I often write a number of net worth pieces on athletes, coaches and other famous individuals, but what about the rest of us who aren’t worth millions? Your age and net worth should have a positive correlation, the older you get the better the opportunity to build your net worth. That is why I pose the question, is a $250,000 net worth before you are 30 even possible? The answer is yes!
We are familiar with young stars such as Justin Bieber, Rihanna, and Andrew Wiggins having a net worth in the high millions, but what about the rest of us? Let’s first talk about what net worth actually means. As is illustrated in the image above, net worth is calculated with a simple equation. You take all of your assets (house, retirement accounts, cars, etc.) and from that you subtract all of your liabilities (mortgage, debts). The resulting equation will equal one’s net worth.
As previously stated, net worth tends to increase the older you get. That is why I am looking forward to my future net worth. At 28 years of age, my net worth already exceeds a quarter of a million dollars.
How have I been able to build a $250k net worth?
There were a number of smart financial decisions I made in order to build my wealth in such a short period of time. When I began my first job at the age of 23 (just five years ago), I had a negative net worth. There were student loans I had to pay back, and after being in college for four years I didn’t have a chance to save much money. I focused on paying off my debts, in this case my student loans. Getting out of debt is crucial to building one’s net worth.
The next thing I focused on to build my net worth was by budgeting and investing. The focus of this blog today is still the same as it was when I began it three years ago, budget and invest. You can still download a free monthly budget template on this site. Budgeting allowed me to focus on paying off my debts while also helping me determine how much money I could save in a given month. This process helped me towards my $250k net worth that I am seeing today.
The final step was focusing on my earning potential. I switched jobs a couple times, each time to a position that paid me more than the previous. I also, turned my house purchase into a cash flow positive rental property. By increasing my earning power and paying off my debts I have now been able to save more than ever before.
Each person’s financial situation is different. There are plenty of individual’s in their twenties who are worth a lot more than me and there are also plenty that are worth a lot less. I was once told long ago that you cannot focus on someone else’s earnings and net worth, you have to focus on your own. After all, only you can control your financial decisions.
Budget Smart, Invest Wise