How Real People Become Millionaires (None of That Social Media Hogwash) 

Great idea. I started paying attention to finances around age 27.

and a more realistic annual percentage raise of 2-3%

Yes, I became obsessed with finance and investing/savings rate at 28 y/o. Before that i didn’t have much of a thought out plan, but thankfully I was still saving money. Investing was only 6% in 401k with 7% match, so 13% of my pay went into my 401K age 22-27. I def could’ve and should’ve been doing more! 😢

Yes, 100% . I want to see mutants with less perfect starting points

@@MightandMagic88exactly. I know very few people who make over $150k and I’m in my 50’s.

Well done, manny and Mandy are kind of the ideal, but we all have different stories! Better late than never!

Manny and Mandy are far from average. This is just an ideal scenario. Most people are not this diligent or ideal.

You’re basically talking about the early steps of the FOO being stretched over a longer period of time

I think they get to 5% because it takes into consideration the occasional bonafide promotion that might get 10-15% a few times in a career to pull the normal 2-4% annual average up. In corporate America it’s not unusual to double or even quadruple your starting salary in 15 years or so. My wife literally quadrupled her white collar salary in 15 years, mine started higher but had slower progression but still ended up 2.5x more in 15 years… that’s more than 5% average.

Well pharmacy has other issues, but over the last 4 years (that’s all the data I personally have) I’m averaging about a 7% average annual raise. I have pharmacy friends only seeing 4% but they got higher starting offers which meant more money but a lower average raise.

Most people I know only get a 2-3% raise annually

Sounds about right 😂. Not all messy middles are the same but they usually rhyme.

woof that sucks man.... prayers and hard work blessings for ya! you'll be back on your feet in no time at all!

That's nearly my same story, I'm about to turn 36. In my case we had to replace the roof last summer (2023), I lost my job January 2024, we have a baby due in mid May and we literally just ordered a new washer from Costco. I'm still unemployed so extra expenses are a problem right now.

We've been in our house six years with no major issues; I've recently started feeling like I'm on the clock for a major house expense...

@@BegravelseinBrussels you ARE on the clock, that's why there is a critical need for an emergency fund that is larger than an average American household, and then even the worst major housing expense can't derail you.

Pretty sure it’s spreading out the promotion raises on average

I was concerned about the same thing, so I wanted to hunt down an answer. I am not a financial expert and don't have time to hunt down tons of research so take it with a grain of salt. I would love perspective from the money guys on why they choose 5%. I found a St. Louis Fed chart for nominal median household income and compared it to an expected 5% increase. There are a lot of stretches where the median income stays pretty close to 5%! But whenever there is an economic downturn it falls away pretty fast. If you zoom out over the course of a career it is way behind 5%. However, you will likely start your career below the median and end it above the median as you specialize and gain experience. This could potentially explain the discrepancy? It does imply to be a mutant you have to be in the right career fields and never coast professionally.

Average Wage Increase from the social security site gives an average increase of 3.7% per year. So as long as you go from below average start to above average finish, probably!

I just retired two months ago. Over a 38.5 year work career, I averaged 4.2% annually. Some years were really tight and barely 2% while other years I had a promotion and approached 9% or so. 5% might be a little high but certainly not way out.

In the 28 years I have been working, from my first job out of college to now, I have averaged about 7%, with promotions and job jumoing.

Probably below 7% interest and paid off in 10 years. So the year he loses that payment his wife is at home.

They would have mentioned it, so no.

​@@abetterlivedlife as long as those student debt were in their budget there would have been no need to mention it.

I also did a double take when they said 5% every year. That sounds AMAZING! I agree more like 3%/yr with a bigger promotion once or twice per decade

I agree. Both of them starting at $50k a year in their 20s. That's a household income of $100k starting out. 5% raise consistently -is not typical.

It’s very realistic. I’ve received a 15-20% raise every year since I was 23 and I’m 27 now. With all due respect, if you don’t get at least a 5% raise, it’s time for a change of job.

@@ericmarquez2287 3.5% is the national average. It's totally realistic to expect 5% raises during *some* of your career, but no way does the typical person keep getting 5% FOR 40 YEARS. And all due respect, there's no way your company continues 15-20% every year. You'll be making half a million per year in about 10 years! Give it another few years and your salary will be $1 million!

I believe 5% would be close to an average, I typically get about 8% yoy.

Your story is very similar to my story. The hosts’ example is really about 2 kids from middle-upper middle class who got married without any childhood hardship, trauma or student loans. Not everyone is so fortunate with their upbringings. Typical privileged white hosts who cannot see past their own world.

You got this!!

