The Best Financial Strategies (BY INCOME!)

Transcript:

Episode of the personal finance podcast. The best financial strategies by income.

What's up everybody. 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 going to be diving into the best financial strategies by income. If you guys have any questions, make sure to join the master money newsletter by going to master money.

co slash newsletter, and you could subscribe and respond to any of those issues that come out every single week with your question, and you may get your question answered on the show. And don't forget to follow us on Spotify, apple podcast. Podcasts, YouTube, or whatever your favorite podcast player is.

And if you're getting value out of the show, consider leaving a five star rating and review on Apple podcast, Spotify, or your favorite podcast player. Now, today we're going to be getting into the best financial strategies by income. And as your income progresses over time, what you're going to learn here is that your strategies may shift.

Over time, depending on how much money you are keeping. So it's all about how much money you keep. It's not about how much money you make and you can make significant financial progress at any income level. Now, a lot of these things I'm going to be talking about, I want you to be doing this at every single income level, but as you start to progress and as you get to higher income levels, you need to make sure that you are.

Absolutely paying attention to some of these items, which is why we do these episodes. I want you to see, Hey, problems can shift and problems can change as your income rises and you need to be aware of very specific things. And because of that, we're going to be going through each and every single income level.

We're going to be going through 50, 000 a year, 80, 000 per year, and then 100, 000 plus per year. And some of the things that you need to be looking at there. So love doing these by income level episodes without further ado. Let's get into it. All right. So we're going to be starting at the 50, 000 or less income level.

Now, this isn't a very important income level for most people. Maybe you have an entry level job or you've been working at your job for some period of time and just have not grown your income as much as you've wanted to. And we're going to talk through how your income is a huge catalyst to building wealth.

But what really matters is how much of that income you actually keep. You know, You can make tremendous progress on wealth building, making 50, 000 or less per year, depending on where you live. Now, a lot of these incomes are location dependent because when I talk about 50, 000 per year, if you live in the middle of Silicon Valley or you live in New York city, maybe that's just not a livable wage and you need to focus on growing your income.

But if you're somewhere on an average place in the U S maybe it's the Midwest, maybe you're in the South. Then you can really live on 50, 000 per year and not have a ton of different issues. And so today, what we're going to do is we're going to dive into each of these and we'll start at 50, 000 and we're going to show you exactly what to do.

Now, the baseline for all of these is number one at the 50, 000 level, but this is really for every single income level is you need to build your financial foundation by using the one three, six method. Now the one three, six method is our emergency fund method, meaning that you need to first save one. So one month of expenses need to be saved up before you do anything else whatsoever.

And so once you have one month's expenses saved up, you want to save this in a high yield savings account. Now, what does the emergency fund do? The emergency fund protects you against life. And when you were at this 50, 000 or less level, these dollars matter so much more and having financial protection is way more important than anything else.

Why is that? Because you're not going to have a big direct deposit coming in every couple of weeks that can save you. If some emergency arises instead, you've got these smaller deposits coming in because you make less income. And because of that, we got to make sure that we have financial protection in place so that we do not get derailed based on something happening in life.

It's not if something is going to happen in life, but when will something happen in life? We need to prepare for that. The emergency fund does that for us. So having one month of expenses saved up first before we get to the next step is going to be really important. After you have one month of expenses saved up.

Now it's time to focus on any high interest debt that you have accumulated. So this can be things like high interest debt from credit cards or from personal loans, or this can be things from even a car loan. Any interest rate above a 6 percent interest rate outside of your mortgage. I want you to focus on paying off because that is considered high interest debt.

And your dollars are going to be way more productive. Paying those high interest debt options off instead of going to some of these next steps. So you get that high interest debt paid off. If you have credit card debt or anything like that, that is killing your wealth building ability. And at the 50, 000 level, it is much harder to catch up.

So you need to make sure that you are throwing as many dollars as possible you Towards that high interest debt. I cannot stress this enough debt will destroy your wealth building ability. You need to make sure that you get rid of it. Now, not all debt, high interest debt is what I want you to focus on.

