The Best Financial Strategies (BY INCOME!)

Transcript:

On this episode of the Personal Finance Podcast, the best financial strategies buy income in 2026.

Oh, what's up everybody? And welcome to the Personal Finance Podcast. I'm your host Andrew, founder of Master money.co. And today on the Personal Finance Podcast, we're gonna be talking about the best financial strategies. By income in 2026. If you guys have any questions, make sure you join the Master Money Newsletter by going to master money.co/newsletter.

And don't forget to follow us on Apple Podcast, Spotify, YouTube, or whatever podcast player you love listening to this podcast on it. If you wanna hop out the show, consider leaving a five star rating and review on Apple Podcast. Or Spotify cannot. Thank you guys enough for leaving those five star ratings and reviews.

They truly mean the world to us and are really, really helpful in helping us spread this message that we believe anybody in this world can build wealth. Now, today we're gonna have some fun. We're gonna dive into the best financial strategies by income, because the one thing that I think a lot of people need to realize is that your income level is going to shift the way that you have to think about money.

Now, we talk about this a lot in Master Money Academy, where we teach people, Hey, if you are making more money, well, your strategies need to begin to shift. For example, maybe you start to make more money and you're making a hundred grand, then you're making 150 grand per year, then you're making 200 grand per year.

Well, at each of those different levels, you're gonna have to change the way that you invest in retirement accounts. You're gonna have to change your tax strategy. You're gonna have to change the way that you think about money. You're gonna have to change the way that you set up your financial plan so that you can make sure that you're.

Optimizing where your dollars are going. And so as your income increases, then the playing field changes. Whereas if you were someone who was just starting out, you're gonna have to do some very different things than someone who has a lot of extra gap money available, meaning a lot of extra leftover at the end of the month.

You have to do two very different things. And so we're gonna talk through this today and talk through some of the different strategies that each person needs to have based on your income level. We're gonna start at the survival level where people making zero to $30,000. If you are in that position, I'm gonna show you exactly what to do and I'm gonna show you how to get your money right.

I'm gonna show you how to pull that income lever so that you can increase your income over time, and we're gonna go through that as well. Then we're gonna go through 30 to $50,000. The foundational building phase, where we're gonna figure out exactly what folks who are, maybe you're in an entry level job, maybe you are working and have been working for a little while and you just wanna know what to do next at that level.

Then we're gonna talk about 50 to $75,000 and what you need to do during that level. 'cause it is actually different than 30 to 50. Then we're gonna be diving into 75 to a hundred, and then we're gonna get into the higher income levels, like a hundred to one 50. One 50 to two 50, and this is where you're really cranking out extra income if you can make this work.

And then two 50 to 500 and then 500 plus. And so we have a ton of different income levels to go through in this episode, but each of these levels is gonna have some different things that you need to be doing. This is an episode that I want every single person to lock in on. I want you to lock in and understand what you need to be doing based on your income level.

And if you have suggestions or things that you think have helped you at certain income levels, leave them in the comments down below. If you're watching on YouTube or you're watching on Spotify, leave them in those comments down below. I wanna hear from each and every single one of you, some things that have worked for you.

I want you to give us feedback. Tell us what you've been doing. Let's talk, let's help each other in those comments as well as we get the ball rolling. Now, the comments on this podcast. We want to use them as ways to help other people. That is our entire goal is for you to help others share what you've been doing or share some of your struggles and other folks can kind of help you and tell you what they have been doing to overcome some of those struggles.

And I appreciate each and every single one of your comments. We try to respond as to as many of those as possible and so cannot Thank you guys enough for though, so I'm ready to get into this. So without further ado, if you're ready to lock in, let's take a break and we'll get right into it. So tier one, this is gonna be the starting point overall for most people, is the zero to $30,000 survival mode.

Now, let me tell each and every single person that is in this mode right now, I know exactly how you feel. I was in this mode, I made $30,000 per year at my first job, and so I was at the higher tier of this mode, but this is just survival. You're trying to figure out where your money's going every single month.

You're trying to cut back as much as you possibly can and just trying to survive. I want, and my goal for you is to get out of this survival mode and start to make more money. Your number one priority when you are in this mode should be earning more income. You should focus all your time, all your energy, and all the thoughts that you have into earning more income because this is gonna be the thing that fixes your financial situation.

Fastest. You can only cut back so much and there becomes a point in time where you cannot cut back anymore. And so we need to make sure that instead we are growing our income. So number one is I want you to build a one month starter emergency fund. Look at how much you spend every single month, and I want you to save that much into a high yield savings account.

Now, if you are struggling to do this, and this feels like it's taking you a long time to do this, then I want you to do at least your essentials. Your essentials are gonna be housing, food, transportation, healthcare. Those types of things are gonna be the big deal that you wanna make sure that you are saving into an emergency fund, because this is gonna help you in a number of different ways.

One is, if you are working towards your financial goals and some emergency happens, it's gonna make sure it does not derail your progress. Those who are living paycheck to paycheck or who don't make a lot of money when an emergency happens, that is what derails their financial success. And so instead, I want you to make sure that you have that one month emergency plan in place so that you can not have any disasters.

Number two. Now, there are seasons of life where you're gonna have to do this, and there are seasons of life where you are not going to have to. But if you make less than $30,000 per year, then you need to track every single dollar. You need to know where every single dollar is going, and you need to understand where it's going.

I like a tool called Monarch Money, and with our link, I think it's like four bucks a month, and a very inexpensive tool to help you do this. So you don't have to spend so much time tracking every dollar, but I want you every single day to set up a budget. A zero based budget, and I want you to go in there and track every single dollar we have something called the five minute drill, where every single day.

We go in and we track where our money is going. And so this takes less than five minutes. In fact, I have this down to a, a flow where I'm doing it less than 60 seconds every single day. And I just take 60 seconds a day, make sure I look at all the spending that I did the previous day, and I categorize it.

And that way it goes into my budget. My budget is flowing perfectly, and that is the way to do this. So if you don't know how to do this. Just took look into a zero based budget. Uh, you can use Monarch money, you can use a spreadsheet, which is a free version, I think in power, which we'll link up down below.

