America’s Saving At An All-Time High. Are You Keeping Up?

Savings at All-Time High (0:00)

Brian: Savings are at an all-time high. Are you keeping up?

Bo: Brian I am so excited about this because this is a piece of good news and we love when we get to share good financial news with you guys out there in money world. And there was some exciting stuff that came out of a recent study by Vanguard.

Brian: Yeah, this is Vanguard recently released their 2025 How America Saves study. And look, we pick on the typical American. And we’re still going to pick on the typical American because there’s a far cry. By the way, more content to come on this, the difference between the typical American versus you financial mutants. But still, we should take a moment to celebrate when something has obviously jilted or changed the way people are building things. And by the way, we think we know what it is. So if you stick until the end, we’re actually going to show what has actually changed systemically that’s allowing more people to start saving and investing.

Bo: And specifically when we’re talking about savings, I want to hone in on 401(k) retirement plan savings because when we think about how this study laid out the data, there were sort of two different segments that we ought to look at. We want to look at some wins from the employee side, but also some wins from the employer side. Let’s start with wins from the employee side. I thought this was incredible, Brian. Again, according to this Vanguard study, 82% of eligible employees were enrolled in their employer sponsored retirement plans. That means that eight out of 10 folks are actually in there and participating, which is huge. People aren’t just letting life happen, ignoring this benefit that exists at their job. Pretty exciting. A lot of folks are taking advantage of.

Brian: Well, and obviously a lot of people are starting to get more excited because 45% of participants actually increased their deferral rate from the previous year. So almost half, that’s an all-time high that many people increased their savings.

Bo: And what I think is wild is you may be thinking, okay, well man, life is tight, expenses are high, I can’t do a ton, but it’s amazing what even just 1% more can do for you. So, if you’re someone out there and you want to know how powerful 1% can be, we would encourage you go to moneyguy.com/resources. And we have a deliverable for you that shows if I can just save 1% more starting right now, it can have a huge impact later in life. It does not take a lot if you give yourself a lot of time to make those changes.

Brian: Well, that’s what, look, we have found out that a lot of you guys are way ahead of schedule on when you started showing an interest in personal finance. If you’re in your 20s, if you’re in your 30s, I don’t care if it’s just $50 a month, $100 a month. A little goes a long way because you guys, you can turn the power of your time into your superpower to building long-term wealth. I love that. Another really exciting thing that came out of this study is that 18% of participants, again, this is from Vanguard’s How America Saves in 2025 study, 18% of participants actually made Roth contributions. And if you listen to our show for any amount of time at all, you know that we absolutely love Roth dollars. We love them so much that they actually exist in step five. Brian, can you hold up the thing? In step five of the Financial Order of Operations, they actually, they could even exist in step two. If you’re someone who has an employer match, and it makes sense, you can actually do Roth contributions and still get your employer matching. And 18% of participants desire to have tax-free growth inside of their portfolio. That’s the key thing is tax-free growth. And for young people, that’s a superpower upon itself. Now, look, this is where we’re a little different. We give you the nuance that not everyone should do Roth, though. So, that’s why you have to kind of lean into our content. Once again, we encourage you go to moneyguy.com/resources. We have all kind of tools, worksheets, and other downloads that you can use to try to figure out what’s the best way you should be saving in your 401(k).

Bo: And then last thing on the employees, think about this, the average account balance, again this is from 24 to 25, average account balance increased by 10%. So if we look at, again this is according to the survey and study that Vanguard did, the average account balance in 401(k)s is about $148,000, but if you look at the median it’s about $38,000 and those numbers are up 10% over last year. So some of that likely has to do with market performance and the market performing well over this last year but there are some other things that might also be playing into that.

Employer Wins (4:35)

Brian: Well, and this is what we’re going to talk about employer wins. And I think this is where we’re actually going to see what has been the line in the sand that has changed the behavior of the typical American worker. And the first thing is 76% of plans allowed employees to join immediately. That’s an all-time high. Meaning you didn’t have to wait a year. You jumped right in. I thought it was also 86% now offer Roth tax-free saving opportunities. That’s an incredible thing. That’s up from 74% in 2020. So that’s a marked difference right there.

Bo: Yeah. So think about that. Three out of four plans allowed for Roth contributions in 2020. And here we are just five years later and now eight out of 10 make it available to you. I like to think that we get a little bit of credit for that, Brian. I like to think that the Money Guy Show is the reason why employers are starting to do that.

Brian: Well, if you want to jump on that train, we’ll have to say that we’re part of this as well, is that part of, and this is the bigger, this is the stat that I think is really driving a lot of this, government has encouraged employers and said, “Hey, look, we’re going to give you through these QACA type arrangements and other things. If you increase automatic enrollment in your 401(k) plans, we will give you some additional benefits on testing and so forth.” And wouldn’t you know it, now 61% of employer plans offered auto-enrollment. So you have to physically opt out of these things to not be part of it. And I think that the American workers are actually better for it because people are instead of opting out, they’re actually just kind of going for the ride. And you’re starting to see some fruit from people just rolling into these plans and start saving for the future.

Bo: 401(k)s and employer sponsored plans can be a huge benefit inside of your financial tool belt. So, if you’re someone who hasn’t recently increased your savings or maybe as we go into the new year, as we think about closing out this year and starting next year, you ought to be asking yourself the question, man, can I increase my contribution? Can I save 1% more? Can I save an extra $100 per pay period? Because we know most millionaires actually hit millionaire status inside of their employer sponsored retirement account. So it is a huge opportunity that you should be taking advantage of. And it seems like a lot of your peers, a lot of your colleagues, a lot of your co-workers are beginning to do that. And I think Brian, one of the reasons, I’ve already said this, that that’s happening is because we talk about it so much here at the Money Guy Show.

Brian: Yeah, it is definitely something that don’t sleep on it. The government, despite what social media tells you, your 401(k) can be a superpower with that free money from your employer, plus the just consistent savings, always be buying, being reinforced so your behavior and other things don’t happen. This is why we love the message here. I did, this is probably a great time to open up the show to some Q&A, but Rebie, you’ve done a bad job here because you’ve entertained me and Bo with your shirt today. But then you have a laptop. You have a laptop that covers everything. So, nobody is going to be in on the joke but me and Bo.

