As you know, this site is about three easy steps toward financial independence (FI): earning, saving, and investing.
In case you want more specifics see What Does ESI Money Mean? and The Essentials of Building Wealth.
Separately I’ve been thinking about the various ways to reach financial independence. In How to Become Financially Independent I mentioned a whole host of factors that work together to get someone to FI. There are almost as many ways to hit FI as there are moves in a chess match!
As I thought more about the ways to become FI and the three steps needed to get there, I came up with some random thoughts I want to share with you today.
The ESI Scale
Let’s assume there’s a rating scale for each of the steps that describes how good a person is at that particular step. I’m going to suggest this one: disaster – bad – neutral – good – excellent.
You could use different words but I think the meanings are clear. There’s a range from totally terrible to totally awesome.
That scale can be used to rate someone (or yourself!) on each of the three steps of earning, saving, and investing.
By doing this and playing around with some combinations, some interesting conclusions come to light.
It’s kind of like dissecting paper – rock – scissors! 🙂
Working the ESI Scale
Here are some thoughts I have about the combinations based on my experience:
- You can’t be a disaster in any of the steps if you want to reach FI at a reasonable age. Being utterly useless in one of the three areas is enough to kill any great progress in the other two. For instance, even if you are great at earning and saving, if you lose a ton (or at least can’t propel your earnings) through investing, you’re dead in the water. If you can’t earn more than minimum wage, it’s going to be hard to make much headway with the other steps. And of course we’re all probably familiar with the disaster of someone making a ton of money and spending even more!
- Even if you’re “bad” in one of the steps you’ll likely be hindered significantly. There’s a reason Warren Buffett says “never lose money.” And if you’re bad at any of the three steps you’re going to lose money. Maybe you can overcome it with stellar results with the other two, but I doubt it.
- Those two points lead me to the conclusion that to reach FI at any reasonable age you need to be at least neutral on all of them. At least at that point you aren’t harming your finances. So I’m setting “neutral” as the baseline for all three steps for those who want to reach FI.
- As we move to the positive side of things, obviously the better you are at all of them, the faster you’ll get to FI.
- I’d add to this that if you want to reach FI when you are younger (let’s say 50 or below), you have to be excellent with at least one of them.
- The most common paths for reaching FI in relation to E-S-I seem to be “excellent – good – good” and “good – excellent – good”. The ones who retire really young are “excellent – excellent – good.”
- I don’t think anyone is excellent at investing. I think “good” is about all most of us can strive for realistically. That leaves earning and saving as the focus areas for us all.
How I Match Up on the ESI Scale
If I was rating my performance on the scale, here’s what I’d give myself:
- Earning – Excellent. This is the area where I performed the best IMO. I worked at growing my career and literally realized the extra millions I talk about for those who work to make the most of their careers. Most of my success was generated by trial and error and one reason I write so much about growing careers is to let others in on secrets and tips I had to learn the hard way.
- Saving – Good. You could give me an excellent rating depending on your criteria. My savings rate has been 36% over the past 20 years. I think someone would need to be at least 40% to be excellent, but I’ll let you judge that. Still, 36% is pretty good, especially on a high income.
- Investing – Good. If I was near the top of the good rating for saving, I think I’m closer to the bottom of the good rating for investing. I started off rocky as I waited to invest and then tried picking my own stocks — both losing moves. I eventually only got good because I listened to other people and did what they said. I learned about index fund investing and started applying it. Then I read The Bogleheads’ Guide to Investing
and it reinforced what I was doing, so I kept at it. Finally I got a real estate mentor and listened to him. I bought rental properties near the bottom of the market which helped deliver a great return and solid appreciation. These then allowed me to retire early. So I’d say good, not excellent.
and it reinforced what I was doing, so I kept at it. Finally I got a In the end being excellent at generating income, good at saving it, and good at investing was enough to generate a multi-million dollar net worth.
That’s my scorecard — what yours? I’m interested in how you’d rate yourself on these three. Let me know in the comments below.
photo credit: chawkfan91 Next Move? via photopin (license)
For me, being younger, it is tough to assess exactly where I’d be on the scale but I’ll give it a go:
Earning: Relative to my age group, I’m doing very well. I graduated college in 3 years, got a Master’s, joined the workforce, and bought a house where I have some roommates paying me rent. As of now, I’d put it at an 8 or 9 out of 10, but I need to stay hungry and get to 10.
Saving: I’ll been a saver all my life. I’m relatively frugal, but need to make it count. In a given month, my recurring and discretionary expenses are about 50% of my income. It’s the big ticket expenses I struggled with in 2016 (13k car, 5k in landscaping, 6k for a refi). These were necessary expenses, but in 2017, I should be able to save more since I’m not messing around with these things. I’d put savings at a 7.
Investing: I bought a house which I plan to rent out eventually. I invest in index funds through my 401(k). I make regular contributions each pay period. Overall, I’m doing fine. I’d put this one at 6 out of 10.
I love the rating scale!
Maybe I need to create a formal one with some sort of guidelines…
I think that would be awesome!
I love how you break it down into those three phases. Good lessons to learn and ones that I also hope to pass down to the kiddos when they ask how I managed to retire early. I think I have been good – excellent – good on your scale.
I’ve been decent at growing my career over the last 10 years and earning promotions.
I did a simple savings rate calc based on pre-tax income and come to around 50-55% over the last 5 years which I think is pretty decent given the addition of a kid and the government taking an increasing chunk of it.
And investing has been good. I started early and kept it mostly in index funds. My goal has been to meet or exceed the S&P 500 and I’ve tracked to that decently well.
Great post, ESI!
This has made me think. I guess I can consider our overall household income as excellent. Saving rate is a bit more tough as it highly depends on the yearly bonus. Including that, our yearly saving rate is around 30%, but without it it’s closer to 20%. So I’d give good score for that.
Investing: I agree that it’s hard to get an excellent score for that. I’d give good to myself. And hoping to add another factor: luck 🙂
The Earn-Save-Invest model you have creating is absolutely brilliant, because of it’s simplicity. Was it Einstein who said make it as simple as it needs to be, but no simpler?
You’ve accomplished that ESI!
As for my ratings…
EARNING – I would say Excellent! I have compounded my earnings 35% a year since I started working. My sole focus out of college was to climb the corporate ladder a quickly as humanly possible. Being in finance, I always got to see all the compensation of everyone in the organization…which was highly motivating to me. I graduated from college in 2008, with my first job paying $52,000 a year and in 2017 my income will be right around $300,000 (at 30 years old).
My goal early on was 3X my age in income, it is now 10X, and I am working towards a 20X multiple over the next couple years. I think I could be making 7 Figures in the next 5 years. This doesn’t even include my wife’s income (who is also a rock star in this department).
Some say we are a power couple. That just might be true 🙂
I believe that a high income is the first step towards financial nirvana.
