How Much Money You Should Make by Age?: Have you ever felt like everyone around you is making more money than you are? Or perhaps you avoid talking about money completely out of fear that you're not earning enough.
Well, today I'm going to be telling you exactly how much you should be earning in order to keep up with the national average, at every age between 20 and 60 years old. And what's more, I'm going to give you advice on how to spend the money you do have in order to keep up with or even outrun the crowd.
I have made a detailed video that you can watch at the top of this page or on my YouTube channel. If you really want to learn exactly how to make the most of your money, I highly recommend watching the full video until the end. In this article, I will summarise how much money you should make by age and how you should invest it. If you find this information useful, please share it with friends and family on social media. I want to get financial education to as many people as possible, but I need your help to do it!
How Much Money You Should Make by Age? 20’s
At this age, you're likely just starting out in the workforce, perhaps after school or university. The average salary for a 20-year-old in the UK is around £19,000 a year, which, let's face it, is nothing! This will likely make saving incredibly difficult. Your key focus at this point is education. The main reason, in my opinion, that most people struggle financially their whole lives is because we aren't taught how to build wealth.
At this point, savings might be modest, but now really is the best time in your life to start investing. The later you leave investing, the harder and riskier it is to make any real money. For instance, if you start investing at 20 years old, £500 a month into a low-risk S&P 500, by the time you're 60, you'll have £1.7 million saved for your retirement!
How Much Money You Should Make by Age? 30’s
At this point, you should aim to be earning around £33,000 per year—that's the average salary for someone in the UK. But it's not about your income. By the time you're 30, you should ideally have a net worth that equals your annual salary. So if you're earning £33,000, try to have that amount saved or invested.
Be aware of inflation in your 30s. We're taught all our lives to save money, but no one tells us how to save properly. If you save £5,000 a year and put it into your bank account, the next year your £5,000 has actually gone down in value. This is because inflation makes the cost of everything go up over time—food, petrol, houses, everything. In 2022, inflation hit 11%, meaning your £5,000 is now worth less than £4,500. So you have to work even harder and longer to outrun the depreciation of money.
Make sure you're investing in assets that grow faster than inflation, like stocks or property. At the very least, put your money into a high-interest savings account. Make sure it has a minimum of 4% interest to outrun the depreciation.
How Much Money You Should Make by Age? 40’s
By your 40s, the average salary in the UK is around £42,000. By now, you should be well-established in your career, and your net worth should reflect that stability. You should also have been able to build up assets, such as a house, investment portfolio, or stocks. The aim in your 40s is to have at least two to three times your annual salary saved or invested. So if you're making £42,000 a year, your net worth goal should be between £84,000 and £126,000.
At this stage, with some cash in your bank account, you have the option to put larger sums into projects that yield larger and more immediate returns. My advice here, unsurprisingly, is property investment. While an S&P 500 will likely return 8% on average, purchasing, letting out, or developing a property should see a minimum return of 20% on each investment you make.
How Much Money You Should Make by Age? 50’s
In your 50s, the average salary tends to peak, with many earning around £45,000 to £55,000 a year in the UK. Your net worth at 50 should ideally be around four to five times your annual salary. So if you're earning £50,000 a year, you should be aiming for a net worth between £200,000 and £250,000. Now is the time to double down on your investments. If you did one buy-refurbish-refinance last year, for example, next year, do two!
The biggest mistake you can make in your 50s is failing to prepare adequately for retirement. It's easy to underestimate how much you'll need, especially if you're still carrying debt like a mortgage or credit cards. Another pitfall is not diversifying your investments. As you get closer to retirement, your investment strategy should shift to protect against market volatility. This is due to the limited time you have to recoup any losses.
How Much Money You Should Make by Age? 60’s
By your 60s, many people are preparing for retirement or reducing their work hours. The average salary for a 60-year-old in the UK is around £44,000 to £45,000. However, your net worth should be substantial by now. Aim for six to eight times your annual salary in net worth. So, if you're earning £42,000 a year, your net worth should be between £252,000 and £336,000. This will help ensure a comfortable retirement, giving you peace of mind as you step away from full-time work.
One of the biggest mistakes in your 60s is retiring too early without sufficient funds. With people living longer, your retirement savings might need to last 20 to 30 years or more. Another pitfall is underestimating healthcare costs, as medical expenses can quickly eat into your retirement savings.
How Much Money You Should Make by Age? Changing Your Financial Story!
Now that you know how much money you should make by age, I want you to know you can build wealth via property at any stage in life! If you want to learn this skill, I can teach you! Join me at my next £1 training event!
On the course, you will learn how to:
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Become a property investor using other people’s money so that you can get started straight away
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Utilise the 5 different types of raised finance so that you know exactly what to offer and when
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Find the perfect properties for the BRRR strategy
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Recycle your money so that you can ‘rinse and repeat’
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Build a power team you can trust, so that you can save time and money
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And much more!
Tickets are only £1, and you can get yours here. If you are ready to take action, I hope to see you very soon!
