How to Build Wealth Right Now and How Couples Can Align on Financial Goals
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Elizabeth, are you ready to keep it real? Like, really real? So real that people might be shocked by what you're saying?
I think that's my default, Sean. As a recovering oversharer, I am well-versed in realness.
You know, I think that's why we get along so well. Well, this episode, we're doing another round of Money Hot Takes, where we lay out the nerdy truths about money that people might not be ready to hear, but it's our job to do it anyway. So buckle up. Welcome to NerdWallet's Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Piles.
And I'm Elizabeth Ayola. This episode, we talk with a married couple about how they manage their finances together. even when they don't agree on what they want to do with their money.
But first, you heard us up top. It's time for another round of Money Hot Takes. If you are new here, this is how it works. Elizabeth and I have 100 seconds on the clock to rail against something in the personal finance space that we are annoyed by or simply don't like. because there's a lot of misinformation or just misguided stuff that happens around money, and it's our solemn, nerdy duty to impose our perspective on listeners every so often. Elizabeth, this is your very first Money Hot Take segment, so you have the honor of going first. Are you ready?
I stay ready, Sean.
Okay, okay. I'm setting my timer to 100 seconds. Three, two, one, go.
So owning a business isn't the only way to build wealth. It grates my nerves when I see social media influencers or business owners tout this idea. I mean, that isn't the only way to become a millionaire. All right. So first of all, about one in four businesses fail within the first year. And I'm not saying this to be a negative, Nicole, or discourage people from starting a business. Of the business owners who are making it, shout out to y'all, the average makes under $100,000 a year. Owning a business also doesn't automatically mean that your business is going to be worth millions either. Now, while it may be true that you're unlikely to become wealthy just by earning income from a 9 to 5, the part that people miss is that if you consistently invest that income in, let's say, stocks, bonds, mutual funds, and low-cost index funds, you can become wealthy in a couple of decades.
50 seconds left.
Pressure. Most people who become millionaires in the U.S. do so by contributing to a retirement account consistently over time. I also am going to say an analysis by 401k provider Fidelity Investments found that in Q3 of 2024, 544,000 of the 24 million participant accounts in the 401k plans had balances over a million dollars. Case in point, you can become a millionaire working a nine to five. As someone who is a small business owner and a 9 to 5-er, I want to say that there are benefits of doing both simultaneously. If you want to increase your cash flow, you can save and invest more money by doing both. And I was able to hit some of my savings goals quicker as a late bloomer to investing because I had extra cash to max out my 401ks and contribute to a SEP IRA.
Okay, that's 100 seconds. Do you have any more you want to say?
I do. Thank you so much for being so gracious, Sean. Okay, okay, okay. But before I bow out, I am going to add that owning a business is not for everyone. So sometimes it's better to take that time and those resources and pour them into lobbying for a raise or developing high demand skills and making yourself more valuable in the job market. That extra money you make can be put into smart investments that help you grow your wealth without having to become a boss.
There you go. A little over 100 seconds, but I think well worth the extra time because that is a really important point. So many people, especially on social media, are consumed with this hustle culture mentality and think that you have to be working constantly to become a millionaire. And first of all, becoming a millionaire can provide great financial security, but it's not everything in life.
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