The Best Financial Strategies by Income, from Financial Advisors

Introduction: Building Wealth Across Income Levels (0:00)

Brian: How does building wealth differ across income levels? Guess what? You’re about to find out.

Bo: Brian, I am so excited for this one because as financial advisors, we know that your income is your greatest wealth building tool. But that doesn’t mean that you need some massive income to be able to be financially independent. But the journey might look different depending on where you fall.

Brian: We’re going to take you through a wide range of incomes, how to make the most of the money, and what you can do to level up your way to your great big beautiful tomorrow.

Bo: But before we dive in, one quick disclaimer. All of these numbers will vary depending on your state income tax, your withholdings, your spend rates. These are just meant to be rough estimates. Everything we’re going to go through today is going to be a rough estimate of where you might be, but your individual situation will likely vary.

Brian: And what I like is we’re going to start all the way down at $40,000, go all the way up to $300,000. And I want you to know what we’re going to hopefully highlight is the intersection of both the analytics, but also the mindset because this is going to have some differences. And I like that we’re financial advisors that are willing to open the curtain and let you see what’s going on.

$40,000 Income: Every Dollar Must Have a Purpose (1:27)

Bo: So Brian, let’s start at the beginning with a $40,000 income. So if you have a $40,000 income right now, that equates to an hourly pay of about $19 an hour. If you’re curious, okay, where does that stack up across American earners in this country? Well, for individuals that work 40 plus hours, that would put you in the 29th percentile of income earners. For households, if you have a household income of $40,000, that puts you in the 24th percentile of income earners. 75% of households are making more. But that doesn’t mean that you can’t do it. It just means that you got to be very deliberate with every dollar that comes into your army of dollar bills. So when we think about this after we you know we’re not factoring in automatic payroll deductions to 401k or HSA or varying state taxes on average the take-home pay if you have a $40,000 income is going to be about $2,800 per month. And so the thought becomes okay well if my take-home is $2,800 a month how should I spread that out? How am I going to be able to make the ends meet on that level of income?

Brian: Yeah. Every dollar that comes in is going to be important. This is, you know, we talk about when I wrote Millionaire Mission and we talk about typical behaviors. I was talking about being laser focused. And look, I like as much as anybody to give you latitude on how you spend so that you can hopefully save money, be deliberate with it. But at this level, $40,000, it’s not a what can I do? Can I go out to eat? It’s what every dollar has to do for you. You have to think about this on not only how you eat, the cars you drive, how you live and structure your life. It’s that important because what works for a lot of people, you’re going to have to be much more laser focused just because you don’t have a big shovel.

Bo: So, as we think about how to divvy out our income, we want to think across needs, wants, and saving. Well, obviously at this income level, a lot more of your take-home pay is going to go towards needs. And certainly depending on where you live in this country, that will affect that. Being a family in Athens, Georgia would be very different than being a family in LA. And so the take-home pay would obviously affect that. So while we often talk about we want to think through a split of our take-home pay around 50% goes to needs and 30% goes to wants and 20% goes to savings. At this income threshold, you may have to move those numbers a touch. It’s likely going to look more like 75% of your pay goes towards needs, 15% goes towards wants, and maybe you are only put 10% towards savings.

Brian: And I think it’s important to note that 10% savings, that’s net income. You know, a lot of times on the show, we’re talking about gross. So, you can see why every dollar has to have a purpose. That’s why don’t guys budget. I mean, if you’re not doing a budget to know exactly where every dollar is coming in and where it’s going out, you’re not going to be successful at this threshold.

Bo: So, if 75% of your take-home is going to go towards needs, that comes out to roughly $2,100. That would mean this is rent and gas and groceries and other household items. Not a lot of room for wiggle room. And so then when you get to the wants, if that’s going to be 15% of your take-home, that’s probably going to be $420. And normally this would be things like eating out or clothes or those sort of things. But in all honesty, at this threshold, you’re probably not doing as much of that discretionary stuff. And what the wants actually becomes is preparing for unknown expenses that are likely going to pop up in your financial life.

Brian: Yeah. And then we of course talk about the savings rate. You know, if you think about the savings rate on this, it’s a little less than $300 a month. It’s $280 a month. But look, every dollar, especially if you start young enough, because hopefully a lot of you guys when you’re in this, my first job right out of college was $28,000 a year. So, I resembled this when I graduated. But if you know, a little goes a long way. You might not be wealthy in how big your shovel or your income is, but you might be a billionaire of time if you’re catching this type of content in your 20s.

