Here’s Where Wealthy People Put Their Money

Where Do Wealthy People Put Their Money? (0:00)

Brian: If you want to be wealthy, do what wealthy people do, right? But where do they put their money and what assets do they actually own and what investments do they have?

Bo: Now, Brian, I am so excited because today we’re going to reveal where wealthy people put their money to help them not only preserve, but also grow their wealth. And we’re going to talk about the strategies that you can copy to apply to your own financial life.

Brian: So, I’m Brian, he’s Bo, and this is the Money Guy Show, where two financial advisers show you there’s a better way to do money. And with that, let’s jump right in.

Bo: Yeah, Brian. According to the Federal Reserve, if you want to be in the top 10% of wealth in this country, you need to have a total net worth of about $1.9 million. Now, obviously, you may be asking, okay, if folks have that kind of money, what is it that they spend their money on or where do they actually put their assets? And it might not be what you think.

Brian: Come on, Bo. I’ve seen enough episodes of Cribs. I mean, we’re probably talking yachts, Rolexes, supercars. I’ve seen enough on my social media feed to have this figured out.

Bo: Yeah. Well, when you actually look at the numbers, and what’s great is the Federal Reserve actually tracks this data. They look at, okay, well, where do wealthy people put their money? It’s not in the places that you would think. And while you may not be in the top 10%, you may not be at that $1.9 million net worth stage yet, I would argue there are a lot of things that wealthy people do that you can copy even today to start putting yourself on that path.

Wealthy People Buy Back Their Time (1:35)

Brian: So before we get into the yachts and supercars that I was talking about, you’re probably going to start me off with number one, which is they buy back their time.

Bo: That’s exactly right. Wealthy people, they figure out that there is a way to actually exchange their dollars to buy back their time. This doesn’t always mean luxury things. Sometimes it’s outsourcing low-value tasks they just don’t want to do so they can focus on using their time for the things they actually care about.

Brian: Now, it looks like the content team had to dig deep on this one, but they did find research that shows that millionaires were nearly three times as likely as the general population to outsource many of the tasks that they don’t enjoy.

Bo: That’s right. This can be things like cutting their lawn or cleaning their house. And so when you’re at this level of wealth, you recognize that your time becomes more valuable as your financial circumstances change, as your income increases, as your responsibilities increase, and as your complexity increases. Your ability to buy back your time, as those things happen, becomes more and more important.

Brian: Now, I think it is important to put an asterisk on this and say this is not actually what they did to become wealthy. It’s just something to note that once they have actually built up a base level of assets that they do outsource so they can use their time as they please. In a sense, they are actually turning their money into time saving.

Bo: That’s exactly right. They recognize that time is money and money is time. So what’s the strategy that you can copy? How can you begin to emulate that today? Recognize that right now you are going to trade your time for money until ultimately you get to the point and you build up assets to then where you can start trading your money for time.

Why 96% of the Wealthy Own Stocks (3:23)

Brian: Okay, surely the next one is Rolexes, right?

Bo: Sure. Obviously we got to have fancy watches. No, wealthy people when it comes to where they put their money, they actually put their money in the stock market.

Brian: So if we compare and contrast typical Americans to wealthy Americans, it is interesting to note that 58% of all Americans own equities. I think a lot of that’s probably in retirement plans, their 401(k). But if you actually compare that to the top 10%, 96% in that top 10% of Americans do own equities.

Bo: Yeah. And what’s interesting is when we say own equities, I don’t think that has to mean individual stocks. Exactly what you said. They’re participating in their employer sponsored retirement accounts. They’re owning low-cost index funds. They’re owning mutual funds. And this is actually true because we know that research studies have found that when you look at how millionaires actually built their wealth, most millionaires say this is the way they did it. It was consistent long-term saving and investing via the equity markets.

Brian: Kind of set it and forget it. Start early and often. And that’s why I love that the stats show 80% of these millionaires attribute to investing in their 401(k). 75% of the millionaires said regular consistent investing over a long period of time was a big part of their success.

Bo: Now, there are two specific things to point out here. Number one, they invested consistently. They weren’t trying to go out there and figure out, okay, well, how do I put my money to work today, but then pull it out tomorrow and try to time the market? And if you’ve listened to our content for any amount of time at all, you know we believe that time in the market is way more valuable than timing the market.