SAVING – I would rate this as Good and moving towards Excellent. I track my savings rate on both a gross and after-tax basis (for my wife and I combined). On a gross basis we achieved a 37% gross savings rate in 2016 and a 50% after-tax savings rate. As our income has grown, we have continued to increase our savings rate, with an ultimate goal of reaching for a 50% gross savings goal over time.
For 2017 we are projecting a 42% gross savings rate and a 63% after-tax savings rate. However, if we want any chance of achieving that 50% gross savings rate, we are going to need to continue diversifying our income streams to streams with more favorable tax treatment (i.e away from earned income). We are working to increase our passive income to around $120,000/year (up from $27,000 currently) over the next two years.
I believe in relative frugality, and when you have an growing income, it is pretty easy in my opinion for the savings rate to naturally increase over time as your income grows. At least this has been the case for us. This one kind of goes on autopilot.
INVESTING – Again just a good rating here. We haven’t been uber aggressive here, and have probably left a decent amount of money on the table by sitting on the sidelines for two long. However, we are getting better at this. We all only have so much bandwidth, and I chose to focus most of my energy earning, which takes the pressure off needing to earn super high returns.
Based on my earnings alone, with a 0% return, I am confident I will become a multimillionaire. That said, I also realize we could blow our goals out of the water, if we just get a bit more aggressive at putting money to work.
Now that I made my goal of making the C-Suite by 30, I feel like I can spend more time in this area of wealth building, which should help make our accent to financial freedom exponentially faster. Although we have no plans of retiring anytime soon (as of now).
Cheers,
Dom
You are an over-achiever through and through! 😉
Earning – This one is good/excellent. If I hadn’t been laid off a couple of years ago, I would have left it at excellent, but now it’s only good. Although, compared to the average U.S. income, maybe it still is excellent. The engineer/MBA combo is powerful stuff.
Saving – I would say good here as well. I’ve always salted away money from every paycheck, but I’ve never been super aggressive about it. Lately, we have been ramping up the savings rate, hitting 38% Gross in 2016 (if you include my pension)
Investing – This is good. I’ve been solid here. Index funds and dollar cost averaging all the way.
Love the system!
Interesting and very concise way to break things down. We fall firmly into the good category of all three, maybe the upper end of good in savings and earnings. Slow steady consistency is the game were playing in my case.
Interesting Post – love your holistic approach to building wealth. I totally agree that the best we should hope for with investing is good. Very few people can be excellent and the vast majority of the public is terrible – either because they try to be excellent or don’t invest.
Earning: Good
I’m 26 and have been working full time for almost four years. I have been building my career since much I have increased my base salary by 50% , got excellent and increasing bonuses and had 3 career moves (same company) in that time. I got my employer to pay for my MBA which I hope helps out in the earning category once i finish it this spring (didn’t include this sum in earnings). I hope i can keep up the rate of increases that i have so far but only time will tell.
Saving: Good/Excellent
I have always been a natural saver, it started before University when i saved to pay for it. Managed to graduate with zero debt because of this. My savings rate since graduating is somewhere between 35-40% of my gross income. I consider this very good as I am Canadian and our tax rates are horrendous.
Investing: Good
I have always maxed my company match and am invested in globally diversified index funds. I have made 2 mistakes with investing. Staying in cash for about a year after i started working because i didn’t know anything about investing, got that one fixed now. I also made some minor asset location mistakes. I put as much as i could into RRSPs (tax deffered, deductible contributions) when i was in a lower tax bracket when I should have focused on the TFSA (Pre-taxed and growth and withdraws are tax free).
I agree with a larger scale that is fluid. Sometime I am at the best I can while others will improve once some factors are no longer in the picture.
Earnings- Wife and I are at the best we can be. 9. I say that because there is always room for improvement. SIde gig?
Savings is 7. Primary factor here is college has one more semester to save up for and then we will be at a 8 to 9
Investing is a strong 8 in that we have maxed out what we can while still having that collge kid.
I can see how this can apply to a person in trouble financially.
Earnings =5
Savings =0
Investing = 0
Debt = 7
Crisis =-5
Bankruptcy = have to
This is a good way to evaluate things, I’ll keep it simple and stick to your original scale:
Earning – Excellent / Our household has had consistent increases in income over the years
Saving – Excellent / Being frugal at heart, we’ve averaged over 50% in savings
Investing – Neutral / Definitely room for improvement in this area, was doing fine until financial crisis and then lost confidence in the market. Would have rated this as good 3 years ago
Love the post!
This is a very thoughtful post, ESI.
For me I’ve been Excellent at earning ($200K – 500K per year the past 10 years), Excellent at saving (>50% gross income saved each year the past 10 years).
On Investing I’ve done badly for most of my life- keeping the money in the bank or in mutual funds with fees. During the last 3 years I’ve upgraded this to neutral with investing in dividend paying stocks. On a positive note I think there is more time to get the investing component right while building up a sufficient bank of investment capital through savings. The focus on earning and saving is far more important than investing in the first several years of savings.
-Mike
36% Saving Rate in NOT good, especially on a high income!
Joking, obviously. I can’t help but whipping on my back for haven’t made it to 70% SR, given my high income 🙂
“The most common paths for reaching FI in relation to E-S-I seem to be “excellent – good – good” and “good – excellent – good”. ”
Wow. This is brilliant. Really, really good. Groundbreaking thought, and mentally stimulating. I’d rate myself: Earning (Excellent) Saving (Excellent) Investing (Good), and I’l be retiring at Age 55.
Great stuff.
Earnings – 3
Savings – 9 (close to 50% not sure but we lived on 33% of gross and the rest taxes)
investing – 10 (always maximized our investments in and dumped more money when the market tanked. In fact we went negative value during 2007-2009 years. Now our returns this year in investments was close to $250k and we’ve saved just the 401k maximum of $18k).
We both did phds so our earnings are in the toilet. DH just took a year sabbatical from a well paid job and switched careers at 38 years old to be happy (he’s turning 40 now and lighting it up!!!!) Got his dream job at a dream company and makes even more bank and it’s not work to him. However we did give up a very lucrative money for more lucrative money.
Have enough to FIRE, but not in the lifestyle we’d want. We moved and had no income, 2 kids, and I don’t work. Did I mention I defended my thesis and didn’t work after? I had two kids and now I’m working part-time at something else i like. So we probably should have spent the last 7 year dual income and mad stashing but instead of earning we lived frugally.
So we crater earnings wise until now. But frugal living and wise investing kept the ship upright. Also now we are making quite a bit and have been since we had kids and went to 1 income (don’t ask me how but the year I quit working DH got a raise the same amount I made). And he’s doubled his salary (which was 6 figures in 2010) in 7 years with more potential to go up.
But to us money isn’t a big deal. We’ve made enough to get by and we save conservatively and invest aggressively. The main thing is we’ve always felt we had flexibility to give the finger to a job (which he did) and leave. And now more than ever we bought less house, and are in the same boat as before. At any given time he could quit and sail off into the sunset.
I think I am and have been a GOOD for each of E, S, and I.
