nothing. My plan allows me to split my contributions between pre-tax and Roth. So you can have 75% go to pre-tex (getting the deduction today) and also start to build Roth with 25% of your contributions. Not a financial advisor, just thoughts.

Interesting data, but I believe a lot of the people that are rich are that way because of their businesses and it doesn’t register under their personal income per se

Just want to say thank you. Investing more money than paying in income tax. Watching it grow from just my contributions is fun. Can’t wait till the market puts some work in

Real state has never been that appealing to me. As a home owner, this year alone I had to get a new garage door and repair my furnace. Two years ago I installed new carpet and replaced the front door. Not to mention that taxes and insure went up since the houses are over evaluated in my town. There are tons of expenses associated with being a homeowner.

We were overseas missionaries for the first 5 years of our marriage and we had to raise our personal support. We didn't have any debt and we had a pretty comfy net of support, even had huge gifts when we really needed it. We never realized we should have been doing anything but just putting that money into our low yield savings account and now we're kicking ourselves. Thankfully we just went from earning a collective $50k with a young child in daycare to over 3x that within a year. Now we have the money we never had and it's really hard not to spend it on ourselves and our daughter. Especially because just a few years ago we were living in a place where it was 5x cheaper to eat out every day than it was to purchase good food to cook. I could eat out really well on $4 per day there.

I always max HSA. It is basically my medical emergency fund. It's part of step 4... Or even 4.5 to me. I keep $2k liquid in HSA in cash and invest the rest.

LOL - #52:02 "hyperbolic discounting" which is an exaggerated behavioral bias of time - disscounting, favoring the present much more than the future ----- nerd-dom from Brian strikes again !!!! 🙂

I am constantly reminded of the song "Back Porch" by the Presidents of the United States whenever I watch this channel.

Can you guys do an episode on car leases? I work at a dealership and get benefits for new leases like $1,000’s of dollars off the MSRP, GAP insurance and a residual right around $10,000 in 3 years I don’t think leases would be a great option for very many people but it seems like some of them might not be too bad especially since the rates on some leases are lower than APR’s on financing

3:44 Those probabilities are allowed to sum to > 100% since the percentages are for X greater than some value. e.g. if the data were incomes of 25k, 55k,150k,600k,1.1million then those percentages would be 80%, 60%,40%, and 20%.

The beginning graph drives me crazy. They didn't ask people how many households make $50-100k. They asked how many households make over $50k. So all those people that make $100k-1M+ should also be counted in the $50k bucket too, based on how it it written. It doesn't mean they calculated over 100% of people. It probably means the data is distorted because people were answering the question under 2 different perceptions. This is why so many surveys are useless.

Later in life 25 percent is small, once your debt is gone and your life style doesn’t go up, guess where your debt payment goes? To your investments

Brian is always excited 🎉 🎉🎉

The categories are not mutually exclusive, so they don't have to add up to 100%

Happy B-day, Bo!

Here's an interesting fact. Only 10% of individuals that earn over $1 million a year is through active income(job.). 90% earn mostly through passive income.

I do our household net worth every quarter. I love looking forward to getting our quarterly statements in the mail.

I'm only 4 minutes in, so I'm not sure if they correct themselves, but those statistics arent supposed to add up to 100%. That data would claim that 50% make less than 50k, 12% make between 50/100k, 12% make between 100/500k, 6% make between 500/1000k and 20% make over 1mil which does equal 100%. An off-handed statement about the people that answered this survey is rude and blatantly incorrect.

1 hour 12 min - woman saying her friends say she’s investing too much - those are the same friends that will be asking if she has a room for rent, when they retire!

Watching you from Europe.

Yeah, so once you have the emergency fund and 5 years in Roth if you can’t otherwise max contribute, then you can hold your emergency in the Roth in conservative return funds (fed funds is 5% right?) so what’s tax savings on 5%.. it’s effectively a 1% boost).. if you are maxing anyway, then no

Ill pay less taxes in retirement than i do right now, ill take my chances and do a roth conversion when my income drops when im older.

I’m retired with a 7 figure IRA. I want to buy a new car, but if I pay cash and take the money out of my IRA I’m subject to 20% taxes. What can I do to not have to pay an extra 20% for the vehicle?

What is your recommendation on how to pay for expensive "toys." For instance, my husband and I are thinking of purchasing a camper. Is it OK to take. a loan, or should we save up and pay cash for this? Thanks.

Yes

I'm about 15 minutes in. Can you do a similar video for net worth or savings & debt? I'm income-poor right now

Is that $1 beer a Busch light

Coming up on age 60, I don't have any friends, and I'm cool with that. Every friend I've ever had has let me down. Just having the wife is fine with me.

For the survey at the beginning of the video, did they only ask people who never had to work for their money?

Chad: a guy that guys want to be and women want to be with.