Rebie’s Kramer Shirt (7:42)

Rebie: If you were here last week, you may remember that Brian lovingly accused me of making a Kramer-like entrance to one of our meetings.

Bo: He called you Kramer.

Rebie: Here, can we see this video? Look at that. That’s glorious. Fantastic. The Kramer of the Money Guy Show.

Brian: I am officially the Kramer of the Money Guy Show and just decided to keep—So, is that Etsy or is that an eBay? Is that an Amazon? What type of purchase? What type of the economy did we stimulate?

Rebie: Amazon humor. Very low price. Cosmo Rebie, there’s a lot of Kramer merch out there. A lot of Kramer memorabilia. So, I’m choosing to take it as a compliment. If you missed, for our listeners, I’m wearing a Kramer entrance t-shirt that you can find on Amazon, not sponsored, but—

Brian: I got a lot of personal texts about your—I didn’t realize—

Bo: Comparing myself unhinged on that show last week.

Rebie: I mean the comments last—honestly if you didn’t listen to last week’s Q&A it’s a good one. It’s fun.

Bo: You were unhinged. It was honestly it was fantastic. It was wonderful.

Brian: Well, and I did love because we do read the comments. So, make sure you’re commenting on the shows and the live streams and everything else. Is that I did love that somebody because I think your reaction was was awesome, but I think you didn’t know how to handle what I said. But I did like that the audience like, you took me by surprise. The audience was like Kramer’s beloved. So, I think Brian meant it from the most best warmest possible place. But it really was if you guys just taking you back in time when we all showed up, when Bo and I showed up wearing the exact same outfit and then we’re having a conversation in the content meeting and then Rebie walks in the room. I mean it really, and she was wearing the exact same outfit that they were, she could drop in with the—and that’s why I immediately was like, “Holy cow, she just came in.”

Rebie: Inspired me to go back and watch a couple Seinfeld episodes. And they were fantastic, weren’t they?

Bo: They were great. And Kramer was the most interesting character. It was always fun when he made his entrance. So, I mean it. I’m just owning it. Those episodes were spectacular.

Rebie: Okay. All that to say, we do have some questions queued up. So, we’re going to kick it off with Aaron G’s question.

Dollar Cost Averaging vs Lump Sum (9:57)

Rebie: It says, “If I’m dollar cost averaging into the index on a weekly basis, but have the cash to max my Roth sitting outside my emergency fund right now, how much of a downturn should happen for me to abandon dollar cost averaging and just max it out today?”

Bo: This is a, you know Aaron, this is an interesting question because a lot of financial mutants like to get super cute and I would say like major in the minors, right? So you’re on this plan, you’re on this strategy where you are dollar cost averaging into your Roth IRA on a weekly basis and we love dollar cost averaging and we love putting money in Roth, but one of the things that I asked the question is okay, is the juice of this strategy worth the squeeze? And this is what I mean by that. If you’re somebody and you have a net worth to where an annual Roth contribution, $7,000 is fairly immaterial to the rest of your net worth. Let’s say that it’s like less than 10% of your total net worth. So you have a $70,000 portfolio, but every year you’re putting $7,000 in your Roth. I would argue I don’t know that I would even worry about doing the weekly DCA thing. I would do something where I could just set it and forget it either annually. Drop in that $7,000 once a year or set it up on a monthly basis or or even leave it on the weekly basis because odds are if you’re trying to accelerate or change the strategy for $7,000 divided by 52 weeks of the year, even if you waited for a downturn and even if you accelerated it, you’re likely just opening yourself up for an emotional roller coaster, thinking, “Oh gosh, I did it one week early or two weeks early or a month early.” I would remove that from the equation and just let your strategy stay in place and continue to invest without trying to get so particular with it.

Brian: I don’t know because I know we recorded it I think it was last week but there’s a show dropping with all of our rules and guidelines that are downloadable if you go to moneyguy.com/resources but one of the things we’ve talked about and I love that we actually put numbers, this is how nerdy we are, is we did the Goldilocks rule because there’s this crazy debate out there in the personal finance world where everybody’s always debating lump sum versus dollar cost averaging. And look, it’s inherently already a flawed argument because statistically lump-suming wins because eight out of 10 years markets make money. Well, that’s a huge statistical head start for lump sum investing. But what you always have to be mindful of is what happens on the one-off years, the two years out of 10 where the market gets its teeth kicked in. If you put in a million dollars, you’d be pretty upset that you fell into that statistical outside the norm process. So that’s why we were like, hey, this is an easy enough thing to figure out is that why don’t we say as a percentage of your total investable assets, if this is small, who cares? You know, just put it in all at once or you know, dollar cost, but typically all in at once is perfectly fine. But if this is life-changing money, meaning that it’s greater than 20% of your investable net worth, you probably ought to spread that out because if you got caught holding the bag because the market got beat up, you’d be pretty upset if your million-dollar investment all of a sudden turned into $600,000 in a matter of weeks because it can happen that fast. So go out there and look at that. We’ve done content on it. But here’s something better. Well, or know thyself. If you’re brand new into this investing game, I love the thought of dollar cost averaging in a systematic way into your Roth because maybe like we’ve had guests on Making a Millionaire that are in their 20s and this is beyond just doing the employer match. The Roth IRA contribution is the best way that they’re saving. Absolutely. So why not go ahead and set up a behavior that’s automatic for the people that just is, you know, it doesn’t matter what’s going on. You’re just automatically investing every month, every paycheck. But you’ve said something, Aaron, that makes me think that you’re beyond this. You’re kind of a financial mutant like myself is that I loved the process of investing monthly that I was like, you know what would be better? Twice a month. If this is good, I should do this even more. And then after I got into doing investing, I was like, you know what feels better as a financial mutant instead of investing every two weeks? It’d be cool if I was investing every week. That way the weird financial mutant type things when the market gets its teeth kicked in you’re like yes I’m buying into this downturn or this volatility but when markets go up you’re like yes so it’s a win-win all the way around.