I’ve excelled most at Earning!
Early career promotions into mgmt allowed me to invest heavily with higher income
I definitely want that on a poster…Thanks sir for the opportunity!!
I think I’m best with the Saving piece of ESI. We’re saving approximately 30% of our income. I would say next would be Investing and then lastly Earning. I am in the military so I am hampered by the very structured promotion system, but once I retire from the military at 41 in 7 years I’ll be collecting a pension and will have a chance to start my second career at a relatively young age.
Earn – A middle of the pack “good.” I have a good government job – the salary is decent, if not spectacular, but it comes with lots of benefits, including a modest pension when I retire. The one downside of my job is that, due to the sensitive nature of what I do, I am not allowed to earn outside income through “side hustles.” Also, my job is “up or out” – so regardless if I am financially ready for FIRE, I might find myself involuntarily retired at some point.
Save – Poor, but improving. Saving is something I have long struggled with, as it was easy to just live on my salary and trust that the pension (plus TSP) would be there when I retired. When I finally realized a year or two ago that I may wind up “out” earlier than expected (which would significantly lower my pension), I ramped up my savings considerably. I now try to save around 30% of my income each month, as well as maxing out my TSP. I’m currently saving to buy a house in the place where I want to retire, with the intent of renting it out until that point.
Invest – Fair, but improving. I’ve always put at least 10% into my TSP, and gotten the full match. Two years ago, I bumped that up to max it out. I also have a Roth IRA that I am maxing out, and have started putting any “extra” money into a taxable investment account.
Hard call on why we have done best. I feel like we have been good but not great on all 3 phases. If I have to choose one. I would say Earning. I have made some company hops and even suffered through 4 years of commuting 3.5 hours a day round trip to make much more money.
Earnings – Okay – First level Manager
Savings – Pretty good (no kids nor wife, yet – so expenses are low)
Investing – lately pretty good…
E: Neutral
S: Good
I: Good
Best: saving. I grew up with a bad example of investing but early on moved beyond that to invest with discipline in funds. Those same parents were maybe not savers but definitely not spenders, so that stayed with me and had me start saving early.
I’m about average in all three areas but if I had to choose one area that I am best at it would be investing. I’m happy with my results but I just wish that I would have started earlier and with move fervor.
Earnings – neutral.
Savings – good. Savings 23% of each paycheck.
Investments – good. Bought a few stocks that seemed undervalued (ADM, AFL, CASY) & mutual funds in the late ’80’s & have held on, reinvesting the dividends.
Earning – Excellent since I started working full time in 1988.
Saving – Good. With 4 kids and a stay at home spouse it has been difficult at times but managed to save probably in the 30-40% range.
Investing – Good of late (since 2001). Stupid mistakes earlier with individual stocks. Got caught up in the dot.com bubble back in 1999-2000. Made a killing on margin at first and lost it all plus a good chunk of the principal. Been solely in mutual funds and ETFs ever since. Live and learn. I give myself extra credit for not selling during the financial crisis and plowing a lot of money into stocks in the 2008-2011 period.
I’m best at saving. I rate myself at excellent for that. I’ve had a heavy working “saving” gene since I was about 8 years old. It’s almost a curse.
Earning: I need to earn more.
Saving: I need to save more.
Investing: Bad, where do I begin?
Earning – Excellent – I’ve learned a lot about myself by working for myself. 🙂
Saving – Good – We save quite a bit mostly because of high income, not because we look to save money in areas. We still try to save money on major purchases, areas that are unimportant to us, but in general our spending is pretty strong. 🙂
Investing – Excellent – After finding financial success early, we’ve front loaded many of our investments so they’ve performed quite well.
Introspection is a good thing!
I’ve done pretty well at all three, but definitely growing my staring post college income from $30,000 to where it is today has been my forte. It has taken a lot of hard work as I have always been the work harder and not smarter type, unfortunately. Genxer here.
EARN-Good rating, not willing to change jobs to grab the brass ring
SAVE- This is where I excelled, maybe not to the point of excellent but definitely beyond good
INVEST- Probably just fair because of some early mistakes such as getting caught-up in the dot-com bubble without being properly allocated and also over-bought variable annuities just prior to retirement.
I have since been following bogleheads and improving on my investment discipline.
So with all that being said, I was still able to retire at age 57 with the help of a defined pension plan and an early retirement package after 31 years with my mega-employer.
We have been the best at saving. We both opened our 401(k)s early and never wavered from maxing out. We also sweet money into our children’s 529‘s is soon as they were born, and did a ton of refinancing of our mortgage tickets lowest rate possible.
We started with our investment strategy from day one and haven’t wavered. While we are not diversified beyond our brokerage account and our home, we have had good returns on our investments.
My husband and I both had six-figure incomes for 20 years. I have recently walked away from full-time corporate America and I’m now enjoying spending more time with my preteen and teenager. It is a big risk to reduce our income while in our mid 40s to just my husband’s salary, but we are hopeful that we can leverage our passive income from our investments to keep us in the black.
I am doing fairly well at earning and decent at saving. Started late but am on track to be ok when I retire.
I am approaching 40 years old and I feel like I am behind my colleagues in terms of achieving FI.
Earning: Excellent! I achieved what Inconsider to be success at a young age and I am still motivated to adapt and grow within my company. My career has plateaued over the past 5 years, but I believe this has more to do with making up for the early achievements than anything else. In a corporation, a mature look goes a long way.
Savings: Medium-Good. I contribute to my 401k at the maximum rate, but I haven’t drilling me a good job of saving beyond that. The basic cause is my lack of cost control. In my opinion, this is where I must focus in order to achieve FI by my mid-fifties.
Investing: Good. I have been maintaining any company issued stock and there is a big potential upside in that area. In addition, I have one rent house which pays for itself. My personal investments in the stock market are tied to the comments about savings above. If I was doing a better job of saving, I would be doing a better job of investing.
In general, I am headed in the right direction in terms of acieving FI. My goal is to have FI by 52 years old, and this is achievable if I can reign in my spending.
Earning – 8
Saving – 8
Investing – 6
I spent years the first 5 years out of school with an Automatic Millionaire mentality trying to save my way to wealth. Then I changed industries with the intent of increasing my income and career trajectory. Now another 5 years later my income has significantly increased and my smallest raise since making the switch brings home more than I could have incrementally saved. Looking back I see the limitations in the previous way of living and trying to accomplish my financial goals. A well-rounded ESI approach is definitely the way to go!
Max that 401-k as that would be ideal in the S process. Especially getting the free match money.
I have learned through your blog that I need to get better at building my earnings through career growth. Always been great at savings and investing. Thanks for all you do for this community!
I’m a late starter but I’m working on my earning potential by restarting my business in Dec-Jan. I have some great testimonials, & before and after pictures that should boost my sales. Also, I will receive a raise at work in January. I have improved my saving & investing skills than in the past, and I plan to increase both next month with a revised & updated budget, and action plan. I’m cutting a subscription I don’t use and just hitting the library a little more often. I’m investing in my health too by exercising & stretching more.
