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Why Your Financial Life Gets More Complicated

September 18, 2023

We often say that your finances become more complicated as your wealth grows. What exactly does this mean and which parts of your financial life become more complex? For more information, check out our free resources.

Transcript

Michael H asks, “You’ve said our financial lives become more complicated as we have more wealth. What do you mean by that? Can you expound on that and the kind of complications that will come your way that you might need help with?” Yeah, man. Michael, I don’t know how old you are, but I’m going to ask some questions, right? If you are over 30, think back to the very first tax return you did when you had your first job. Like, the very first tax return. First drop. All you had was a W-2. You get your W-2, you put in your tax form, you click file, and you’re done. That’s it. And then you wait for the refund. And then you wait for the refund. Now, fast forward. If you’re in your 30s or 40s, you recognize, “Oh, I got more than that W-2. I got the W-2, I got the 1099s. I might have K-1s. I might have Schedule E. I might have Schedule C. I got a lot of stuff going on.” So that’s just one way that it just naturally gets more complicated because I have more things going on.

Well, then if you make the decision that, “Hey, I don’t want to just go with this life alone. I want to like join up with another human being, and I want to do this life together.” So I get married. Well, now I got all my junk going on, and then I got all that person’s junk going on. So we got a lot of junk going on. And then we decided we want to create some humans, and then we’re like, “Oh my gosh, I even have more things going on.” And it just naturally gets more and more and more complicated.

Then, if you’re moving through your career, and maybe you start out as an entry-level job, and it’s great, you have your W-2. But then you start getting into some leadership roles, and then you have bonuses that come in. And maybe you work for a publicly traded company, and now there’s a stock incentive, incentives that come in, RSUs, ESPP. Well, all of a sudden, you look around, you’re like, “Jeez, this is a very different financial situation than it was when I first started my career. How did I get here? I didn’t go looking for it. I didn’t think to myself, ‘What can I do tomorrow to make my financial situation more complicated?’ It just happened. It just showed up.”

And what we have found is that for most people, especially those that are committed and dedicated to building wealth and working towards financial independence, it just shows up, whether you want it to or not. And so that’s why I think, Brian, you always say, “Don’t go try to find it. Believe me, it will come and find you.”

You hit all the cause. I think the tax return is a great way to first look at this. And I won’t spend a ton of time on this because I want to talk about the two other points I had. But I just think about the basic stuff is that when you first, W-2 is the only tax form you’re dealing with. And then, once you start giving to charity, you buy a house and do other things, you have that Schedule A for the automatic deductions. And then I think about when you start side hustling, you get the Schedule C. And then when you buy a business or you’re invested in a business, you start getting the K-1 documents. And then you buy real estate, now you have Schedule E. I mean, by the way, K-1s also are Schedule E, so there’s all kind of crazy stuff. And then we didn’t get into capital gains and all this. So that’s just the tax components that make life complicated.

But then, let’s talk about planning needs because a lot, I love it, there was a comment – I mean, a question we got probably two or three sessions ago when we did these Q and A’s, where somebody said, “Why would anybody hire a financial planner? You know, because I can just go buy a Vanguard fund or go buy Fidelity index Target retirement fund.”

Wow, if that’s all you know, if that’s all it was, you should question everything at that point. But I know, and this is why I love the abundance cycle: come learn, apply, grow. You’re gonna reach a level of success; you don’t even have to ask yourself when will I know, because you will know. You will know because you’re going every time it’s time to do your taxes. Every time you’re trying to now get into the planning steps of, “Hey, can I retire? Hey, how do I do college education funding in a better way? Hey, life’s a little complicated; I want to make sure my wishes at death are going to be there. So, do I need a different estate plan? Oh, wait a minute; what about, man, my family really needs to know what’s going on, or if I died tomorrow or I became disabled, do I have enough life insurance? But I also want to – I don’t want the person just because they make a gazillion dollars on commission to sell me this life insurance; who’s actually going to tell me how I answer these things?”

And, guys, I could go on and on because business ventures, because the more money you have, also people who come to you with opportunities. You go have opportunities that come your way, and you’ll need some type of protection. And then you go try to land this airplane at some point, and you’ve never retired before. Fortunately, it’s people like us who’ve retired thousands of times, meaning we’ve worked with clients all over the country and dealt with this. That way, you don’t feel like you have to do this alone because that’s the part.

I know when I got into some publishing and other things, I read a contract came to me, and I thought I was going to Google the heck out of this thing and solve it because I’m a masterful negotiator. Just go look at my car transactions of the last 15 years. So, I was like, “Why would I need a professional to do this?” After I got the contract, I was like, “Oh yeah, I’m hiring a professional to help me because I’ve never done one of these types of contracts.” And it’s the best thing that I could have done. I tell Rebie and Daniel as we’re working through this stuff; I was like, “Thank God we have him on our side.” I mean, you know this person, not just God being on our side too, but this individual on our side, this agent because he has helped me out so much. And I think about how crazy I was to try to do that myself with a publisher before I actually brought in the big guns that made sure that I wasn’t being taken advantage of, that made sure that all the blind spots and things I was unaware of that they were covered for me. That’s exactly what we do for clients. You don’t know your blind spots; you don’t know what your stresses are going to be in those first few years. We are there not only to help you grow it but also to land the plane and then make sure that you stay wealthy. The stats are horrible on the ability for your kids to not show up and turn out to be disasters, and then they pass it on to the grandkids. We are there to answer all those complications. So that’s why I never worry about my career. I don’t worry about AI. I don’t worry about all that stuff because there’s always going to be need to know how do we do this better and how do we make sure that we’re filling in all the creative stuff, and we’re there for that. So that’s why come get all the free stuff you want, moneyguy.com/resources, load yourself up. We’ll be waiting when you get to that level of success and application. We’re right there for you.

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