Also has a free version of a budgeting planner, but just make sure that you are tracking every single dollar and where it's going. Now, if you are the good old fashioned pen and paper type of person, a great exercise is to actually carry around a little notebook for 30 days. And for 30 days, I want you to write down exactly where every single dollar is going so that you understand and have a good indication of what is happening there.

Number three. I want you to apply for every single benefit that you qualify for. So there are a lot of benefits out there. For lower income earners, I want you to apply for all of them. Maybe it's SNAP benefits, maybe it's Medicaid, maybe it's ship. But apply for all those benefits. Every single extra dollar that you can gain in this situation helps.

But your ultimate goal is not to stay with those benefits. No. Your ultimate goal is to get rid of those and instead increase your income over time. Number four is I want you to eliminate high interest debt. So if you. You're not relied on a payday loan. Maybe you have some credit card debt, maybe you have a personal loan, you do a lot of buy now, pay later stuff.

All of that stuff needs to go. It needs to make sure that we get this wiped out so that you can actually make financial progress. Because if you are a slave to the payments of debt, if you are a slave to these car payments, if you're a slave to high interest credit card debt, if you're a slave to some of this other stuff, you will never get ahead financially.

It is a pants on fire emergency, especially when you don't make a lot of money. You've gotta make sure that you are not living paycheck to paycheck, and one of the best ways to do that is to ensure that you are not taking on more debt because the borrower is a slave to the lender. I don't want you to have to do that.

Number five is making sure that your checking accounts and your savings accounts are both free. Do not pay expenses in your, in your different bank accounts. There are so many different free accounts out there. A lot of low income earners get targeted for bank accounts for some reason that have higher expenses.

I want you to make sure that you are not doing that. Number six is to make sure that you are getting your employer match. Your employer match is a hundred percent free money, and if you don't have enough money left over at the end of the month to invest anywhere else, at least get that employer match so that you can make some progress.

Even just getting your employer match is gonna set you up over the long term to have a great retirement. If you have a long-term time horizon, if you have 30 years, just your employer match alone is gonna help set you up and have some sort of nest egg so that you can live off of in retirement, especially as you're just getting started out.

Next is you need to focus aggressively increasing your income because if you're at this level, this is a level I do not want you to stay at, and the only way to pull yourself outta this situation is to increase your income. I'm gonna say that again for the people in the back. The only way. To get ahead if you're making $30,000 per year, is to increase your income.

That is not a livable wage right now in 2026, I don't care where you live. You can maybe get by, but that's about it. And you don't wanna spend the rest of your life just getting by. No. You want to thrive, and I want that for you. I want you to build wealth. I want you to feel zero stress and anxiety with money.

And so I need you to thrive when it comes to your dollars, and this is one of the most powerful things that you can do. And then number eight. Is you wouldn't avoid any new debt at all costs? No. Buy now. Pay later. No new car payment. No. Credit card debt? No. Getting a brand new mortgage when you make $30,000 per year?

No. We wanna make sure that first we are stabilizing our financial situation and getting all the steps correct and in order done, then we can go and start to go buy a house if you want to or figure out your car situation, but do not take on any more debt when you're in this situation until you start to increase your income.

Okay? That is the number one thing. And honestly, if you can avoid debt for the rest of your life, if you figure out a way to avoid that as much as possible, you will never go. Backwards back into this financial situation, and so I really, really would like for you to make sure that you are doing this also.

Let's add one more in, because this is one that I think for most of you out there needs to be said. If you are sports betting and you are making a low income like $30,000 per year, which a lot of people are, I see all these videos come across my feed where these guys will go and interview people at the mall and they'll say, Hey, how much is in your checking account?

And the person will come back and say, oh, I've got 200 bucks in my checking account. And then they'll go and say, well, this was the last person I talked to. This was their balance in their checking account. And the last person's balance was something like two or $3,000. And the person with no money in their checking account gets all excited.

And they say, what would you do if you had this balance in your checking account? And they say, oh, I'm, I would go put a $500 parlay down. Guess what? If you are doing that, if that's your mentality, you're gonna be broke for the rest of your life, and I don't want that for you. I want you to thrive and build wealth.

My entire goal is to make sure that you build wealth over time. We wanna create a million millionaires here at the Personal Finance Podcast, and the only way for you to do that is to change your wealth. Mindset. So I want you to read more books. I want you to have a financial education. Keep listening to podcasts just like this one, so that you can change your financial life forever because you have the opportunity.

Maybe you didn't grow up with money. Maybe you grew up poor your entire life, maybe you and your family. Every single person in your family, they never got an education and or they never even had a dollar to their name. And every single person in your family, when they die, they have $0 to their name. And in fact, a lot of them have debt.

Well, guess what? That's not gonna be you. You can make the change to your family tree right now, but it's up to you to make sure that happens. And so I'm pumped for you to get started right now. Each and every single person making less than $30,000 per year, you can do this. I did it, and it is one of the things that can change your financial life forever.

Let's jump to tier two. So tier two is $30,000 per year. Two $50,000 per year. A lot of entry level jobs. You may be starting at this level. A lot of my teachers out there, you may be starting at this level. A lot of folks out there, you probably started here. Or you know what it feels like to make this or less than this.

And so I wanna talk about this because this is the foundation building stage. This is the stage where we're gonna decide, okay, I've increased my income from tier one and in tier two, I wanna make sure that I can start to grow this even more. And so let's talk about that foundation and how to build that financial foundation.

So number one. Is since we already have one month of expenses in place for our emergency fund, now we need to get to three months. We have something called the 1 3 6 Method where you build one month, then three month, then six months. And the three months is where you can build out right here during this foundation building.

And then after that, we wanna make sure that we have our savings buckets set up. So if you don't have a high yield savings account set up currently, you wanna make sure that you open one up. There's a bunch of great options out there. Uh, just make sure they have buckets in place. So there's like Ally, there's Marcus, there's SoFi, there's a ton of different ones out there that have buckets in place where you can budget inside of your high yield savings account.

This prevents you from having to have 12 different savings account and syncing funds if you don't need to. Uh, just reduces complications. And that's all I'm trying to do for you here as we start to set up these savings buckets. And so once you have these set up, you may already have one month saved. And so now we need to get to three months of expenses so that we can protect ourselves and our financial.

