9 Financial Goals You Must Hit by 50

Hey there, real quick, before we jump into the episode, listen, if your earnings treadmill hasn't set you free yet, running faster won't either. Listen, hustle without principles just going to burn you out. So here's what I want for you. I want you to join me for my money machine experience live. It is three free trainings. Deep dive into how to escape the treadmill and build a money machine that actually works for you. All right, Grab your spot here by going to moneymachinelive.com and I'll see you in the free training. All right, so you're trying to figure this thing out. You're building wealth. You're trying to build wealth. You're earning money. You're putting money away. You're investing. You're trying to do all the things. You're digesting the content and running the miles. The question is, how do you know if you're on the right path? How do you know if you're doing the right things and you're actually getting closer to your goal? So. So in this episode, I'm gonna break it down for you. I'm gonna give you nine financial goals that I want you to try and strive for to hit by the time you're age 50. Now, whether you're 20 years old, 30 years old, 40 years old, 50 years old, you use these as milestones, guideposts, and a checklist to make it happen. And I'm gonna break it all down for you in this episode of the Affluent Entrepreneur show so you can take it, put. Put it in your life and make sure that you're on the right path to financial freedom. All right, I'll see you in the episode.

All right, so you're doing the investing. You're listening to the content. You're reading the books. You're putting money away. You're participating in your 401k. You're getting the company match. You're putting stuff in an ira. You're running things from a budget. You're doing all the right things. But how do you know that you're on the right path? How do you know that you're on target to hit the numbers that you need to hit to make it happen. So here's what I want to do. In this episode, I'm going to break down nine things, nine goals. Financial goals that I want you to hit by the time you're age 50. And like I said in the intro, doesn't matter whether you're 20. Listen to this. 30, 40, 50, or even 60. Use these as Milestones, guideposts, and a checklist. And if you're, you're close to it, great. If you're not close to it, we got some work to do, and we'll help you there, too. So let's, let's start off with the very first thing, all right? The first milestone, the first guidepost that I want you to do. And I'm going to jump to my iPad. Here is liquidity. And here's what I mean by liquidity. By the time you're age 50, I, I want to make sure that you have some cash available. All right? I want to make sure that you have liquidity in cash. Now, as we're recording this high yield savings accounts are performing pretty well. Five, five and a half percent. So we're going to put cash away. But here's the reason for it. We want to make sure that we have enough cash to take care of ourselves for any kind of sustained downturn. Sustained issue an emergency, a big house repair, a big, big event, something that is not planned, and really start to build it out so you have the opportunity to navigate through it with peace of mind. It's the very reason that in my book building your money machine as part of the wealth priority ladder, we call this a peace of mind fund. Some people will call it an emergency fund. But the important thing is that when you're getting up to the age of 50 and beyond, is that we start to make sure that your peace of mind is assured because you don't have as long a Runway to recover if there's a downturn, a problem or a situation. And so it's important for us to make sure that you have liquidity in place. So that's the first thing that I want you to do. And you know, in our world, I say that, you know, there's so many people that say three to six months on, on, on their emergency fund. I think it's too, too small, too short. I think we need to be looking at nine to 18 months. If you want to average it, call it 12 months. Okay. And as you get up in years, you're probably going to want to extend it closer to the 18 months because you're, you may not be earning as much, you may be not working as hard, you may not be doing the things, and you want to slow some things down. So. And we need to have the ability to sustain ourselves. When you first look at this, you might say, well, that's a lot of cash to put aside. I get it. We may not get there right away. You'll start with three months, you'll get to six months, you'll get to nine months, you'll get to a year. Over time, it's part of the wealth priority ladder that we are building. The recipe to give you safety first, growth second. I need to keep you from going in the ditch. I need to keep you from doing, digging a hole. I need to keep you at ground zero and above so we're not having to, to fix a disaster. And at age 50, liquidity matters. So I want us to start looking to, to, to do that now. If you get, if you get your funds in place at age 40 or age 30, great. However, here's the thing. Let's say, let's say that you're making, uh, it's costing you $5,000 a month, $5,000 a month to live, and you're 30 years old, okay? It's costing you $5,000AMONTH. 