I think I excelled at diversifying my assets.
Earn – Good – We are both professionals so we make good money, however, other factors were more important to us so we never sought out the big money
Save – Good – We always maxed out our retirement accounts and never spent all that we made and we lived below our means.
Invest – Neutral – We should have taken more time to learn about Investing so that we could have optimised our returns.
I would say I am best at Earning – but I have substantially cut back my expenses in the last 2 years so Savings is pretty strong these days.
I’m supposed to say where I’ve excelled…hmm. I’m hard on myself, so I don’t think I’ve excelled anywhere, but I guess compared to others we’ve excelled? Savings. Two kids almost thru college (2 classes left!) debt free. Always put something away in savings/401k (at minimum getting the match and in the last few years since I re-entered work force full time maxing it out). Rental property is 7 years away from being paid off.
I have excelled the most in savings for me as I am a spender.
Saving. Bought my own house at 23 with 20% down. Was paid (on merit scholarships) to go through Undergrad. Grad school also paid for plus stipend. Now I have a real job and I continue to max out retirement accounts every year. Which are currently doing well-so maybe a couple points for investing too!
I think saving is the most important of the 3. The higher the savings rate the better
Excelling at Earning has made everything possible in our lives.
Earning- (7)
Savings-(5)
Investing-(8)
Earning: 7/10
Saving: 9/10
Investing: 7/10
Always room to improve…
Earnings – ok, I’ve had a job where I made better money but my current one makes me feel good inside AND guarantees a retirement (I work for a school system now)
Savings – Good – after taking a cut in pay to take this job (which had MUCH better benefits!) my husband and I are still putting 15% each in our 457’s, 10% automatically in savings that’s hard to access and an extra $200/month in savings that’s more liquid for just in case
Investing – for some reason, the 457 stocks I’ve invested in have earned on average 15.6% each year over the last 4 years
E – Average
S – Good
I – Good
Saving worked best for me. My earnings were upper middle class but keeping expenses low allowed me to save 60% of my take home pay.
E — Good
S — Good
I — Fair
Well, I’m not very good at grading myself, but I’ll try.
E: Good, always had a job, worked 34 years in public safety (EMS/Fire) which pays on a lower scale, so can’t rate myself higher, but I know people who don’t stick with anything, so I think I deserve a little credit.
S: Neutral, should have been much more diligent years ago, but had high family medical expenses as an excuse to quit saving, then never restarted.
I: Good, some of the investment was in sticking to a career that now gives me a pension for life, and medical insurance till Medicare age. Also used 457b program and DROP option on pension to leave the job with about 300k in tax advantaged investments.
Overall, here I am at 53 with my version of FI. I have the rare and hated public pension providing about the same moderate income as I earned while working, and a small investment start that I hope will provide future inflation protection.
I think I excel at earning the most , need to work on saving more.
I excel most at the I (Invest) – I put my money in low-cost index funds through automatic transfer, and I use dollar cost averaging. It has worked well….mostly because the market keeps going up up up!
I’m probably best at the *investing* part because I’ve gone 7 years in a row maxing out both my 401k/SEP as well as my Roth IRA, while I fluctuate greatly on the earning part depending on how many kids are in my life 😉
E – Excellent
S – Good
I – Good
My spouse and I score as follows:
E: Good – We both put ourselves through grad school and continue to build our careers, increasing cash flow and thus how much we are able to save.
S: Neutral – We are focused on rapidly getting out of debt, so actual saving is not where I would like it to be. However, our overall net position growth rate may be considered good. True savings will ramp up very soon when our cash flow army receives marching orders to attack the other side of the balance sheet and building our investment portfolio walls to protect us from ever having to deal with debt again.
I: Neutral – We have done okay with our investments, and are growing in confidence and knowledge, adding funding and different vehicles to our portfolio, perpetually increasing our E, S, and I.
Earnings: Average to Good. I had a well paying job at a good company but there were not many opportunities for advancement without a relocation, and due to family issues I was unwilling to relocate. In order to balance work/family life, I cut back to a 30 hour week in 2000. While I realize that hurt me in earnings, it paid hearty dividends in all other areas of our lives. My husband has always had a well paying professional career so that allowed me to cut back my hours. He’s still working while I am early retired.
Savings: Good. We generally save 30% of our income.
Investing: Good. Index funds and dollar cost averaging. Don’t mess with success.
Earning – Good to Excellent; I went for a second degree and a certification which bolstered mine greatly after 8 yrs as stay-at-home mom mid career. Best raise was this summer when child #1 graduated college. <3
Saving – Good to Excellent; when both employed would save most of lower salary.
Investing – Good to Excellent; always maxed 401Ks – now looking for "residual income" and entered into "angel Investing".
I would define excellence in investing on beating the S&P 500 with less risk. I was able to achieve this by doing the following:
1. Put my daughter’s college savings in the Washington guaranteed education tuition fund in its early inception. That fund yielded almost three times my investment over 18 years.
2. Bought and held a mixture of small and mid cap funds.
3. Purchased, cleaned up and sold rental real estate in Portland Oregon where urban growth boundaries are rigidly defined insuring that property close to the city center would appreciate over time.
I am the best at savings. My earnings and investments are not bad but there’s room for improvement.
My savings scale will go from Good to Great with the addition of a nice shiny 2017 Silver Eagle. Who are the other nine readers that will join me in the Winner’s Circle?
I think we hit a close triple on the ESI scale — sliding in just under the tag after an awesome throw from the right fielder. The earnings accomplishment is excellent. The investing accomplishment is excellent. However, I would rate us only good on savings. Controlling spending is frankly the tougher part.
E: Currently in a solid place with my wife taking early retirement at 63.
I: We put the investing on auto-pilot with 401(K), TSP and Roth IRAs combined with growing equity in our house (mortgage rate 3.5 percent).
S: With just over two years to my retirement target in February 2020, controlling spending will be the area where we can accelerate to the finish line. “S”pending is the flip side of the “S”aving Scale. If we can control the former, then we can improve the later.
Looking for a nice place to display my Silver Eagle. It will match my hair and beard.
Although I have a decent income, I feel that I’ve excelled most in minimizing spending. My wife and I pass for middle class while spending only about 15k per year. This excludes income taxes and charitable giving.
Although my stash is now large enough to theoretically retire, I’m still working because we are expecting a child and for the health insurance. I’m enjoying my job right now, so I don’t mind too much.
Within a couple years we’ll probably have enough to cover insurance and child expenses, but those expenses are largely unknown to me at the moment.
As for investing, I max out IRAs and 401(k)s with mutual/index funds. Nothing unusual there.
I think I’ve been pretty good at all three steps. I earn a good salary, I’ve always spent significantly less than I made, and a lot of my income straight to index funds.
The Savings part – setting goals worked great – we were excited about reaching the next net worth level – we reached them all and I retired at 52.