And again, we talked about getting an employer match at the first level. Making sure you do all the things from the first level is gonna be very, very important so that you have all these structures in place. And ultimately we wanna get to a six month emergency fund. That is our entire goal because this protects you against life, but it also protects you against the number one threat to your income, which is job loss.

And job loss is one of those things that I believe over the course of the next couple of years, we're gonna see happening to a lot more people. We need to decide and bulletproof our finances based on that. This is not to scare you. This is reality and we need to make sure that we have protections in place and we are taking personal responsibility.

If it's to be, it's up to me and so it's up to you to make sure that you go out and take care of this. And so I'm gonna guide you through that on this podcast over and over and over again, you will hear me beat. This drum. And the reason for that is because there is going to be a big shift in the job market over the course of the next couple of months, and you need to be ready for it.

Next is to capture that 401k match. We talked about that in the first one, and then open up a Roth IRA. So anybody out there. In this range, the Roth IRA is a fantastic vehicle for you to invest your dollars. Why? Because the Roth IRA is the account where money goes in that's already been taxed. It grows tax free and you could pull the money out tax free.

But because you are not making a lot of money right now, what you can do is you can contribute to a Roth IRA and you can lock in the taxes for this given year. Meaning that you're paying taxes this year at a lower tax rate. And if you think you're gonna make more money in the future, then this is a great time to have a Roth IRA and start to fund your Roth.

Because at this income level, this is gonna make sure that you lock in those tax rates so that in the future tax rates, when you pull the money out, you're not paying any taxes whatsoever. And so this is a great time to look at this. Next is a attack. Any consumer debt that you have in place that is a high interest at above that 6% interest rate with either the debt snowball.

Or the debt avalanche method. Now, the debt snowball works just like this. You start with your lowest balance first, pay that off, and then make minimum payments on everything else. And so you pay off that lowest balance. And then that payment that you were making to that lowest balance goes to the next lowest balance, and it starts to snowball and grow how much you're making payments towards some of these debt payments.

This can help you tremendously. If you wanna pay stuff off fast, you wanna see progress. It's a very powerful way to think about this, and so I highly encourage people out there. If you are looking to get this debt paid down as fast as you possibly can, the debt snowball is a great option if you wanna stay motivated.

The debt avalanche is the faster method. So the way that you look at this is you go from highest interest rate to lowest interest rate, and you pay off the highest interest rate first and then move it on down. To the lowest interest rate. Now, for those of you out there who just wanna make sure you get this debt paid off, and you are thinking about the psychology of this, I think the debt snowball method is actually the overall best option for most people, and studies have shown this.

The reason why is because the psychology behind it allows you to pay off that debt faster because you're getting these quick wins. And quick wins are very important in personal finance. You wanna feel like you're winning because if you're stretching out the timeframe that it takes to get a win, it's gonna be very, very hard.

Number six is when you're at this income level, I want you to make sure that you understand the basics of investing. You should at least have an understanding of, you know, the different accounts that are available to you. You know, index funds and ETFs have an understanding of how investing works. It's all up to you to make sure that you have this happen.

You do not wanna rely on someone else. You wanna make sure that you are getting your financial education. And so I highly encourage you to just read a couple of books that are out there. Get started investing that way. And a great couple that I'll send you right now are the Simple Path to Wealth by JL Collins.

He was just on this podcast a few episodes ago, if you wanna check that out. One of our most popular episodes so far this year, and just an all around great author and a great guy. He sold tons and tons of copies of that book, and it is the gold standard when it comes to setting up your finances. The simple way.

So that's a great place to start. The Millionaire next door is another great place to start. If you wanna master your money, psychology and master the way that you look at your dollars and think about money, uh, that is gonna be a great place to start. John Bogle has a great book called The Little Book of Common Sense Investing.

This is a great one to start for index funds and ETFs. If you are brand new to investing, you read those three right there and you'd be ahead of a lot of folks out there when it comes to money. So I want you to think through that. I think that's a great place to start. Number seven is to protect your income with term life insurance.

So when you are looking at this, you need to at least have term life insurance if you have people who depend on you. This could be a spouse, this could be children, but if you have people who depend on you, making sure you have term life insurance is the best way to go. It is the cheapest. Option when it comes to life insurance, but it just protects.

If anything happens to you, then your income and the amount of money that you're making is going to be covered with a lump sum. With term life insurance, the way that term life insurance works is that you buy it for a term. So say for example, you're 30 years old and you want term life insurance from H 30.

To age 59. Well, you can buy term life insurance during that timeframe. Then the idea is by the time you turn age 59, then you're gonna already have a portfolio in place and your, your family is gonna be financially stable enough where they don't depend on you anymore. And so that's the goal and that's why term life insurance is so cheap.

I get it from PolicyGenius. That's where mine was from. Uh, and they're gonna help you compare different places to, to do this policy. Genius is where I recommend because they make it easy. That's where I got my. Term life insurance from. And uh, they are someone who is very, very helpful when it comes to this.

And then I would also create a basic estate plan. So a basic estate plan is gonna help you overall. Just getting a will in place is gonna help you ensure that all of your assets go to the right places and have an understanding of where they go. Trust and will is a very easy place to set this up. And a very cheap and inexpensive place to set this up.

If you go to an attorney, it's gonna cost a lot more, but trust and Will is a great place to do this, uh, and make sure you have this in place. And then the last thing I would do. Is make sure that now is the point in time where you need to make sure you have that financial protection plan. Because even when you're at the 30 to $50,000 income level, depending on where you live, you can start to really build a tremendous amount of wealth.

Because if you just take small amounts of money over time, they can grow to very large amounts of money. And the last thing I want you to do is have that derailed by making a mistake or some sort of financial scam that is out there. And so for us specifically on this show. We talk about financial scams a lot because they're happening more and more and more.

And so making sure you freeze your credit is a big portion of that. Making sure you remove your personal information from the internet, from these data brokers is a huge deal, and if you don't know what that is, you can use a service like delete me to go out there and get your personal information removed and what they.