Emergency Fund and Key Strategies at $40,000 (5:41)

Bo: But even at this income, you still need to honor the Financial Order of Operations. Brian, will you hold up the FOO for me? You still need to make sure that you’re keeping your risk coverage. So, likely at this income, your emergency fund should be somewhere between $8,000 and $16,000 to make sure that you’re protected from the unknown. So, if you’re someone who finds yourself at this income level presently, we want to walk you through some things that you can think about to make sure you’re optimizing in this stage. And the first one, Brian, you’ve already alluded to this a number of times is to be intentional.

Brian: Yeah, this is the one where look, if you’re doing something that’s untraditional in the fact that you don’t have a big income, but yet you’re trying to build financial independence on this low income, you’ve got to do things in a way that people are going to think you’re crazy. And that’s why, yeah, you might drive around that used car for well over 10 years. Yes, you might be when your friends want to go out to eat, you’re making different decisions just because it’s not built into your budget. This is the part where you have to be very intentional with every dollar that comes into your army of dollar bills.

Bo: Yeah, you just said it right there. You must you literally must have a plan for every dollar. And one of those plans for those dollars might be planning ahead for future expenses. You can’t wait for the unknown to happen. You kind of have to start now beginning to prepare for, okay, I know that I’m going to have to replace the brakes or I know I’m going to have to replace the tires or I know that I have that medical thing coming up and I’m going to begin putting aside money to prepare for those expenses.

Brian: Well, intentionality is also important. We always hear the latte effect and a lot of us even we have been like dismissive of this like no you know what type of coffee you drink is not going to derail your financial that is false when you’re at this first tier is because every dollar is so purposeful you might have to do grocery shopping different meal prep is going to be different you’re going to have to be strict with every dollar but the good news is you can still do it I don’t want this to be a pessimistic outlook I want you to feel like this is a lot of opportunity, but it’s very deliberate that you have to make something happen.

Bo: The other thing that you have to be super careful of at this income level is to be wary of consumer debt and you have to get rid of it if you have it. Because every dollar matters so much, what you’re losing to interest payments on debt becomes more and more and more devastating. We know right now the average credit card payment on a monthly basis in this country is $273. But remember, if we were segmenting out this income and we said 10% was going to savings, you’d be saving about $280. So if I am having to spend $273 on a credit card payment, I do not have that $280 left over to save. You are paying for your past self instead of building for your future self.

Brian: And that’s why we often talk about go to moneyguy.com/resources, look at our wealth multiplier so you can see what every dollar has the potential to become. You’ll think about spending completely different and the what this is a perfect compare and contrast is that if people are spending close to $280 bucks on credit card debt monthly and that same amount of money might be the building blocks to crossing their first million dollar. You can see how this is a decision. It really is an opportunity cost decision. Structure your life so that you don’t get caught in that consumerism trap. You can’t be paying 20% plus credit card interest and expect to be successful.

Bo: And then the last thing is make sure that you’re patient. Yes, it’s likely going to take you a little bit longer to reach some of your financial goals. You may have to save for a longer period of time. You may have to be more disciplined. Your purchases may be further out in the future, but that’s okay. You can do it. You just have to be patient and make sure that you trust the process.

Brian: Yeah. We on the Money Guy Show we talk about aspirationally we want you saving and investing 20 to 25% of your gross income. More to come on why we did net versus gross. But a lot of you who are watching this in this $40,000 threshold are like that seems very aspirational. Yes, we know it is. That’s why we even adjusted this when we built this model to kind of show you what can and cannot happen. But that doesn’t mean that it doesn’t take the responsibility off of your shoulders. Because we think the part of being patient is keep making steps. Set yourself up for automatic investments. Make the good habits as easy as possible. That’ll also protect you from the bad habits being that much harder. But then keep being purposeful. As your shovel, your income gets better, you’re going to be just poised to take advantage of that next threshold.

Bo: And be sure to give yourself grace because any progress is still progress. It’s a matter of continuing to move forward in the journey.

$80,000 Income: Dead Center of America (10:28)

Bo: All right, Brian. Now, let’s move to our next income strata. Let’s talk about $80,000 a year of income. So, if you think about an $80,000 income, that comes out to an hourly pay of about $38 an hour. If you’re an individual that works 40 hours a week and you earn $80,000, that already puts you in the 67th percentile of income earners in this country. If you’re a household that brings in $80,000, it puts you in the 49th percentile of household income earners in this country.