If you have some low interest debt, we can push that off to later on down the line, because we have more important things to focus on if you have that low interest debt. So once you get that high interest debt paid off, we need to move on to saving up three months of expenses in our emergency fund. What that is going to do is allow us to accumulate these funds and start to protect us against major things in life, like a job loss, as we start to progress through some of this.

So three months of expenses in a high yield savings account. Once you have that, then we can start to really develop a plan to start investing after three months. And so we're going to talk about in a second, how much you should be investing. And then ultimately your goal is to get to six months of your emergency fund.

I think that is the minimum of where your emergency fund should be, but you're putting a portion towards investments in a portion towards that emergency fund. And you're starting to grow your wealth over time. And so using that one, three, six method is going to be the number one thing at any income level that everybody needs to be doing.

Next, we need to make sure that we have a spending plan at 50, 000 or less. When I had my first job and I was making less than 50, 000, the most important thing I did was have a spending plan. I knew where every single dollar was going. Now, why is this so important? It's important because these dollars really matter.

They make a huge, significant impact on your life. Every dollar that you can save at the lower income level. This is why income is a huge factor to building wealth because you can grow your income. You can really enjoy life more and spend more freely as your income rises. But early on when money is tight, you need to make sure that you have a spending plan in place.

Now my favorite tool is Monarch money to do this because it automates the process. So you can set up a budget in on Monarch money and then you can go in there And it will start to automate your budget for you. So you're not in there just kind of checking categories all the time. You can make this part of your weekly or monthly review is to go back in there and start to check some of those categories.

So Monarch money is a great place to do this, but every dollar counts. Every dollar you can squeeze out means that's more dollars you could put towards your freedom, put towards investments. It means more dollars that you can put towards things that actually matter or more dollars you could put towards things that you value, things like your vacation or your hobbies.

This is why we really need to have a spending plan, especially at this level. It is more important to be more granular at lower income levels. And then we can focus our time later on, on growing that income so that we don't have to worry so much day to day, week to week, month to month. So make sure you have a spending plan in place.

Again, if you don't know where to start, just look at Monarch money. We have a link down below. They're a sponsor of this show. Uh, we have a link down below that you can check it out and get a 30 day free trial. So make sure you check that out. If you've never used Monarch money for, is one big thing that most people don't understand is when they are at this level, a lot of people, when you start to review their finances with them have no idea how much money they spend on groceries.

That's the number one shock factor I've noticed is that people just have zero idea. And then you start to. Added up every single month and all of a sudden like, Oh, my goodness. I had no idea I was spending this much on groceries. So I want you to be aware of your grocery bill. Being aware of your grocery bill means a, I need to see, am I spending what I think I'm spending?

B, I need to set a plan in place so I don't overspend on groceries and see if I am overspending on groceries. I need to change either my shopping habits or where I shop. So I still, even today as a millionaire, I still shop at Aldi. And the reason why I shop at Aldi is because the costs are significantly lower than anything else in my area.

Now, a couple of things that I do is I'll buy in bulk things like meat. So I'll go to either Sam's club or Costco and buy all my meats for the month. Typically, so I'll buy a ton of stuff. I have a freezer in my garage and I'll buy a ton of different meats and then everything else fills into place. I shop at Aldi.

And the reason why I do this is because I can save hundreds of dollars every single month just by shopping there. And I will still do that to this day. But I started doing that when I was making 33, 000 per year at an entry level job. And so this is a habit that I developed over time and it really helped me save more money.

If you're a person who is sitting there and you're saying to yourself, Hey, I can't max out my Roth IRA. That's one of my big goals, but I just cannot figure out how to get money into my Roth IRA. Look at your groceries first. See if you can change some of those financial habits. That's going to be something that is big for a lot of people.

The next thing is I want you to pursue certifications to increase your income. So no matter what level you're at, if you're at this 50, 000 level, I want you to see what certifications you can get that can help you in your current job, increase your income. Maybe this is something if you're in finance, you can get some excel certifications.

Maybe this is something if you're in nursing, you can get additional certifications based on nursing. Maybe this is something if you're, you know, In the blue collar job, maybe you're a plumber. You can get additional certifications in plumbing so that you can do commercial jobs or whatever else it can be.