Bo: So now he’s decided he’s actually dollar cost averaging daily.

Brian: No I don’t do daily. I do weekly. I do invest every week and it’s set up automatic and I love that. But if you’re one of those people then I think you’re probably beyond and this is going to be counterintuitive to me saying weekly but is that you probably can now put in the Roth once a year. That’s what I do. You know, so I set up my monthly joint account goes in every week but then my HSA, my Roth, you know, backdoor conversion strategies, first week of January those are typically done all at once just to go ahead and get that money in there and working. But go out there don’t sleep on this Goldilocks rule but it’s more about know thyself, what’s the behaviors that are going to be successful because what I don’t want you to do is to go fund it one year and then you wake up four years in the future and go crud, I forgot to do all those Roth contributions because that’s a huge risk as well.

Bo: Or you do something like this and you’re like, man, I’ve listened to these guys so much. I know that every year the average intra-year decline is about 14% somewhere between January and December even in good years. So what I’m going to do is I’m just going to wait. I’m not even going to fund, I’m not going to do any DCA. I’m going to wait for that 14% drawdown on average then I’m going to do my Roth. Well, you start playing those silly games and you win silly prizes and you get to December, you’re like, “Oh, no. I didn’t fund my Roth.” So, I just think put a strategy in place that removes the emotion and focus on the bigger things that have a bigger impact in your financial life.

Rebie: Well said. Aaron G., thank you for your question. We’re glad you’re here.

Am I Behind? (16:18)

Rebie: All right, we’ve got a question queued up from Kai. It says, “I’m 29 and I bought a condo worth $300,000 with 50K equity. Wow. I’m still building up my emergency fund and enough to fully contribute to my Roth IRA. I am going to miss my one times my income by 30 in my TSP.” So, one times income is talking about our Money Guy markers. I believe the question is, am I behind? What do you think? What do you have to say to Kai? He’s feeling behind. He’s got a lot going on.

Bo: Well, so I’m assuming when you’re referencing the emergency fund, Brian, will you hold the thing up for me? You know, we have this great little program that you can work through, this system called the Financial Order of Operations. It kind of tells you exactly what you should do with your next dollar. And so when I hear that Kai is in step four, I’m thinking, okay, well, there’s probably no investment assets yet, right? If we’re still building up an emergency fund, we probably haven’t started doing a 401(k) more than the employer match. We haven’t started doing a Roth IRA. We haven’t started doing any of that kind of stuff. So, what Kai has done is kind of jumped right into the home ownership side of the equation. Put $50,000 down on a $300,000 condo, which is a really healthy down payment. And it sounds like that was the first step that Kai took in his financial journey. So the question is am I behind is a little bit difficult to answer because am I behind is a derivative of okay what are my goals and what goals am I trying to work towards. If one of your goals and one of your top priorities is, hey, I really want to own my property because I want to start a family, set up roots, whatever, then I’d argue no, you’re not behind based on that. You’ve already done that. But you do need to recognize that if you also have the goal of financial independence, prioritizing the goal to jump on the condo ownership train with no investable assets behind you has put you behind on the financial independence train because we like for you to have one times your annual salary saved up by the time you’re 30. Well, you’re 29. It sounds like you’re kind of starting at zero, starting at the beginning. Likely going to be hard to get to one times your annual salary by 30. But the good news about being young is it’s kind of hard to really significantly be behind when you’re young.

Brian: Well, that’s what, there’s a difference between milestones and destinations. And I think that’s what you are, you are behind on that milestone. But you’re way ahead of schedule on just the journey of financial independence because the typical American doesn’t even discover personal finance until their 30s. So, the fact that you’ve already, and the fact that you built up $50,000 for a down payment probably means that you’ve already got some of the behavioral, because remember what are the three components of building wealth, the three ingredients is discipline is the first ingredient. If you do discipline, live on less than you make. You create the margin that generates the money. That’s the second ingredient. You put that money to work and you give it enough time, the third component, the most valuable of those three, and voila, you know, all of a sudden you just start putting these things together and 20 years, 30 years in the future, you’re like, “Holy cow, how did it get to be this sum?” So, you picking this up at 29 and already having the key component of living on less than you make to where you can actually build margin and create money. You’ve got two of the three ingredients and you’re even picking this up at 29 years of age, which is well ahead of the curve. So, you even got the third ingredient of time. So, yes, you failed the milestone, but you’re still going to win this battle or war of building financial independence if you just now turn your laser focus onto funding the Roth IRA. You know, fill up the, do exactly what you’re doing, the Financial Order of Operations, fill up the emergency fund, and then take that white hot focus right into your Roth IRA. And I think you’re going to wake up and be like, “Yeah, this is okay.” I mean, because I have written an entire book of all the mistakes and problems you don’t have. That’s the thing. I want everybody to know, don’t get discouraged because you do things a little differently. Realize that perfection is not going to happen for any of us. But it does allow you to kind of know, hey, I can still screw up a lot of stuff and still come out the other side in a perfectly really good place to where I get my 50-year-old, 60-year-old version is go look at my 20 and 30-year-old self and be like, “Job well done.” Even with some of those things that maybe at the time seemed a little unorthodox.

Bo: That’s what I love about wealth, about building wealth. You can get a lot of things pretty wrong, but if you just get a few things right, you’re likely going to be set up for success.

Brian: That’s why the three ingredients are so valuable is because, yes, the timing is maybe we can compare and contrast or debate, you know, putting $50,000 on a first house, which is well over 5% down payment. Maybe that’s the right decision, maybe not. But who cares? You’re 29 years of age and you’re living on less than you make. This is all going to come out in the wash.

Bo: Love it. Awesome.

Rebie: Kai, thanks for the question. Hope that helps you think through your next financial move.

Lost Decade Concerns (21:28)

Rebie: All right, Alex C is up next. It says, “What are your views on the lost decade? My wife and I, both 31, are on step seven. I am concerned that we may see another lost decade in the future and as a result lose out on key growth years. Thanks.”

