The Best Financial Strategies by Income: $40k, $75k, $100k+ #Finance

what’s up guys Humphrey here so I made today’s CashNews.co to give you guys some major tips on the best financial strategies as well as Milestones to hit depending on how much money you’re bringing in we’ll have three different buckets of Income that

we’re going to be talking about today so whether you make 40K per year 75k per year or 100K and above we have something for you and the main reason I made this CashNews.co is that the strategies that you might employ at the $40,000 salary level are going to be different than say if you make

$150,000 or more so let’s get right into it and let’s talk about some strategies if you make around $40,000 per year when I first graduated college my starting salary was $38,000 working a customer service job at a CashNews.co game company and I remember this time being quite difficult

but still somewhat possible I think when you’re at the salary level I think it’s important to acknowledge that you can make life work and while it is difficult it’s nothing to be ashamed of in fact I respect anybody that can make a $440,000 salary as well as make life work because

out of all the Income levels that we’re going to be talking about today this is the level where the Finances matter the most that’s because every

single dollar is way more important at this Income level when you’re at this level if you’re able to save 10% of your gross Income towards your other goals I think this is going to be really key and I think there are three major goals that we really

want to accomplish at this Income level and the first is not having any Consumer Debt or any bnpl or buy now pay later Debt now having any sort of Consumer Debt at any Income level is going to really suck but at

the $40,000 salary range every dollar matters a lot more so having Consumer Debt let’s say with an interest rate of 10% is really going to compound your problems the the average take-home pay of someone making $40,000 gross per year is about $2,700 in take-home per month and

that $2,700 needs to cover your rent your groceries your transportation and ideally some Savings and Investments so even an extra $100 per month in Credit card interest could be the difference between you making rent or not or you being able to

save for retirement or not the average Savings rate in America right now is a dismal 3.8% and the average Credit card balance in America varies by age but generally the average is about $5,700 so I think one of the first strategies of this $40,000

Income level is to try to clear off this Debt and if you’re able to save let’s say 7.5% or even 10% of your gross Income and put it towards your Debt this is going to be really helpful once you’ve done that the

second goal is to kind of set up your financial foundation so have your emergency funds set up start investing in your Roth IRA and start looking at other types of Investments I’m sure if you’ve watched my channel before you know the importance of having at least a

3-month emergency fund as well as starting to contribute to a r Ira where your earnings are going to grow tax-free the strategy here is that if you don’t have any emergency fund at all you want to save that 7 to 10% from step one or goal number one of this Income bracket and

put it towards that so ideally you have 3 months of an emergency fund set up before you start investing in a Roth IRA and so that means if your take-home pay is about $2,700 a month and let’s say you spend $2,000 a month on your expenses you want to have at least a $6,000 emergency fund saved

up after that you can start putting some of your paycheck into a Roth IRA and the contribution limits for that right now under the age of 50 are $7,000 a year and over the age of 50 it’s about $88,000 per year now some of you might find that saving 10% of your gross Income is

actually quite difficult and if it is just wait till the next section where I talk about Budgeting and tracking your expenses so quick message from today sponsor one of the issues that I faced when I was making about $40,000 per year before I started tracking my expenses was

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description to get started for free you can also unlock even more features with premium and once again that’s rocket money.com / Humphrey to get started for free and thanks to them for sponsoring this portion of the CashNews.co now let’s talk about the third goal at the $40,000 level

which is that we should start looking for ways to make a little bit of extra money now you don’t have to go out and get an entirely new career or even switch jobs but if you’re able to make some extra money on the side doing what you already know or perhaps investing in yourself to

learn a new skill that could be well worth it a good way to think about this is that if you make $4,000 per year that is the equivalent of about $20 per hour given the fact that there are about 2,000 hours in a work year so if you’re able to find a side hustle that pays at least $20 per hour

or sometimes even 30 or $35 per hour then your time is going to be very efficient and actually you’re making more money for your time if you’re having trouble thinking about the different ways that you can earn more money my favorite way to think about this is like think about all the

knowledge that you know that you can trade to others so let’s pretend you’re good at the guitar perhaps you’ve been playing since you were a kid or maybe been in some bands you can start to trade this knowledge that you have to others for hopefully a higher hourly rate than what

you were getting paid in your day job if you don’t want to pick up a new skill or a side hustle I completely understand but if you have an occupation already what you can do is actually pursue a certification or a credential that can instantly boost your salary so monster.com launched a

report that outlined the top 10 certifications in all Industries and for example right here if you worked in the logistics and transportation industry you could become a certified