I'm just making stuff up here as I'm talking through this. But are there additional certifications or education requirements that you can meet that will allow you to earn more money? Now, I'm not talking about going back and getting a four year degree and going, you know, 100, 000 in debt. I'm talking about things that you can do over the course of the next year that will guarantee that you make more money.

I want you to look into that because increasing your income is the biggest thing. I want you to focus on at these levels. We need to grow our income. It's going to help us a invest more be put more in our emergency fund. See, spend more on the things that we love and allow us to really enjoy life more as time goes on.

Six along that same token. I want you to spend money in. And I want you to spend time on your personal growth. The number one thing that I did when I was making less than 50, 000 per year is I started the book per week habit. Now what that did was it opened up my mind to the amazing possibilities that there is money everywhere to be made and there was wealth all around.

All over the place. And that's really the impetus of how this podcast was even created is I read so many different books, hundreds and hundreds of books. And all of a sudden I had all this knowledge and I was talking my friend's heads off all the time about personal finance. And I said, Hey, let's just help other people instead.

And so we started this podcast off the stuff that I learned based on reading books and reading all these different things. And my personal growth skyrocketed because of that. And when I started doing this, all of a sudden my income started to grow as well. So spend money and energy on courses or books or things that are going to help you learn more.

It's going to make a significant difference. Now you can also focus on specific skills. So focusing on high demand skills like digital marketing or coding or project management or focusing on sales or negotiation or All of these are really, really going to matter going forward seven is if you're not getting your 401k match and your employer offers a 401k match, make sure you get that 401k match.

This is free money. It should be the first thing you do even before you save that one month of expenses. Your emergency fund is always get that 401k match. This is going to help you start to build wealth early on, get into the investing habit. It's actually an Automatic investing habit that allows you to grow your wealth over time.

It is significant what the difference in the growth of your wealth is over time, just by getting your 401k match, make sure you get your employer match. It is so incredibly important and it is absolutely free money. Do you like free money? Cause I love free money. And so your 401k match is free money.

Number eight, start a Roth IRA. If you're at this income level, I want you to start a Roth IRA because you've already been taxed in the money. So money is going in. That's already been taxed. And guess what? You don't care about getting taxed on that money currently right now, because you're planning on making more money in the future.

And then what's going to happen is once your money is in that Roth IRA, it grows tax free. So if you make more money in the future, those dollars are completely tax free, even when you withdraw them. So start a Roth IRA, especially at this level to make sure that you are starting to grow your wealth. And that is the first place I'd be putting my dollars is a 401k match.

Then once I have that three months of emergency fund expenses, I'd start funneling it into the Roth IRA. It is a. really powerful account. It is so amazing what you can do with the Roth IRA. I've talked about this a number of times, but if you max out a Roth IRA over the course of 30 years, you're going to have over a million dollars in that account and over 800, 000 in that account is going to be completely tax free.

You want to make sure you're taking advantage of a Roth IRA. It is one of the best advantages, especially even at the 50, 000 or less level that you can go after and really make a big difference in your finances. Nine, I want you to start to think about and we have an episode coming up on different income streams and we've had a bunch in the past as well.

So make sure you're subscribed to this podcast because we have a bunch coming up soon, but I want you to start to think about and develop an income stream and maybe you try an income stream and it just isn't working out for you. You're not feeling it. It's really not working and you feel like, Hey, I've been pushing at this for a year And I'm really not making much money.

Well, then it's time to move on to the next one, because as you start to develop this, I went through a bunch of different ones before I found some that actually started to work into click. And really what you're doing is you're developing skills, but I want you to try one at least this year and see if you can develop one income stream that can earn you just a little bit of money.

Let's make a goal and start with the goal of making, you know, a hundred dollars, 200 per month. What is your goal and what do you want to get to? Maybe you just want to pay your mortgage with a second income stream. That'd be an amazing goal. That was my first goal was to figure out how can I pay my mortgage with a second income stream.

