How To Level Up Your Career and Outpace Higher Earners

Frank the doctor makes $1 million per year. 50% of this goes to federal and state taxes. He’s left with $500,000. He saves and invests 10% ($50,000) of this every year. The rest is used for lifestyle.

Joe the realtor makes $200,000 per year. 40% of this goes to federal and state taxes. He’s left with $120,000. Joe lives modestly and only spends $40,000 per year on lifestyle. He saves and invests the other $80,000 (67%).

Even though Frank the doctor makes 5 times as much gross income as Joe the realtor, Joe’s investments outpace Frank’s by 60% every year.

What About 10 Years Later?

Frank the doctor would have contributed $500,000.

Joe the realtor would have contributed $800,000

Assume these balances didn’t grow any amount in the 10 years, but do pay 5% in cash flow / dividends.

Frank’s $500,000 makes him $25,000 per year. His lifestyle still costs him $450,000 per year. He’s only 5.56% to his financial independence number.

Joe’s $800,000 makes him $40,000 per year. His lifestyle still costs him $40,000 per year. He is now 100% to his financial independence number.

This blog post is an excerpt from my book Passive Wealth. You can check out the book at the link below.

Amazon link