Brian: Yeah, I think that means you’re dead square in the middle of America right now. $80,000 is right there at that median household income. So that means that hey, you are making enough. And there’s even that the Princeton study from years ago that $75,000 was the happiness factor. And I always thought that term happiness seemed a little on the shaky ground. But I understood what they were trying to get at. Is it likely at this income, you’re at least able to cover the foundation and hopefully have a little margin to even build on top of that, but it’s still going to be tight. I mean, because look, when we talk about take-home pay, a lot of these communities, if you think of cost of living areas, when you look at the national average on what a two-bedroom apartment is, it’s right around $1,900 a month. You can see your take-home is still going to be tight.

Bo: Yeah. You can see that at this income at $80,000 of income, again, adjusting for the fact that there are payroll deductions and the taxes vary by state on average is going to be about $5,700 per month. So, it’s obviously larger and more flexibility than you had at $40,000, but it’s still you have to be strategic with how you use your resources. And now maybe we are getting closer to that 50/30/20 breakdown. Maybe now we can think about 50% of our take-home going towards our needs, 20% going towards our wants, and then 30% going towards savings.

Brian: And this ties in exactly what I was just talking about is if you look at that 50% needs, that means that we’re going to have about $2,850 a month coming in net of all the taxes and the withholdings. We talked about that in the disclaimer. But if your rent is close to $1,900 a month, that’s only leaving a little right around $1,000 for all the other needs. That’s just not a lot of wiggle room. That margin is still going to be tight. So you better be super super direct with every dollar in your army of dollar bills.

Bo: And look, we understand again different parts of the country have different cost of living. So what we’re modeling here is 50%, your cost for your needs may be up to 60%. We recognize that, but again, you have to be diligent because when it comes to the wants now, you do have a little bit more margin. If you’re going to think about that $5,700 monthly take-home and 20% of that is chiseled out for wants. That means it’s about $1,140. So, you do have a little bit more for flexibility. You’re likely able to build up a little bit of margin so that you can do those intermediate term goals like saving for that trip or maybe having a splurge here or there so long as you’re willing to make sure you’re not letting your lifestyle creep out ahead of you.

Brian: This is where maybe we’re now getting beyond the latte effect where, you know, little decisions, nitpick decisions aren’t making as big of a deal as they did for the $40,000 income household. But you still need to be very deliberate on what type of vacations you’re driving, what type of cars you’re driving. These decisions still have big results when you’re thinking about building your army of dollar bills.

Bo: And then if the goal is to save 30% of our net, that’s going to be about $1,710 on a monthly basis. If you actually look at the dollars based on the gross income, that’s about a 26% savings rate. So, it is very much possible to hit our 25% aspirational goal at this income level.

Brian: And there’s some gamesmanship with how we looked at these numbers because remember, we’re talking about when we say 30% savings, that’s a net number. There’s a lot of manipulation that goes into that with your tax rates, the state you live in, all the deductions that are coming out of your pay. We put 30 because if you do the math, just like Bo said, it came in very close to that 25% of gross income, which is the aspirational number that we want people to do. And where did we come up with that number? If you go to moneyguy.com/resources and you look at what your income by savings rate can do, you can quickly see that this stuff does intersect with the math. We’re just trying to make sure we’re very intentional with where do your behaviors fall into this as well.

Bo: And again, even at this income level, we want to make sure that we’re honoring risk management. Your emergency fund with an $80,000 income is likely going to look differently than it did with a $40,000 income. So on average, we’re thinking your emergency fund will likely fall somewhere between $17,000 and $34,000. Again, depending on your unique circumstances.

Key Strategies at $80,000 Income (15:29)

Bo: So if you’re someone who finds yourself in this income range, what are the things that you ought to be thinking about or what should your mind be focused on? And not incredibly dissimilar to someone at $40,000. You should know where your money is going. You should actually have a plan for your dollars rather than letting them escape and wondering where they went.

Brian: Yeah. For everybody who’s watching the full show, not the highlight, I talked about when you make $40,000 household income, you have to know where every dollar is going, you have to budget. Just because your income is now up to $80,000, which is dead at the median for the United States, I still think you’re budgeting. Yes, you have more margin, but you still have to know where every dollar is going because this is a very purposeful period where what your behavior is, what your actions are with your army of dollars is going to yield big results.