Brian: Alex is 31. 31. Here’s what’s wonderful about your question. Alex, I know two guys that were investing and we’re helping folks invest and we’re helping folks navigate their financial life during that lost decade. Here’s what I think is, and I’m, Bo you can, you’re always so good with the data points better than me because the two numbers I’m getting confused is there’s two periods of time that people always bring up and one of them is a lot closer than the other but the Great Depression, there was actually like a 20, 30-year period where the market was actually down if you look at it. So instead of it being a lost one decade it was like over 25 years, it was lost two decades. And then there’s the, you know what happened after the dot-com bubble and then you’ve got the Great Recession. If you look at that 10-year period and most people go and grab it, what was it 1999? I think it was 99 to 09 is the lost decade that everybody talks about and they scare you to death. They be like, “Holy cow, if you, everybody’s counting on this 8 to 11% rate of return, but if you, man, if we hit another lost decade, you are hosed.” Here’s what they never tell you. What do I always, and why do I have such a high inflection point when I talk about this? Always be buying baby. Because this is the thing, if you’re dollar cost averaging which somebody who’s 31 years of age, this is the reality of the situation. If you’re a 60 year old, yes this is scary as I’ll get out. But hopefully even for 60-year-olds I don’t want you to be scared if you’ve done this the financial mutant way. We got you covered through diversification and other things. But for a 31-year-old you ought to actually hope for, I know that’s so weird and contrarian, but you build so much wealth when markets get their teeth kicked in. So, a 31-year-old that the market goes down in two bad downturns like we had with the dot-com bubble as well as the Great Recession, every month when we hit those volatile periods, you were buying in. You were buying in every month. And then what happens is when you look back like the Great Depression, that 25 years, we figured out that if you were just dollar cost averaging through that period you still averaged close to 11 to 12%. It was like 11.7 or it was some, it was between 11 and 12% annualized rate of return during a 25 year period where supposedly it was lost. Same exact thing happens if you were dollar cost averaging through the last decade of the dot-com and the Great Recession. You’re gonna be somebody like me and Bo where you look back and go, “What was everybody freaking out about?” I built a lot of wealth during that because there were so many contrarian opportunities by just always be buying.

Bo: Yeah. I think if you look when people think about the lost decade, as I say, I had this person that started investing in 1998 or 1999 and when I look at where the market was from 98 or 99 to 08 or 09, it was at the same place. When I just look at what the S&P 500 or whatever index you want to look at was trading at, what we noticed for our clients and what we realistically lived through is that if you were someone that was investing in a diversified portfolio, meaning you didn’t have all your assets in a singular asset class, it was actually not a lost decade for you because there were asset classes that did do really well. And there were asset classes that helped mitigate volatility and there were asset classes that helped during the drawdown. And so if you were someone who had a portfolio built that way, when you looked at your annualized return from 98 to 08 or from 2000 to 2010 or from 2003 to 2013, it wasn’t zeros. It was not goose eggs across the board. Yeah, there were periods of volatility. Dot-com bubble portfolios went down. 2008 portfolios went down. But those folks who had a well-diversified portfolio, kept a level head about them. They were back to break even within a couple of years. That’s what all the numbers would suggest. When you look coming out of bear markets, the average time that it takes to get back to where you were, depending on the type of portfolio you’re in, is usually somewhere between 18 to 36 months. So, if you can get back to where you were in that 18 to 36 months, you’re going to recognize, man, I can do exactly what Brian said. I can keep buying, keep dollar cost averaging, keep putting my dollars to work, and there’s a high likelihood that I’m not going to have a lost decade. So, Alex, for you 31, if you’re worried about the next decade being the next lost decade, you should be really, really excited. If you’re worried about that happening right at the time that you are 55 going into age 65, you need to make sure that your portfolio appropriately matches what your risk tolerance and risk capacity is so that even if the market and the economy freaks out around you, your portfolio is not freaking out in that same way.

Brian: This is, I don’t know if it’ll stay in if we turn this into a highlight, but I think it’s worth me sharing the experience. I started, remember I graduated college in the mid 90s and you want to know what really ticked me off being a brand new freshly minted financial mutant in the 90s was is I come out, you know in 95, 96 and then you watch, you look at the rates of returns of the financial markets in 96, 97, 98 and I have, I mean I’m putting in what, $1,000, $1,500, $2,000 because I mean, for a staff accountant right out of college making $28,000 is just not, even if I’m saving at a good, healthy savings rate. I’ve only got a few thousand dollars to go in. And I remember being so frustrated thinking, man, this is just so unfair because I’m watching clients. I remember we had this client, I’m not going to give too many details, but he had $2 million. Fast forward because it was one of those crazy years in the late 90s. Came in the next year for his 12 month review of his first year with the firm I was at at the time. And he had $3 million. He’s like, “Boys, I mean, I started a business. If I have known it was this easy to make an extra million dollars, all I’d do was invest, you know, 2 million with you guys.” I mean, that’s how crazy times were back then. And I remember thinking, man, yeah, but my $2,000 only turned into $3,000, you know, because all the technology funds were crushing it back then. That’s why I tell, no matter where you are and you get, we all get this chip on our shoulder is that man, it was only good for the people behind me or the people ahead of me, I should say. They got all these opportunities. No, it’s going to be okay. You’re that there’s going to be the law of accelerating returns, this ever-expanding economy we live in. There’s going to be opportunities that come your way to take advantage of as well. So just make sure that you’re checking your head, checking your motivation, and then do the behaviors that actually set you up for success. And I think you’ll be just like me in 20, 30 years in the future. You’ll be like, “Yeah, that was all right. What was I worried about in the 90s when I was jealous of all the older people that were getting those huge returns.” It’s going to be okay. You will be rewarded for your discipline. You’ll be rewarded when you turn that margin or money and put it to work investments with enough time. You’ll come out the other end A-OK.

Rebie: Okay. Love that. That’s great. Alex C, thank you for the question.