The Huge Cost of Trying to Time the Market (5:00)

Bo: And the numbers would suggest this. If you think about a $10,000 investment that was put into the S&P 500 in 1987 and it was left undisturbed until 2025, that $10,000 investment would have turned into $616,000. But if you missed just the one best year, you said, “I’m worried about the market. I’m nervous,” and you just missed the one best year of performance in that timeline, your total would have dropped to $448,000. If you missed the best three years, it drops to $273,000. If you would have missed the best five consecutive years from 1987 all the way until 2025, instead of letting your $10,000 turn into $616,000, that $10,000 would have only turned into $175,000.

Brian: Now, a lot of you are probably looking at this slide and going, “Wait a minute. I’ve seen other people who create content use these miss the days.” We actually took a little different spin on this because a lot of times when you see the same period of time from the 80s all the way to present day, people will say what if you missed the best 10 days, 30 days, six months or whatever. But we are like, in our experience we don’t see that. We don’t see people missing days. We see people when markets get their teeth kicked in, they jump out and they jump out for like years because they start seeing it go back and they’re like, “Well, it has to come back down. How do I get in?” Or you see it the other way where they take a little money and they decide, hey, I’m going to take a little profit, put it in my back pocket and just wait this out because surely the market is overheated. Once again, they don’t miss like 30 days at a time. They typically miss years. So, we wanted to update this research to show what does it look like when you actually miss the years. And I think you can see very dramatically it is hard to get this right because a lot of people, yes, even if the market’s overvalued and you get out, you’re more than likely you don’t know when to get back in. And even if you time the market and get out before the next crash, when do you get back in there? That’s the problem. Nobody has the time machine. So, you don’t know when to get in, you don’t know when to get out. So, the best thing to do is just stay consistent and always be buying.

Automating Your 401(k) and Investments (7:13)

Bo: That’s exactly right. That’s why we say always be buying. And a way that you can actually do that is to just automate your finances. Set it up so that it happens automatically without you having to think about it. And what’s interesting is when you think about the idea of automating, the second thing that the millionaire study showed is that a vast majority of millionaires invested in their employer sponsored retirement accounts. It’s one of the very best and easiest ways to set it and forget it. You let your dollars come out of every single paycheck and begin going into tax-incentivized accounts, going into your 401(k), going into your 403(b), going into your 457. And if you can do that, it creates a natural mechanism where not only are you taking advantage of tax savings either today or tomorrow, but you’re also setting a system that can automate and stay consistent no matter what’s going on in the world around you.

Brian: And that’s why, because you just laid out a bunch of stuff. I mean, different accounts act in different ways. You got tax-free growth. You got employer accounts where they’re even pouring gasoline in the carburetor by giving you free matching money from your employer. So, you have to think about when and how should I invest? And just like there’s a better way to do math, you have to do PEMDAS to get the right order of operations for math, there’s a better way to do money. And that’s where the Financial Order of Operations comes in. You don’t have to come up with what the best way is. We’ve already figured it out for you. This is your all-terrain, all-weather vehicle that will get you through success.

Bo: Now, notice what the millionaires or wealthy people didn’t do. They weren’t investing in complicated life insurance products. They weren’t out there trying to day trade or do some sort of algorithmic solution. They weren’t speculating and they weren’t participating in get-rich-quick schemes. They were staying steady and consistent. So what’s the strategy that you can copy if you want to even employ that type of discipline in your life? Invest consistently in low-cost index funds within tax-advantaged retirement accounts following the Financial Order of Operations: 401(k)s, Roth IRAs, HSAs. If you can do that, you will be emulating the same things that got millionaires to millionaire status.

Brian: And so it’s worth repeating: instead of trying to beat the market, just be the market. And if you’re curious how much you should save and invest, we’d encourage you to go to moneyguy.com/resources and download our How Much Should You Save? resource. All you have to do is look at the intersection points. How old am I currently? When do I want to retire? Voila. It’s going to tell you how much you need to save and invest as a percentage of your gross income.