Once I achieved that, then the goal started to rise over time and you're going to see the possibilities of how this can work. Maybe you don't have a lot of time, so you want to do an internet business and leverage that. Maybe you have a little more time and you want to do some sort of physical or service based business that you can probably earn immediate income from.

But think about exactly what you want to be doing as a second income stream. Start trying stuff, try one at a time, focus on it, and then try to grow it over time. I think it's going to make a big difference on how you think about life and how you think about things and how they work. And the last thing is once you start investing, I want you to try to invest at least 15 to 20 percent of your income into.

Income producing activities, meaning things like stocks or real estate or whatever else you want to invest in. Now, one of our core beliefs here is that you need to invest at a minimum 20 percent of your income, but as you're starting to get some of these things done, 15 to 20 percent can help you kind of grow this over time.

If you want to start at 15 and start to increase it by 1 percent every single month or every other month till you get to that 20 percent level. That is completely okay with me. But just knowing if you start at 15%, we want you to get to 20 percent over the next couple of months and or year so that you can really start to grow your income.

Your savings rate is the catalyst to how soon you can retire. We've had a bunch of episodes on this, but it shows you it is the catalyst to how soon you retire. The higher your savings rate, the sooner you can retire. And so you need to make sure. That you were looking at this because your savings rate really, really matters.

So starting that 15 to 20 percent goal now, starting it early, starting it when you are making less money than you will be in the future is going to be really, really powerful habit that is going to carry you through your entire life. And as your income grows, that 20 percent grows with it. And as you start to really think about, Fuel that fire.

You're going to see these retirement accounts and all your other investment accounts really start to grow over the course of the next decade or so. So really important stuff to make sure that you are doing that as well. So this is the 50, 000 or less level. These are the 10 strategies I'm giving you at that level.

Next, we're going to go to the 80, 000 level and see. What's going to change here? All right. So now we are at the 80, 000 level and everything that we talked about in the 50, 000 or less level is going to apply to the 80, 000 level, meaning like, Hey, we got to pay off that high interest at that's always our number one priority.

We got to make sure we have an emergency fund in place. We got to make sure that we're doing some of these core things, but then beyond that, there's some other things that you need to be doing. Now, there are six numbers that we talked about in a previous episode. You need to be tracking. And one of those six numbers that everybody should be tracking is net worth.

At the 80, 000 level. I want you to make sure that a hundred percent of the time you are tracking your net worth. Maybe when you're at the 50, 000 or less level, you're like, I'm just trying to hustle and try to get this stuff going, uh, but really you need to be tracking your net worth at every level, but at the 80, 000 level, there is no excuse for you not to be tracking your net worth and you can do it with tools like Monarch money that we suggested earlier, you can do it with Other tools like empower as well.

And these will automatically help you track your net worth. One cool thing about Monarch money and their network tool is that you can put in like your VIN numbers of your cars and it'll pull the blue book value of your car and even add stuff like that into your net worth number. So there's some pretty cool stuff that they have a tool wise at Monarch money, or you can just do it in a spreadsheet.

If you want to use a spreadsheet, you can start to adjust that spreadsheet every quarter or every year, and just keep tracking that net worth. Why? Okay. A. It motivates you. So it motivates you to see that number go up and you may have a negative net worth when you start. But over time, you're gonna see that negative net worth get to zero.

And that's a huge milestone if you started with a negative net worth. And then you're gonna start to see it go positive. And this is so powerful to watch this stuff grow over time. And so your net worth is that financial scorecard. But there are six other numbers we talked about. For example, like your savings rate, things like knowing what your income is.

And so talking through this stuff is really important. You need to be tracking all six of those. If you haven't checked out that episode, make sure you go and check that out. We call it the financial scorecard, and it's for a very specific reason. We dive deep into it in that episode. Also, at the 80, 000 level, I want you to track your expenses.

I want you to think through this monthly. When you track your expenses, I want you to say, Hey, Which one of these expenses is just unnecessary spending? What subscriptions do I have? That's unnecessary. Where am I spending unnecessarily? Because a lot of people at the 80, 000 level who cannot build wealth, or they can't put dollars towards investments, or they can't put dollars towards things that they actually value is typically because they also have unnecessary spending.