Is they go to data brokers. I mean, you can do this right now. You can Google your name or your address and quotations, and you'll see a bunch of information pop up about you. And there's all these different websites that have your information. Well, if they continue to have your information, they can sell it to scammers.

They sell this information to other people who are willing to pay for it. And so if someone gets a piece of your personal information and then they go on these data broker websites and try to get the rest of your information. They can open bank accounts in your name. They can open student loans in your name.

They can open credit cards in your name. So it's very, very important to make sure you get that information removed, especially in today's day and age. As AI is advancing, these scams are getting very, very good. And I have heard of people getting their entire net worth wiped out just because they didn't have a financial protection plan in place.

Guys, this is so incredibly important, so delete me is the great place to do that. Uh, they make it so incredibly easy and we have a link if you go to join delete me.com/pfp 20. You can actually get 20% off of delete me, and that is one of the best services that I spend money on every single year. So I highly encourage each and every single one of you to do that as well because it is by far the best place to get your personal information removed.

Now, another thing to do, and this sounds obvious, but it's to make sure that you have very unique passwords for each and every single website. Too many of you are still using your dog's name or the same password that you've been using for the last 10 years or all this other stuff. No. There are so many different tools out there now that can help you generate unique passwords and have those passwords stored, and so you need to make sure that you are generating those unique passwords.

Just doing those three things is gonna put you 10 steps ahead of most people that are out there, but you need to start it now. And if you are at the higher income levels that we're about to talk about and you don't have that buy, golly, you are a huge target and you need to make sure that you have that because every single person now is going to be a target with the, in the age of ai, you need to make sure that you have this plan in place.

Tier three is folks making 50 to $70,000 per year. If you make that income level and you are in that income range, you need to do a number of different things. Number one is expand that emergency fund to six months of expenses. You need to make sure that you have six months of expenses and every single person listening at every single tier needs a minimum of six months expenses.

This is not a debate. This is not something that, oh no, I'm gonna do three months of expenses. No. In 2026, the need to have an emergency fund has increased dramatically because of the job market that is out there. I am not saying this to scare you. Again, I am saying this because it is the reality of the situation that we are in right now.

And so you need to make sure that you have this emergency fund in place at a minimum of six months. Now, can you go longer than six months? Absolutely, because anything beyond six months, I want you to find out what your swan number is. What does SWAN stand for? Sleep well at night. That is what the SWAN number stands for, and you can have nine months of expenses in place.

If you're a business owner. Maybe you wanna have a year of expenses in place, but you wanna make sure that you understand what your burn rate is every single month. And you have six months saved in a high yield savings count. Can you invest these dollars? No. You cannot invest these dollars. These need to stay in a high yield savings account because if the market takes a dip, the last thing you need is to lose your job, and then the market takes a dip and you have 50% of your emergency fund gone.

No. Instead, we need to make sure that we have this money in cash. Sure, you are just gonna be pacing with inflation in a high yield savings count, but you're gonna make sure that that money is safe and it is there for its intended purpose number two. Max out that Roth IRA every single year. So once you get to this income level, Roth IRA max out is at $7,500 per year.

I want you to try as hard as you possibly can to make sure that you max that out. If there are two people in your household, each of you should try to max that Roth IRA out. This is gonna help you tremendously when it comes to retirement and the sooner you can get the ball rolling and max out that Roth IRA, the faster this money is gonna compound and you can get that tax free growth and tax free growth is the most powerful methodology when it comes to.

The Roth ira. Now, if you are maxing out your Roth ira, you can also increase those 401k contributions. You're already doing the 401k match if your employer has a match, and so increasing those contributions are very, very helpful. Also, getting serious about your credit score is important during this timeframe, making sure that you, if you have a bad credit score, we need to get that credit score increased.

Why this could save you a million dollars over your lifetime if you have a good credit score. 'cause you get lower interest rates on your mortgages. You get lower interest rates on your car loans. You get lower interest rates on any other debt that you need to take out. And this is gonna be a very, very important metric that over time the difference between you having a lower interest rate can be hundreds of thousands of dollars, especially if you have a mortgage.

Number six is if you are in this situation and you're like, man, I can't get ahead. I still don't have extra cash on hand. I want you to review your insurance coverage. I want you to look at your health insurance. I want you to look at your auto insurance. I want you to look at your home insurance, and I want you to start shopping these things once a year.

It is time well spent where it's gonna take you a couple hours max, and I want you to get three different quotes from independent insurance folks if you can. Let's say, let's use car insurance for an example. I'm gonna put a link down below in the show notes that we use where you can compare car insurance rates.

Now this is a great tool if you are looking to reduce your overall insurance coverage. We'll put it down in the show notes, but basically what you do. Is you get a bunch of quotes from different providers instead of just going to State Farm and they tell you a price and then you just say, oh, okay, I'll just pay that.

That's what the price of car insurance is. No, you need to make sure that you are comparing different quotes. This is gonna save you hundreds of dollars every single month By reducing your overall insurance. You need to make sure that you are doing that. Number seven is making sure that you have some sort of system and bucket system in place.

If you did not do that upfront, we need to have that bucket system in place. And if you are eligible. Considering a health savings account is great to start at this level, meaning. An HSA or a health savings account is if you have a high deductible health plan, then this is the super retirement account is what we call it, because money goes in tax free.

You can invest it and it can grow tax free, and you can pull the money out tax free as long as you have a qualified medical expense. But the laundry list of qualified medical expenses is growing every single year. Amazon has this great page now where you can look at HSA eligible things, but in addition, there's things like treadmills.

I've seen Pelotons are HSA eligible now. There's just so many different things out there where you can find and increase the amount that you have in expenses based on having that HSA. Also is during this level is continuing that financial education, making sure that you are reading, making sure you're listening to podcasts, making sure you're watching YouTube videos on finance is gonna be very important.

So you just have that education in place. You don't have to be an expert. You just need to know the basics and have an understanding, because you can build a tremendous amount of wealth. Just knowing the basics. It's more so mastering that psychology and having an understanding of how you think about money.