Do Wealthy People Invest in Real Estate? (10:15)

Bo: All right, Brian. So, we’re talking about it. The top 10% of wealth in this country is about $1.9 million. And the question we’re asking is, what is it that wealthy people invest in? And are there strategies that we can copy where we are today to emulate that? And this next one I don’t think is going to be incredibly surprising but it’s a little bit different than one of the things that you hear us say all the time and when you actually look at the data and the numbers it is true that wealthy people do invest in real estate.

Brian: This one’s interesting to me because yes, we are fee-only financial planners and a lot of people when they hear we’re fee-only financial planners they’re like, hey, you’re never going to tell us about real estate because you don’t make money off of doing the real estate. Well, I think you can tell very quickly, this is the thing about fiduciary advisors, we try to help our clients in all facets of their life. Yes, we love helping clients get into index funds and know how to be part of the market, but we also help clients constantly work through strategies, whether it’s working through a cost segregation on some commercial property they’re doing or we’re looking at residential rental property that they’re doing. We do actually help clients navigate this, especially the tax consequences, the cash flow analysis. There’s a lot that goes into it. So, we love real estate. It’s just a matter of doing it at the right time in the right place so you don’t get yourself in a bad situation.

Bo: Yeah. And when you actually look at the data, according to the Federal Reserve Survey of Consumer Finances, 69%, so seven out of 10 of the wealthiest 10% of Americans own some form of real estate outside of their primary residence. So this might be vacation homes or rental properties or commercial buildings or condos. So investing in real estate is something that wealthy people do. Now don’t mishear us. We’re not suggesting that real estate is required for you to be wealthy or required for you to be able to build wealth. But if you are at that stage, it can be a fantastic tool to help you do that.

Brian: Well, think about it. You get it’s an appreciating asset because there’s not more land being created. It’s also a great income source. A lot of times in retirement you are looking for new streams of income, so it does check the box on that. I also like it’s an inflation hedge. So if you’re worried about how the government is spending money or how we’re printing money, this is a way by owning assets like real estate you can definitely work against that. But if you do it the wrong way, or what we see more often is if you actually do it too soon, real estate is one of those things by nature of the fact that it’s often very expensive and it’s often done with some form of leverage. It can lead to absolute disaster and financial ruin if you do it wrong. So let’s talk about dos and don’ts. And I think we came up with a short list here. Let’s first go through the dos. Make sure you’re actually putting down down payments and not using leverage, meaning debt, in a reasonable manner. That’s a big part. If you want to know the reasonable, look at the cash flow. Especially, I think a lot of times we look at deals all the time and the math just doesn’t math. And you have to be honest, especially with what’s happened with appreciation of real estate and with interest rates in this current environment. If the math doesn’t math and the cash flow doesn’t work, don’t force the decision. So you have to have reserves for repairs and maintenance. And then here’s a big one, Bo, you also have to plan for all the other stuff because real estate is far from passive. You’ve got to plan for the taxes, the insurance, the repairs, the vacancies. There’s a lot of stuff that can happen in real estate and you need to act accordingly.

Bo: So what should you not do? Well, number one, don’t begin investing in real estate or moving that direction if you don’t have a solid financial foundation. This is a step seven, step eight type activity, not a step three, four activity. If this is the first thing you’re doing out of the gate when it comes to building your wealth, you’re likely doing it wrong. Another thing that we don’t want you to do is don’t take on too much debt. Just because the bank or some lending institution says that they’ll let you borrow money does not mean that you should borrow that money. Don’t assume that real estate is passive. It is not passive. If you don’t believe us, go ask anyone out there that owns a piece of real estate and they’ll let you know. And don’t forget that concentration risk is a real thing. You’re going to go buy a bunch of real estate, but if you buy a bunch of single family rental properties inside of one community, inside of one geography, and something changes in that community or that geography, you are highly concentrated. So if all of your wealth is tied up in that thing, you put yourself at a lot of risk. Real estate’s a fantastic tool. It’s a fantastic opportunity, but it needs to be mixed in with a well-diversified and well-thought-out total investment strategy.