You and me both brother

Stay strong! I felt the same way when I was in my 30s struggling through the messy middle. By my mid-40s, our house was paid off, our household income was through the roof and we didn't have a financial care in the world. The biggest keys to our success were dual incomes (once the kids reached school age) and avoiding lifestyle creep. You got this.

I am 26 and I bumped into these guys as I was finishing up graduate school... very luck that the algorithm gave me Bo and Brian because I could be in a very VERY different place without them. Not that I am rushing to get to my 50s, but I am excited to see the outcome of following the basics that Bo and Brian have been preaching. Love these guys.

I am 60 and just retired. Looks pretty similar to mine. Electrical engineer.

I'm not saying it's not possible. I'm asking for data to explain how one would accomplish this as a baseline. I've been successful, but the path that I traveled isn't available so I wouldn't consider what I did typical. I'm asking for data to backup the assumption.

@@kevinailes4374 that's fantastic. Is the path that you took still available? If it is still available, who's providing it? My reality. There's a value that provides my happiness. I am not thinking that what I did is simply attainable for everyone

@Kevin Ailes Did you delete your post? Because I didn't say it was impossible to replicate the Manny assumptions. I asked for the industry that it was possible. I am also in management and make budget decisions for employee pay. I'd love to give everyone a 5% or more raise every year, but that isn't going to happen in my industry and I couldn't roadmap a way that someone could get those types of raises for 40+ years. I want data and not assumptions. All models are wrong, some models are useful. This model, in my honest opinion, is lacking.

@@chrisgreen359 there were discussions about this in outher comments. The average raise is about 3,7% someone said without double checking. But the model is not applying to everyone, its applicable for very finance savvy people with lots of diciplin, and in this case imo its a valid assumption. The path they showed led to ~125tsd $ income per person, which is between the 75th and 90th percentile today. So the assumption 5% p.a. and a 20% raise one year lead to a 1/4 to 1/8 result. Fairly archieveable if you know what you are doing. Regarding your experience with salary planning, people with such a tragectory would probably a) not work in the same role and b) not at the same company for their whole career. They would take on more responisibility and switch jobs if they cannot get their raises. We are not talking about an everyon case, we are talking about an at least top 20% case.

Do they know something we don't? These elites in tandem with the corrupt government will take this country to it's knees like the fall of Rome, My sympathy goes to anyone approaching retirement, you may have reasonable concerns over your pension and if it'll stretch to cover the rising cost of living, bad regulatory policies, bad energy and insane fiscal policies.

@@LeeParkchu How does that help in anyway?, I’m not being rude but what do you think?

Most people miss it but the secret to retiring comfortably is finding a way to make returns while your money works for you

The taxable brokerage acts as a bridge to be used until you can take money out of Roth or 401k

@@stevenewsome5306 They don't need a bridge account though because they retire at 65. They would only need a bridge account if they were retiring early before 59 1/2. Also, I'm not saying that they shouldn't invest in a taxable brokerage account at all. I'm just asking why they aren't maxing out their 401ks first. The 2 of them could put in a combined $46,000 into 401ks which would make up a much higher percentage than around 5% of their savings. Even if their plan was to pay taxes now and only pay capital gains taxes in the future, they'd be better off putting that money into a Roth 401k.

What?! They are a dual income family - they are married and both college educated. 100k income would assume that they stay at 50k salary each forever, which is ridiculous. Me and my partner are not long out of uni (a few years) and our combined income is already over 100k. So it is definitely attainable. Get a useful degree that has good earning potential. Marry with similar goals, so you’re dual income. And bang 150k+ income. It’s very realistic 😂

Overall, I think the idea of the video is very good. Life happens, savings rates change over time, etc. etc. etc. That being said, there is a lot to this comment. 5% yearly increases in your income is very realistic in your 20s and maybe even your 30s, but a single decline in income at 40 and then carrying that 5% all they way to 65 is not realistic at all. Even if both of these individuals had very stable jobs (a single job loss at 40 is extraordinarily stable in my opinion), it'd be much more realistic to hold the annual raises after 40 to equal the rate of inflation, or in a very optimistic scenario, something like 0.5% over inflation. Running this at 2% over inflation each year sets the whole thing off after 40.

My brother in law is a Mechanical Engineer with a PE. He went into the financial industry about 2.5 years ago. He's starting to see the benefits of the change now and will within the next year or two likely be making more than he was / would have been as an Engineer. I've been tempted to do it myself as well, but as someone in their mid thirties in the messy middle that income means a lot. Thinking about finding a way to start working part time towards financial advisor maybe dealing with West Coast clients so they're in the afternoon when I get off work.