Bo: Another thing that we believe you can do to set yourself up for success at this income range is automate. Automation is your best friend no matter where your income is. But certainly at this level where now you have the ability to have a little more flexibility, to have a little more margin, it’s a little bit easier for your lifestyle to begin creeping. If you can automate your savings, you put a natural protection in there to prevent you from allowing you to get out above your skis. So make sure you’re reviewing your automated process and as your income increases, make sure so too does your savings increase.

Brian: It also leans on that first ingredient of wealth building which is discipline. If you automate the process, it does create a system of success to where hopefully these things are happening automatically. Doesn’t matter what’s going on in the stock market, all the emotional stuff that might be working in the background. This is just going to make it automatic for the people so that you hopefully one day wake up and you go, “Holy cow, all that hard work in the beginning when yes, it was hard before I got all the pay raises before my income went up even more. I automated the process to make the success as easy as possible.”

Bo: And then another thing that you can do, another strategy you can implement at this income range is to use sinking funds. There’s a good chance that you’ll be able to fund small short-term goals out of your cash flow. But for larger or more intermediate term goals, you probably need to save for them in advance. So this is things like replacing the automobile. This is things like going on that next vacation. And if you know when generally the timing of those can be using a sinking fund to begin slowly funding that goal can be incredibly valuable at this income rate.

Brian: And this is another reason why that savings rate is going to be a little bit greater. Yes, we want a good chunk of this going towards long-term retirement type goals, but we also know that that 30% aspirational number is going to include these sinking funds and saving for what could be emergencies or just things that you also know are coming your way and you need to plan accordingly.

$150,000 Income: Welcome to the Top 25% (18:17)

Bo: All right, Brian, let’s keep moving up the income ladder because we’re talking about financial strategies you ought to be thinking about at various incomes. And the next income we want to talk about is an income of $150,000. This is now well into six figure land. So if you’re someone who makes $150,000 a year, that’s equivalent to $72 per hour. If you find yourself as an individual with this income, it means you are in the 89th percentile of individual income earners in this country. If you’re a household making $150,000 a year, you are in the 76th percentile of income earners in this country.

Brian: Yeah. I mean, think about it. Let that sink in. When it says 76 percentile, welcome to the top 25% here in the United States. This is where guys I’ll just be direct about this. A lot of times in those first two tiers we’re talking about the $40,000, $80,000 so much is having to go towards your needs that we give a lot of grace that you have to be laser focused. You have to budget. When you get to $150,000, if you need to wear the weight of your discipline, the decisions you’re making, you have the potential to become a financial mutant, but you better act accordingly because you have enough income, your shovel is now big enough that we better see some results in the long term.

Bo: Yeah. When we think about what your take-home pay on average is at this income level, it’s about $10,200 per month. So now you have substantially more resources than you had at an $80,000 income or a $40,000 income. So you want to think very strategically about how you use those. And when we think about take-home pay in this $10,000 range, we would aim for a spending target of something like 45% of that goes towards needs, 25% of that goes towards wants, and 35% of that goes towards savings. And savings being both long-term future financial independent savings and also short to intermediate term goals that you know you need to fund.

Brian: But like typical Money Guy fashion we put some flex in the system we know some of you live in high cost of living areas it’s not unreasonable to think if you live in San Francisco, New York or some of these other high cost of living areas those needs still might be close to 50%, it could bleed up into 50% but that doesn’t mean that we’re necessarily taking the responsibility because still I think at this level of income, you still have a lot of margin in the system to help you create success.

Bo: So, when you think about 45% of this going to needs, that’s the equivalent of about $4,000 a month. Very different than what we saw at the lower income thresholds. But again, you want to make sure that you’re not allowing your lifestyle to creep and end up eating all of those needs on things that weren’t really needs that were actually wants. When it comes to the 25% wants, that’s about $2,500 a month. And your savings should be pretty healthy. A little over $3,500 a month going to savings, both long-term financial independent savings as well as short to intermediate term goals. If you think about this in terms of your total gross income, this is actually a 29% savings rate that you have at this income level.

Brian: And that leads to because you do have a bigger shovel, you’re going to also see your emergency reserves are going to start growing as well. We expect to see somewhere between $30,000 to $60,000 built up to protect you just in case something doesn’t go as planned.