Career Change with $2 Million Net Worth (29:03)

Rebie: All right. Mech E31 is up next. It says, “I am 40 and crossed $2 million net worth.” So, congratulations on that, first of all. That’s amazing. The next part says, “I’ve lost my motivation at work and I’m thinking about a career change. What are your thoughts on making a bad financial move, but for good for long-term happiness?”

Brian: Oh, I need some glasses here, Bo.

Bo: Well, yeah. I’m going to let you talk about the glasses because what I’m going to start with, Mech, is that we have to keep in mind money is nothing more than a tool that allows us to achieve the goals that we have. And so often we get trapped in this idea of it’s future goals, future goals, future goals, future goals. But our money does do a very real thing for us today. It provides for goals that we have today. In my world, it provides for being able to feed my family, being able to create memories, be able to do experiences. And we don’t do those things at the cost of those future goals, but my wife and I figure out how do we prioritize those goals at the same time. And so, yeah, you could stay in a miserable, horrible, awful job that makes you bite your fingernails on Sunday and just is not giving you a quality of life. But is the cost of that worth it to build for some future goal that your mental health may not be able to get you to? So I would begin to reassess and think through, okay, if I know that I do not like this job, I do not have motivation, this is not where I need to be, and this is not what I want to be doing right now. I think that’s when you begin to say, “Okay, based on all the work that I’ve done up to this point, based on the fact that I’m 40 and I’ve got a $2 million net worth, what options are available to me because of the hard decisions I made earlier on?” And when you begin to do that, you can put on your 3D glasses.

Brian: Well, I want to, before I get into the 3D glasses, I want, there’s something I want to make sure because it said lacked motivation. I didn’t know there’s a difference between being bored at a job that’s a perfectly good job that you’re good at and can create a lot of resources and other things versus just missing out on purpose and being unhappy and chewing on your fingernails on Sunday. So, I’d also compare and contrast that too to figure out where you are because some people you might be in a really good situation but the grass always seems greener. So, I would do some self-reflection on that. But then, this is the way I look at money because Bo is exactly right. Money is no more than a tool. In the beginning, it pays for your basic stuff, you know, your shelter, your food. These are the things when you see those studies on happiness and stuff. It’s not really happiness or fulfillment. It’s more of do you not have to worry about where your next meal or where you’re, you know, how you’re going to pay for your shelter for your family and your loved ones is going to come from. That’s a key component of what money as a tool can do for you. Beyond that, you’re going to start realizing, hey, I need to start being in control of knowing how do I use my time? Because in the beginning part of the journey, you’re trading your time, your labor for those paychecks. But down the road, I want you to be thinking about your money, your army of dollar bills to where you own your time and do what you want when you want. But it does scare me because when you get to be 40 with $2 million, that’s way ahead of the curve. So that’s going to give you lots of opportunities to look at money as a tool to figure out how do you own your time. But that does now lead to the next exercise of you got to put on your 3D glasses before you make, because what I don’t want you to do is to cross the threshold because you’re obviously in a good paying job to be able to create $2 million at 40 years of age. There’s some money being generated. There’s a pretty big shovel somewhere in the background. I don’t want you to walk through the threshold of saying, I’m kind of bored or I’m not getting what I want. I’m going to walk through this. That might be the right decision, but it also could be a horrible decision if all of a sudden you come out and six months later you’re like, “What was I thinking?” You know, I’m having a midlife type crisis and maybe I didn’t do this right. So, here’s the 3D glasses. I want you before you go cross through that threshold and make a big life change, I want you to actually put pen to paper or Excel spreadsheet or however you know, Sheets, whatever you want to use to where you’re going to run three different five-year scenarios. I want you to say, “Okay, let’s do the dream plan. This is where I get to land my next job. I wake up every morning feeling like, you know, rainbow sunshine and it’s awesome.” And you model out everything working out exactly like you want. Then you do the down-to-earth plan. You say, “Okay, I’m going to change jobs, but I’m also going to have some bad things that might happen. This is the way I think it will work.” And then don’t skip out on this third one because nobody likes to do the third one. And that’s the doo-doo plan. There’s the 3Ds. Dream, down to earth. And then don’t skip the doo-doo of you changed this job and then 6 months in the future you realize you made a huge horrendous mistake and now you have to figure out how do I recover from this mistake of letting my emotions or something make me do this decision. If you do this on paper or through your spreadsheet or your 3D glasses plan, it’s going to be much better to experience it there versus in real time and in real life. And if you go through that exercise, I think you’ll then now have the variables to determine, hey, a dashboard view of is this the right decision to do career changes? And I think career changes, we have a whole swing of them back there in our financial planners that come from engineers, doctors, musicians, songwriters, producers. I mean, it’s kind of amazing how people can have some success and then yes, we’ve seen some successful transitions, but just don’t skip out because I think sometimes we don’t realize how unique we are when you have these opportunities. I just don’t want you to walk away from something without making sure you do the other side of the equation work as well.

Bo: Love that.

Rebie: That’s great. Mech E31, thanks for asking the question and hope that helps you think through what you’re going to do next.

Disney Plaque Tangent (35:16)

Rebie: I’m going to sanction a tangent. Oh, I know. Surprise. We’ve had several people ask a tangent. We’re going to brief tangent to happen right now. We’ve had several people ask—I thought that was like we’re going to put a fine on it.

Brian: No, you’re going to allow this. Not put a fine on it. We’re going to allow it. Okay. Well, I was like, what did I say? How much money could we raise if we put fines on tangents? It would be like a cuss jar. A card for every tangent.

Rebie: No. We have a new set piece that people are noticing and people want to know. Did they notice it? A lot of people noticed what it says. And I can’t quite read it from here because your head’s right there. So, I was wondering if you could tell people what it says.

Brian: Why are you getting up? Oh, here we go. Why are you getting up? So, I can look at the prop.

Bo: So, we can actually—He loves a prop.

Brian: Because by the way, Caleb—Bo was like, “Why did you do that?” I noticed it the other day when I came in because I gave this to Caleb. I came in and Caleb goes, “I’ll show you where.” I said, “Should we put it?” I was like, “Is it too much?” He’s like, “I’ll tell, we’ll see if we can fit it in.” So, here: you leave today and enter the world of yesterday, tomorrow, and fantasy. Does anybody know where that’s from? I’m sure in the comments somebody—

Rebie: It has to be Disney, right?

