Here’s Where Wealthy People Put Their Money

21:21This next one's going to sound hot just because of how controversial this whole asset class is right now. But we'll go ahead and share it. Wealthy people. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply.

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22:00Brian Preston:Low energy, unfocused, foggy. You might be dehydrated. Gatorade Zero powders have been scientifically designed to help improve hydration balance in the body. with a clinically proven electrolyte blend and no artificial colors or flavors. Great tasting hydration, no matter where you're going. Shop now online or at retailers nationwide. Gatorade hydrates better than water. Is it in you? Symptoms noted are signs of mild to moderate dehydration. Consult a healthcare professional if symptoms persist. They actually own their home. Yeah, again, we're looking at the numbers and the data. This data is according to the Federal Reserve serving consumer finances, And they did find that 95 % of those top 10 % of wealthy Americans do actually own their primary residence.

22:46Brian Preston:In this instance, they're not renters. Yeah, but look, there's also some bias in this stat from the recency of, you know, because we know wealth creation is something that typically takes 27 to 29 years. You know, most people cross into that two comma club, the seven figures when they're in their late 40s. So it makes a lot of sense to me that a lot of people who've already had that success, that, you know, they were able to buy a house much easier. So if you're younger, I wouldn't let this discourage you. I think it's just something to have context so you can figure out what do I need to know in my own wealth building journey.

23:19Brian Preston:And look, there is a reality. While 95 % of the top 10 % of wealth individuals do own a home, we genuinely believe that homeownership is not absolutely required to build wealth. Being a homeowner today is very different, looks very different than it did 10, 20, 30 years ago. And that's not saying that one is better, worse, easier, harder, it's just a reality. And if you don't believe us, we actually did a show titled, Things Have Changed. Should you buy or rent in 2026? And if you're someone who's trying to figure out, does home ownership make sense for me? Should I be a renter? How do I still build wealth given where I fall in that spectrum?

23:58Brian Preston:Go check out that show because we do not believe that it's one size fits all. We do not believe that you have to be a homeowner in order to be wealthy and to live a great, big, beautiful tomorrow. But I am here to tell you, we want to give you the tools so that if the market changes and it becomes much better to buy your principal residence, here's some things that are benefits to owning your own home is that you are building equity while you're paying for the house you live in. You also, this counts towards your net worth. Now, it's hard to use this in retirement because it is your shelter. But I do like the fact that real estate naturally is kind of an inflation hedge.

24:35It appreciates over time. But also, I like that you just, when you're in retirement and going across that threshold, it's nice if you have your housing expenses locked in. Homeownership does allow you to go through that experience, knowing what your annual expenses are going to be out on homeownership.

24:52Brian Preston:But keep in mind, housing is a very personal decision. So even with these benefits and even with how amazing it sounds, and even with how many other people would say, oh, do it, do it, do it. you have to make sure that it aligns with your goals. So what's the strategy for you to copy? Buy a home if it aligns with your goals and lifestyle, but don't feel like it's something you must do in order to build wealth. And if you are someone who's going to buy a home or you are someone who's interested in doing that, we would argue there's a better way to do it. The conventional wisdom has changed a little bit.

25:23Brian Preston:We subscribe to the idea of 3-5-25. When it comes time to buy your first home, We don't think you have to put down 20%. We're perfectly okay if you put down 3 % on your first home. You want to make sure that you can see yourself being in that home for at least five years. And you want to make sure that your total housing costs do not exceed 25 % of your monthly gross income. If you can do that, if you can make sure you fall inside of those thresholds, you're going to likely put yourself in a situation where you don't become house rich and life poor. Well, and I think we can close out this tip with, once again, I'm going to just give you the website.

25:58You guys are probably starting to notice a trend. Go to moneyguy.com slash resource. You're like, is there really that much free stuff sitting out there with all these calculators, these buying guides? Yes, get in there and get that. We've designed this entire abundance cycle where you take as much free stuff as you possibly can to learn, apply, accelerate your journey. And then we're hopeful one day you're gonna have so much success that it creates complexity. That's when you'll probably need us. But I love that I get to give this next transition because if you look at my business partner here, he might know a little bit of something about this next point.

26:33And as we're talking about wealth, things that wealthy people invest in, without a doubt, they invest in their health.