We are excellent on the earning scale, but not why you think.
My wife and I are a team and the same age.
I have a PhD in Chemistry. She has a BS in computer science.
At the beginning of this year I switched from a bench chemist role to a purchasing role.
This is the first year that I will earn more than she will!
She is very good at her job and an expert at her application.
Sometimes longevity in a field can outweigh superior education.
Earning – Good (practicing engineering consultant)
Saving – Neutral Good (my favorite AD&D alignment)
Investing – Good (401k’s >10%, Roths max, 5% additional, rental properties)
Savings
I agree with your three pillars – they are all critical in order to achieve FI. A little like building a stool – you need 3 legs. Here are how I’d rate myself on the 3 elements:
Earning – Good. I’d rate myself as good here, though it took me a little while to hit my stride. Once I got into my current industry, and was able to demonstrate my value, the rewards followed (increased salary, other significant financial benefits). Today, my total income (base, bonus, stock, exercised options) is between $400-$450K.
Saving – Neutral. Early on, I thought I had plenty of time to invest, so by the time I hit 40, I needed to do some serious catching up. Fortunately, I’ve been able to maintain a lifestyle well below my means, and invest the excess income (% of base, all bonus, all stock, all options). Although I started late, I’ve been fortunate that I’ve been in a position to save approximately 45% of my income over the last 10 years.
Investing – Good. Perhaps my returns could have been better, though on the upside, I’ve been consistent with contributions to my investments over the years. In the past few years, I’ve added investment property to my portfolio in order to diversify. I get good cash flow, and have experienced great appreciation, though I’m not interested in flipping any of the properties.
At this point, I am about 2.5 years from my target date, when my youngest will finish her third year of college. If everything goes according to plan, I should retire with about 4 mil in assets.
E: B+
S: B
I: C+
Be on the lookout for more of my details on an ESI Money blog post near you! 😉
I’m good at Earning and Saving, Investing is harder for me to understand
We never expected that we would make a lot of money working in non-profits. However, we were good at investing and even better at saving. We saved 10-20% in our 30s and 40s, around 30-40% in our 50s, and have been socking away closer to 50% in our 60s. We’re retiring soon and will start spending those savings.
I was focused on saving and investing then through chance and additional experience my earnings doubled in only 3 years. So earnings has been where I’ve had the greatest success.
E – Good
S – Average, Getting Better
I – Learning
I wish I understood more when I was younger… Good at earning, Good at saving, Good at Investing… I came from humble beginnings, had no positive role models or education on the topic of finances until late in the game. I always had the goal of not retiring poor, did not want to struggle and worry as I saw my parents do. I chose a career based on income opportunity, and happen to enjoy it and am good at it. I dreamt of big bucks, not huge bucks. I have always saved, but could have done more. I made some mistakes by not really understanding all the rules. I did not learn about investing until in my thirties. But, I am doing ok – and have a few items to straighten out, and will be back on the path to retiring… just a little early.
E – feeling good
S – maxing out 401k
I – majority in third index fund portfolio, ~10% moonshots
E- good
S-okay; need to do better
I- not where I need to be
Still early on in my career (less than a year out from college), so difficult to determine where I fall in Earnings.
Savings, I’d say good. My wife and I are quickly paying off student loans and cars while also saving for a house, over 60% of combined gross income.
Investment, also difficult to say. Employer matched 401(k), but nothing else yet. Waiting to first pay off current debt and get into a home (the real investment we’re aiming for).
Thank you again for a great post! A good one to re-visit.
Personally, I’m doing really well at each of these. As a couple we excel in the invest category because I have the most control over that portion.
E= Good for the work I want to do, where I live, and peace of mind. I could go higher, but don’t want to go into management.
S= Good. With what we have saved, most would probably RE. Still want to build more cushion.
I= Pretty good. Have over 23 years of 401K, but wish I did more private investing earlier in index funds. Started a little later with private index investments, but still happy with returns.
Earning – Good until I decided to become a stay at home mom.
Saving – Excellent. I’ve become a minimalist over the years.
Investing – Good now. I’ve always invested but haven’t always been great about tracking them. One year a fund was tumbling and I didn’t notice until it was much too late.
I love the simplicity of the scale. For me, I’ve excelled at the earning (excellent), and my success with savings and investing varies depending on the day, month, and sometimes even the year. I have always focused on the career and what I need to do make the next career move or get the next promotion, etc. I think I’m probably second best at investing (real estate) and have to constantly work towards saving more.
You do a great job of breaking down steps in an easy to understand way. Keep up the great work
I am doing the best on saving portion. Following the principle of paying myself first really helps with this.
My ratings:
E – better than most
S – excellent
I – average
The media and most people would have you believe that “I” is most important when in fact it’s probably the least out of E, S and I. What made the most impact for me was “S” – a good habit of saving since an early age. With that foundation, I could then move onto accelerating my “E”. I only concentrated on “I” in my late 20s. Most of my mistakes have been on the “I” side, though nothing serious enough to derail the FI train. Lastly, luck is one of the least appreciated factors. Living in the US has put me well ahead of most of the world as far as opportunity and earning power.
E – Good for industry
S – Average; getting better
I – Better than most; maximize pre-tax; low-cost Vanguard funds, etc.
EARNING: Good
After getting a graduate degree I got a good job, got promotions fast enough. But since 2011 my career got stagnant.
SAVINGS: Excellent
I never really calculated the savings rate, but in my rough estimation I was over 40%.
INVESTMENT: Good
I have been investing my savings regularly in index funds.
So I guess my area of “excellence” is savings.
Earning – Good
Saving – Good
Investing – Good
E – Good, Fell into the Tech industry while in College and worked my way up to SVP, which paid well. It was a lot of long hours and traveling, but allowed me to Save and Invest.
S – Good, I made sure I contributed to 401k’s and maximized company matches.
I – Good +, Along with having decent long term returns (had to ride out the dips in the market) with our 401k’s. we’ve focused on purchasing rental properties early on and now have 8. We leveraged our equity to purchase more in the beginning and now have focused on paying them off, so we maximize our monthly cash flow. I finished paying off our primary residence earlier this year which allowed me to just retired at age 54! I’m handy with building and repairing things, so I keep myself busy by managing our rentals myself.
Great post ESI! This really got me thinking …
There is the element of maturity and age, along with time … Sometimes you can move in and out of different scales at different times / phases in life …
In the beginning i was good on most everything, and then an event would set me back in to the bad scale… even back to the disaster level … sort of like the chutes and ladders game …
In my current status, i’d say we are good – good – lucky good …
I say lucky good on Investing because our wealth has come from real estate in the last 5 years. we were lucky to buy at the bottom and continue buying until prices wouldn’t allow us a positive cash flow … We financed everything using 15-year mortgages so we’re half-way paying for our real estate mini-empire …
Great read! My earnings continue to pick up as I develop more passive income. But I’m limited as a pastor. Savings has been good, roughly 50%, not much more upside in the short term. I am happiest about investing, while not perfect, and with many mistakes, my investing returns are both consistent with my station in life and beat the market, consistently. I guess that means I’m happiest with our investing. The key is to structure the investments so they continue to perform into and through retirement.