Brian: It’s Disneyland. Yeah. I mean, this is when anybody walks into Disneyland, you go under this plaque. Well, when you join Disney 23, they, this is one of the membership perks that they offer you is that you too can get your own—You’ll be happy to—We actually had someone in the comments say, “Oh, bet he’s a D23 member.” So, our folks—

Rebie: Yeah, we had a few people coughing it and mentioning Disney. I want to put it back so people can see it. There we go. Sorry. Is that a good enough tangent?

Brian: That was fantastic. Thank you for—I mean because it was like that or like a spirit shirt and I was like I’ll never wear that shirt. But I definitely when I saw that now you’re like I got a place for that. Y’all will have to tell me because y’all know part of my fascination is that if I’ve read some book, you know, Walt Disney, Roy Disney, the duo because I love them both. I mean, I really do because Walt was the visionary, the dreamer, and the creative, but then his brother Roy was like the accountant mindset. And I think a lot of people don’t give Roy enough credit for he’s the one that took his brother’s dreams and tried to figure out how do we actually make this work because Walt was kind of a wild man on, he didn’t care about debt. He didn’t care about, you know, he would just do it because he wanted to do it. It was Roy that was kind of the builder in the background of fulfilling that. And that’s what I think is just so cool thinking of Walt having this vision that he didn’t have something to do on the weekend with his girls and then he created this whole new thing with amusement parks. And I mean, because I go to Universal, it’s just world changing in a lot of cool ways. And I just, you know, sentimentally, it brings a lot of really nostalgic ideas and positive things.

Bo: Love that. Love it.

Rebie: Well, thank you for answering the question about the plaque. Now everyone knows what it says. All right, we’ve got some more questions.

Three Bucket Strategy Question (38:42)

Rebie: All right, let’s move on to the next personal finance question. And it says it’s from MBFM. It says, “If I’m investing 25% plus just with my pre-tax employer match, should I be concerned that I am not funding the other two buckets that we talked about in the three bucket strategy?” He’s 32 in the messy middle and he says, “I don’t have the extra margin to invest more right now.” And admittedly, 25% plus is a good number, but what do you think? This is a unique situation.

Bo: Yeah. To be 32 years old, investing 25% plus when you factor in the employer match is awesome. And so what I’m going to assume, you didn’t mention if you’re married or single. One of the things I’d love to know, MBFM, is what is your annual income? I’m going to assume that because you are including your employer match, that means that if you are married, the household income is below $200,000 or if you’re a single individual, your household income is below $100,000. That means that you can include the employer match when you’re counting towards your 25%. Well, if that’s the case, the next question I’m going to ask you is, okay, well, what state do you live in? Because I want to know your tax rate. Because one of the things that might be worth investigating is if I’m putting money into my employer sponsored account and I’m maxing that out. Is there a chance that I happen to be in a lower tax rate environment? Maybe I live in a state that has no state income tax or low state income tax. Should I potentially be doing Roth contributions into my 401(k)? Because even if you do Roth contributions into your 401(k), you still get your employer match and your employer match still goes into the pre-tax bucket of your 401(k). So if that were the case and if it did make sense for you to do Roth contributions, in just doing that, just doing the 25% in your 401(k), you’d actually be building up two of the three buckets. You’d be building your tax-free bucket in Roth. You’d be building your pre-tax bucket with the employer contribution. And at 32, I think that that’s okay because you’re far enough away from needing these dollars that I think just doing that is likely going to suffice.

Brian: This is why I get so proud, and I know pride you have to be careful with it, but I am very proud of the Financial Order of Operations is because we built this into the system. Look, we recognize for some people, especially if you’re married, $110K. Yeah. That’s what, because that income is about right because I know anybody who’s in the low six figures or right under six figures, you’re going to be able to graduate from step six, which is max out retirement assets to step seven just because you’re hugely disciplined. But you’re maxing out things without even loading them up all the way because we’ve actually had people raise their hand who made $80,000 and they didn’t even get to hit the full salary deferral limit and we still said no, you graduated to step seven because you’re doing 25% of your gross income. And the reason why I think this is so powerful and this ties into what Bo just gave the advice on when you’re early, once we get you, just so you can kind of know what’s the engine that’s driving the Financial Order of Operations. Steps one and four is to keep your life out of the ditch. You know, obviously emergency reserves. Step two is just you’re crazy if you’re missing out on 50 to 100% guaranteed rates of return with free employer money. Obviously, credit card debt and other things. You’re never going to get ahead if you’re paying 20% to a bank while you’re expecting to only make 8 to 12% from the investments that you have. So, but when you get to steps five and six, these are all about tax efficient saving and investing. We ought to take, if the government’s going to restrict who can save what, how much you can put in where, you should probably take advantage of these things. But there is a problem with this that we’ve built into the system is that I want you saving 25% because we’ve done the math. We know that this is where the intersection point if you go to moneyguy.com/resources, How Much Should You Save, whatever that thing is called.

Bo: That’s actually the name. First time you’ve said it exactly the right way.