Brian: So, here’s the strategy to copy: invest in real estate if you’re prepared to handle the risk. Don’t get caught up in just the brochure. Yes, there are great tax incentives with depreciation and other things with real estate. Yes, you get leverage, debt that can cause a multiple on your appreciation factor. But if you don’t have the depth of pockets to handle the downturns when you don’t have other people’s money coming in, you could be taking yourself too far out on the risk spectrum and actually create failure that ruins your entire financial system. So, we love real estate, but make sure you’re at the right time and right place in your financial journey to handle what real estate brings.

Business Ownership and Building Wealth (15:26)

Bo: In that same breath, I feel like we’re kind of stacking these ideas that kind of build upon each other because this next one is not incredibly different. When we look at the data and the study, when you think about the top 10% of wealthy folks in this country, a number of wealthy people either own a business or they have some sort of equity in a business for which they work. As a matter of fact, 48% of the top 10% of Americans have some sort of equity. So, businesses and business ownership is a common thread among wealthy people in this country.

Brian: Yeah. But let’s be crystal clear on this. And look, we’re pro business. I mean, obviously we’re entrepreneurs as well, but this is the type of thing that it’s boom or it’s bust, like literally bankruptcy. So, that’s the thing I think you have to always throw a little cold water into situations so that people don’t get too frothy. And that’s why it’s important to understand two out of three businesses are no longer even in operation 10 years in the future. That is not a stat that people celebrate or even really disclose when they’re putting out the brochure of why it’s great to be in entrepreneurship.

Bo: Yeah. If you think about it, when you start a business, when you move into entrepreneurship, you’re naturally introducing concentration risk. You’re introducing oftentimes liquidity risk. You’re introducing a new stress that may not exist previously. So, when we think about it, and we love entrepreneurship, but if you are someone who’s wired for it and you’re thinking, okay, maybe this is something I want to do or I’ve got this idea and I want to see if it’s going to work, we would always encourage you: is there a way, and sometimes there’s not, but is there a way for me to start small and build? Can I come up with some sort of MVP, some sort of minimum viable product or minimum viable service to prove that there’s a market out there that desires this thing or this service? And is there a way for me to implement that at a low cost and low risk? If you have to go borrow tons of money, create some speculative product, speculative service, and hope that there are people out there to buy it, and you’re betting the entire farm on that thing succeeding, I would argue that you’re probably not doing it in the best manner possible.

Brian: So, we’ll give you the strategy to copy, and this is going to sound very similar to the real estate one: only start a small business if you’re financially ready, meaning you have that base underneath you and are prepared to handle the risk. And I’d go a step further: we always talk about, especially for people who are starting big changes in their life, put on your 3D glasses. Meaning run a business plan that’s going to chart out what the next five to seven years are going to look like. Both from the dream, this is the one that’s easy, how I’m going to be so wealthy because everything’s going to work out just swimmingly well. That’s never going to happen, by the way. You could do the down to earth plan. That’s the second D. Down to earth for what you think will happen. Some good stuff, some bad stuff, some struggles, but you’re gonna probably be okay. And then do not skip out on the doodoo plan. Meaning that you’ve got to go ahead and look it in the eyes. What does it look like if this business fails? How am I going to pick up the pieces and not let this ruin my entire journey?

Bo: Yeah. And even in terms of how you think about the down to earth, the dream, and the doodoo: is there some way this business or idea could even start as a fledgling side hustle? Is there some way that you can do it in conjunction with the thing that you’re already doing until you prove that it actually has long-term viability? There’s a lot of great businesses that started as side hustles. Nike, Spanx, Mailchimp, none of these were out of the gate businesses that started. They all started on the side and they gave themselves time to actually be able to be successful. So, if this is something you’re interested in or something that you’re curious about, we actually have a fantastic ultimate guide that you can use. Go to moneyguide.com/ultimateguide. And we have one for entrepreneurs for people who think they want to move in this direction to make sure that you can do it as wisely as possible to give yourself the highest probability success moving into this new endeavor.