26:40Brian Preston:Yeah, I would even argue, you know, even some of these other ones, you can fight us on. Oh, I don't need to own a home or I don't need to own a business or I don't need to own real estate. And look, we're not gonna fight you on that. But I would argue if you're someone who's neglecting your health, no matter what age you are, whether you're the 22-year-old or the 72-year-old, If you're neglecting your health, you're likely not setting yourself up for a great future. And the numbers would suggest this. According to UBS, 92 % of wealthy investors said that their wealth or that their health is actually a thing or their wealth is the thing that allowed them to live a healthier life.

27:16Brian Preston:Meaning because they made the decisions to defer someone today for tomorrow, to build up their resources, they were actually in a position where health could become a priority. And 90 % said that investing in their health was more important than growing their wealth. So I don't think that those two are mutually exclusive. I think they have to actually work together if you really want to live your best future. Well, I mean, look, some of this is self-proving is because once you start having a little success, I mean, it does, you're past the survival side of what money can and cannot do for you.

27:53So you start thinking more about your mortality. And that's when you will start, you do the concierge doctor. That's when you do the gym memberships. That's when you maybe talked about a nutritionist or do a meal plan so you can do macros. All this stuff kind of goes on that trend that I think you do see people that are spending a lot of time working on longevity because they realize that this is something they can invest in and they see the results in their quality of life.

28:20Brian Preston:Yeah, and so, okay, well, what does it mean? What does it mean to actually invest in your health? And I want to be clear, this is not for just once you get wealthy. This is not for later on in life. I would argue this is for every stage, no matter where you're at, no matter where this is reaching you. Brian, we have a really good friend, a doctor buddy of ours. He said, if you want to change your life, there are really three pillars to health that you ought to focus on. It's how you move your body, how you feed your body, and then how you recover your body, how you let it restore itself. So how do you sleep?

28:53Brian Preston:What are you eating? And how are you moving? If you're not focusing on those three areas and putting some priority around those three areas, it will catch up to you. It's just a matter of when. You cannot bad diet, bad sleep, bad exercise yourself into a better future. So you might as well start investing in those things now. Well, I think this goes into the preventative care side of things. It's so much, if you've read all the books I have on trying to really extrapolate this health is wealth, a lot of times you'll find is that, yes, most Americans live to be there late 70s, but the functional part of that lifespan can be severely limited, meaning that if you lose your mobility or you're cognitively not the same because some influences coming in there cause dementia or some other issues that come your way, you can quickly realize, hey, if I can just be preventative on this, I might get more of the usable part of my health so I can make all those blossoming memories.

29:52I can live my best life and not have regret. So that's why I think it is a healthy thing. Invest like a millionaire and make sure your health is a priority.

30:00Brian Preston:And if it is a priority, it will show even in terms of how you handle risk management. Are you doing things like having appropriate health insurance, not just going out and buying the lowest cost, most catastrophic coverage and never using it? Are you actually making wise decisions? Do you have things like disability insurance in place? If some unknown thing were to happen to you, have you made sure that both you and your loved ones are gonna be okay and gonna be taken care of in that instance? Part of managing your health is managing the things that you can control, but also having an active role in trying to mitigate the risk that comes from the things that you cannot control.

30:35Okay, a lot of you are probably watching this go, I'm sold, I wanna start investing in my health. Is there a better way to do it? Man, no, man, do we have you loaded up. There's a reason. Step number five of the financial order of operations on tax-free growth opportunities is your health savings account. We love health savings accounts because these things, and more to come on this, are triple, if not even quattro, tax advantage. But, Bo, what is a health savings account? Yeah, literally.

31:01Brian Preston:It's a type of tax advantage savings account that, for folks that are enrolled in a high-deductible health plan, you're eligible to contribute to it. And the money that you put in can be there, and that money can ultimately be used to pay for qualified medical expenses. But there is a reason that these accounts are different than other types of accounts, like a regular brokerage account or like your 401k, because they have some very unique and distinct tax advantages. Number one, when you participate or when you contribute to an HSA, no matter what your income is, no matter how high your income is, you get a tax deduction on the contributions on the front end when you put the money into the account.