I think a lot of people (FIRE folks specifically) are starting to realize setting a goal with a specific number attached does not automatically yield happiness once it’s achieved. They may find that there’s still something missing once they achieve that goal. Being rich is worthless if it comes at the cost of your loved ones, health, or other values.

I'm 1 of 2 successful people in the friends group. Most of my friends have had bad hands dealt too them in life, and they'll never get out of or recover from.

Technical question on the emergency fund in the Roth - let’s say you put $6,500 into a Roth on Jan 3rd. In May, you have an emergency and need to pull out $5,000. Do you have to wait until the next year to put that $5,000 back in? I think it’s, yes, you have to wait, because there is no claw back provision.

Yep, Bo, as long as that money is invested in good quality companies with good fundamentals and a good CEO, even if that “money” goes down, you still own SHARES. And those shara will probably come back up. Having said that, yes, you have to look at stocks and see which ones may be overpriced, too huh valuations, etc…but o said good companies - making sure their technicals aren’t over their skis.

It really sucks if you have to pull out your Roth for your emergency because you can't put it back

What are you guys writing down when listening to these questions?

Some people are just in more debt than you

You also have, at least, one viewer from Canada.

Bo Hansen = Bo Handsome 😂

my guesses were 70, 40,10,

What are 'deductibles'? Doesn't tell much to someone from Finland. Something you can deduct from taxable income in taxation? What specifically? We have some numbers and systems so different here where e.g. education and health care is (almost) free. And pension systems are automatic and managed by pension funds.

Did the dude on the left just claim people are bad math because the percentages don't add to 100%? You do realise people can fall into multiple brackets right? Households making over 100k automatically also make more than 50k.

3:45 “this is well beyond 100%” Someone in 1m+ group would also be in $50k+ group. So it shouldn’t add to 100%.

Does it make financial sense to buy a new car and keep it for 10 years or more?

This is household income, not single income, huge difference. Also its income, not net worth. Also huge difference if you spend more than you earn. Many have high net worth because 50% of that is their home value especially their primary home, which is overinflated as far as i am concerned. I always exclude this in my net worth calculation.

The engagement ring slip made me laugh haha

Is a 8% HELOC considered high interest debt?

haha, he starts off with that "Over 100%" but I didn't see in the data saying it excluded the higher tiers. So it saying 20% make 1mil, 6% make less than 1 mil and over 500k, and 12% make over 100k but less than 500k. Cause all of the 1 mill people make over 500k. and thus would be a part of that number.

Is it up to 50,000? I was not sure if you were putting people who make less than 50,000 with the 50,000 group

Do you recommend maxing out a traditional 401K or should we break it up and contribute enough to get the max, and then max out our ROTH IRA’s, then put whatever is left into the trad 401K?

8% auto loan... I went to test drive a slightly used Corolla as I wanted to buy one new for 3.99% but couldn't find one in the color I wanted. Go figure, dealership is very good at selling and I caved when I thought I was given a good price (they can read you like a book). I wanted to not pay cash for new, wanted to keep my cash more liquid for upcoming expected expenses, but pay off after 2 or 3 years on a new car. Waited for the loan paperwork to come in, listened to the the payoff figure. In less than a week it had grown by $50 and was growing at $4 per day for interest (they wouldn't let me put down a large downpayment). Wrote a check and mailed the same day for payoff. Maybe I'll pay less in the end and be more happy going this route (hey, the car came pre-dented and scratched, so I don't have to obsess over the first one). I kept my old car and handed down to my daughter--she just has to get across town, so a 24 year old car is ok for that. Me, I drive over 100 miles a day for commuting. I spent the last year searching in the rustbelt to find something that I thought I could use, but... the used market is awful. Just awful. Not convinced I'll keep this car for 10 years but if I don't, it'll be because I can drop the cash to move on (while still saving 20%). Used to love cars when younger, now they are just a tool that does something for me, while costing me money. No joy now in them.

I’m weak off the new terms and phrases 😂😂😂

My friends make less than me and all live more luxurious lives than me. Pretty obvious they won't have any reasonable retirement. Then again, they all have wealthier parents so they never understood a savers mindset. I have one friend who spends hundreds on collector shoes and thousands on collector cards. It's bad spending and they just go into debt for everything. They bought a 2$k phone because it's all on credit anyway.

🎱 It is certain!

Is the face value of a term life insurance considered part of your net worth?

If you work for your money, you become rich. If your money works for you, you become wealthy.

It's actually not over 100% because it didn't say "over but less than"

Only idiots would ask this question. I don't care if I'm richer than my friends. I only care if I'm rich.

I’m confused of how much of the 25% savings i should keep as cash for short term sinking budget goals and how much should be the minimum investment amount. Should certain savings goals have a specific length of time if starting from 0?

But is Bo excited about this episode?

But you can pull your contributions to a Roth. Just not your gains.

You don’t want to move to San Francisco!