Now, tier four, this is gonna be the tier. Where a lot of folks are getting some traction. This is where you could be getting traction in your financial life, in your career, and you could be seeing a big, big difference overall. So this is the folks making $75,000 per year to a hundred thousand dollars per year.

We are approaching that six figure mark and we wanna make sure that we are taking advantage of our finances based on that. We have a lot of listeners in this tier and so we wanna make sure that we are tra, making sure we're taking advantage of this. So this is the tier where I really want you to make sure.

That you are hitting at least that 15, 20% towards your retirement, uh, every single year. Our goal is at a minimum, we want you to save 20% of your income. Some of it needs to go to emergency fund, and then the rest of it can go to your investments. But making sure that you are saving a good chunk of your money in your Roth.

IRA. In your 401k and getting close to that 20% number is gonna be very important at this level. And also as you're starting to get to 20% maxing out that HSA is also very important if you have a high deductible health plan. In addition, if you have extra cash left over at this tier, opening a taxable brokerage account could be a great option, especially if you wanna retire early because you can pull down that money at any given time.

I know a lot of people who made between 75. To a hundred thousand dollars per year who have been able to retire early because they increased their savings rate and they reduce the amount they spent every single year. Early retirement is very possible at this level, and I think for most people out there, if you are aggressive enough, you can definitely make a big, big difference in your situation.

Also, let's look at optimizing our tax withholding at this level. We'll talk more and more about taxes as we get later on down the line here. But tax withholdings are gonna be important in this level because at this income level, you need to start having conversations with tax professionals and seeing if you can optimize some of your tax savings so you're not over or under.

Withholdings. And so making sure you look at your withholding, seeing how much you have in place so you're not giving the government a free loan can be very, very important. Also, at this level and every single person at the level before this, but also at this level, you need to make sure you automate everything.

All of your investments should be automated. All of your bills should be automatically paid and you just monitor it. Your budget should be, for the most part, automated the way that you think about money, the way that you spend money. Can be automated. There are so many different areas that it's very, very important that I think you need to automate everything.

Now we have a money automation checklist that we will link up down below in the show notes. If you've never automated your money before, I want you to check that out and see if it of of interest to you. Also, in Master Money Academy, we have a course called Automate Your Money in a. That helps you and walks you through the steps to automate your money over the course of just one single weekend.

So if you're interested, check out Master Money Academy, uh, down below. Next is I want you to start building additional income streams. So if you are someone at this level and any level below this, but. Someone at this level, additional income streams are really gonna help you accelerate your path to financial independence.

And I know for most people listening, we wanna get to financial independence as fast as we possibly can, or at least have the option to have financial independence if we want to. And maybe you love your job, you wanna continue working, but having that option can be really, really great. So looking into maybe freelancing or consulting or doing digital products or figuring out ways to integrate AI into your life.

We're gonna talk about AI a lot. In terms of increasing your income over the next couple of months, because it is the way to increase your income faster than anything, any opportunity that has ever happened over the course of the last couple of years. I highly, highly recommend you really work through this and find ways to make this work.

Number eight. Is then again, review your life insurance coverage because as your income continues to increase, you need to make sure that you have between eight to 12 times your income in term life insurance. And so making sure that if your income has increased, you increase the amount that you have within that life insurance.

Again, you can get up to a million bucks with policy genius, and I've seen it as low as $30. So it depends on your age. It. Depends on your health, but it is something that I think most people need to make sure that they're reviewing, uh, every couple of years to ensure that they're in the right spot. If you've gotten a raise recently, making sure you are careful with lifestyle inflation, making sure you are careful with increasing the amount that you're spending every single month is also very important at this level because there are way too many people making 75 to a hundred thousand dollars per year.

That's still a paycheck to paycheck. And every level above this, if you're living paycheck to paycheck, you really need to check your lifestyle inflation and your spending. It is very, very important to make sure that you do that. Alright, let's get to tier five. So at tier five we are gonna be making a hundred thousand to $150,000 per year.

And this I call these six figure foundation. Level, this is the level where most people need to make sure they are optimizing their financial situation. So one is I want you to focus on maxing out your retirement accounts as you, if you can, maxing out as many of them as possible. So the Roth IRA is at $7,500 per year.

Your 401k, and this is the big one, is $24,500 per year. Now, some of you may be saying to yourself, how am I ever gonna do that? But also I have kids and a family and all this different stuff. Well, if your household income is at that level, trying to get as close as possible to doing that, if you really want to get aggressive is very important.

If becoming financially free as your goal, then you really wanna get towards that. If not, make sure you're just at least saving that 20% of your income towards these accounts, and that's gonna help you get there. Your income increases. And so number two. Is, I want you to work with a CPA if you can. A CPA is gonna help you optimize your finances and is going to help you make sure that you have the overall best tax situation.

Now we have in Master Money Academy, we have this document that shows people what questions to ask your CPA. And why you would even want to have a CPA in the first place and how to interview a CPA. Uh, so if you're interested in that, make sure you join Master Money Academy. And again, for podcast listeners, we give you a seven day free trial down below.

So make sure you check that out if you haven't already, then implementing tax loss harvesting in your brokerage account. If you have a really large brokerage account, you've been, you've been at this level for a long time. Some of you I know out there are making between a hundred and $150,000 per year, and you've been making that amount for a very long time.

You've been increasing the amount that you've been making every year, but you've been in this range for a long time. And if you have, maybe you have a pretty large brokerage account now. Maybe you've been taking some of those extra dollars, you've lived below your means and you've been investing those dollars within tax loss.

Harvesting can be in consideration and you could talk to your CPA about that, but that is gonna help you when it comes to your tax situation. But I also want you to consider things like the Backdoor Roth. The Backdoor Roth. Could be, there could be, you know, optimal times for you to look at this as your income is this high.

Because if you think you're gonna continue to get raises and promotion and jump into the next levels, then the backdoor Roth may be something, uh, that we want to look at at the upper end of this range, because you're gonna start to hit those income phase out limits if you are at the upper limit of this range.

Also, as you can start to diversify into. Real estate investing. If you are maxing out some of those accounts, looking at real estate investing can help you with your tax situation. It can help you with some cash flow. It can give you some appreciation. There's a ton of ways to build wealth with real estate, and at this level, this is a great time to take some of your extra dollars and if you're interested in real estate going there.