12 months of that is $60,000, okay? So you want to have $60,000 in a peace of mind fund at that point in time. Now you keep working, you keep working, you keep working. Now you find yourself at 35 years old and at 35 years old, you're now, it's now costing you $10,000 a month, but you haven't changed the 60,000. See, if you, your peace of mind fund has to grow with your, your lifestyle expenses. So now if it's costing you $10,000 a month to live, you need 120,000 in that fund. So be be aware of, if I hit the goal that I continue to adjust that number as my expense structure goes up or down to make sure that I have sufficient liquidity in place. All right, that leads me to number two. Number two. Oh, this is debt. Oh, the big four letter word, debt. Here's the thing. I am not one of those folks that says all debt is the devil. Okay? I don't believe that all debts the devil. However, I do believe that all debt has two personality traits, two characteristics that are the same. See, I believe that there's destructive debt and there's productive debt. Destructive debt is the debt that you are using to pay for your current lifestyle. It is for consumables. It is for momentary pleasures. It is for. That stuff is for the present moment that you can't pay for in cash, which tells me that it's probably something you can't afford to. It is not productive debt. Productive debt is the stuff that's going to increase your cash flow in the future and your wealth in the future. It could be a mortgage on a rental property, it could be anything like that. But it is not debt to buy a big screen tv. It is not debt to buy clothes or luxury items. And so we need to be mindful of those two things. What I do want to do is by age 50, for sure, I do not want to have any destructive debt, nothing for consumables. I am not financing our current lifestyle, okay? Nothing at all. Now remember I said two personality traits, two characteristics. All debt, whether it's productive or destructive, will cost. It's called interest. You're going to pay for the borrowing, for the use of the money. So all debt costs and then all debt stresses. And like it or not, it stresses you financially because the burden on your finances, it stresses you psychologically because of the burden on you. Whether it's good debt, bad debt, or whether it's productive debt or destructive debt doesn't matter. They both stress and they both cost. So. So we need to be mindful of it. Now, at the same time, I do want you to start looking at how do I get debt free at 50 years old? You can see retirement on the horizon. It's within ey shot. And what we want to do is I want you to be debt free by the time you get there. So you don't have the stress, so you don't have the burden, so you don't have those issues. Because if you go into a situation where you decide, hey, I'm done working, but you have this debt that you got to pay, whether it's a mortgage, whether it's car debt, whether it's something else, it's going to burden your cash flow and your money machine inordinately and stress you going into years where you actually may not be able to earn as much, not want to earn as much, not want to work as much. And so I want to give you the gift of that freedom. And the way we do that is we start to put ourselves on a, a debt payment plan to get it dialed in. Now, I'm going to be fully transparent. I am 62, going to be 63 this year, and I am not debt free. I have a mortgage on this house. So. And there's a reason for it. Now, can I be debt free? Absolutely. I can be debt free, but here's what I'm doing. And if you have discipline, you want to do it, you can do it. If the there is a difference between debt free and the capacity to be debt free. The mortgage on this house is at 2.75%, Y'. All, Yang going to see 2.75% anytime soon. So instead of me paying the mortgage off, what I've chosen to do is take the amount to pay off the mortgage and put it in a high yield savings account. I'm earning five and a half percent. I'm paying 275. Playing the arbitrage. So at any given time, if we choose to, we write a check, we're debt free and we're done. So just to be fully transparent, I want you to know that I'm not debt free, but I have the capacity to be debt free at any point in time. So that's what I want for you. So you can