Sponsor: Abound Wealth (19:24)

Brian: All right, Bo, before we move on, let’s do a shameless plug for Abound Wealth. I have no shame because I’m mighty proud of the work that we get to do for our clients every single day. Here at Abound Wealth, we’re fee-only. We’re fiduciary advisers. That means we’re legally required to work in your best interest. And we love helping our clients optimize their army of dollar bills so they can live their best life. And before you leave a mean comment about us self-promoting, keep in mind Abound Wealth helps us keep this entire thing going, creating free content, growing the team, and changing the financial landscape. We’re honored you’re watching and listening. And we hope you use this content to help you learn, apply, and grow your army of dollar bills. And when your financial life gets complicated, it’ll happen. We’d love for you to come back to where it all started. That’s the Money Guy Show and Abound Wealth. And if you’re ready to take the relationship to the next level, check us out at aboundwealth.com or click the link below.

Why 95% of the Wealthy Own Their Homes (20:24)

Brian: This next one’s going to sound controversial just because of how controversial this whole asset class is right now, but we’ll go ahead and share it. Wealthy people, they actually own their home.

Bo: Yeah. Again, we’re looking at the numbers and the data. This data is according to the Federal Reserve surveying consumer finances, and they did find that 95% of those top 10% of wealthy Americans do actually own their primary residence. In this instance, they’re not renters.

Brian: Yeah. But look, there’s also some bias in this stat from the recency of it because we know wealth creation is something that typically takes 27 to 29 years. Most people cross into that two comma club, the seven figures, when they’re in their late 40s. So, it makes a lot of sense to me that a lot of people who’ve already had that success were able to buy a house much easier. So, if you’re younger, I wouldn’t let this discourage you. I think it’s just something to have context so you can figure out what do I need to know in my own wealth building journey.

Bo: And look, there is a reality. While 95% of the top 10% of wealth individuals do own a home, we genuinely believe that home ownership is not absolutely required to build wealth. Being a homeowner today looks very different than it did 10, 20, 30 years ago. And that’s not saying that one is better, worse, easier, or harder. It’s just a reality. And if you don’t believe us, we actually did a show titled Things Have Changed. Should you buy or rent in 2026? And if you’re someone who’s trying to figure out does home ownership make sense for me, should I be a renter, how do I still build wealth given where I fall in that spectrum, go check out that show because we do not believe that it’s one-size-fits-all. We do not believe that you have to be a homeowner in order to be wealthy and to live a great big beautiful tomorrow. But I am here to tell you we want to give you the tools so that if the market changes and it becomes much better to buy your principal residence, here are some things that are benefits to owning your own home: you are building equity while you’re paying for the house you live in. This counts towards your net worth. Now, it’s hard to use this in retirement because it is your shelter. But I do like the fact that real estate naturally is kind of an inflation hedge. It appreciates over time. And also when you’re in retirement and going across that threshold, it’s nice if you have your housing expenses locked in. Home ownership does allow you to go through that experience knowing what your annual expenses are going to be.

Brian: But keep in mind, housing is a very personal decision. So, even with these benefits and even with how amazing it sounds and even with how many other people would say, “Oh, do it, do it, do it,” you have to make sure that it aligns with your goals.

Bo: So, what’s the strategy for you to copy? Buy a home if it aligns with your goals and lifestyle, but don’t feel like it’s something you must do in order to build wealth. And if you are someone who’s going to buy a home or you are someone who’s interested in doing that, we would argue there’s a better way to do it. The conventional wisdom has changed a little bit. We subscribe to the idea of 3/5/25. When it comes time to buy your first home, we don’t think you have to put down 20%. We’re perfectly okay if you put down 3% on your first home. You want to make sure that you can see yourself being in that home for at least 5 years. And you want to make sure that your total housing costs do not exceed 25% of your monthly gross income. If you can do that, if you can make sure you fall inside of those thresholds, you’re going to likely put yourself in a situation where you don’t become house rich and life poor.

Brian: Well, and I think we can close out this tip with once again, I’m going to just give you the website. Go to moneyguy.com/resources. Yes, get in there and get that free stuff. We’ve designed this entire abundance cycle where you take as much free stuff as you possibly can to learn, apply, accelerate your journey, and then we’re hopeful one day you’re going to have so much success that it creates complexity. That’s when you’ll probably need us.

The Investment Most People Overlook: Health (24:23)

Brian: I love that I get to give this next transition because if you look at my business partner here, he might know a little bit of something about this next point. And as we’re talking about wealth, things that wealthy people invest in, without a doubt, they invest in their health.