And so it's, again, this is location dependent. So 130, 000, but it just depends on where you live, but. 80, 000 per year is that mid range level where you really need to be thinking about, Hey, is there places I can cut back spending? And sometimes there is, but say, for example, you have two or three kids.

They're in daycare. Hey, the struggle is real. When you have kids in daycare, I know how expensive that can be. It is one of those things where there's not many places that you can cut back and you may not be able to find places you can cut back. So then our focus needs to go towards, well, how can I Earn more because now I need to earn more income because I can't cut back anymore.

There's nothing else I can cut back. And so I need to earn more. And so thinking about this, you know, we need to track those unnecessary expenses and then we can make financial decisions based on if we can cut back or if we cannot cut back going forward. At the 80, 000 level, I also want you to be contributing to multiple retirement accounts.

I want you to be able to max out that Roth IRA, but in addition, also start to contribute to your 401k, 403b, whatever you have at that pre tax level is starting to contribute to some of those retirement accounts. And if you're a really good saver, maybe you start to add money into your HSA and, or even your taxable brokerage account.

These are all All great strategies that you can use, but maxing out your retirement accounts or getting as close as possible to maxing them out is going to be a really powerful strategy at this level. And one thing to note is when I'm talking about these levels, I'm talking about per person. So you can look at it as a household income, but I'm really talking about per person in your household.

So if you're an individual. And you're making 80, 000 per year. That's what these strategies are for. But if you're married, maybe you have two incomes coming in at 80 grand a year. So we want you to be able to max out some of this stuff and start to really make progress on things like your Roth IRA, your 401k, or get as close as possible to maxing that stuff out.

Number six is I want you to be saving at least 20 percent of your income, meaning that when you start to save and start to build wealth, you need to have 20 percent or more going towards either building up that emergency fund split off into building emergency fund and investing and or all of it going towards investing depending on what stage you are in in the one three six method phase.

And so because of this, you need to save a minimum 20 percent of your income. I want you to get to 25 maybe even 30 eventually, but at a minimum when you're at this 80, 000 level, I want you to save 20% Towards your future self so that you can start to build a tremendous amount of wealth and at the same time, you'll be able to retire so much sooner at that 20 percent level where you're not working 40 plus years anymore.

Instead, you'll be working a little less than 30 years because you started to save 20 percent of your income. And then lastly, if you are maxing out all of your retirement accounts, if you're a really good saver, and you're a really good investor, and you're maxing out those retirement accounts, then start to look at a taxable account as well.

Start to get some dollars in that flexible taxable account so that if you decide, Hey, maybe I want to retire early, then you'll be able to do that and utilize that taxable account to help you bridge some of the gaps. When you start to think through that process, that is another place to go. When you're at that 80, 000 level is to see, Hey, If I'm maxing out both of these retirement accounts, can I go to the taxable brokerage account as well?

Now, when you're investing in these accounts, I like to invest in index funds, low cost index funds and ETFs. That is my favorite way to invest. That's the way Warren Buffett invests his family money. And so there's so many different things that you could definitely be doing there, but it's very important to make sure that you're investing in index funds and ETFs.

If you don't know how to do that, we have a course called index fund pro that teaches you exactly how to do that. You just go to master money. co slash courses, and you'll be able to see index fund pro. Now, two more things at this level is one, you need to make sure that you have an established estate plan of some sort.

You need to do this at really every income level, but at 80, 000, you need to have some sort of estate plan in place. Meaning you either have, I have a will in place, or if your net worth is above a million dollars, then maybe considering a trust, maybe the next option to go. Now you can do this a couple of places.

You can go to an attorney and talk it through with them. You can go to a place like trust and will, which is an easy place to do it as well. I'm not affiliated with them, but they are very easy to use. Uh, and so between those two places, that's a great idea. Great place to start as well, but you got to have a plan in place in case something were ever happened to you.

