# A Depressing Way to Inspire You to Save More

When you take a step back and think about how much money you or your family has earned in total versus your net worth may be a very depressing way to inspire some lifestyle changes.  I have said it before, but I believe that actually calculating and tracking net worth changes over some set time is an important exercise for anyone running their family’s finances.

I am not entirely convinced there was a point to creating the spreadsheets below since most people understand that it is all about what you save.  Nonetheless I was curious as to what these numbers would add up to.

## Examples of Cumulative Earnings

Obviously, everyone coming across this article is a different point in their life.  Maybe you are just out of college, maybe you are married or have a partner, maybe you are 40 years into your working career and about to retire, etc.  Notwithstanding, when I started playing around with the excel spreadsheet I became depressed and inspired at the same time.

You are about to be 15 years out of college and you have been steadily working since that faithful graduation day.  You have had an average job with no lateral changes or meaningful raises.  You currently make \$60,000 and think it has just increased every year by 2 – 3%.  Your best guess is that between all taxes you are paying about 20%.

 Age Year Gross Income Taxes – 20% Net Income Cumulative Net Income 22 2003 \$42,094 \$8,419 \$33,675 \$33,675 23 2004 \$43,173 \$8,635 \$34,538 \$68,213 24 2005 \$44,280 \$8,856 \$35,424 \$103,637 25 2006 \$45,415 \$9,083 \$36,332 \$139,969 26 2007 \$46,580 \$9,316 \$37,264 \$177,233 27 2008 \$47,774 \$9,555 \$38,219 \$215,452 28 2009 \$48,999 \$9,800 \$39,199 \$254,652 29 2010 \$50,255 \$10,051 \$40,204 \$294,856 30 2011 \$51,544 \$10,309 \$41,235 \$336,091 31 2012 \$52,866 \$10,573 \$42,293 \$378,384 32 2013 \$54,221 \$10,844 \$43,377 \$421,761 33 2014 \$55,612 \$11,122 \$44,489 \$466,250 34 2015 \$57,038 \$11,408 \$45,630 \$511,880 35 2016 \$58,500 \$11,700 \$46,800 \$558,680 36 2017 \$60,000 \$12,000 \$48,000 \$606,680

Wow, over \$600,000 earned net of taxes!  According to CNN the average net worth of the class of 2003 is only about \$20,000! Census.gov has the average net worth at \$45,000.  Granted these are two very different numbers, but both are a tiny sliver of the cumulative earnings of that individual; especially when you consider the compound growth that could have happened for those dollars invested in 2007 through 2016!

### Average Dual Income Couple From 25 to 40

Who cares when, but lets say you have 2 earners making \$50,000 a year or so gross; what would it look like then?

 Age Gross Income Taxes Net Income Cumulative Income 25 \$100,000 \$20,000 \$80,000 \$80,000 26 \$103,000 \$20,600 \$82,400 \$162,400 27 \$106,090 \$21,218 \$84,872 \$247,272 28 \$109,273 \$21,855 \$87,418 \$334,690 29 \$112,551 \$22,510 \$90,041 \$424,731 30 \$115,927 \$23,185 \$92,742 \$517,473 31 \$119,405 \$23,881 \$95,524 \$612,997 32 \$122,987 \$24,597 \$98,390 \$711,387 33 \$126,677 \$25,335 \$101,342 \$812,728 34 \$130,477 \$26,095 \$104,382 \$917,110 35 \$134,392 \$26,878 \$107,513 \$1,024,624 36 \$138,423 \$27,685 \$110,739 \$1,135,362 37 \$142,576 \$28,515 \$114,061 \$1,249,423 38 \$146,853 \$29,371 \$117,483 \$1,366,906 39 \$151,259 \$30,252 \$121,007 \$1,487,913 40 \$155,797 \$31,159 \$124,637 \$1,612,551

And if we extend that couple from 40 to 65?

 40 \$155,797 \$31,159 \$124,637 \$1,612,551 41 \$160,471 \$32,094 \$128,377 \$1,740,927 42 \$165,285 \$33,057 \$132,228 \$1,873,155 43 \$170,243 \$34,049 \$136,195 \$2,009,349 44 \$175,351 \$35,070 \$140,280 \$2,149,630 45 \$180,611 \$36,122 \$144,489 \$2,294,119 46 \$186,029 \$37,206 \$148,824 \$2,442,942 47 \$191,610 \$38,322 \$153,288 \$2,596,231 48 \$197,359 \$39,472 \$157,887 \$2,754,118 49 \$203,279 \$40,656 \$162,624 \$2,916,741 50 \$209,378 \$41,876 \$167,502 \$3,084,243 51 \$215,659 \$43,132 \$172,527 \$3,256,771 52 \$222,129 \$44,426 \$177,703 \$3,434,474 53 \$228,793 \$45,759 \$183,034 \$3,617,508 54 \$235,657 \$47,131 \$188,525 \$3,806,033 55 \$242,726 \$48,545 \$194,181 \$4,000,214 56 \$250,008 \$50,002 \$200,006 \$4,200,221 57 \$257,508 \$51,502 \$206,007 \$4,406,227 58 \$265,234 \$53,047 \$212,187 \$4,618,414 59 \$273,191 \$54,638 \$218,552 \$4,836,967 60 \$281,386 \$56,277 \$225,109 \$5,062,076 61 \$289,828 \$57,966 \$231,862 \$5,293,938 62 \$298,523 \$59,705 \$238,818 \$5,532,756 63 \$307,478 \$61,496 \$245,983 \$5,778,739 64 \$316,703 \$63,341 \$253,362 \$6,032,101 65 \$326,204 \$65,241 \$260,963 \$6,293,064

Granted I didn’t take into account changes in taxes or inflation, but the absolute number of pure earnings is both inspiring and depressing.  Inspiring because of what could be for so many people and depressing because so many people will squander their earnings.

## Comparing Cumulative Earnings to Average Net Worth By Age

One of my current favorite sites is called Don’t Quit Your Day Job.  Seems like there are at least two people running it, and they must have a background in statistical analysis and programming, because often they’ll take complex data sets and build 3 input calculators out of it (my favorite one is their dividend reinvestment history calculator which I have actually written about before – interestingly, I called that one depressing too).    Well the folks at DQYDJ was able to put together a fantastic table which I am going to lift I hope they don’t mind to share below:

So our 2003 college graduate who, on average, has earned over \$550,000 in income has, on average, only \$40k.  Interestingly, the median is significantly higher! That is a big more reassuring actually  since it means 50% of the population will be over that robust \$257,000 number and 50% below.  Our next two examples of the 40 year and 65 year old have similar issues having a net worth of only a fraction of what their cumulative earnings were.

To me it seems like the average American has no idea what they are doing, but 50% of the population at least have a grasp of basic personal finance concepts.

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