Bo: Yeah. I would even argue, even some of these other ones, you can fight us on: oh, I don’t need to own a home or I don’t need to own a business or I don’t need to own real estate. And look, we’re not going to fight you on that. But I would argue if you’re someone who’s neglecting your health, no matter what age you are, whether you’re the 22-year-old or the 72-year-old, if you’re neglecting your health, you’re likely not setting yourself up for a great future. And the numbers would suggest this. According to UBS, 92% of wealthy investors said that their health is actually a thing or their wealth is a thing that allowed them to live a healthier life. Meaning because they made the decisions to defer some of today for tomorrow to build up their resources, they were actually in a position where health could become a priority. And 90% said that investing in their health was more important than growing their wealth. So I don’t think that those two are mutually exclusive. I think they have to actually work together if you really want to live your best future.

Brian: Well, I mean, look, some of this is self-proving because once you start having a little success, you’re past the survival side of what money can and cannot do for you. So, you start thinking more about your mortality. And that’s when you do the concierge doctor, that’s when you do the gym memberships, that’s when you maybe talk to a nutritionist, do a meal plan so you can do macros. All this stuff kind of goes on that trend that I think you do see with people who are spending a lot of time working on longevity because they realize that this is something they can invest in and they see the results in their quality of life.

Bo: Yeah. And so, okay, well, what does it mean to actually invest in your health? And I want to be clear, this is not for just once you get wealthy. This is not for later on in life. I would argue this is for every stage. No matter where you’re at, no matter where this is reaching you. Brian, we have a really good friend, a doctor buddy of ours. He said, “If you want to change your life, there are really three pillars to health that you ought to focus on. It’s how you move your body, how you feed your body, and then how you recover your body, how you let it restore itself. So, how do you sleep, what are you eating, and how are you moving?” If you’re not focusing on those three areas and putting some priority around those three areas, it will catch up to you. It’s just a matter of when. You cannot bad diet, bad sleep, bad exercise yourself into a better future. So, you might as well start investing in those things now.

Brian: Well, I think this goes into the preventative care side of things. If you’ve read all the books on trying to really extrapolate this health is wealth thing, a lot of times you’ll find that yes, most Americans live to be their late 70s, but the functional part of that lifespan can be severely limited. Meaning that if you lose your mobility or you’re cognitively not the same because some influence is causing dementia or some other issues that come your way, you can quickly realize, hey, if I can just be preventative on this, I might get more of the usable part of my health so I can make all those blossoming memories. I can live my best life and not have regret. So, that’s why I think it is a healthy thing. Invest like a millionaire and make sure your health is a priority.

Bo: And if it is a priority, it will show even in terms of how you handle risk management. Are you doing things like having appropriate health insurance, not just going out and buying the lowest cost, most catastrophic coverage and never using it? Are you actually making wise decisions? Do you have things like disability insurance in place if some unknown unknown thing were to happen to you? Have you made sure that both you and your loved ones are going to be okay and going to be taken care of in that instance? Part of managing your health is managing the things that you can control, but also having an active role in trying to mitigate the risk that comes from the things that you cannot control.

How Wealthy Investors Use HSAs (28:36)

Brian: Okay, a lot of you are probably watching this going, I’m sold. I want to start investing in my health. Is there a better way to do it? Man, do we have you loaded up. There’s a reason step number five of the Financial Order of Operations on tax-free growth opportunities is your health savings account. We love health savings accounts because these things are triple, if not even quattro, tax-advantaged. But Bo, what is a health savings account?

Bo: Yeah, it literally is a type of tax-advantaged savings account that for folks that are enrolled in a high deductible health plan, you’re eligible to contribute to it and the money that you put in can ultimately be used to pay for qualified medical expenses. But there is a reason that these accounts are different than other types of accounts like a regular brokerage account or like your 401(k) because they have some very unique and distinct tax advantages. Number one, when you participate or when you contribute to an HSA, no matter what your income is, no matter how high your income is, you get a tax deduction on the contributions on the front end when you put the money into the account. And if you put the money to actual work, meaning you’ve got your deductibles covered and now you’re actually starting to invest that money, the money that you’ve invested within your health savings account can actually grow tax-deferred.