Opportunities abound in any field, but, bear in mind, this industry didn’t even really exist before about 30 years ago. At least nowhere near its current form. What changed? Basically the mass adoption of the 401k and technology, i e. computers and the internet, online brokerages, financilization of everything etc. What do we know now, in aggregate, financial and investment advisors almost never beat the market for any appreciable time period. So, this industry is poised to be displaced by automation. That is not to say there won’t always be a need to assuage and hand hold the clientele, but what seems to be most common is that new entrants into the financial services and financial planning industry quickly become little more than glorified insurance salesmen. Why, because commissions on insurance products, think whole life and annuities, are huge. This activity becomes a major drain on investors accounts, with the vig going to companies who underwrite these products. So, the idea of being a “fiduciary” while simultaneously promoting bad insurance products or loaded mutual funds or frankly anything that pays a commission is an oxymoron. If you are considering going into this field, might I suggest specializing in tax work. You rarely find a financial advisor willing to dig into the tax weeds. Why? Because it is hard and because generally speaking, this work is best done by accountants which requires higher ed and rigor. If you can both provide financial advice and specific tax management, now you have a chance to really add value for a client. Just my two cents.

Follow your passions.

the 75th percentile of 25 year olds earns 60k so assuming they started at 50k at 22 they got a yearly increase of 6%. From that i would say its safe to assume that 1/4 americans earns 50k at 22, not such an outrageous assumption imo. Beyond the norm sure, but "the norm" is not financially literate.

we dont know if they started at 0? Student loan payments could just have been budgeted for which is manageable if he starts with 15% savings rate.

Bo is like a human version of a golden retriever. Always excited about something 😂

If you are dedicated and make informed education decisions its a fair assumption imo.

@@mlsasd6494really. Two kids out of college and already 60k plus and working with young people.

I don't think they're disconnected, they're trying to educate people on how the best way to reach a goal. They understand that it's not always gonna work the same way it's gonna take longer to get to that 25% goal but that's just it it should be the goal for anyone that wants to build wealth. I think compared to a lot of other financial content creators, they're the most rooted and down to earth and realistic they know it's not gonna work the exact way they say it should.

The median means 50% percentile. So half the population will be below the line and half will be above the line. Not sure why that is an unfair

You can do it in one sentence: you need to make more or spend less. Usually both. Hard to do a 40 minute show on that.

Most “real people” aren’t financial mutants. They’ve said in other videos getting above the median income is about where you start to escape subsistence living and have some surplus to grow wealth. Still a fair bit of people making 6 digits that can benefit from this content.

*Hard truth incoming…* Brian and Bo are not talking to the average person that is bad with money, saddled with debt and make financially poor choices. They are not talking to the people that are comfortable and lazy. They are talking to financial mutants, so the nerds that are really interested in personal finance, hard workers, love spreadsheets, organised etc. Those people are the ones that are grinders, the ones that will work hard and sacrifice to get to where they want. Often times, it’s these kind of people that end up *high income earners* because of their drive. That’s their audience.

They didnt have to, they even said that, my life went pretty close to the example and I could be done at 57 if I wanted to roll the dice on sequence of returns risk but Ill probably wait until 60.

they are able to spend 150tsd $ in retirement. They could have just cut their expenses and retire earlier.

@@mlsasd6494 There are some expenses that you cant cut without radically altering your financial life - usually running costs on properties acquired and other assets that have to be maintained (taxes - insurances - upkeep etc.) and you are correct - anyone can retire if they don't spend any money...

You are so absolutely correct about having a spouse that shares that vision. I am lucky because my wife is also a money saver and not a big spender.

I'm assuming you started your savings and investing journey at 20 something though, huh?

@@AnalyticalMenace yes but at a very small amount in a job that paid very little. It took many years to build up to 10%. At 31, had cancer and that derailed life for a few years. At the time, I did not expect to live this long. Learned about FIRE and 4% rule in 2017, and then ramped up saving

Do you have $2 million? Do you even have $1 million?

@@giainto5564 My point was, inflation keeps moving the number higher. $1 million isn't enough anymore. People in their 20's are likely to need $2 million (if not more).

As you get closer to retirement, one strategy is to have multiple buckets to optimize taxes. Taxable brokerage accounts are taxed as capital gains and not income (like an IRA) so they’re more favorable tax wise (not as favorable as a Roth and you don’t get as much up front savings on taxes as an Ira) but they’re awesome to have in your buckets preparing for retirement and tax strategy! Also, you can access them whenever you want and don’t have to wait til 59.5 so if you retire earlier, it’s also handy to have.