In addition, along those same lines, you need to have a financial protection plan in place. I talk about this all the time because it's so incredibly important. There are data breaches happening left and right. And we need to make sure that we have a plan for them. And so making sure that you have things like freezing your credit, making sure you have a very specific password system, making sure that you are using two factor authentication and doing all of these different things that we always talk about is really important.

And one of the biggest things that you need to be doing is removing your personal information from online. Now we talk about this all the time because so many data brokers out there that are pretty scammy, in my opinion, have your information and you need to get it removed so they do not. Sell your information and get it into the wrong hands.

And the way that I love to do this is through delete me, delete me, helps me remove my personal information on the internet. It's probably the cheapest way to do this. And it saves you hours and hours of time every single month because they are continuously monitoring these data brokers to make sure your personal information is removed.

So. If you're serious about your financial protection plan, make sure you go to join, delete me. com slash PFP 20 and you can get 20 percent off any delete me plan that they have available through that link. But I love delete me because of how much value they truly provide and how much time they actually save.

So your financial protection plan is really, really important. We have. Other episodes talking in deep diving into how this works. So make sure you check those episodes out as well. But delete me by far as my favorite service to help you through that process. And then having some identity theft protection and all those different things will make a ton of sense.

So in those episodes, you'll kind of see us deep dive into that as we progress through this. But you got to have that financial protection plan in place, especially at this 80, 000 level. You have more to lose. And as you start to build more wealth over time, really at every single level, you need this. But especially you need to have this 100 percent done at the 80, 000 level.

So those are two other things that a lot of people don't talk about or think about, but you need to have those in place if you're really serious about your finances. Now, let's jump to the six figure level. So now we are at the 100, 000 plus level. Now, Location dependent. Again, if you're in New York City, maybe this is not as much as, you know, somewhere in Alabama, for example.

But if you're making six figures, if you're making a high income for your area, this is going to really make a huge difference in what you can do with your money. And there are some things that you really need to focus on as you start to get to that six figure and beyond level. Now, six figures, eight.

What it used to be. We all know that, but at the same time, there are some areas where six figures is still a big income and you can do a lot of stuff with six figures, depending on what your lifestyle is. If you're a single person making six figures per year, you can do a lot of really cool things depending on where you live.

All of income is location dependent. Now let's talk through this. The first thing you need to do is you need to understand your lifestyle creep. And this is why it is so important to kind of control and understand how much you make every year and then how much you're spending every single year. And I'm almost a huge proponent of, Hey, adding up how much you spend every single year as a percentage and monitoring that over the course of the next couple of years.

That's why I love these automated tools that are coming out now, like Monarch money, because they can actually monitor how much you spend every Year over year so that you can see, Hey, my spending increased by 20 percent over last year, my lifestyle is starting to inflate and it's starting to creep up.

So how do I combat against this? And so if you don't know what lifestyle creep is, what that means is that as you start to make more money, your lifestyle also creeps up with it. So maybe you get a promotion and you start to make, you know, 15, 000 more per year and all of a sudden you buy a brand new car.

But Well, now your monthly expenses went up 600 per month, depending on how much you finance on that car. And as this starts to progress, then you say, Hey, well, now I can finally afford to do that outdoor kitchen remodel. And so you do the outdoor kitchen remodel and your expenses go up per year. Based on that, you spend a little more on Amazon.

You spend a little more at target. And so your lifestyle starts to creep up over time. This can really sneak up on you. Now, let me say something right now. I am all for lifestyle creep. I want your lifestyle to creep up as you start to make more money, but I also want you to increase the amount that you're investing over that time frame as well.

We're not here to restrict you whatsoever. In fact, I want you to spend lavishly on the things that you love. And so as you start to make more money, make sure you set aside more money To spend on things that you love, to spend on your hobbies, to take extra vacations. I want that for you. That is what money is there to do.

Money is a tool to get you what you want in life. That's exactly what it's there for. It's also a tool to help reduce your stress and anxiety. And if your lifestyle creeps up too high, you're going to start to get stressed about money. You're going to start to get anxious about money. So making sure you control this and just understand what the heck is going on is half the battle.

