There’s really no one way to define “” — everyone measures wealth in different ways.
“I know many people who make less than $50,000 but consider themselves wealthy because of their health, family, and friends,” Douglas A. Boneparth, CFP and president of Bone Fide Wealth, which offers financial planning and advice to high-net-worth millennials, told Business Insider.
But when talking pure dollars, it helps to understand what the top 1% of the country earns and has in terms of their net worth. “From an income standpoint, the top 1% of households earn around $430,000,” Boneparth said. “From a net worth perspective, it’s north of $10 million.”
Whether you define rich as $50,000, $100,000, $1 million, or $10 million — or as quality of life in general — it’s never too early to start building wealth. We talked to Boneparth about the key steps millennials should take at their generation’s milestone ages to build wealth.
25: Get goal-oriented
Now is the time to focus on identifying, quantifying, and prioritizing your goals, according to Boneparth.
“Build a strong foundation for savings by mastering cash flow. This means diving into the data,” Boneparth said. “What did you spend your money on over the past six to 12 months? What can you consistently save? Define a comfortable and realistic lifestyle.”
Consider the NFL player Brandon Copeland: At age 27, he saves nearly all of his salary. He previously told Business Insider that saving isn’t about how much you earn — it’s about how much you spend. Saving money starts with tracking your expenses, which will help you figure out where to cut spending, he said.
In fact, your mid-20s is when you’ll have the least amount of expenses, Alicia Butera, CFP at Planning Within Reach, previously told Business Insider. It’s a time when you start making real money but are still living the college lifestyle, making for good discretionary income, she said: “Saving when you’re young is crucial and most important for compounding — the longer duration you have will reap you the largest benefit.”
30: Continue to build your foundation
“If you haven’t built your foundation at this point, don’t delay,” Boneparth said. “You should focus on satisfying your short-term goals such as cash reserves, making the standard payment amounts on your student loans, and/or saving for just about anything that you’re looking to accomplish in the next four years or less (i.e. a house).”
Business Insider previously looked at the monthly savings needed to buy a home by age 35. If you start saving at age 30 for a 10% down payment on a $250,000 home, you’ll need to save $400 a month — a 20% down payment would double that to $800 a month. If you started earlier, at age 25, you should continue socking away $192 for a 10% down payment or $284 for a 20% down payment on the same house.
You should also be saving cash in a high-yield savings account or money-market fund and taking advantage of any matching retirement contributions, according to Boneparth.
35: Focus on the long-term vision
“Start to make greater and greater contributions towards retirement and long-term goals if you’ve tackled short-term goals or have greater capacity to save,” Boneparth said, adding that you should automate all savings. “Out of sight out of mind. It makes increasing savings that much easier.”
Automating your finances is “the most important” first step to take in building wealth, according to David Bach, author of “The Automatic Millionaire.”
He calls it the “pay-yourself-first plan” — automating your accounts so that a portion of your paycheck moves into your 401(k) plan or savings account before you even see it, he told Business Insider in a Facebook Live interview: “When that money is moved before you can touch it, that’s how real wealth is built.”
40: Revisit your goals
“Return to fundamentals and analyze cash flow again,” Boneparth said. “Continue to be disciplined in spending and savings. See if your goals shifted at all and if any changes need to be made.”
Your financial goals may shift as you enter the decade considered to be mid-career. This is the time when you’re most likely to be earning the top tier of your income, so you should focus on outsourcing things — such as hiring an accountant to do your taxes — so you can focus on your career and extending your income and benefits, Butera previously told Business Insider.
Another thing you should be revisiting? Your net worth, and you should be doing so twice a year, according to CFP Sophia Bera in her book, “What You Should Have Learned About Money, But Never Did.” Seeing how you’re progressing toward your target net worth will help you stay on track with your goals.
This content was originally published here.