@jessymadsen2699 yes, indeed that's true. But it seems excessive. They could have optimized more of the tax savings in the 401k, or if they had enough pre-tax they could have done more in a Roth 401k. The flexibility of the brokerage is very nice, it just seemed unusually high in comparison to the tax-advantaged accounts, especially since they didn't retire early.

If you hit 25% savings rate before maxing 401k, TMG considers Step 6 complete and you can proceed to Step 7. Then in Step 7, you can decide if brokerage makes more sense than giving up tax advantaged money. That’s probably what you’re seeing.

@@cooldude2648 if you look at the slide they’re only at about 15%

I have $1.4M in my 401k at age 46 starting in 2000. I actually have posted my milestone before in comments to show the ups and downs of the past 23 years. I can share that with you as a real life example if interested.

@@NewGuy2024 I am not sure why or how your finances have anything to do with the video., I was stating that the content of the video (Manny and Maddie) would be a lot more interesting if it was accompanied with actual numbers. The assumptions of salary and costs vary dramatically state to state, so all I was saying is that this general ideal example is just fluff without numbers to support it. Spoiler: If you just follow the FOO you win, but content is more interesting when seeing the numbers behind the logic.

@@rlig5932 Gotcha. I believe some of their previous videos about this same topic do include numbers.

You are thinking like an employee - you have 2 choices in todays economy if you want to make serious money, A. Change jobs every 3-5 yrs for a higher paying company (assuming you are in an in demand job description - I wasnt) or B. Start your own thing (which is what I did at 32), work your ass off for 25 yrs and boom - youre a multi millionaire with many options - and yes it is just that easy - if you have the balls to do it.

@@NewGuy2024share it with me. I would like to see it

If you are good at waht you are doing you should not aim for what everyone gets. Getting 5% yearly probably includes position and employer changes.

🤣 Straight as hell dual-income no kids over here trying to compete with the GCWOK 😁. Wife and I don't seem to be able to conceive naturally and decided not to pursue IVF.

Yeah for sure. I think the only way to make that work is one person making as much as both here, and potentially lots of money from older generations. Maybe I missed it, but these guys stayed in their starter home.

I mean, it certainly isn't the norm but it isn't unheard of. I've always got raises between 5%-20%/yr at every job I've had (Got a 15% raise at the start of this year.) Granted I work for a Swiss company, not an American company, so that's probably why.

@@GreedyBeanieyou nailed it when you said it’s not the norm. It’s definitely not the norm. But yes, you could find corner cases I’m sure where it’s happened.

got a 25% raise at 23 (position change), friend of mine got a 20% or 45% hourly raise (40 hours to 35 hours per week) at 27.If you are good at what you are doing you should not aim for "typcial" and if you are educated enough at 18 to make education choices to lead to good job opportunities and diciplined enough to be good with finances you are probably good at what you are doing.

@@mlsasd6494it’s always possible to find someone that fits a scenario. Also the lower your starting pay the easier it is to get a higher raise based on percentage.

Summer camp. We are a two income family and we also send our child to camp during winter and spring break. Our parents are not able to and/or not interested in helping out. If you have good mom/dad friends, maybe share the load? During spring break, Family 1 agrees to take off a day and watch all the kids, then family 2 returns the favor for day 2, etc etc. some camps are very expensive but there are also more affordable ones. Check out youth sports clubs or the Y

Also if your workplace offers FSA you can pay for camp through the FSA if both parents work

@@kp67113 Thanks, great ideas! We have a year to figure it out, and I recall, as a child, going to a babysitter until I was old enough to watch my siblings.

They assumed 3%, which is the historic average. We’ll get back to that over the next 5 years or so.

He sure is

I haven't read the fine print on the offer. But I'd be willing to wager that they have language in place that will, over time, benefit their business rather than you. Probably through hidden wealth management fees. Just my guess, I don't know for fact.

Because the Robinhood match is only 3% of your contribution, I would argue it moves the needle in your financial life about as much as using a cash back credit card. Which is to say, not very much. Certainly get that benefit if you already have a Robinhood Gold subscription and think it's valuable, but imo, the juice is not worth the squeeze.

Robinhood is a taxable brokerage account and should be more focused in step 7 hyper-accumulation unless you’re planning for FIRE

@@Yugiboii Robinhood is very actively advertising their new retirement accounts, with matches.

Every comment replying to this so far is wrong lol. Goes to show why you shouldn’t trust the youtube comments for your financial education. For those wondering, Robinhood is offering a 3% match for ALL transfers and contributions to their Roth IRA. The benefit to Robinhood for doing this is that you have to keep your money there for 5 years, and you need to buy one year of Gold ($60). If you have a substantial amount of money at another brokerage it can be thousands of free dollars.