Then once you understand it, then you can make adjustments based on how your lifestyle inflates. And what we really want to do is we want to spend money on things that we value. We have an episode coming up with Jen Smith where she talks about how to spend money on things that you value. And I'm really excited for you guys to hear that one because we kind of talked through it, how she developed her plan, how And so that is a really cool episode as well.

Value based spending is what we do here at the personal finance podcast and is what I want you to think about when it comes to spending money. Number two is at the hundred thousand plus level, the six figure level, I want you to start to target financial independence. I want you to have that number in your head and you should have this at every level again, but I want you to really make sure that at this level, you 100 percent have a number in your head of what you want to be spending in retirement.

Now we have another episode coming up. Make sure you're subscribed to this podcast. We have another episode coming up, talking about how to figure out how much you're going to be spending in retirement by age. So I'm really excited about that one. It is going to really walk you through step by step, how to figure out how much you're going to spend in retirement.

We're going to factor in inflation. We're in some about all those different things. So you know how to figure out your retirement number. So let's say for example, you want to spend. 80, 000 per year in retirement. The way you get that number is with the 25 X rule. So you say 80, 000, you multiply that by 25 and that's going to give you 2 million.

That's how much you need invested in your retirement accounts in order to be able to retire. If you want to spend 80, 000 per year, you can subtract social security and some other things if you want to, but that is where you need to be. And this is based on something called the 4 percent rule and the 4 percent rule states that you can draw it on 4 percent of your portfolio.

Every single year. So it's just the math reversed. And so because of this, the 25 X rules, the quick and dirty math, it's not perfect. You got to factor in a bunch of other things, but you just got to make sure that you know what that number is. At this six figure level, we are starting to get to the point where we can take bigger chunks of money.

Put them aside and we can buy our freedom back. And that's the number one goal is as you start to make more money, the reason why you're doing this is so you can buy your freedom back. So you don't have to work anymore. You can have that F you money. You can have that available to you. So you don't have to work another day in your life.

So making sure you have your financial independence number is really important because that is your North star. And I want you to have that North star ready to go. So you do not have to second guess a, am I saving enough money? I have too many people come to me. Okay. Later on in life, and they don't know how much money they need.

I want you to target as soon as you possibly can. And if you're starting late great This is a great time to target that number as well So that you know where you need to go over the next decade or so The next thing I want you to think about is I want you to think about as you start to invest more You need to be maxing out those retirement accounts.

You know, they're 401k Roth IRA, even getting more dollars into that HSA. And if you are maxing out those accounts, let's say, for example, you're making, you know, high six figures, you're making two, three, four, 500, 000 per year. And we have listeners who make that much. And let's say you're making that much.

Now it's time to start to think about other areas to put your dollars in. Real estate is a great play. If you're looking for the tax benefits, if you're looking for cashflow, if you're looking for appreciation, cash flowing, real estate is an amazing place to put your money, but. But it's not for everyone.

A lot of people, you're going to get phone calls. You're going to have to deal with tenants. You're going to have to deal with toilets, like they always say. And so it's really not for everyone. You got to make sure that you want to do that, but you can look at other ways to invest your dollars as well.

Going towards that taxable brokerage account and making sure you're buffing that up and building that up is huge. The HSA is really important too. And so we've talked about that a number of times, but I really want you to have your HSA early on because healthcare expenses are rising so incredibly fast.

And you can invest those dollars and it also can turn into an additional retirement account. So the HSA is what I call the super retirement account. It's probably my favorite account overall because it has triple tax benefits. And so over time, you're going to make tremendous, tremendous progress just by having that HSA really, really love that stuff.

But start to allocate an increased percentage of your portfolio towards your freedom. Start to buy back your freedom day in and day out. Increase the amount that you're investing. You want to increase it every single year by at least the inflation rate, but I want you to bump it up every single raise you get.

Take 50 percent, put it towards those investments. Take the other 50 percent, And then you can put it towards yourself, your spending and having fun, whatever else you want to do. But diversifying some of your investments as you start to make more money is going to be really, really important. Next thing is I want you to start to think about, hey, do I want to start planning for long term goals?