Brian: Yep. And then if you use this on qualified medical expenses, tax-free distributions. Very few things give you a deduction on the front end and then give you tax-free distributions after they’ve grown. That’s what makes these things, in a lot of ways, even more powerful than a Roth IRA. That pains me to say that out loud. But then, and we like to put this as the three for the triple tax advantage, there is an honorable mention quattro which is if your employer offers this health savings account along with the high deductible health insurance, because that is required, you might even be able to exempt yourself out of the FICA and Medicare taxes on your salary deferrals into these health savings accounts. And so what’s really interesting is these accounts have gotten more popular even though people recognize that HSAs are a thing and they have these sort of three or four distinct tax advantages. Only about 13% of the adult population uses them, taking advantage of these distinct benefits.

Bo: So if you want to be in that 13%, if you want to be one of the folks who actually optimizes their HSA, this is what it looks like. Every year you have to make sure that you participate in a high deductible health plan. That’s what is going to allow you to put money into your HSA and then you want to contribute the maximum amount depending on if you are covered under individual coverage or family coverage. You’re then going to invest that money inside the HSA and let it grow, oftentimes in low-cost index funds. Whenever you have a medical expense, you’re going to pay for those medical expenses with money out of your pocket. You’re not going to use the HSA dollars. You’re going to pay for it and you’re going to save that receipt either in a digital repository or somehow in a spreadsheet, so you’re keeping track of expenses that you’ve incurred. And then at some point in the future after your dollars have grown tax-deferred, after those dollars have turned into bigger and bigger numbers because of compounding interest, you can actually go and reimburse yourself. So you may be in a situation 10 years from now where you get to reimburse yourself for medical expenses that were incurred a decade ago and you’re getting to do it with earnings that have never ever been taxed. It is a totally tax-free exchange.

Brian: So to kind of close this out, a lot of what we talk about in personal finance is small decisions you make that have huge results for the future. So the strategy to copy when it comes to your health, to think like a millionaire or very successful person does: once again, make small decisions. Use a small portion of what you have coming in today to invest in your long-term health. And I’m telling you, your future older self will thank you with sloppy happy tears in the future because you’re going to have more usable time and build your great big beautiful tomorrow.

What Wealthy People Actually Drive (32:29)

Bo: All right, Brian, here it is. This is the one that you’ve been waiting on. We’ve been talking about it. You’ve been listening to it. This is the supercars, right? Supercars, Rolexes, and yachts. I keep waiting for those to show up.

Brian: That’s right. When we think about where wealthy people spend their money, it is true. It is in fact accurate. Wealthy people spend their money on vehicles.

Bo: All right, we’re finally here. So, go ahead, lay it down for me. Lambos, Ferraris, where? I mean, I’m kind of excited to see where my peers are loading up so that we can show it off.

Brian: So, according to Experian, when we think about wealthy people and how they spend, 61% of households making over $250,000, so these are high-earning households, don’t drive luxury brands. Instead, even these households that are very high-earning, they drive cars like Hondas, Toyotas, and Fords. They buy cars and they spend money on cars, but they are not buying expensive luxury brands. Now, look, there’s a lot of flex in this because yes, more than half, 61%, drive your millionaire next door Toyotas and Hondas and Fords that we’ve all been taught. But that does leave 39% that are probably doing something. But I do think it is worth noting. Let’s talk about why vehicles, for people who know how to use resources well, why they don’t love vehicles. For most vehicles out there, they depreciate like a rock. And I think that’s what wealthy people know.

Bo: Well, yeah. So, they depreciate like a rock. And I think a lot of wealthy people recognize, hey, I just don’t want my money to disappear that way. However, in reality, when we’re thinking about the top 10% of net worth across Americans, realistically at that level, vehicles are usually a very small percentage of a wealthy person’s net worth. And Brian, you already alluded to that other 39%. If you are someone who’s in the top 10% of net worth and you have a net worth of $1.9 million, say, you know what, I’ve deferred gratification and I’m at this stage now and I want to drive a luxury brand and I want to go out and buy a 2026 BMW X5. I want to go buy a nice luxury automobile and that automobile is going to cost over $70,000 and that’s a lot of money to pay for a car. In reality, that represents about 3.7% of your total net worth. I think we have to ground ourselves and recognize that if you were the median American who has a median net worth right now of $191,000, in purely percentage terms, that would be the equivalent of that median American going to buy a 2016 10-year-old Nissan Altima for $7,100. At the end of the day, even though it’s an expensive car, even though it’s an expensive purchase, it is a small fraction of a wealthy person’s net worth. And that’s okay. They have now earned their right to spend that money if that’s the way they choose to.