31:41And if you put the money to actual work, meaning you got your deductibles covered and now you're actually starting to invest that money, the money that you've invested within your health savings account can actually grow tax deferred. And then if you use this on qualified medical expenses, tax-free distributions, very few things give you a deduction on the front end and then give you tax-free distribution after they've grown. That's what makes these things, even in a lot of ways, even more powerful than a Roth IRA. And that pains me to say that out loud. But then we like to put, that's the three for the triple tax advantage.

32:14There is an honorable mention, Quattro, which is if your employer offers this health savings account along with the high deductible health insurance, because that is required, you might even be able to exempt yourself out of the FICA and Medicare taxes on your salary deferrals into these health savings accounts.

32:30Brian Preston:And so what's really interesting is, so these accounts have gotten more popular. Even though people recognize that HSAs are a thing and they have these sort of like three or four distinct tax advantages, only about 13 % of the adult population uses them taking advantage of these distinct benefits. So if you want to be in that 13%, if you want to be one of the folks who actually optimizes their HSA, this is what it looks like. Every year, you have to make sure that you participate in a high deductible health plan. That's what is going to allow you to put money into your HSA. And then you want to contribute the maximum amount, depending on if you are covered under individual coverage or family coverage.

33:08Brian Preston:You're then going to invest that money inside the HSA and let it grow. oftentimes in like low cost index funds. Whenever you have a medical expense, you're going to pay for those medical expenses with money out of your pocket. You're not going to use the HS dollars. You're going to pay for it and you're going to save that receipt either in a digital repository or somehow in a spreadsheet. So you're keeping track of expenses that you've incurred. And then at some point in the future, after your dollars have grown tax deferred, after those dollars have turned into bigger and bigger numbers because of compounding interest, you can actually go and reimburse yourself.

33:41Brian Preston:So you may be in a situation 10 years from now where you get to reimburse yourself for medical expenses that were incurred a decade ago, and you're getting to do it with earnings that have never, ever been taxed. It is a totally tax-free exchange. So to kind of close this out, you know, a lot of what we talk about in personal finances, small decisions you make that have huge results for the future. So the strategy to copy when it comes to your health, to think like a millionaire or a very successful person does. Once again, make small decisions. Use a small portion of what you have coming in today to invest in your long-term health.

34:17And I'm telling you, your future older self will thank you with sloppy tears, happy tears in the future because you're going to have more usable time and build your great, big, beautiful tomorrow.

34:28Brian Preston:All right, Brian, here it is. This is the one that you've been waiting on. We've been talking about it. You've been alluding to it. This is the supercars, right? This is the one. Supercars, Rolexes, and yachts. I keep waiting for those to show up. That's right. When we think about where wealthy people spend their money, it is true. It is, in fact, accurate. Wealthy people spend their money on vehicles. All right, we're finally here. So go ahead and lay it down for me. Where Lambo, Ferrari, I mean, I'm kind of excited to see where my peers are loading up so that we can show it off. So according to Experian, when we think about wealthy people and how they spend 61 % of households making over$250 ,000.

35:05Brian Preston:So these are high-earning households don't drive luxury brands. Instead, even these households that are very high-earning, they drive cars like Hondas, like Toyotas, and Fords. They buy cars and they spend money on cars, but they are not buying expensive luxury brands. Now, look, there's a lot of flex in this because yes, more than half, 61 % drive your millionaire next door Toyotas and Hondas and Fords. We've all been taught. But that does leave 39 % that are probably doing something else. But I do think it is worth noting. Let's talk about why vehicles, I think for people who know how to use resources well, why they don't love vehicles, for most vehicles out there, they depreciate like a rock.

35:56And I think that's what wealthy people know. Are there other things people should know about vehicles?

36:01Brian Preston:Well, yeah, so they depreciate like a rock. And I think a lot of wealthy people recognize, hey, I just don't want my money to disappear that way. However, in reality, when we're thinking about the top 10 % of net worth across Americans, realistically at that level, vehicles are usually a very small percentage of a wealthy person's net worth. And Brian, you already alluded to that, oh, the 39%. If you are someone who's in the top 10 % of net worth and you have a net worth of$1.9 million, say, you know what? I've deferred gratification. I'm at this stage now, and I want to drive a luxury brand. And I want to go out and buy a 2026 BMW X5.