I'm maxing out all my retirement accounts or I'm taking care of my retirement. I'm hitting the goals that I need to hit. Now it's time to think about, hey, what long term goals do I want to hit? Maybe it's starting 529 plans for your kids. Maybe it's starting investment accounts for your kids where you want to build wealth for your kids over time in a brokerage account or a Roth IRA.

If they have earned income, uh, maybe it is thinking about wedding savings. For example, uh, wedding costs are rising significantly every single year. If you know that your kids are going to have a big extravagant wedding and you're going to be paying for it, then that might be something you want to start allocating dollars for as well.

So thinking about and planning for those future expenses. Can be very, very important. And I think a lot of people need to take that into consideration, um, is having specific savings or investment accounts for some of those future planning things. I love the five 29 plan, a flexible five 29 plan for college savings.

I love taxable brokerage accounts for investing for your kids. We've talked about that a number of times. And so thinking about some of this stuff is really, really important. Next thing is I want you to start mastering salary negotiation and networking to earn even more. The more dollars that you can earn at this level means really as long as your expenses are taken care of, that is just sweeping more cash into income producing activities that are going to help you retire even faster.

And so learning to master salary negotiation and learning that skill is going to be really important. A great. Book on this is a book called Never Split the Difference by Chris Foss, and he goes into a bunch of different strategies, things like mirroring, for example, that teach you how to negotiate with other people and understand where they are coming from.

And negotiation is really a collaboration. And so that book kind of dives deep into a bunch of strategies that he used as a high stakes negotiator. It is one of my favorite books on negotiation. Make sure you check that one out if you're interested in learning that Negotiation is one of those skills that will take you Take you so incredibly far when it comes to building wealth that you really don't understand the power of it until you start doing it.

The second one is networking, making sure that you are networking with other people is I cannot stress enough how important that is. And so spending time, Hey, maybe just taking people to lunch, maybe going out to eat, maybe going to networking events with other business owners or entrepreneurs or other people in your field.

Networking is so powerful to your longterm success. You need to make sure you are networking In your field, in order to be successful, it's going to help you tremendously earn way more income by networking. So I want to make sure that you focus on those two skills, especially at this level. Also, a lot of the critical skills like sales, are going to be huge as well.

And then lastly, is if you're interested in it, we talked about real estate, but if you're interested in it, consider, you know, buying businesses. Businesses are a huge opportunity right now, and I really think it's one of the best opportunities out there where you can make the most money, but you have to spend a lot of time and energy in those businesses.

But consider that as well. If you have the extra cash looking at things from passive stuff like laundromats all the way up to buying real physical businesses that actually produce services and goods that can really make you a lot more money. You can buy these businesses at low multiples, and you can go build them up and then resell them, make Millions of dollars.

I mean, it's happened over and over and over again. A great book on this is buy then build. And we had Walker Dybul, the author of that book on this podcast, and we talked through that. We had Cody Sanchez on this podcast as well. And she talked through why buying small businesses is so powerful. And so I want you to think through that.

Um, and that's something I've been focusing a lot of my time on, bought our first one last year, going to be buying more here in the future. And so it's a huge, huge strategy for me and what I'm doing going forward. So if you are making enough, make sure you look into that as well. Read, buy, then build.

It'll show you and make the entire case of why that is. And listen to that episode of Walker. Walker is an amazing author. And in that episode, he talks through All of this stuff. So listen, I hope this has helped motivate you on some of the best financial strategies by income. If you guys have any questions, please reach out to me by going to mastermind.

co slash newsletter, signing up for the newsletter and any of those newsletters that come up, just responding. It takes me probably a lot of times it will take me a couple of days to see it and or respond to you. But once I see it, I'm either going to actually answer it on the show or I'll just shoot you a quick message there.

And give you a quick answer. So thank you guys so much for submitting those questions. As we go through this and follow us on all the socials at master money co. And again, thank you for listening and thank you for investing in yourself. Cause that's exactly what you're doing when you listen to this podcast is you are investing in yourself.

Can I thank you guys enough for being here and we will see you on the next episode.