Real estate is not for everyone, and I want you to make sure that you understand that. Fixing toilets, understanding tenants, managing a property manager, it doesn't matter. All of this is still a business, and so it's a second business. A second thing you have to worry about and a second household that you truthfully have to manage if something breaks.

It is your responsibility, not someone else's. And so if you wanna diversify into real estate, just know what you're getting into first. 'cause it is definitely more work, uh, than maybe some other stuff. Now, if you want real estate exposure, then you can also consider things like REITs. Those are great options if you just want the passive way to look at this.

Again, there's index funds and ETFs that have REITs in them, and there are other things that you can do your research on. Number six is to review your asset allocation at these, this level. Make sure your asset allocation, meaning the mix of stocks and bonds that you have in place and other investments, making sure it is actually aligned with where you are at your income level.

That is something everyone should do on a yearly basis anyway, but at this level, it becomes more and more important 'cause your asset allocation, it's what we call a million dollar money decision. When we talk about these million dollar money decisions, they are decisions that you can make that can change the trajectory of your finances by a million dollars.

And your asset allocation is one of those. We need to do that episode and do an updated version of that episode of The Million Dollar Money Decisions because it is one of my favorite topics to talk about, and it really opens people's eyes to the power of these big financial decisions and how they impact their bottom line.

Next is to protect your wealth with something like an umbrella policy. If you are getting to the upper level of this, if you've made this amount of money for a long time and you have a million dollar net worth, then you may wanna start looking at an umbrella policy and looking to see if you need that.

So do your research into umbrella policies and see if you need that insurance in place. For most people out there who are making more money or have a higher net worth and their in their net worth is increasing over time. That is when I would start to look at this. Once your net worth starts to hit a 800,000, 900,000 a million bucks, that's where you really wanna look at umbrella policies and see if it should fit your lifestyle based on your day-to-day actions and what you do each and every single day.

So that is tier five, is the a hundred to 150,000 level. Let's take a break and then we're gonna jump into tier six. Alright, so at the tier six level, this is gonna be people making $150,000 per year to $250,000 per year. This is what we call the wealth building phase because if you're in this range, depending on where you live, but pretty much wherever you live, you can start to build some sort of wealth.

If you live in New York City, maybe you have less leftover than someone who lives in Alabama. But at the same time, anybody making this amount of money can build wealth, and you should have something left over every single month. And so here's what I want you to do. For most people out there, you need to aggressively stack tax advantage accounts, meaning your 401k, your Roth IRA, your HSA.

This becomes increasingly important because these are going to be things that are gonna help you with your taxes long term. So this is the level where it starts to become a question and you need to talk to your CPA about this, about do you need to think through contributing to a 401k or a traditional IRA before you contribute to the Roth, or is it great to still continue.

Investing in the Roth, you need to look at your tax situation and start to have these conversations. Now, if you are a business owner, a solo 401k is a wonderful option. There's also a SEP IRA, and if you are someone who is a business owner, who has employees, a simple IRA is also another thing that you can look into.

These are all fantastic options that you need to take advantage of as much as possible, it's gonna reduce your overall tax bill, and you need to make sure that you are looking at this. Two is if your plan allows it and you're making this amount of money, try to execute a mega backdoor Roth IRA. Now, we've done an entire episode on the mega backdoor Roth IRA, but this allows you to get more money into your traditional IRA and some 401k.

Plans allow you to contribute after tax contributions that can also be converted to a Roth in the future. And this can add tens of thousands of dollars into your Roth thing annually, and so you wanna make sure you are doing this. Number three is if you are interested in real estate. Building a real estate portfolio intentionally at this level can be a very powerful asset class for those who are, uh, interested in real estate.

Even just having one to three rental properties can really help diversify your situation. If you are interested in real estate, it is not a requirement, and I don't think it's for everybody, but if you are interested in real estate, it can definitely be something that could be helpful. Number four is if you are feeling uncomfortable about the market.

You can also diversify outside of index funds. We mentioned real estate, maybe a small business, but diversifying some of your portfolio outside of index funds could be beneficial, but again. Not for everybody. Some people want that passive income. They want it to be completely passive. And so index funds are one of the best places for that.

And so you wanna make sure that you are looking that. Now, number five is very important, and this is where, at this income level you need to make sure that you are doing that. One is you need to run quarterly tax projections with your CPA. So my CPA and I, we meet quarter. And we talk through my tax situation.

Now I have businesses, I have a complicated situation, but for, not for everybody else, but for even someone who is just a W2 earner, you wanna run quarterly projections with your CPA to understand where you currently stand. You need to figure out, okay, well if I run a business, what are my estimated taxes going to be?

Am I on track with my estimated taxes? Am I on track with my deductions? Am I on track with making sure I take advantage of every single tax benefit that I can currently? Because this is gonna help you stay on top of this and ensure that you are making the right moves throughout the year. What way too many people do is they get to November.

And they get to December and then all of a sudden realize, oh no, I'm gonna be paying way too much in taxes. I need to figure something else out. Now they call up their CPA and then they try to do tax strategy within a month, and it is a very stressful time and it's very difficult to do within a month.

Instead, you need to have these quarterly meetings. So we call it the tax plan with my uh, CPA, but go find a CPA who will run these quarterly things for you and make sure that you have a plan in place to do so. Next is you can also set up things like donor-advised funds at these levels. If you are charitably inclined, if you are someone who is interested in giving money away to cost, as you believe in donor-advised funds can be something that can help you.

There's uh, companies out there like Daffy who can help you set this up simply. Then it will be really, really beneficial for a lot of people. And then number seven is you really need to, at this level, if you, and if you don't do this, you're gonna be very wasteful with your money, is you need to have.

Defined and clear goals with what you wanna do next with your money, because you're gonna have some excess cash on hand, and if you have that excess cash and you burn through all of it, you are working so incredibly hard for nothing. You need to make sure that you have a defined plan in place if you don't already have that, where it talks through, Hey, this is my investment plan, this is my spending plan, this is my tax plan.