Key Strategies at $150,000 Income (21:48)

Bo: So then the question was, okay, at this income level, now that I have some flexibility, now that I have some margin, now that things feel a little bit more comfortable, what are the things that I ought to do? What are the financial planning things I ought to be thinking about? And the first one we’ve already alluded to a number of times. You have to make sure at this income threshold you are keeping an eye on lifestyle creep.

Brian: Well, I think that there’s a disconnect in America and the fact that when we’ve even done content on this is that most people have a bloated sense of what their peers are making. So, when you see that you’re in this tier, in the top 25% making $150,000 of household income, you might be looking above and seeing what’s on social media and being like, “Man, I’m still poor. I still can’t.” So, maybe I need to have a nicer car. I need to have a nicer house. This is why we give you the boundaries is because I don’t want you to fall into that consumerism that is just so prolific here in America that you get disconnected from the wise. Take some time figuring out what makes you happy, what you actually get purpose and value out of how you spend your money and now structure your financial life where it reflects that. So that way your savings rate can also reflect that and it doesn’t just fall into more lifestyle because you think that’s what people at your income are supposed to do.

Bo: And now don’t mishear lifestyle creep is not necessarily bad. It’s a natural progression that happens as we have financial success. But lifestyle creep that runs rampant is bad. That’s why, Brian, we love the idea of this 60/40 rule. Okay, if I’m going to get a pay raise, if I’m going to get a bonus, if I’m going to have some sort of increase in my income, I’m going to let 60% of that go towards lifestyle and increasing that, but I am going to make sure that 40% of that additional income goes towards savings, goes towards building for the future.

Brian: This is why I like the 60/40 rule. Somebody who grabs this content right out of college, you get that first entry level job. You might resemble that $40,000 person we were talking about and you’re not even fully able to fund your Roth IRA, but then you get into that $80,000 threshold a few years later and you’re maxing out the Roth. But what if you just stop there and then you now get to this threshold where we’re talking about where you are in the top 25% of your peers. But if all you’re doing is just funding your Roth, you missed out on a huge opportunity. We expect, yes, there’s going to be some lifestyle creep, but we’re hoping every time you get those pay raises or you’re getting that step up, you plan and act responsibly and very disciplined accordingly. Let 60% at least 60% go towards expanding your future financial life and then 40% can go towards living a better life. But you’ll be much more rewarded in the long term with this type of balance and discipline.

The Three Bucket Strategy (24:32)

Bo: Another thing that happens at this strata, because remember the monthly savings is like $3,500 a month. And if you begin saving at that clip, it does not take long for the dollars to really begin to build up and build up and build up. And so you may need to even be thinking about things like, okay, it’s not just what I am investing in, it’s where I’m putting my dollars. I may reach that critical mass, that boiling point where how I even think about the different accounts I have available to me can have a meaningful impact in my financial life.

Brian: Yeah, we call this the three bucket strategy. And look, each bucket has different things that they’re good at. And if you think about like the pre-tax, this is going to be that tax favored account that’s primarily funded through employer matches, even though that could be changing in the coming years. It’s going to be those things that you get a traditional deduction when they’re funded, but when you pull it out in the future, it’s going to be taxed to ordinary income. Tax-free, we all love tax-free. We all, it’s our precious. We love the Roth accounts because they continue. This is how you go be a tax-free millionaire. And then the after tax, this is after you fill up those tax favored buckets. It’s likely that you’re going to still need a place to save and invest in a diversified portfolio. A brokerage account is going to be a great place to land to start funding those brokerage accounts.

Bo: You’re probably saying, “Well, how do I know if I’m doing this right?” Guys, don’t worry. We’ve already created the system, the Financial Order of Operations. If you notice, outside of getting through the first four steps, which are those keep your life out of the ditches, but also maximizing the free money from your employer, it’s when you get into five and six, we’re already loading up the pre-tax and the tax-free. It’s when you get into step seven, we’re going to allow you to do the after tax and building those bridge accounts because we’re thinking about how you use the money, not just how you build it. We’ve already done the hard work for you. Go to moneyguy.com/resources and you can get into this. We want you to be educated, but I think it’s very affirming when you see that our system matches these things that we’re talking about like the three bucket strategy.