Brian: So, How Much Should You Save? This is going to show you. But you get to step seven. There does come a point and this is why, and I’m not trying to sell books but man oh man this is why I wrote the book, best chapter or most improved is the step seven chapter because it covers exactly this point is that you will get to a point where you say you know what money is only a tool, I’ve done everything in the most tax-efficient way and I do agree with Bo, you should make sure the Roth, maybe you should be doing the Roth instead of the pre-tax. $110K married, state with no income tax, it’s about, it’s just on what’s the value of what that tax-free could become potentially. But there will come a point that you need to, this is what step seven is trying to do for you is how am I going to use this money? Because now we talk about the three buckets and we say if you’re part of the FIRE movement and you think you’re going to leave the workforce at 50, 55 years of age, you’re going to need some, even if you’re giving up something from pre-tax or tax deductions now, you’re probably going to need some after tax bridge account money so that you can actually leave the workforce when you want to. There’s also going to come a point where you’re going to say, “Hey, through step seven and step eight, I have kids. I want to start saving in a 529. It seems cruel if I’m just saving everything into my own retirement and I’m saving well beyond, you know, I’m at 25%. When do I get to do the kids?” All these things come into play. And then I also want to fast forward to when you’re 42 years old. You don’t want to be taking out a bunch of car debt anymore when you go buy a new car. And I’ve had, what’s so frustrating is I’ve had prospects that then became clients that they’re trying to go buy a car and they have seven figures in retirement assets, but they don’t have enough cash to go buy a car with cash. That’s a failure of your structure. And this is why we’ve created the Financial Order of Operations with hyper-accumulation step seven where you’re thinking about the three buckets, the pre-tax, the after tax, the tax-free buckets. So you can think about how you’re actually going to use money as a tool to accomplish, empower your life, not just be stuck in where you’re just loading up retirement assets and not actually knowing where you’re going to go next. We got you covered. And that’s why I love that the system is so in-depth and it’s so well thought out. It’s almost like we manage money for a living and said, “Hey, there’s a lot of systems out there, but they don’t have the nuance to actually tell you as you, because you’re going to get beyond basics of just basic debt and other things. You’re going to want to know how to actually maximize and build your money in a really good way.” And I’m pretty proud that we did it.

Bo: Love it. That’s great. That was a high five right there. No big deal. That was so sweet.

Rebie: Well, MBFM, you got them to high five. They loved answering that question so much. So, thank you for submitting it.

Brian: You know, Bo and I have this list of like we try to keep it around a hundred things that I can talk on my Tangent Time. One that I’m going to do and I just, because it might be, because I’m trying to keep them around two minutes, but this one probably might be three to four minutes and we’ll just let the edit crew do their thing or maybe two at different times. Is the stories of the FOO because it is, you know how it came to be because I know I kind of have and I also know the one, the step that I think you had the genius idea on that kind of, and it’s a pretty cool story I think eventually.

Rebie: I love it. Good teaser. Do I know I haven’t recorded that yet? I might know that story. I don’t know if I do.

Brian: You will when I tell you when I remind you because every now and then I just remember like how because it really does have a Pimms-type thing. I don’t want to give too much because it will be a fun little behind the scenes thing.

Bo: Look at you cliff-hanging. I love that.

Brian: I don’t mean to. I’m dying to tell the story.

Bo: If you are out there and you’re like talking about Tangent Time, it’s a brand new thing that we’ve started doing on our socials. So, if you don’t follow us on Instagram, if you don’t follow us on TikTok, if you don’t follow us on X, make sure you are following us there because our social media team is getting this Tangent Time with Brian out there for you to enjoy. So you get to just hang out and go on a walk with Brian and it’s an awesome thing. So if you’re not following or subscribed to those channels, make sure you do that now and find us at Money Guy Show. If you’re not subscribed to this channel, make sure you subscribe to this channel right now so that you know every time we put out brand new content.

Brian: I recorded one last week. I haven’t uploaded it yet because I haven’t figured out is this even worthy. It’s when you and I were going to make smoothies.

Bo: Oh buddy, please record that one. Your wife gets all of the credit in the video, diverting us out of that one.

Brian: So look, I’m hoping these Tangent Times will be not only fun little Brian-Bo stories, but there are some teachable moments in there. There’s also why I love Disney. I mean, I try to put, there’s no limits besides just what the content team says. Yeah, I wouldn’t say that. There’s the only, that’s the only boundary we have.

Rebie: If you ever wonder, “What if we got to hang out with Brian?” Go check out Tangent Time because that’s what it is. It’s just hanging out with Brian.

Medical Bills After NICU Stay (47:59)

Rebie: All right, we’ve got another question queued up from C. Hewes. It says, “I’m 24. I make $80K and I have $87K invested,” which honestly that’s incredible. He says, “Our baby spent some time in the NICU. He’s healthy now.” Which so glad to hear that. But we’re stuck with $21K in bills and $1,300 per month in insurance. How do we get back on track? And I understand this question. It’s like this is what the insurance and the emergency fund is for, but now what would you say to C Hughes and his family?

Brian: What C Hewes has fallen into is what he thinks the FOO is versus what the reality of the FOO is.

Bo: Yeah. So, I’ve got $87K invested baby. We racked up some medical bills. Now we’ve got $21,000 in bills and $1,300—How do we get back on track? I just, one I want to empathize with you because a lot of folks, unknown unknown things happen and sometimes unknown unknown things happen with the people that we love. In this case, it was your child and I’m glad to hear that everything is better now. But there was a cost associated with that. So, for some reason, depending I don’t know what your health insurance looked like or whatever that was, but you have $21,000 in bills outstanding and you’re trying to figure out how do I knock this out? Like, how do I do this? Well, the first piece of advice I would give you, and this is one thing I don’t think a lot of people realize is that when it comes to medical bills and when it comes to having costs that you owe, everything inside that world is negotiable. And what I mean by negotiable is you call and say, “Hey, I’ve got these medical bills and I’m trying to put together a payment plan and you tell them the story and you tell them the honest story of where you’re at, what you and your spouse are going through, the stuff that you’re looking at.” Say, “Hey, I would love to be able to pay this off in the next six months, whatever.” And they’ll say, “Hey, we will work with you to be able to either put you on a payment plan or we will, hey, if you can pay this much by this date.” It is not uncommon for folks to call and be able to make a deal with the institution that has the medical bills outstanding. So that would be probably the first step I take. Hey, what resources, what options are available for me to be able to satisfy these bills? And then once you figure out what the number is, then you begin working the strategy of how you actually begin to knock them out.