I would say I’m the best at Investing. I got started early and enjoy analyzing companies, over the last 5 years or so I’ve beaten the market.
Definitely earning. I have improved a lot on saving though – to the chagrin of Amazon. 🙂
Earnings – good
Savings – neutral
Investing – BAD!
Earnings: bad
Savings: good
Investment: bad
I have $4.2 million in cash, all taxes paid. 1/2 in money market earning 1.15% and half sitting in a brokerage account backing my many many many way out of the money puts sold on stocks and index funds. I am trying not to lose money and I am not going to get caught at the top. When this market finally does drop I will be ready.
Heading into retirement in 16 months at age 57, I’d have to rate 9/10 for earning. Secure in my position as VP in a Fortune 500 company. 7/10 for saving. Nearly 40% of income automatically goes into savings but I still like to indulge with a steak and good bottle of wine. 8/10 investing. Thanks to sites like ESI, my asset allocation is well diversified across low cost index funds. Just have to stick to the plan and trust the process.
I am doing my best on the savings side. Thank goodness for 401K and saving it and never seeing it.
earning = good
saving = excellent
investing = good (except during recessions 😉
I would say I have done pretty well with all three, but have probably done best with the saving component. Thanks for another great giveaway!
In my opinion, earning is the most important lever, but only if well complemented by saving and investing.
Remove earnings, and the other two aren’t going to do much for you. In contrast, with enough earnings, you can do pretty well even if you make some saving and investing mistakes along the way (and I’ve made some!).
I’ve heavily invested in my career development and that’s paid off in spades, despite suffering some short-term opportunity costs (full time MBA from a top program is the most obvious example).
Love the blog and the contest idea. Makes it fun and interactive!
I love this scale.
Earning—Good
Saving—Neutral
Investing—Neutral
I can also be hard on myself. I am better than the average American but could be better in the FI community.
It’s a touch call; we’ve been “good” (not great, but certainly not horrible) on each, but I’ll pick “investing” as our best, because we managed to hang on and keep up with the program even through the Great Recession.
That’s “a tough call”, not “a touch call”. At least, it *should* be .
Earning—Good
Saving—Excellent
Investing—Excellent
E – ok, middle income earners
S – ok, emergency funds and other funds set up for savings
I – big time – stocks, and rental properties.
Earn: B+
Save: A-
Invest: B+
Earning: Excellent
Saving: Excellent
Investing: Excellent
E – good
S- neutral to good, and improving all the time
I – neutral to good, we had some bad downturns in the past, but are on track now
Saving and Investing. I started saving early, kept investing, did not panic when the market fell. Having a moderately high income level I have a massed what will be a comfortable retirement savings and other investments.
Now I am super saving and looking to retire earlier.
S- Saving- As others have commented, start saving and investing as soon as possible. Even if you have a 401k, it’s also good to put annual maximum into Roth IRA. The after-tax Roth contributions enable tax-free withdraws in retirement.
E could do better, potential for way higher income but at a cost of more hours
S is the best for me.. i’m aiming for 50% this year (at least i hope that’s how my math is calculating out!)
I not too bad, still learning!
Earning Very good, take advantage of possibility for extra earnings the past 10 years
Saving Good, Could do better at spending less on a monthly basis and I am not very good at budgeting.
Investing…Excellent just bought our second rental property. Invest the max to 401K and catch up contributions as well as dabbling in bitcoin and marijuana stocks.
EARNING: Good
I enjoyed my job, worked hard and asked for performance reviews in the middle of the year. I wanted to find out what needed to improve so I could earn raises and not be surprised at year end. If a raise wasn’t an option, asked for stock options or other rewards.
SAVINGS: Excellent
I enjoy saving money. Maxing 401 and IRA before 401 was a standard that I followed. Using coupons for groceries is fun, not a chore but not excessive on effort. Using coupons to eat out is important since we like the social aspect of eating out, we utilize coupons and even take home food so we don’t over eat while out. I don’t like shopping, so that is a large saving that I don’t even count but my friends tell me often of their impulse purchases and I am shocked.
INVESTMENT: Good
I invest money in a variety of tools: mutual funds, individual stocks, Index, CDs, Bonds etc. I should spend more time managing my money but I know the market goes up and down so timing is difficult.
I learned from my parents on Saving and Investing and married a spouse who has similar beliefs so retirement (18 months now) is just great.
I am still a work in progress but among the three, I will say I am Good at savings. I am careful about spending but as kids are growing up, it’s getting tough.
Earnings = Good/Neural
Investing = Bad
Savings = Good
Need to focus more on improving my earnings and investing skills
I think I am doing my best at saving. I pay myself first every time I am paid.
Save as much as you can and start young.
Earning helped the most. I got off to a slow start (self-employment at low pay), but then caught up later when in the workforce with large salary increases and bonuses.
ESI,
Earning – Good to Excellent, me and the misses earn a lot for a household, but not great for attorneys. Trading family time for bigger paychecks is worth it to us. We like being government lawyers.
Savings – Again Good To Excellent. We are both naturally frugal. I do not believe in bare bones budgeting, but we live far below our means and have a solid savings rate around 50%
Investing – Decent to Good. I don’t make actual money mistakes, but I am sure there is plenty of room to tweak my strategies.
Earning and Saving is where I’ve really excelled, excellent for each.
Investing is getting ramped up and will be the next act to follow. Currently it’s a neutral but will get better with time.
-Mike
Saving/Investing are the one’s that have helped me most. Don’t keep up with the Jones’, they are probably poor and can’t retire. Save at least 25% of your earnings and invest a good portion of it in low cost index funds (as early in your career as possible), and you are 75% of the way there…
All 3 aspects are equally important. But for me I think educating yourself to manage your own money is key.
ESI, I’m happy to report that I’ve excelled at all 3.
E: I progressed rapidly in my early career, continued to gain promotions through 30 years of Corporate America. BONUS: I’ve earned a 32 year pension!
S: Always been a saver, and the savings rate increased as my E increased. No lifestyle inflation here (ok, maybe a bit, but well below my rate of “E”!).
I: I’ve always loved Investing, and have a widely diversified portfolio consisting primarily of low cost VG index funds! Sure would be nice to add some more Silver to the portfolio (wink!).
I’d have to go with saving or investing. At 21 I’ve saved nearly $50k and have grown that to nearly $60k in equities! My goal is to get to FI before 30!
Thanks for all fo your great content!
Love this contest, as it made me think a little about the three elements a little deeper than I had before. So here goes:
Earnings–Good. Getting a chemical engineering degree from a good school gave me a great start in beginning salary but there wasn’t much opportunity to raise it. No commission, and raises and bonuses were small and formulaic, and had only partial relevance to your actual performance. Leaving to pursue an MBA from a top 10 business school helped a lot too, but not in the short term. My salary coming out of business school was only marginally higher than what is was two years prior when I quit work to go to school, but the trajectory of future raises was much steeper than what it would have been had I not gone.