move forward and say, I don't have that burden. So that's number two. Number three, you got to know your target. Where are you going? Because too often we don't know where we're going, we don't know where we're trying to get to. If we don't know where our finish line is, we're going to keep running the race and maybe we burn out, we break down, we stress ourselves out, we affect our relationships, we affect our health when the finish line was behind us. So it's really important for us to look at it and say, what kind of life do I want? This is why I do this. In my book, my trainings, when I work on my Elite 101 clients in my master's program, we start with your lifestyle. Why are we built, why are we building wealth in the first place? We're building wealth to create a lifestyle, to fund a life, to fund an impact, to fund the richness of our life. So why not start there with the end in mind, as Stephen Covey said, and say, what is the life that I really want? And when I understand the life that I really want, then put a price tag on it. So it starts with the vision. You put the price tag on it, you create the strategy to make it happen and then you based on the plan to make it happen. So the, the vision will define the plan. Then you know what your target is. Now the target is going to change. It's going to change as you go through life stages, life in situations, it's just going to change and that's okay, but at least you're going in the right direction. And as you get closer and closer to that time where you maybe are going to retire or do something else, you become more and more precise. As, as I've gotten closer and closer to these, these years of my life, we've gotten more and more precise. We've refined it, we've moved the target, we've adjusted the target. When my grandkids were born, we adjusted the target. When I got married, I adjusted the target. All those things happen. But we need to set a trajectory to start and then continue to adjust as we go. So that's. Know your target number four. I kind of mentioned this, and that is a definitive plan. Okay. And I'm going to do some calculations here for you, just so you know, is that we got to have a plan. Having the vision, having a vision board and all that stuff was great. I got it on the, on the wall. I look at it every day. I, you know, vision boards don't make you, make you rich. Vision boards don't change your life. Vision boards don't do any of that unless the vision board is translated to a plan, which is translated to a strategy, which is translated to tactics, which is translated to actions. That's how vision boards will change your life. That's how your vision changes your life. So here's what I want to, want to do is for you to understand where should you be based on this plan? And I'm going to go through a formula. This is not my formula. This is a formula from a book, a classic text on personal finance, the Millionaire Next Door. And he talks about this formula of how do you calculate where you should be net worth wise based upon your age so you start to understand whether you're in the ballpark or not. And he calls it this average accumulator of wealth formula. So I'm going to calculate it for you and I'm going to show you how it, how it's, how it's done. So the average accumulator of wealth formula is, is your age times your income divided by 10. Okay, so let's just do an example here. Let's, let's just assume that you're, you're 45 years old. Okay? You're making $100,000 a year. So 45 times 100,000 is 4.5 million divided by 10. That's, that puts you at, at 45 years old. You should be at $450,000 in net worth. So that makes you what he calls an average accumulator of wealth. Now he also talks about this, this idea of a prodigious accumulator of wealth. And what he does is he says, just take that number and multiply it by two. So to be an overachiever of wealth, then it would be $900,000. So, so this gives you an idea of, hey, am I on track? Am I on track with the things that I'm doing? And, and if I am, great. If I am not, then I. I've got some tweaks to do. I've got some things I should be taking care of and, and work from there. Now, this formula has been criticized. Look, any generic formula has its flaws, but it's a starting point. Now, one of the criticisms is that if you're younger, if you are under 40, it. The formula doesn't really work as well for you. And so some dear friends of mine, Brian Preston and Bo Hansen from the Money Guy show, they modified the formula for those of you that are under 40. So if you're under 40, this is the modified formula from them. And that is you're going to take your age times your income, okay, divided by 10. But you're going to add to it the number of years to 40. So let's just, let's do an example here. Let's assume you're 35 years old, same income, $100,000. 