Automotive fleet manager and the median pay of someone not holding this certification is $55,000 a year versus if you had the certification you can start making upwards of $70,000 per year so that is another option look around in your industry and see what types of credentials or certifications can

actually boost your salary okay so that brings us to the next Income bracket in this CashNews.co which is the $75,000 level this is the median Income of a household in America things here actually start to change up quite a bit you can see here that the take-home

pay of $775,000 a year is going to be right around $55,850 that comes out $4 4,652 per month which actually gives us a little bit more room to work with the biggest things that you can do at this Income bracket are the following first if you haven’t already done so make sure

your highest interest rate Debts are paid off like we mentioned earlier in the $40,000 bracket then after that is taken care of it’s time to start thinking more longer term to start targeting Financial Freedom in order to do that I actually have three strategies for you guys

for this Income level but they’re not actually exclusive just to this Income level but I do think that they fit in this in level appropriately the first is going to be Budgeting and tracking our expenses and basically what we want to do here

is build out a really good habit for tracking how much money is coming in versus how much is going out and what of the money that is going out what we’re actually spending it on this is going to be especially important if we have a family because now we have more people in our household that

we need to keep track of and therefore the expenses are going to be quite variable once you figure out how much you’re spending on every single category we want to cut relentlessly all the things that we are spending money on that are actually not not fulfilling us or driving us forward so

for example let’s pretend that you go through the exercise of tracking all of your spending and you realize hey maybe I spend a little bit too much money on shopping your total comes to $843 2.37 don’t worry about that you got um perhaps you’re an Impulse Shopper that every time

you go to the mall you like to buy something new well instead what you can do to curb this behavior is like the next time you go to the mall try to put that item that you really want to buy on hold for 24 hours then if you still want it after 24 hours you can go back to the shop and actually get it

but what I actually find is that when we think deeper about our own decisions and our own purchases what we actually might find is that we don’t actually need a lot of the things that we buy another way to cut back on a certain category is to set yourself a firm budget so let’s say

it’s $200 per month on shopping and then put that actually in cash in an envelope now you know that the maximum that you can spend in that category is the $200 in the envelope every time you go and actually spend you physically see the money leaving your envelope and that actually hurts

psychologically a lot more more the number two strategy at this Income level is to actually start tracking your Net Worth your Savings and your investing rates just like dieting or going to the gym if you start tracking what you eat and how much

weight you’re actually lifting you have more awareness about how healthy you are in the gym and the same goes with Finances so here’s a table of the media

Net Worth in America by age by empower the retirement company and how much you should have saved based on a Fidelity study so this table is really interesting because if we look at the median Net Worth by age for every body here they kind of seem a little bit on

the low end if you watch my channel regularly you’re likely taking steps to improve your overall Financial Health so I think a good objective or a good goal for us viewers to have on this channel is to at least aim for double the media Net Worth in America if we look at

Fidelity’s guidelines and how much money you should have saved for retirement their suggestions are way above the media Net Worth and so that’s kind of why I said that we should probably also aim for double as well now to illustrate this point further the media

Net Worth of someone in their 30s here is $34 $1,691 but according to Fidelity by the time you are 30 you should have at least 1X your salary saved for retirement so if you make 75k a year that means by the time you are 30 you should have $75,000 saved in your retirement as well as

your taxable brokage accounts combined together you can see that by the time you’re the age of 40 you should have at least 3x your salary saved so at a $75,000 Income range that’s going to be $225,000 I think what this Fidelity study just really emphasizes to me is that

if you want to retire comfortably we need to actually be really shooting for a higher Net Worth than what the median is in America all right my third strategy for this Income bracket kind of ties into the previous one which is that we need to really Target a

Savings rate that will get us to a comfortable retirement now depending on your age this Savings rate is going to differ quite a lot and depending on how much you have saved already it also differs a lot as well if you’ve been saving 10% of your gross

Income every single year since the age of 21 you’re likely in a very good financial position however if you’re the age of 40 and you have nothing saved for retirement then your target Savings rate needs to be a lot higher than the 21-year-old

counterpart that we just talked about so let’s take a look at someone making $775,000 per year and three hypothetical situations where they have Z saved Fidelity recommends that by the time you’re the age of 67 you have 10xe salary saved so we’re going to go with $750,000 in

today’s example if you’re the age of 30 with $0 saved you need to start saving and investing at least 4.6% of your Income every single year in order to have a balance of $750,000 by the time you’re 67 now at the age of 40 that goes up to a 10.67%

Savings rate or you need to save about $88,000 per year and if you wait 10 years longer after that if you’re the age of 50 and you have nothing saved at all then you actually need to save 27.4% of your gross Income at $75,000 per year in order to retire with

$750,000 you can see that with more time you can actually get away with a lower Savings rate but the older and older that you get you actually have to play a lot of catchup that’s why starting from a young age is so important and being consistent with it every single year and

if you’re able to save 10% 15% maybe even upwards of 20% then you’re going to be in a really good financial position one of the ways to hit these Fidelity suggested Savings numbers on autopilot basically is to contribute to your Roth IRA and try to Max it out every

single year I talked about this a little bit earlier in the CashNews.co but if you’re able to compound $7,000 per year in a Roth IRA which means all the gains are taxfree then you’re going to be pretty much on autopilot to become a millionaire by the time you’re 67 I have so many

