re: Money in savings at different ages

I'd shoot to save as much as possible, but don't freak out if you're in your late 20's and don't have a ton of money saved. I'm 27 and only have about 30k saved, but I also have a graduate degree and a wife with two years left of a 4 year professional program and our only debt is one car note. I know I'm behind the 8 ball versus some of my friends, but I'm confident I'll "catch up" when my wife gets out of school.

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low -0, average -0, and high -0

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I didn't have savings. Too busy spending.

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Where did you get this from? Id love to see the info to back it up.

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It came from the book "The Millionaire Next Door" by Dr. Thomas Stanley, PhD.The book is a favorite of mine and I employing his strategies has changed my family's financial life - and will change my family tree for my children and grand children.

Most of the concepts are fairly basic. You may not keep up with the Jones', but you will be the Jones.' For example, he suggests buying cars that are two model years behind and well kept, rather than new. He suggests staying away from status symbols and purchasing good quality goods. (A $300 Seiko does as well at telling you time as a $3000 Rolex).

For his savings model as reference above, he calls anyone that by age 35 that doesn't meet the criterion a UAW (under accumulator of wealth), which is most Americans. an average accumulator of wealth (AAW) is one that meets the criteria - and one that will retire very comfortably. Then there is the PAW - the Prodigious Accumulator of Waalth, the person who doubles up the AAW number (factor of five) - this is what you should strive to be, regardless of income. This is the level where it becomes hard to spend what you are making in interest in your later years.

Another thing he rails against is what he refers to as one of the biggest drains on wealth building - economic outpatient care. Don't support your adult children or adult siblings.

He's a big fan of insurance and using it as a wealth building tool as well. Everyone should have 10 times their income in term life insurance until they can self insure. If something happens to a father who makes $100,000 a year - a million in insurance should keep wife and kids living the same lifestyle.

He talks about "Million Dollar Choices." From the book synopsis:

Some of the financial choices that UAWs make are considered to be “million dollar choices” because if the choice hadn’t been made, the UAW would have in excess of a million dollars. One example of a million dollar choice is to smoke. Smokers and alcoholics tend to be UAWs because instead of building net worth, they spend their income to purchase alcohol or cigarettes. Another hypothetical example given in The Millionaire Next Door explains how a small purchase of cigarettes over a long period of time can accumulate a large sum of money. Mr. Friend’s poor parents were smokers and drinkers. They smoked at least three packs of cigarettes a day during the week. Three packs a day over 46 years translated into a sum of money that exceeded the value of their home by $33,000.[1] Even more extraordinary, if the Friends had invested and reinvested that money over a 46-year period, the portfolio would have exceeded $2 million. The value of a small amount of money over a long period of time is amazing. A UAW makes choices that, although financially insignificant at the present value, have a very significant future value. Choices such as drinking two cases of beer a week, smoking several packs of cigarettes a day, and buying large amounts of unnecessary food and objects are some examples of typical UAW choices. These choices are not necessarily large financial purchases right now, but over a long period of time, the opportunity cost of that money is very expensive.

Its not for everyone but I believe the book is a must read for any young person interested in personal finance. I have given it as part of college graduation and wedding gifts in the past.

About smoking and alcohol, I won't give up drinking to save a little money. Not yet at least

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Silly. It only matters what you are spending, not your salary.

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Agreed. The important question isn't: What's your salary?.. The important question is: How much money do you have in the bank?

ETA: Not bank as in savings/checking accounts. I mean it more in terms of net worth/investments.

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In the nicest way possible, this is the most delusional and out of touch with reality statistic I've ever seen on the money board.

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It isn't my metric. Its Thomas Stanley's. Lots of folks on the Money Board have pointed to him.

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What is the author's end goal with the money? Is it to just say he grew his wealth to x dollars, or is to eventually spend money however he wants to?

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Its up to the person. Many of the people he interviewed planned to leave significant estates behind, but quite a few were traveling the world, doing whatever they wanted to do.

Its boring - but I grew up never having a HHI more than 30k. I'm changing my family tree.

98.75% of 34 yr olds

Can't say i did it on my own though.

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I'm changing my family tree.

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Till your kids blow it on alcohol and smokes.

Yep. Debt service is a huge factor.