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Hello? Oh, hello, George. This is Eugene calling from Questionable Research, LLC. Do you have a few minutes to answer some questions? Uh, well, I'm in the middle of dinner, so... Perfect. So we're conducting a quick survey on salary. How do you know about my salary? Well, that's why I'm calling. First question, in order for you to feel secure, how big would your salary need to be? Well, I mean, it's not really about the size of it. I mean, I guess as long as it's crunchy and... I mean, I do try to go organic when I can. No, I said salary. Yeah, salary. No...
That's what I'm saying. Salary. Salary. Salary. No, I mean, like, how much money would you need to make? Oh, $233,000. Wow, that's oddly specific. And that's how you deal with spammy phone calls from researchers.
According to a recent survey, Americans say they need a salary of roughly $233,000 on average to feel comfortable or financially secure. And that amount is over three times the median US household income of about $71,000 a year. And here's the kicker, less than one in three adults in the US say they're completely financially secure. In other words, most Americans feel like they need to earn about three times what they're currently making. And frankly, seems a little high to me. I mean, sure, who wouldn't want to make three times their current salary?
But why would Americans think they need that much just to feel financially secure? And is that number anywhere close to what people actually need? Well, in today's video, we're gonna talk about what it really means to be financially secure, how you can get there, and even how you can go beyond that to becoming financially independent.
Ooh. I like it a lot. But first, you know what would make me feel secure? If this channel had 233,000 followers. So smash those like and subscribe buttons and share this video with at least 232,999 other people. Big help. Do you have that many friends? No. But your top eight on MySpace plus 3,000 on Facebook, that's a good start. You'll get there.
Okay, first of all, let's be clear. This $233,000 salary is not a mathematical calculation of how much money Americans need in order to survive or even thrive financially. This stat is really about feelings. How much people think they need in order to feel comfortable or financially secure.
And naturally, those feelings are going to be all over the place, like the menu at Cheesecake Factory. Seriously, choose a lane. Pasta on this page, sandwiches on this page, a jewelry ad on the next page, and I'm still like two chapters away from getting to the cheesecake. Hi, welcome to Cheesecake Factory. Are you here by mistake? Anyway, just keep in mind this data is a little squishy. And on top of that, the phrase financially secure probably means something totally different to different people.
So before we talk about whether or not we really need three times our income to feel financially secure, we got to start by defining some terms. So what does it mean to be financially secure? Well, for our purposes, we're going to say it means you have no consumer debt, you have a fully funded emergency fund of three to six months of expenses, and you can pay for your normal expenses with a three to six month emergency fund.
with margin left over for investing and giving. Now, if that's you, you're in a pretty good spot because you've got a solid buffer between you and whatever financial fiasco life throws at you, like a car in the kitchen.
Maybe no one will notice. If you can deal with something like that and not have to go into debt to cover it, that is true financial security. Now, it may not always feel like you have a ton of extra money, but you're still financially secure in that scenario. And here's the deal. You definitely don't need to make $233,000 to get to this point. So why do people say they need so much to feel financially secure?
Well, it could be that they're just throwing out a high number that sounds like it would let them save and invest without having to adjust their lifestyle or any other money habits. But there could also be some confusion around the term. Here's why. I suspect when some people say financially secure, they really mean financially independent. So what does that term mean?
Well, financially independent means you don't have to go to work, go to an eight to five to make money. Your investments, your assets are making enough money for you to live off of. So you have the freedom to choose whether or not you quote unquote work. Basically, you can retire and live comfortably. You've got freedom and options and margin.
And at this stage of your financial journey, as Dave Ramsey says, you can live and give like no one else. All right, so let's get back to the magic salary, $233,000. Based on our definition of financially secure, does it actually take that much? The answer is 100% no.
And here's how I know that. A while back, Ramsey Solutions conducted the largest survey ever done of net worth millionaires. And 93% of them said they got their wealth because they worked hard, not because of some big salary. In fact, get this, one third of those millionaires never made six figures in any single working year of their career.
and they still became millionaires. The studies also found that they were average investors at best. These were not financial geniuses or prodigies who just invested in the right stock or mutual fund. They were everyday people like you and me. So financial security is definitely possible without a huge salary.
In fact, you don't even need a huge salary to reach financial independence. If you're smart with your investments, you're using tax-advantaged retirement accounts like 401ks and Roth IRAs. Thanks to the power of compound interest, your money is making you more money. Here comes the money.
Here we go. And eventually it will make so much that you don't even need a paycheck anymore. Get it? Your compound interest produces your salary for that year, meaning that account has now replaced you. You're welcome. Yeah, boy. And you can do this without making $233,000 a year. So the real problem here isn't about income. It's about expenses. If you look at all of your expenses, you might notice that huge chunks of your income are disappearing thanks to debt payments and your lifestyle.
So imagine for a second, you get out of debt completely and you start to get your lifestyle under control. It's gonna feel like you got a raise, isn't it? And the best way to start paying attention to your money and getting control of it is by doing a budget. Once you've got that down, you need a proven clear path with focus steps. And the plan that I personally use to go from negative net worth to net worth millionaire is called the Ramsey Baby Steps. Now, if you're new to this, check out the video I made that outlines this plan at length. I'll drop a link to that below.
But keep in mind, reaching financial security is going to take some discipline. But I promise you it will be worth it. All right, you can't have your cake and eat it too. All right, we got to eat our vegetables here. Here comes the airplane. There you go. Open, open into the hangar. There you go. Giving up the expensive eye cream for a while will seem pretty trivial when your house is completely paid for. So the bottom line here is this.
Being financially secure has less to do with a really high salary and more to do with making the most of the salary you already have. You'll need a plan and a little discipline, aka not buying high-end eye cream. So expensive. Being intentional with your money also means giving every dollar a job with a zero-based budget.
and the budgeting app that I use is called EveryDollar, and you can get it for free in the App Store. I'll drop a link below to that too. As always, make sure to subscribe to this channel, like this video, and share it with everyone you know who eats celery, uses eye cream, or makes less than $233,000 a year. That should cover most people, you know. Thanks for watching. We'll see you guys next time. Hello? I hate celery. Why did I cook this for dinner?