Savings–Good to Excellent. My wife and I have been fairly disciplined (but not overly frugal) in spending and have contributed to my 401k from Day 1. We could have saved a lot more, but believe that providing financial support to religious and charitable organizations is very important. We live in Houston and have seen first hand how relief efforts help people in crisis situations and without financial support it could not happen.
Investing–Good. We managed to hit $1 million in assets (not including the house) at age 49, despite my wife quitting work to stay home to raise the kids (another choice we deemed very important and worth the “loss” in income). The issue I face now which I wish I would have thought about more in the past, is that most of that money is in 401k/IRAs, which is great for tax purposes but problematic if you’d like to retire before age 59 1/2.
Saving for me, currently 60%+ of gross.
Saving: I’ve maxed out my Roth IRA since age 18 now and saving rate’s been 50% and up.
Thanks for the great website! I think I’ve done pretty good with the Earning leg of the stool. I’ve focused on my career and am doing pretty well on that front. Please keep up the posts on that topic!
E – Good, but flat for the past few years
S – Good to Excellent, but inconsistent spending makes it hard to have a reliable percentage of saving
I – Good, but many mistakes along the way
For me it would be saving. $320k net worth at age 33. Planning to hit FI in 5-6 years.
Investing is what has done it for me. I’m further along than people with 3 times the income at the same age.
Every chance u get I have thrown money into investment’s through different vehicles.
401k = all s&p
Roth ira = all s&p
Compurer share = buy stock *directly from companies, no trading costs and buy partial shares. (Nobody talks about this!)
Betterment = they have a total market approach
Brokerage = play money speculation + buying company stock free with every paycheck
Real estate = find a small bank that won’t make you jump through hoops and you can get 30% + returns no problem (low liquidity though)
Some people are too focused on capital preservation. But that is the normal route. The high achievers here have a different problem. A major market correction causes you to retire at 45 Instead of 40. Not a problem!
Jump in with both feet!
Earning: strong – have grown my career from 30k to over 200k
Saving: strong – been saving 30-50% since after college
Investing: mix of a boglehead, ramseyian, and own through blogs like this 🙂 mostly in index funds and a new home purchase recently
Great Website. I am now financially independent and just retired this past January.
Earnings: Good. Had a slow start due to time spent in Medical school & subsequent Residency training, but made up for it later.
Savings: Excellent. Fortunately my wife and I have never been big spenders and our savings rate is generally 30 – 40% after tax.
Investing: Good. Started learning about investing & the power of compound interest as an intern. Just add time (36 years for me) and it becomes a winning formula, despite plenty of mistakes.
Saving is my best part of ESI. Getting serious at age 35, I maxed out my IRS & 401(k) every year. Now 25 years later, FI is within reach.
Previously best at savings, but dramatically improved Investing in 2017.
I’d say I’m a solid good on all three – earning, saving and investing. I’ve grown my income from 32k per year to well over 200k per year. Savings rate was always north of 50% (this was based on what I cleared after tax). My house is paid off in the Northeastern US near the NYC area. In mid 40’s and total net worth (not including the house) is in the low multi MM. I’ve made a lot of mistakes however things are going pretty well.
Earning for me
Kat
Earning: 5/10-retired now, not pulling in the cha-Ching like before
Saving: 9/10
Investing:9/10
Earn – Good, not great. Made a career move a couple years back that increased my pay over 40%, but blew up in my face, resulting in 9 months unemployed. Still trying to recover from that.
Save – OK. Never seem to save enough, especially now as we try to recover from being out of a job for so long. Life seems to keep getting in the way.
Invest – Excellent. I have made some very good moves. My timing has been good, which could be attributed to luck, but the basic soundness of my investing decisions has served me well over the years. My keys here are do it myself, and minimize fees as much as possible.
Investing for me! I make sure I know what the end goal is for every dollar I earn.
Earning – very good; fortunate to have parents that pushed me to pharmacy.
Savings- okay; just average
Investment: average– a bit too conservative in all likelihood.
E – Good now. Not so good early in my career especially since my first career was one that didn’t have much earning potential like I thought it did.
S – Good. Saving other than our retirement is going to take a backseat for a while as we pay off debt. We haven’t stopped it completely, just not putting away as much.
I – Good. Thankfully, we’ve had 401k’s almost everywhere we’ve worked. Our total balance still isn’t what it should be but it’s getting better.
E – Good. Have progressed in my career and may have a new opportunity to increase significantly in my final years prior to FI.
S – Neutral. Always lived below means but only just recently increased savings rate.
I – Neutral. Always invested but could have put more cash to work in the market throughout the years.
Earning. Taking extra shifts and moonlighting.
Earning – Excellent.
Saving – Good+. My savings rate has been 37.1% over the past 15 years.
Investing – Good.
I’m probably doing the best at Saving.
I’ve been excellent at Saving – at least 40% the last 5 years.
Its hard for me to measure “I” in ESI. I mean I know what my returns are but I don’t know how they compare to people with similar net worth, age or income. Not really concerned with risk tolerance as im in my early thirties. So I would have to say “S” is what I am best at. I live in a modest home so I have been able to save 40% after taxes for the last 3 years. Increasing my “E” has allowed that to happen. Since I bought my home 6 years ago my income has doubled and I remain in the same home.
E – Average
S – Good to Excellent
I – Index funds mostly, does that make me average? My wife and I did make small stock investments in March of 2009 with all the cash we could spare ($1,000). She bought $500 worth of Disney at $17/share…so maybe I’ll rate her at Excellent!
I think I have done the best at Earning. Invested in my career and got an MBA and worked my way up at my current organization.
I have done well with savings, I have been able to max retirement accounts (401k/TSP, and IRA)for several years.
I have always been an excellent saver. Always maxing out retirement opportunities alone is going to allow me to retire early. Of course I have always saved on top of that as well. I don’t have a fancy car or fancy clothes but I often have the highest net worth in the room but know one would know it.
E- I never really focused on my career but did my best and always was in the right place at the right time. I also learned how to negotiate my salary and ask for raises, good.
S- this was my best area as I learned right out of college to automate my savings…..via auto deposit. I never missed the money and it accumulated over the years. So did the maxed out 401k every year and the bonuses and commissions that were saved instead of spent. Very good.
I- I’ve only recently started to learn about the details of investing. But I have invested in Vanguard funds as long as I can remember. But I did get caught up in the .com hype and lost some money. Because I started early, compounding has been my greatest friend. Good.
48 years old and 2 more to go until FI…..and I’m a little nervous. But I have all of you, thank you.
Earning – Good
Saving – Excellent
Investing – pretty Good
Earning – Good
Saving – Great
Investing – Average (although for index-fund-fans, shouldn’t average be what we’re shooting for?)