All of these are super, super important to make sure you stay on track with your dollars going forward. And so as we start to think about this. I really want you to make sure that you have that plan in place. Now, let's jump to the next tier. Which is tier seven. Now. Tier seven is for folks making 250,000 to $500,000 per year.

As you can imagine, taxes become very important at this level. And for those of you at this level, and we do have a lot of listeners that I have spoken to personally at this level, folks who are in a really good position. But taxes are eating them alive. I have talked to people who listen to this podcast who make over a million dollars per year.

I have talked to people, listen to this podcast who make eight, seven, $600,000 per year, and I've talked to people on this podcast who have made a lot of them within this range, 252 $500,000 per year, and so you need to make sure. Number one, and this is what I've seen time and time again, is that you maximize every single tax deduction and credit systematically.

A CPA is the only way to really do this, to make sure that they are in your corner to help you with this. 'cause at this income level, every single deduction that you can find is worth so much more, and it's worth literally 35 cents or more in actual tax savings. It's because you're gonna start to get taxed more based on where you are at this income level.

And so you wanna make sure that your tax strategy is locked in. If you're at this level and you don't have a CPA, what are you doing? You gotta have a CPA in your corner. Uh, and I am not a CPA, I'm just a big proponent in saving money on taxes and not paying Uncle Sam every single dollar. And so that's for you because you could take those extra dollars and put them towards wealth building.

And again, I want you to become a multi multimillionaire. And so that's the overall goal. Next is you can also consider a defined benefit plan or cash balance plan if you're self-employed. So a cash balance plan is actually pretty cool. I had a couple of family members who owned businesses that did this last year, and they had a really high income year.

And so this allows you to have contributions far be beyond your standard 401k limits, and you can shelter hundreds of thousands of dollars from taxes annually by having something like this. And so these are great plans to look into. If you have a really, really big year and you are jumping into a bigger tax bracket, or if you're a business owner, uh, this can be really, really important to, for you to look.

Through that. The next one is to build a real estate portfolio with a focus on depreciation. So for folks in the higher income levels, we want to force some depreciation in some of these properties. And so there are things that you can do like bonus depreciation or cost segregation studies that are going to help you claim depreciation early on in the life lifecycle of that property.

And so really. If you invest in real estate, there are things like cost segregation studies that you can go out and get. It can help you make sure that you're in a place to get bigger deductions if you are a real estate investor. Also, if you own businesses, and a lot of folks who are in this income level, they own businesses, but if you do own a business, consider looking at an S corp.

If you're just a standard LLC right now, because an S. Corp can help you save a lot in taxes depending on how your business is set up. Talk to your CPA about this, but it does help a lot of folks save anywhere from 20 to $50,000 per year in taxes. Uh, if you are self-employed, also at this level, I would work with a team.

You don't just have to work with, you know, A CPA, but if you don't know what you're doing. Having a good advisor in place where you pay a yearly fee is gonna be something that could be very, very helpful as well because they can help position you and help you with tax planning, uh, when you are looking at some of your situation.

And then also at this level, you need to begin serious estate planning because when you're making this amount of money and you're taking a good chunk of extra dollars and putting it towards wealth building, you'd make sure that is protected. And so as you start to approach that million dollar mark, you need to have a trust in place.

Or if you own multiple businesses, you need to have a trust in place and or if you are someone with a complicated financial situation, you need to have a trust in place. Trust is gonna help protect you against probate. It's gonna help protect you against a lot of different things that could come down the line if anything were to happen to you.

And you want your assets to go to the actual people that you want them to go to. And so estate planning becomes very. Important. And so you can go to an estate planning attorney, just make sure they know what they're doing, interview a few different ones. 'cause that is gonna help you tremendously. Just protect your wealth, protect your assets, and you can customize these.

So if you have kids, you can customize the way that you give them money, if you're gonna give it to them, if there's charities, you can customize the way that you're giving to charities and if there are other things that you wanna get creative on. A trust allows you to get creative with your dollars in the way that you think about your money.

So trusts are very important in knowing, having someone with a lot of experience. Who knows what to do with trust is important. An attorney, for example, in my state where I live, uh, we paid our attorney about 6,000 bucks to create our trust. Uh, so that's around the range that it would cost, you know, in at least I live in Florida, so that's the range that we paid for, for ours.

Uh, there could be less or more that you pay in different states, but having a good one in place is somewhere around that range, some cost, way more than that. And I think if they. Charge a 20, 30,000 bucks, it better be pretty complicated for them to be charging you that. 'cause my trust is pretty complicated in and of itself.

And so I think for most people out there, just having the right mindset going into this is very, very important. Now, number eight is if you have a lot of extra money on hand and you wanna diversify, looking at alternative assets, I don't think there's anything wrong with that. If you wanna do that for most folks out there, you could just look at index funds and ETFs.

If you wanna, you know, diversify into the markets, you definitely can. You wanna diversify into real estate, you definitely can. But looking at things like small businesses, if you really wanna grow your wealth, can be something that is huge. Looking at laundromats or car washes or if you want to, you know, acquire some sort of small business.

Um, I think that is a great way to diversify it as one of the. Best opportunities that we are gonna have over the course of the next couple of decades. And so ownership becomes increasingly important in the increasing age of ai. And so I really want you to look at that if you can, and then automate philanthropy to align with your values.

So obviously if you wanna give to more causes that you believe in automating, that could be a very powerful way to do this. And so I highly recommend, uh, doing that with a donor advised fund or a family foundation depending on how much you're making. And that'll help you get to that point in time. Now, let's get to tier eight, which is $500,000 per year.

And this is for Legacy and Advanced Wealth Building. So number one is you wanna make sure that you have a plan in place on how you're gonna do this. Are you gonna go from accumulation to shifting to preservation, and then shifting to legacy mode. Those are the three modes that I believe most people into throughout their life when they are building.

Wealth is accumulation. Preservation and legacy the, and those three areas, I think are the three areas that you need to plan out for, and especially when you're at Tier A at this level where you're making $500,000 plus per year. I want every single person live, listen to this podcast to get to this level at some point in time in their life if they can.