36:39Brian Preston:I want to go buy a nice luxury automobile. And that automobile is going to cost over$70 ,000. And that's a lot of money to pay for a car. In reality, that represents about 3.7 % of your total net worth. I think we have to ground ourselves and recognize that if you are the median American who has a median net worth right now of$191 ,000, in purely percentage terms, that would be the equivalent of that median American going to buy a 2016 10-year-old Nissan Altima for$7 ,100. At the end of the day, even though it's an expensive car, even though it's an expensive purchase, it is a small fraction of a wealthy person's net worth, and that's okay.

37:22Brian Preston:They have now earned their right to spend their money if that's the way they choose to. So I think this more or less, and this is something we've always shared, is where you are in your journey. It matters. Because that is the big part. If you are like step eight and beyond in the financial order of operations, you're probably not faking it anymore. And you can, because it's back to your point. So I think that's why we can get to strategies to copy, is don't let a large percentage of your net worth go into depreciating vehicles. There's a reason. What I love about this is this is why we've created rules like 23.8 to help you have kind of boundaries or know where the guardrails are.

38:03Because this is going to protect you in several ways. First of all, large down payment, 20%. So you can go ahead and get ahead of any depreciation that's out there. You're going to have to pay it off within three years. just so the fact that you can make sure the depreciation's not eating you alive and it also makes sure your cash flow and your budget so that your car compared to what you have coming in doesn't get cattywampus. And then I love that we've made this where it's 8 % of your gross monthly income. Now, we do have some notes. These are key distinctions. Notice this says luxury cars, same as cash.

38:37That's right, one year. One year, same as cash because we never know how your cash flow is coming in and out. We want to give you some grace or flexibility on that. But we're not talking about Ferraris, Lambos, Mercedes, BMWs. With this, 23.8 is to get you reliable transportation to and from your job so you can slowly turn time that you're investing to make money so that eventually you own more and more assets. And then the other thing that's key is make sure that your investments, what you have going in every month, is exceeding what's going into the car. I think the big takeaway for me is people driving around, hopefully in the luxury cars.

39:13I'm hoping that they're actually rich, not just trying to look rich.

39:17Brian Preston:Yeah, it's much better to actually be rich than to look rich. And if you're someone who's in the car market, you're trying to figure out how much car can I afford? Again, we have a fantastic calculator. Go to moneyguide.com slash resources and play with our car buying calculator. You can put in your income. You can put in the interest rate available to you. You can put in what your current monthly car payment is or what you want your current monthly car payment to be. and it'll adjust and show you, okay, what is the amount of car that I can afford? Again, if you can do this, if you can work through this exercise, it's going to prevent you from getting out ahead of your skis and buying too expensive of a car too early in your financial journey.

39:56I think a good way to kind of put a bow on all this is that a lot of us, when we think of millionaire and beyond, we're kind of doing that to borrow from Morgan Housel. He talks about most people who aspire to be millionaires, like be lottery winners or big windfalls, you're daydreaming about how you would spend a million dollars, not actually how you live like a millionaire. And what we've seen by doing today's show is, is I want you to live like a true millionaire. That's where you actually know the value of your time. You know that you should buy assets. So no matter what's going on, you don't have to work so hard with your back, your brain, your hands, because your assets start generating just as much, if not even more than what you do, there are better ways to do money.

40:39And a lot of you, if you could check the box on every one of these things we went through and you realize, hey, these guys seem like they have an understanding of what people with wealth have done. I love what they've done, but I've realized I'm kind of at the point, I went through the journey that they talked about, but now my simple life and all the good things I did, man, oh man, has the success become very complex. And not only has it become complex, I just don't have the time of the day to do this. And my spouse, she just doesn't have the interest to understand this as well as I would like.

41:10And what happens when I'm no longer here, that's when we're going to leave the porch light on for you. We work with clients all across the country. We'd love for you to remember the abundance cycle. Who planted the seeds with all those great free resources that were on moneyguy.com slash resources. If your life's not complicated enough that you don't need us, that's A-OK. Okay, get in there and get some of that free stuff. Accelerate your journey. But when it does get to that point, and it will, I promise, no matter how successful you feel like you are on the journey, one day you will wake up with this complexity.

41:41We'll leave the porch light on for you. I'm your host, Brian, joined by Mr. Bo, Money Guy team. Out. The Money Guy Show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities, laws, and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through The Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice.

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42:53Close your eyes, exhale, feel your body relax, and let go of whatever you're carrying today.

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