Brian: So I think this more or less, and this is something we’ve always shared, is where you are in your journey matters. Because that is the big part. If you are like step eight and beyond in the Financial Order of Operations, you’re probably not faking it anymore. And you can, because it’s back to your point. And so I think that’s why we can get to strategies to copy: don’t let a large percentage of your net worth go into depreciating vehicles.

The 20/3/8 Rule for Buying a Car (35:52)

Brian: There’s a reason what I love about this is that we’ve created rules like 20/3/8 to help you have kind of boundaries or know where the guard rails are, because this is going to protect you in several ways. First of all, large down payment, 20%, so you can get ahead of any depreciation that’s out there. You’re going to have to pay it off within three years. So that the depreciation’s not eating you alive and it also makes sure your cash flow and your budget, so that your car compared to what you have coming in doesn’t get cattywampus. And then I love that we’ve made this where it’s 8% of your gross monthly income. Now we do have some notes. These are key distinctions. You notice this says luxury cars, same as cash. That’s one year, same as cash, because we never know how your cash flow is coming in and out. We want to give you some grace or flexibility on that. But we’re not talking about Ferraris, Lambos, Mercedes, BMWs. The 20/3/8 is to get you reliable transportation to and from your job so you can slowly turn time, you know, that you’re investing to make money so eventually you own more and more assets. And then the other thing that’s key is make sure that your investments, what you have going in every month, is exceeding what’s going into the car. I think the big takeaway for me is people driving around hopefully in the luxury cars. I’m hoping that they’re actually rich, not just trying to look rich.

Bo: Yeah, it’s much better to actually be rich than to look rich. And if you’re someone who’s in the car market and you’re trying to figure out how much car can I afford, we have a fantastic calculator. Go to moneyguy.com/resources and play with our car buying calculator. You can put in your income. You can put in the interest rate available to you. You can put in what your current monthly car payment is or what you want your current monthly car payment to be and it’ll adjust and show you, okay, what is the amount of car that I can afford? If you can do this, if you can work through this exercise, it’s going to prevent you from getting out ahead of your skis and buying too expensive of a car too early in your financial journey.

How to Actually Live Like a Millionaire (37:56)

Brian: I think a good way to kind of put a bow on all this is that a lot of us when we think of millionaire and beyond, we’re kind of doing what Morgan Housel talks about. Most people who aspire to be millionaires are daydreaming about how you would spend a million dollars like a lottery winner or big windfall, not actually how you live like a millionaire. And what we’ve seen by doing today’s show is I want you to live like a true millionaire. That’s where you actually know the value of your time. You know that you should buy assets so no matter what’s going on, you don’t have to work so hard with your back, your brain, your hands, because your assets start generating just as much, if not even more, than what you do. There are better ways to do money. And a lot of you, if you could check the box on every one of these things we went through and you realize, hey, these guys seem like they have an understanding of what people with wealth have done, I love what they’ve done, but I’ve realized I’m kind of at the point where I went through the journey that they talked about, but now my simple life and all the good things I did, man oh man, has the success become very complex. And not only has it become complex, I just don’t have the time in the day to do this. And or my spouse, she just doesn’t have the interest to understand this as well as I would like. And what happens when I’m no longer here? That’s when we’re going to leave the porch light on for you. We work with clients all across the country. We’d love for you to remember the abundance cycle. Who planted the seeds with all those great free resources that were on moneyguy.com/resources? If your life’s not complicated enough that you don’t need us, that’s a-okay. Get in there and get some of that free stuff. Accelerate your journey. But when it does get to that point, and it will, I promise, no matter how successful you feel like you are in the journey, one day you will wake up with this complexity. We’ll leave the porch light on for you. Come become a client. I’m your host Brian, joined by Mr. Bo. Money Guy Team, out!