Brian: Now, remember, we’re talking about financial planning strategies by income. You notice we didn’t do an age overlay because there are some people who may be making this income at a very young age and you just haven’t had enough time for your assets to really build. And if that’s the case, remember early on in your financial journey, your savings rate is exponentially more important than your rate of return. So where you should focus your attention on is how much am I saving, not how am I what buckets and how am I doing this. But at some point you will reach that critical mass. You will reach that boiling point where maybe you do need to graduate to thinking about your overall portfolio allocation. Maybe you used a fantastic general solution like a target retirement index fund early on, but now at this point of your financial journey, because you’ve been able to save so aggressively for so long, you might want to think about, okay, I’ve got these different accounts. Not only do I want to make sure that I’m being as tax efficient as possible, I want to make sure that I have the right risk inside of my portfolio. My portfolio as a 35, 40, 45 year old might need to look different than it did as a 22, 23 or 24 year old. So, make sure if you are at this income level and you are saving this clip and you have reached that boiling point that you’re also considering your overall portfolio allocation.

Bo: And this is kind of an echo of what I was just talking about. This is like likely in the Financial Order of Operations around a step seven structure where not only will you need additional allocation options, but you’re also going to see that there’s a way to structure these portfolio accounts within those three buckets to be very tax efficient. They work nicely with each other. We try to load you up with as much information, but this is also when you can try to keep life as simple as possible, but just success naturally is going to create that complexity. This is where the abundance cycle and working with an advisor sometimes can definitely help you make sure that you stick the landing on these tough decisions.

$300,000 Income: Welcome to the Top 6% (28:23)

Bo: All right, Brian, let’s talk about the next income tier. And this is for folks who have an income annually of $300,000. If you have a $300,000 annual income, that equates to about $144 per hour. If you’re an individual making this level of income, you are in the top 97th percentile of individual income earners in this country. Or if you’re a household that’s bringing in $300,000 a year, you are in the 94th percentile of households in this entire country.

Brian: That means you’re in the top 6%. And I know we just did a short show talking about there was a CNBC survey that said that 25% of Americans think you need to have a million dollar income. And here I am looking at this stat and we’re about to show you how powerful this is. This is just thin air. There’s not a lot of people that are making this type of income. Once again guys, don’t fall into the trap of this consumption world we live in where they make you believe that you have to spend like a millionaire, meaning spend a million dollars versus actually build the net worth and the savings. It’s so much better to be rich than to look rich. I want you to recognize if you are in this category, that top 6%, we’re going to give you the tools so that you can truly beef up your financial mutant self to maximize the opportunity.

Bo: So, if you have an income of $300,000 a year on average, that’s going to equate to a take-home of about $19,500 a month. And most people in this country would say, “Oh, okay. If I made that much money, I could never screw it up.” And yet we see so many people, whether it be celebrities or professional athletes or whatever headline you want to read of folks who make this level of income and yet they never reach financial independence because they get their priorities out of whack. We think that if you’re making this kind of money, you should structure your life in such a way that only about 35% of that has to go towards your needs, the things that you must have in order to live the life that you’re living. 25% can go to your wants, the things that you choose to have, the discretionary items. And because you have such a high income, the onus for saving, the onus for building financial independence really falls on you. So, we want you to have about 40% of that net take-home going to fund future financial independence and maybe even current abundance goals.

Brian: I think this is one of those things where we give grace in our system for when you’re starting out where we give you the goal of 25% towards housing, 20/3/8 for your car purchases. And a lot of people when you get into this really unique circumstance of a really big income, you have a big shovel, they don’t those rules, they kind of turn it upside down. You don’t have to keep moving the goalpost. Meaning that if you live in a home and it’s meeting all your needs, just because you can doesn’t mean you should necessarily go buy a bigger house just because you think that’s what the Joneses or somebody in your income should do. It also means you don’t have to, despite what America tells you with lease payments and car payments that go out seven, eight years, it’s okay at this threshold. I don’t like you to even be using 20/3/8. I like you to be paying cash for your vehicles, driving something that actually gets you from point A to point B, but letting your money, your army of dollar bills drive you to your wealth journey, and not falling prey to all this pressure that’s out there in consumption.