Because honestly, the abundance that's out there is tremendous. But if you think you will never hit this. Nothing wrong with that whatsoever. You can build a crazy amount of wealth to become a millionaire making under a hundred thousand dollars per year and a multimillionaire under a hundred thousand dollars per year.

So this is something that if you are just a high earner, maybe you own a business or maybe you work for a, uh, you know, a growing company that's paying you a lot, maybe you're an executive, all of those folks, maybe you're an attorney, maybe you're a doctor making this amount of money. I want you to first realize is a blessing.

You need to make sure that you are a good steward with these dollars. You need to make sure you are a good steward with your money, and you are putting it in places that is going to benefit you. You did not work hard to get to this point in time to just waste all this money and way too many high earners at this level that I talk to and that I meet, there's a lot of them living paycheck to paycheck, and it breaks my heart because they have the greatest opportunity of their lifetime where they can take large chunks of cash and allow that cash to work harder than they ever could.

But instead they throw it at just random things like. Random private equity deals or just random investments that they have no understanding of. Instead of looking at ways that they could grow that money over time in a safe way, but also helps them accumulate wealth, that is the best way to look at this.

Two is establishing those trusts need to be in place. If you're making over $500,000 per year, uh, it is very important to have a trust in place and it's gonna have. All the information that you need in there, it's gonna help protect you. Implementing advanced tax strategies is very important at this level as well.

Your CPA and your advisor needs to be helping you with these tax strategies, um, so that you can make sure that you are paying less to Uncle Sam and more of that money yourself. Number four is I would say, to diversify concentrated stock positions tax efficiently. And so people can help you with this, but if you have just a bunch of wealth tied in up into a single stock or a single business, making sure you diversify out of that can be really, really important.

If all your eggs are in one basket, then you are at huge risk to market conditions. You are at huge risks to just a number of different things, and so you need to make sure you diversify out of those situations. Also number five is you can use annual gifting strategies to transfer wealth during your lifetime.

So if you're someone who is getting from, you know, that accumulation stage and moving on to the preservation stage, or you're still in the accumulation stage, but you just have more money than you need, then you can start to gift money to your heirs, uh, while you're alive. And I think that's the best way to do this, to be honest, is that you can see and help them through their financial situation.

A lot of people out there, what they do is they wait till they die. And a lot of times when they die, and especially if you die at an old age. Your kids don't need the money at that point in time. They've already grown up and they've already established themselves financially when they need it. As you know, in their twenties when they're paying off their student loans in their thirties when they're trying to figure out and navigate their financial life.

And so those are the times when your kids need it the most, and so you can figure out plans to put this into place where you can start to give while they are alive. Number six is I would build a personal board of advisors. Mentors are gonna be very important. I would develop, you know, business coaches or executive coaches to help you through tough situations.

I would have a CPA in your corner. I would have an advisor in your corner when you're at this high level and making sure that you put the, and position an advisor in place that is not just someone who is taking, you know, a huge percentage of assets, but if you can find someone who will you. Put together plans for you on a yearly basis and help you through that process for maybe a fee.

That is gonna be a really important thing that's gonna help save you a lot of money as you have a high income. And so all of these are really, really powerful. But having these folks in your corner can be helpful. Having an insurance specialist in your corner. Can save you a lot of money and maybe even a business advisor who helps you through all the, the things that you have in place and an executive assistant, all of those can help you save more time, so you can spend more time either focusing on where to put this income, where to grow your business, and or spending more time with your family and having that financial freedom.

That is the overall goal for most of us. And number seven, and I would highly encourage each person who is a really high earner to do this, is define your legacy intentionally. What do I mean by that? I mean making sure that you understand and think through your legacy a little bit. What do you want your legacy to be?

Meaning being a good steward of your money. How do you want your money stewarded. How do you want your dollars distributed? How do you want to be remembered? Because if you wanna be remembered for someone who just works all the time and you built off this really high income 'cause you're just constantly working and your, that's all your kids remember, that's what's gonna happen.

But if you are someone who wants to have this balanced life and you wanna be there for every single one of your kids' games, or you wanna be there for your, your spouse, or you wanna be there for your family, then maybe we need to define our legacy in a different way. And so I want you to think through this.

I want you to actually write this out on what you want your legacy to be. Think deeply about this and see where you land, because I think for most people, when you think about your legacy, it can shift the way that you act day in and day out. Listen, thank you so much for listening to this episode. We love doing these buy income episodes because I think they're really helpful for a lot of folks out there who are at different income levels.

'cause you gotta make different moves based on you looking at different income levels. So I think it's very, very important for most people out there. To think through where you are and where you stand. Now, if you are someone who wants to build wealth and you want a step-by-step financial plan, and you wanna reduce stress and anxiety around money, and you wanna have hope around your money, and you want to make sure that you know that going forward, you are confident in your financial future.

That's why I built Master Money Academy. Master Money Academy is a community. It is a place where you have access to all of our members who are all wealth builders, who are working on the same common goal to become financially free. We have the Wealth Builders journey inside Master Money Academy, which is the step-by-step guide to exactly what you need to do with your next dollar.

In addition, when you get stuck on a step, you can ask me live every single week during our coaching calls. I am on there every single week for our coaching calls, making sure I'm helping you as much as you possibly can. And throughout the week, people are asking questions. And the coolest thing about this is our wealth builders inside Master Money Academy are.

Are able to answer a ton of your questions because they've been with us so far and they know exactly what to do next. And so this has been people helping out other people. So if you're looking to grow your wealth, if you're looking to build your wealth, I invite you to Master Money Academy for podcast listeners, we give you a seven day free trial so you can see behind the curtain to see exactly what Master Money Academy is all about.

And we are growing every single month and it is so fun to meet every single one of you and to work on your financial plans together. So Master Money Academy highly encourage each and every single one of you to join and can't wait to see you inside of there because you are about one your away from transforming your finances, and that is what Master Money Academy is built to do.

Again, thank you so much for listening to this episode. Please leave a five star rating and review if you're getting value outta this episode or if you're watching on YouTube, make sure you're subscribed. A lot of you are not subscribed yet and so would love to see each and every single one of you, uh, subscribed.

It means the world to me. For those reviews and subscribing. So thank you again so much for being here, and we will see you on the next episode.