35 years old at $100,000 is $3.5 million divided by 10, okay? And since you're 35, you have five years to 40 plus five. So divided by 15, that gives you $233,000 roughly. So bottom line is, is to be an average accumulator of wealth at age 35, based on the modified formula, it's about a quarter million dollars, 233,000. If I want to be a prodigious accumulator of wealth, then it's going to be twice that, 466,000. So again, these are just ballparks, guideposts for you to sit back, say, hey, am I on the journey right? And if you're on the journey right or not, then we get a chance to modify it. We get a chance to make new decisions. The reason we put these things in place is to inform us so we can start to guide ourselves more readily. All right, so that leads me to number five is protections. And we should be thinking about this as we go anyways. But really, especially now, we need to make sure that we have our trust, our wills and insurances in place if we haven't got them done already, and we should listen. Like it or not, we live in a society where there's a lot of lawsuits. We live in a society where there's a lot of dysfunction in family. We live in a society where there's a lot of taxes. So we need to protect ourselves from Lawsuits, family dysfunction, taxes, all those things. And the way you do it is making sure that you have your trusts and wills in place and the proper insurances. I'll talk a little bit about the insurances in a moment, but it is important for us to make sure that, that it is dialed in. So what kinds of insurances should you have? And I'm just going to rattle them off. Look, I'm not here to sell insurance. The bottom line is though, we need the protections when we need the protections. So, so one is we might need life insurance. I only use term insurance. I do not wrap investments in any insurance product. It is inefficient, is costly and expensive. And the only one that makes money is the one selling it to you and the insurance company. Do not do it. Okay? No matter how their sales pitch is, how good it is. Okay. And the reason we create, we get life insurance is not to make our heirs rich. It is to replace the income that they might be missing if you were gone. And, and I want to be really clear, if you are in a household that is more of a traditional household where one spouse is working and one person is, is staying home with the kids, let me tell you something. The value of the person that's staying home with the kids is, is the same or more than yours. So do not discount the fact that saying the stay at home person isn't making money. Therefore I don't need life insurance. Because you know what, the fact that they're home with the kids is allowing you to earn the money. And if they were gone, what would happen? So the purpose of life insurance is to replace that income stream or that functionality to allow you to continue to live, allow them to continue to live that way. It's not to make them wealthy. Now at some point, at some point, if your money machine is big enough, when it's big enough, you won't really need it. You're self insured. Okay? But it is important at the, at the very beginning, then we have disability insurance. This is important for anyone that's the income earner. Because here's the deal. There is a higher likelihood that you get disabled than you die. And if you are the main income earner and you cannot work, how do we pay the bills? So having some sort of long term disability policies important. I have had one for decades. I have used it multiple times and they've literally paid well into the six figures each time to make sure that I got myself healthy again. And it allowed me to pay the bills without having to worry about it. So you want to look at that. Other policies, things like umbrella policies to cover liability if you're a professional, an E. O policy, and this is not all inclusive, obviously. Auto, health, all of these things are there to protect you in a way that you aren't going to drain what you're building to make it happen. So you want to look at these types of insurances to. To protect what you're building and not allow it to go away. The many bankruptcies, the. The high majority of bankruptcies is because. Because they couldn't pay medical bills, having the right health insurance. And let's not get on the topic of the health insurance and the health industry and all that stuff, but bottom line is, we need it. All right, Number six, make sure everyone is on the same page. Oh, my gosh. So as a CPA and someone who's been an expert witness, working with wealthy families, working with people that are trying to build wealth, trust me, I have seen my share of family dysfunction. And when money gets in the game, all of a sudden, loyalty.