Bo: So, because this is a unique opportunity and we’re even going but if you want to know how unique it is, wait until you see the comments that are going to happen on this show when people go who makes $300,000. So, if you resemble this, know how special you are, you need to act accordingly. So, again, at a $19,500 a month net take-home, if you were putting 35% towards your needs, that’d be about $6,750 towards needs. 25% to your wants would be a little under $4,900 to your wants. And then your actual savings rate, the amount going towards savings would be about $7,800 a month. If you think about that $7,800 in terms of your total gross income, it actually comes out to a 31% savings rate. But a 31% savings rate at a $300,000 income does not seem that crazy.

Brian: Well, and also remember that savings rate is going to consist of it’s also the earmarks you’re doing for sinking funds, your emergency reserves, and the emergency funds have now reached a point where it’s between $50 to $100,000. That’s going to take some discipline to even build up an emergency reserves that reaches six figures.

Advanced Strategies at $300,000 Income (33:07)

Bo: So the question becomes, okay, well, what do I begin thinking about at this income threshold? Remember, this is a very small segment of the population that actually makes it to these income levels. But there are some advanced strategies if you’re making this kind of income that you can be thinking about. Maybe your employer doesn’t just have pre-tax and Roth 401k contributions. Maybe you have after tax which opens your ability to do mega backdoor Roths. Maybe you need to start bunching your charitable giving so that you can gift appreciated securities. Maybe you need to start thinking about portfolio location. What types of assets am I holding and what types of accounts? Or maybe this is even that time where you want to think about moving outside of the traditional investing and not replacing but adding on to your portfolio and growth strategy with things like real estate or alternative investments if those things are part of your financial goals.

Bo: The human desire is to keep your life as simple as possible but just naturally success is going to create the complexity and these advanced portfolio strategies are definitely a part of that complexity. Your estate structure is going to be a natural part of that complexity. How you’re going to structure your accounts for tax planning as well as making sure you have money to live your best life in retirement. All that stuff is complexities. We’re going to leave the porch light on for you. But I think that before I even just make the pitch that yes, this is the abundance cycle in process. Consider working with us. I want to make sure everybody hears me on what the whole purpose of this show is.

Final Thoughts: The Better Way to Do Money (34:42)

Brian: We have tried to create a content structure to no matter where you are in your financial journey, we’re gonna load you up. So if you’re coming here and you’re discovering this and maybe you watch the entire show to see aspirationally what is going to happen when you reach that tippity top tier of income, but you’re still in the $40,000. That’s okay. We’re there. All this stuff is interconnected. And I’ve talked about this before. This show is the perfect representation on how you can see why there’s such a vast difference in the advice that’s given out to the public. If you’re somebody who is making less than $100,000 of income, yeah, there’s probably going to be a T-total structure that every dollar has to be so purposeful that you don’t get to go get a cup of coffee. You don’t get to drive the latest greatest car and all these things because every dollar is so purposeful. But then you can also see if you’re a person that is now your income is getting into that top 10%. And you’re going to be making six figures of income, you don’t have to be the same person as some of these financial gurus who are telling you you have to do every dollar. Don’t use credit cards. Don’t get your employer match. I understand why those systems have to exist when people are at this. But we know that there’s a better way to do money for people who have the potential to graduate into financial mutant status. And that’s where I like those second tiers, the $150,000 to $300,000. You’re going to know who you are. You’re going to know you’re not fitting into that median or right in the middle. You know you’re above average with everything you’ve done in your life. And that’s why we hopefully are giving you the tools. So if you’re in the lower part, but you’re aspirationally know you can do better, we got a way for you there. But also, if you’re doing good, you’ve hit some parts of your life that are working out and clicking in place really well, we’re going to help you maximize every moment of your financial life.

Bo: Yeah. What I think is so interesting is that we showed you that at all different income levels, building wealth is possible. And yet, we know firsthand, there are folks who make $40,000 a year that never build wealth. And we know there are people that make $300,000 a year never build wealth. The differentiator, the thing that sets you apart is the behavior. So make sure you’re making the right decisions so that you can live your great big beautiful tomorrow.

Brian: Guys, we’re going to leave the porch light on. If you recognize that you have tried to keep your life as simple but it is complex and that is you, we’d love for you to consider going to moneyguy.com/become-a-client. If you will go check that out, we even have a nice little video intro there to let you kind of know what the process looks like. But this is what the abundance cycle looks like. We load you up with all the free stuff. So then when you reach and resemble and you see that the system works, we’re waiting for you and we’ll help you make sure that you navigate the next phase well too. I’m your host Brian Preston, Mr. Bo Hansen, Money Guy team out.