I’ve increased my earnings 300% since I graduated college 13 years ago, and while the growth rate looks to be slowing right now, at a low $120,000 salary, my family will be fine. I’ve saved 4 times my salary in that time in retirement accounts, and while this could be a lot higher, I am very happy with where we are.
I love reading these articles. Of course it’s always easier said than done.
Earning – Good. My husband and I both work full time as electrical engineers. I believe we are at the point in our careers that if we found a new job we would get a higher income but we are fairly happy with where we are right now.
Saving – Needs work. Right now it seems like we have no extra money at the end of the month to save. I’m hoping this is just a phase. We are in our late 20s — Recently purchased a home and have two small children.
Investing – Okay. My husband and I both put 10% into our 401k accounts. I am also part of an ESOP for the company I work at. I recently started play with a little money in the stock market.
Hello Mr ESI,
I really like your articles. I find them inspiring and provide hope there is a reward for trying to reach a moderate level of financial independence. Here are my comments on your “three easy steps to financial independence”:
Earning – Good. I make a “good” salary in IT and have been in my career for just over 20 years now. However, I was caught in a group layoff this past summer. Not counting that my salary has been good over the years.
Saving – Neutral. Although I try to save, there are heavy expenses in our life. We live in an older home in constant need of repairs, we were hit with major healthcare issues the last few years, and the largest issue is we were not always following a budget. I am working on all of these and working to get my wife on board too. We are also moving to a newer house that (fingers crossed) will need less repairs.
Investing – Neutral. When I was more focused in this area, I had good results at investing. The key word is “was”. I have spent less time in this area recently due to a major medical issue in our family and some demanding work. However, I started a new job recently and the medical issues are on the decline so I hope to focus more in this area very soon. 2018 should be much better than 2017.
I’d say I’m mostly focusing on the investment area now. Since my layoff I’ve only been doing my side hustle that I’ve done for years. This stock market rally has really put me over the top, so I dont know if I will ever bring myself to commit to a full time crazy job again.
Salary was never over $140k, and that was just recent so did not excel there, but did fine. I have typically controlled my spending, thus savings was fine. I always monitor my expenses and google alternatives or look at other plans whether it be phone, insurance, etc. To me this is managing finances as this is my field. So it was an expectation. So above average on Savings. These two gave me the basis or foundation to truly grow my wealth via investing. I have stayed tried and true being in the market. Several errors along the learning curve, but these have helped me to improve my net overall results. This year my wealth has improved $500k because of it (through Nov 21). So to me I have excelled in the investing area, but realize there is still much to learn. I continue to follow daily, look for new ideas, try and find big picture multi-year segments of the market that have potential. Read blogs and other posts comments regarding specific stocks etc. Look for new ideas. I truly believe I put in more time than most here and almost treat it as a second job, but one that I love and is inspiring, that continues to improve my knowledge. When I retire from the 9-5 job, which is likely in a few months, personal investing will be my job. I am hoping in 5 years I can continue to say I excelled in Investing.
Earning-Excellent. 39 with a family of four and making $500K with my s-corp. Purchased a family business at market value for 1.5 million a four years ago and have grown it since then by trimming fat and capitalizing on the current market and each opportunity we get. Niche business in the construction industry that is fairly volatile so know that it won’t stay this high for ever. We will have good years and great years and hopefully won’t have any terrible years.
Saving-Okay. Try not to keep up with the Jones. Fairly frugal but don’t maintain a monthly budget and have been building up a large cash reserve in personal and business savings. Only debt is our mortgage.
Investing-Needs improvement. I’m desperately trying to improve. I had 20K in my first money market fund and was ready to invest it the week Trump was elected. Planning on timing a dip with Trump and it never happened! Plan was to time it once then stay consistent but it fell through. To scared to jump in right now. Bought a large custom whole life insurance policy a couple years ago that we contribute $20k x 5 years and my wife and I max out our IRA but no other investments in the market. Bought a nice 1 bedroom condo foreclosure in Vegas last year that has worked out really well. Researching financial advisors that can help with our whole financial situation but live in a small town and have yet to find the right match. Love this site. Hoping to find a similar one that caters to successful business owners specifically.
Earning – good!
Saving – ok – paying off debt currently, then will ramp this up
Investing – ok – need to up % with our next raises, but the market has been kind this year!
Earning – good so far. 6 figures in a relatively low cost area isn’t too shabby.
Saving – neutral. My family has enough money in various savings vehicles, as well as enough food/other necessities of life that we could survive okay for several months if I were to lose my job or have some other unfortunate mishap.
Investing – poor. Being relatively young (early 30s) with a relatively large family (wife and 6 kids) means that there’s a lot of need for the here-and-now rather than preparing for down-the-road. I do have an IRA and 401k, but I’m not maxing out either right now. This is something that I plan on working on, hopefully as I’m able to get some additional income from my main job and as side projects come to fruition.
I would have to go with Investing as my strong suit.
Did okay with earning for a few years but was awful at saving. Got a windfall and instead of spending, I invested it. It is finally starting to pay off.
Earning – Good. Combined over $200k. Can’t complain.
Saving – Ok. Around 30%. Could definitely improve on this.
Investing – Good. 95% of investments are in index funds/ETFs. Rest is *playing around* money.
Earning: Good to Neutral. I think I could do a lot better in this area. The last big raise I got was around 30% but only after I quit and was given the retention promotion. I handed my boss my letter of resignation and he pushed it back towards me and told me “No” and then by the next morning arranged a raise and a promotion which was given to me by an executive who recruited me into their department. 30% sounds impressive until you realize how low my pay was relative to what I was worth in the market, it was basically just enough to keep me from leaving. I didn’t know how to ask for a raise, promote myself or do any of the other things reccomended on this site so I only ended up getting my worth after quitting and triggering some sort of crisis which went up through the ranks to the CFO which isn’t something you can do every time you want a raise lol.
Saving: Excellent. My wife is taking parental leave from work and is paid a pittance in benefits for this yet we still save 30-40% a month. Prior to this we averaged a 60% or more (after tax) savings rate. So I support a baby and a SAHM, and as a household we save 30-40% and when my wife goes back to work it’ll be back to 50-60% for sure.
Investing: Good. Conventional index portfolio which a small allocation (5% or so ) in berkshire hathaway (has done well since buying) and P2P lending.
I can be great at saving and investing all day, but I am a 36 year old middle school teacher who earns $38k/year, so being comfortable is barely attainable.
https://esimoney.com/seeking-a-six-figure-income/
Hi, I am trying to make a list of good financial books to read, investing, retirement, etc
Have you ever thought of adding a list onto the website? Maybe there is one already and I just have not found it?
Thanks
https://esimoney.com/five-money-books-youll-ever-need/
https://esimoney.com/12-books-that-will-make-you-a-financial-expert-in-one-year/
https://esimoney.com/the-best-retirement-books-to-retire-sooner-and-better/
https://esimoney.com/top-money-books-millionaires-read/