Is replaced with greed. And it is horrible to see some of these things. Now, one of the things that I think is important is that your wishes are communicated effectively while you're there, while you're alive, not because you don't want a situation where they're turning around and saying, well, that's what he or she told me. But that's just your saying it needs to be properly done. This is why trust and wills are sober. You know, two hours after I was diagnosed with cancer, I was in the attorney's office.

Going through the trust to make sure that it was all dialed in, everything was taken care of. And Stephanie was like, I can't believe you're going there to do this now. But I had to. Not. Not for any other reason other than for my own peace of mind. And then sit down with Stephanie, say, look, you're good. You're taken care of. Here's how this works. Here's what you need to do. Here's what Jeremy needs to do. Here's how the grandkids are taking. Here's all of this stuff, and you're good.

Now, she and the whole family understood my wishes, understood what we're trying to do, understood what to do, and there was no question. Get them on the same page, have the conversations so they don't tear things apart, part and destroy the family in the process because they. They were confused as to what it is you wanted. Okay, that leads me to number seven, and that is the right team who is in your court? Who do you have that is helping you execute the strategy and the plan you're going to need to have at some point, especially when you start to build, build enough wealth. An attorney, a financial advisor or cpa, a tax strategist at a minimum. Okay, so you can have real conversations, but it also allows you to know that you can go to someone just like I did after, after getting the diagnosis, call my attorney, go to Robin's office, have a conversation with him. Okay? And my wealth team, everyone knows everything. Now, God forbid something happens to me. See, when my dad passed away and when Stephanie's dad passed away, both our mothers, both our mothers were freaked out because they didn't know if they could stay in their homes. They didn't know if they could afford to live there. They had no idea what was there. They didn't even know where to go. We had to piece it together and stay. I stayed back with her mom for an extra week or so just to try and piece it together and make sure she was okay. And Lord knows, when you're mourning the loss of your loved one, the last thing you want to do is have to deal with the question of your existence.

So having the right team in place is really important. God forbid something happens to me. Stephanie knows she makes one phone call, two phone calls, she's done, everything's taken care of because we have the protections in place, we have everyone on the same page, and we have the right team in place. That leads me to number eight. Number eight is it is a time where you can instill values. And actually I think you should be doing it much earlier. But here's what, what I know I raised Jeremy from five and a half, six years old. As a single full time dad. It was really important for me to instill a set of values in him. And especially when it came to around money, generosity, charity and, and how he shows up in the world to this day. I look at him as a, as a man, as a husband and as a dad. And I go, he's my proudest success. He's my proudest success. And so we have the opportunity to instill values by putting provisions and trusts and wills to have the conversations, to do the things that are. Because our legacy isn't the assets we leave behind. Our legacy is what we leave in the people that we love based on how we lived each moment of our life. And so I want you to look at and say, what values am I instilling in the people I love? What values am I putting out there. And that leads me to number nine in number nine. This is a pet peeve of mine, and this is skill sets before assets. Oh, man. So here's what I mean by this. There is no one in my family that's ever going to be a silver spoon, okay? Silver spoon babies aren't going to exist. And this is the problem that I see in society and what, what I have watched in, in my work over the decades with families that, that I didn't get a hold of early enough. The bottom line is this, is that they need to understand how to handle the money, how to navigate the machine. If you're building a money machine, they need to prove and earn the right to have it. They're not just getting it because of blood. Jeremy will not get anything if he didn't prove that, that he had the right values, the right skills and the right abilities to, to take care of it. Because this, what you're building isn't just for you or your spouse. It's for the generations. You become a financial inflection point on everyone that comes after you if you do it right.

But the only way that happens is that you transfer the skill sets before they ever get the assets and they have to earn the right to do it. So these are the nine things, the nine financial goals, milestones that I think you all should be striving for at 50. If you're not there and you're close to 50 or you're after 50, use this as a checklist. You now know what the priorities are. Follow the processes, follow the recipe, follow the wealth priority ladder. Follow the stuff in my book, building your money machine. It'll get you there. Get off, get out of the stands, get off the sidelines, get on the field. Let's run the game together. At least this, I hope, gave you some things to evaluate and say. Am I on the right path? Am I on the right trajectory, and do I need to change some things? All right. I hope you found this of value. And I look forward to having a conversation with you or hearing from you down the road. If you have a chance and you have any questions, reach out to me, let me know. All right? I'm on. I'm on that crusade. I want to light the path to financial freedom for a million families. And I want you on that journey. I truly believe that financial freedom is our birthright. And your birthright. Let's go claim it. All right. Till I see you on the road, one of my speaking engagements, or in another episode, always, always strive live a life.

Thank you for listening to the Affluent Entrepreneur show with me, your host, Mel Abraham. If you want to achieve financial liberation to create an affluent lifestyle, join me in the Affluent Entrepreneur Facebook group now by going to melabraham.com group and I'll see you there.

And that's it for this episode of Building youg Money Machine where we help you learn how to master your money, eliminate financial stress and live a life of choice. If you found this valuable or helpful to you, here's what I'd love for you to do. If you do me a favor, go to Apple, Apple Podcast or wherever you're listening to this podcast and rate and review the show. It helps us tremendously to keep us at the top of the list so we can continue to get this information and this message out to people because I truly believe that financial freedom is your birthright and I want to help each and every one of you claim it. Thanks so much.