How does one know that he/she is doing great in terms of savings? Is there a magic number?
Age 35, single Savings: > US$100K = great
Age 35, single Savings: > US$200K = outstanding
Age 25, married, savings <10K = poor
My response to him:
Nope, no magic number. There are guidelines and comparisons like this and this–both are very good links that show you how others are doing), but if you’re reading iwillteachyoutoberich, they’re basically meaningless because (1) most people don’t know what they’re doing–do you want to benchmark against that?, and (2) it really all depends on your goals.
If you want to be a multi-millionaire by age 40—or better yet, you have some specific goals like “I want to start a foundation and give away 5% of my wealth every year” or “I want to take a 3-month vacation every year and travel with my kids”—you can plan for them. But if you just want to be better than everyone else in your same age bracket, you’re asking for trouble. It’s a never-ending cycle of keeping up with others…really for no good reason.
There is actually some pretty good data on this question, but I need to go to the library to find it. (Some of the best online data is where the Fed does a survey of consumer finances every 3 years and posts it in PDF here. I printed it out but, man, there are a lot of numbers. Actually, heh, it’s for households and doesn’t break out data for young people). I’ll dig up the data and post sometime when I get around to it.
Send me your questions any time by email.