Brian: And by the way, I’ll modernize this C Hughes. I would even whether it’s ChatGPT or whether it’s Grok or whatever your AI tool that you’re using is, I would run through asking hey give me some thoughts of how to structure this narrative with the insurance company or with the medical provider. It’ll probably be the medical provider themselves, but work with the AI because I’ve done this with, look, I had a car accident in the last two weeks. And I said, “Hey, I haven’t been in a car accident in a long time. I don’t even know what I’m supposed to do or not do with the insurance companies.” I modeled it out and it’s amazing how powerful I think those tools have been to kind of going through and giving you checklist or other things in the background. But here’s what I think is also interesting is exactly Bo is right when you get it down to the number of what it really is for you. I want the content team if y’all could put up there what everybody thinks FOO is, but what it actually is is that you know everybody thinks it’s just this smooth little walk up the stairs and you go from steps one all the way to step nine and then live your best life. But that’s just not the way the world works. What will happen is exactly what happened to C Hughes is that you’ll be making great strides and then all of a sudden life happens. And the first two things popped to my mind is that I would look at your $87,000, see if there’s anything that’s easy access, meaning that maybe after tax assets, after tax assets that don’t have huge gains in them, because maybe after you get that bottom line number that Bo has you negotiating down, you could just come up with the assets, pay it off, and be done. But if that’s not possible, because maybe that money’s in retirement assets and there’s penalties and there’s all kind of other crazy things that it’s just not liquid. Now you got to figure out how long is it going to take you. You have to basically go back to step four, the Financial Order of Operations. This is an emergency reserves type thing. You have to go back and from a triage standpoint and say, “Hey, I know I have this much excess in my monthly cash flow. I think I can knock this out in the next five months.” And then you just need to work with the provider and work out that timeline, work with your Financial Order of Operations plan, but then also keep pressuring yourself to knock it out as fast as possible so you can get right back to the Financial Order of Operations and start building wealth.

Bo: Yeah. And I want to, you know, 24 years old is still super young. You have a lot of time. Your issue was medical bills for your child, but a lot of 24 year olds might have student loan debt, might have auto debt, might have other things that they’re coming through. The great thing about being young is you have time on your side, that even if this puts you what feels like behind or sets you back a touch, that’s okay. So long as you can work through it, get back to saving, get back to where you were from a saving standpoint, all indications are that you’re going to be fine. Give yourself some grace as you work through this unique thing of life happening.

Rebie: Great answer C. Hewes, thank you for asking the question. We hope that that helps. Like the guys said, you’ve done an incredible job so far. So we just want to say that. So, I have no doubt that you’ll be able to work through this and you and your family will be right back on track.

Financial Mutant Survey Teaser (53:53)

Rebie: All right. Well, this has been extremely fun. I do have just a little teaser to give you. I know that you all have really enjoyed along with us our Financial Mutant survey shows. So, the first one came out what, a couple weeks ago, I believe. So, go check that out if you haven’t listened to it. We are recording and getting ready to release the second show that is going to look, dive even deeper into more data from the survey. So, what you guys are doing with your money, what our clients are doing with their money, what the average American is doing with their money, and I’m very excited for you to see it. It is so interesting. So, be sure to subscribe to the channel, subscribe to our email list over at moneyguy.com if you haven’t so that you will be sure to be notified when that comes out because I just think you’re really going to enjoy it. It’s fascinating and I’m excited. So, I just had to tell you about it.

Brian: Well, you know, the thing that makes me so happy is that y’all know what a big impact that Millionaire Next Door had on me in the mid 90s. I mean, because I came out with an accounting degree, but didn’t know how money worked yet. And it was that book and then The Wealthy Barber that kind of changed my life. And then what’s really been exciting for me and I want to give mad respect to Sarah, you know, Dr. Stanley’s daughter who came back out with The Next Millionaire Next Door. Great book. We even did the collab with her. But I am very happy that in the seat of somebody sharing annual data on what are the mindsets, what are the behaviors, what are real Americans that are outside of all the consumption society we live in, the contrarian trends that we see with our clients and now we see with our financial mutants, you guys out there in the listening audience, guys, I think we’re doing revolutionary work that nobody else in the marketplace is doing. And I love that it gets refreshed every year and you guys y’all shown up in force because I was worried. We did the first survey show of the audience last year and the number of you who responded I was like that’s outstanding and then when Rebie said we, you know, I don’t know if everybody will show back up. Y’all showed up and then some. I mean it was amazing to have 25,000 people kind of jump in. These are getting into sums of numbers that you can actually really start seeing some trends. Thank you. I mean, I don’t take it for granted because this thing has already well beyond what I ever anticipated, but I love and I think y’all can see the heart of this is, you know, the whole thing started back in 2006 when I felt guilty that people who just came into their first $5 to $10,000 were going to probably go get sold something that was inappropriate because this is back in the decade of B-shares and all these other horrible investments. Things have gotten a lot better. Index funds were not the predominant thing back when this thing first came on the scene. And I love that that heart of an educator mentality has just grown and grown and then it’s turned into, look, I’m unashamed to say now, I didn’t know it. It wasn’t set up on purpose. It’s turned out to be the greatest business idea in history. Now, that’s why I’m Mr. Magoo of being a marketing genius is because it just happened. I think because the purity of the message and what we were trying to do is that people who were using our systems and our processes all of a sudden started creating success in their financial life and they’re like, “Hey, I’ll never forget that first call in 2008. I’m not going to embarrass her because she’s still a client of the firm, but she calls and goes, “Hey, I have a layover in Atlanta airport. Can we meet?” And I was like, “What? You want to meet?” You know, and I was like, “Oh my gosh.” And then it happened. We had a few more. But by the way, I think majority of these people, all from 2008, 9, 10, they’re all still clients of the firm. Absolutely. And now I’ve seen a lot of them. They’re all retiring. And it’s kind of fun to see this. But y’all woke me up to the realization that this thing can generate financial mutants become Abound Wealth clients. And I mean, that’s why we talk about that. We’ll leave the porch light on for you. And that’s why we call it the abundance cycle is because if you just do what we say, and you don’t have to buy any of our products or tools or anything, but if you just do what we say, you’re going to reach a level of success that complexity is naturally going to find you. And that’s where we’ll be waiting for you. And I just, you’ll have no idea how excited I get that all this works in the way it does. And I’ll close it out at that. I’m your host, Brian, joined by Bo, Rebie and the rest of the content team, Money Guy team out.