CashNews.cos about the Ross IR that I will link Down Below in the description as well all right we’ve made it to the $100,000 Income level and above and if you are at this level you’re likely comfortable in most cost of living cities your bills are taken care of and you

probably aren’t living paycheck to paycheck and even in the highest cost of living cities you can still make $100,000 per year salary work at this stage I think the first thing that we need to really pay attention to is lifestyle creep or lifestyle Inflation every time you

get a pay raise above $100,000 you’re likely going to have way more disposable Income and what do people like to do with more disposable Income they like to buy things to improve their quality of life I’m all for doing that to an extent but just because

now you can afford a nicer car nicer house or even nicer clothes it doesn’t mean that you should do so even if you can afford it living under your means is not only a really great way to accumulate wealth but it’s also a great way to keep your peace of mind and freedom when it comes to

money the idea here is that if you start increasing your costs on an everyday basis or every month basis it’s going to start adding a lot more stress into your life and that stress is pretty much unnecessary so if you are making more money for example and you actually want to buy like

let’s say a new car I think that’s actually reasonably fine as long as it’s still within your budget a popular car buying rule is the 2410 rule that’s where you can put 20% down on a car text-decoration: none;">Finance the car for no more than 4 years and your monthly payments on the car should not be more than 10% of your gross monthly Income so if you currently have a car with a car payment that takes up 5% of your gross monthly

Income I see no problem in trying to improve your lifestyle as long as the new car payment is less than 10% of your gross monthly Income that way it’s still a purchase within reason and you’re not you know stepping out of your means entirely just to

afford a brand new car the lifestyle Inflation I’m referring to is those that spend way too much on a certain category to the point where they start living paycheck to paycheck again all right the number two strategy that we really want to figure out at the $100,000 salary

level is to start targeting our financial Independence number there’s a possibility that you will be able to retire early if you start making a really good Income as long as you have a really good Savings rate and so we want to figure out what steps we need

to take in order to get there so here’s a great resource from Networth ay.com that’s where you can plug in your Income and your Savings rate to see how quickly you can retire if you have a Portfolio value of $250,000 you make $100,000

per year and you save 20% of your Income you could retire in 19.5 years now if your Savings rate was 30% you could possibly do it in 15.9 years this is the primary strategy of the fire community and that’s a community of people that are trying to retire as

early as possible their main plan is usually to aim to save at least 30 50 or even 70% of their Income by being extremely Frugal and essentially sacrificing their short-term pleasure they’re trying to get to their financial Independence number as quickly as possible now do

you have to do this I would argue probably not but it might be a lifestyle you may want to go after especially if you start to make more Income the third strategy at the $100,000 Income level is to really start thinking about how can we get more gains from our

Investments across the board this is going to be a little bit of a hot take and not the usual buy Index Fund strategy that we usually talk about on this channel but when you start making more of an Income let’s say you make 150k 200k maybe 300K and even more

that’s when you can start to take some shots at higher conviction plays to try to grow your investment count as quickly as possible now huge disclaimer this will come with a lot more risk but also a lot more potential upside and for 95% of people out there this strategy is not for them but

this is what I would do if you already make a lot of money I’d first decide how much percentage of my total Portfolio that I’m willing to risk into higher riskier place maybe you decide that’s 5% 7% or maybe 10% of your Portfolio that you go ahead

and risk and put it into some sort of higher conviction play because the more concentrated you go into one position that actually does really well then the more you’re going to make there are Real Estate investment syndicates out there you could also put that money into a

certain company or a stock that you have higher conviction in or you can just put it all on black just kidding about the black on roulette do not do that but you get the idea some of my biggest gains in my Portfolio are from owning such stocks or funds that I’ve had higher

conviction in for example Nvidia as of late meta stock and even Bitcoin has been doing really well this year for some of my friends that is their Real Estate Investments that have done really well for them in the past 5 years this strategy definitely depends on

your own Risk Tolerance how much you can afford to lose when it doesn’t work out and the research that you ultimately do when it comes to higher conviction plays you need to have some sort of Competitive Edge when it comes to the knowledge that you might have about these

certain industry that you’re trying to invest in or the certain product that you’re looking at ideally when it comes to investing like this you have that specific knowledge about whatever you’re investing into so that means if you’re in semiconductors probably don’t

invest in the retail sector that’s what you want to look for which are the intersections of your knowledge and the Investments that you can identify that other people can’t all right guys I hope that you enjoyed this CashNews.co let me know what you guys thought in the

comments thanks again to Rocket money for sponsoring a portion of this CashNews.co check out my next CashNews.co right here on what Net Worth it takes to be upper class middle class or lower class with data I think you would really enjoy that CashNews.co If you enjoyed this one all

right guys I will see you in that CashNews.co or the next one on my channel thank you again peace