The Financial Priorities That Matter Most (By Life Stage)

22:30The only thing I wish I did a little more when I was a dink was her and I would travel even more than we actually did. We traveled a bunch of places, but I wish we traveled a lot more. And a part of it was just job flexibility and those types of things. But please take advantage of some of that stuff while you still can. Enjoy some of life while you still can, but also save for your financial future. If you have that foundation built up, it's a beautiful thing. And you're gonna look back on those dink years as some of your favorite years before you had kids there. So I think it's a really, really powerful way to think about this stage.

22:58And stage two is one that if you are in this stage, you are blessed. Enjoy it. Have some fun. Let's get to stage three. Stage three, and just so you know, these are not in a particular order. These are just different stages of life that you could be in. For some people, they could be in these stages for the long haul. You could be in one stage forever. And so this is something I just want you to note. This is not in a particular order. But stage three are Henry's. What does a Henry stand for? High earner, but not rich yet. So all of my high earners out there who feel as though you have this really high income coming in and you don't know what to do with it.

23:33Typically, it's somewhere around$150 ,000 plus. Maybe you're all the way up to$500 ,000, but wealth has not followed the paycheck. You could be single, you could be dual income, or married with kids. It doesn't matter what those situations are, but you are a high earner and you are not rich dead. And so for a lot of you, you're dealing with a couple of different things. One, you could be dealing with high taxes and that tax situation is eating into your earning potential and your earning power. Number two, you could be dealing with high lifestyle inflation, Whereas maybe you have this big income coming in, but you're still living paycheck to paycheck.

24:04I have talked to people making almost a million dollars a year who still live paycheck to paycheck. Your income does not mean that you are rich or you are good at managing money. Instead, a lot of high earners are still living paycheck to paycheck because they don't know what to do with those dollars next. And so I want you to focus your time and energy on thinking about, do you have a high lifestyle? Maybe you drive the fancy car. Maybe you got the fancy house. We got to think about that and what we're going to be doing there. And then number three is high expectations. Maybe you have some high expectations for your lifestyle because you have this high income or you went to school for a long time and you really feel as though you deserve to have the fancy car or you deserve to have the nice watch or you deserve to have the designer clothes.

24:46And so this is something where you have these high expectations for yourself. And really, it has not turned into wealth because you've spent the majority of it. Now, if you often feel financially stressed, despite the income that's coming in, this is a huge indicator of a Henry because a lot of them just don't know what to do with their dollars next. Now, your income could be strong, but your wealth accumulation just really has not happened or has not caught up. And you're still carrying significant lifestyle inflation if you don't have a big delta. If you don't have a lot of difference between your income and expenses, and there's not a big gap left over every single month, then most likely you are overspending in a few different categories.

25:23And so let's talk through some of the things and the top priorities that you need to make sure that you are looking at if you are a high earner, not rich yet. This is very, very common in the United States right now. I see so many people making over$150 ,000 per year who really are still living paycheck to paycheck. It is very, very common. And so this is some things that I want you to focus on. One is tax optimization. If you are a high earner, but not rich yet, if you're getting phased out of the Roth, for example, or you are completely phased out of the Roth and your household income has continued to rise, I want you to get serious about tax optimization.

25:56So first, you can look into things like the backdoor Roth, the mega backdoor Roth. You can look at deferred compensation. You can look at tax loss harvesting if your portfolio is growing and is large enough. But these are some of the things that I want you to really get serious about. We just had a tax masterclass inside Master Money Academy going through some of the things that A, W-2 earners should be doing. B, some things that business owners should be doing. C, what high earners should be looking into. And then D, we talked about some optimal strategies when it came to real estate. And then we went into even some advanced tax strategies.

26:26So in Master Money Academy, a lot of our students had a ton of great questions when it came to what high earners should be doing and how they should be thinking about this. And so when we do those masterclasses, it's very, very helpful to kind of see where people land. So these are just some of the things that you should be looking into when it comes to tax strategy. If you don't have a CPA in your corner or a fee-only advisor or a fiduciary advisor in your corner, it's going to help you a lot, especially if you're a high earner, make sure that you're making the right choices. Two is I want you to build a financial plan that matches your income.

26:57See, most Henrys, what they do is they end up just winging it. They feel as though, eh, I can just wing my personal finance side because I've been so good with my income. And I feel as though the income is just going to take care of itself as time goes on. So I'm going to wing this and just hope my bank accounts grow over time. No, we need to get a big time financial plan locked in. Even if you have to hire an advisor to put that advisor in place to get your financial plan locked in so that you feel clarity, I highly recommend doing that. Maybe jump into Master Money Academy. Make sure that you can actually get a financial, step-by-step financial plan put together.

27:28That's exactly what we designed this for so that you have the steps, the next steps that you need to be taking when it comes to that. If you want a link to Master Money Academy, check it out down below, seven-day free trial if you want to check it out. Also, if you do feel like you're winging it, make sure you get some clarity, make sure you get some guidance, understand what your North Star is and why you are doing this. Number three is I want you to ruthlessly audit your lifestyle spending. So how would you ruthlessly audit your lifestyle spending? Well, first, I want you to just take 30 days and I want you to go and just track how much you're spending in certain areas.

27:59So my favorite way to do this is when I feel like my spending gets out of whack, I'll go into Monarch Money and I will start to track every single expense over the course of next month. I do this anyway, but when I really feel like it's getting out of whack, I will buckle down and make sure everything is exact. So the way that I do this is called the five minute drill. So I will dive in to every single transaction and I will categorize that transaction and make sure every single dollar and every single cent is accounted for. Do this over the course of 30 days and all of a sudden you know how much you're spending every single month and you know how much you're spending every single month in that category.

28:33It takes five minutes a day. Actually, really, now that I have it all down, it takes about 90 seconds per day and you know exactly where your dollars are going. Then after those 30 days, you can assess, okay, what do I need to do to make sure that I'm reducing this overall spending if I am overall spending? What are some of the areas I can cut right now? Look at the big stuff first, then come down to the little stuff. The little stuff matters a lot less for you high income earners, especially if you are spending large amounts of money out every single month. The big stuff is what's going to make the big impact for you and it's going to make the big changes for you.

29:04A lot of people focus on the lattes or the random Amazon packages. And sure, those can add up when you put them all together, and it does make a big difference. So I'm not discounting those. But what I am saying is that you also need to make sure you're looking at the big stuff, your housing, your food, your transportation, or your car payments, the ones that are really eating in to your overall account, or you're eating out or your Uber Eats. Is that what's killing you? You got to look at some of the bigger stuff and how it impacts your overall financial situation. So housing, food, transportation, daycare costs, those are the big four that I want you to look at.

29:33Number four is you need to, if you have a high income, max out every single tax advantage account. I want you to max out the Roth and I want you to at least max out your 401k or your pre-tax accounts. If you can't do that and you're making over$200 ,000 per year, then you need to reevaluate some of your lifestyle expenses. Obviously, location matters too, but you need to reevaluate some of that stuff, especially if you are in a regular location. So those two are big, big deals for a lot of people to make sure that you were looking at those. And then build a real portfolio. You wanna see your portfolio, boom, get bigger and bigger every single year.

30:07you should see some big chunks going in on a yearly basis, and your net worth should be changing every single month. Meaning that if you have a lot of income coming in, and you are actually contributing two, three, four,$5 ,000 plus per month into your investment accounts, you should start to see some big swings. And so for my high earners who are not rich yet, I want you to track your net worth on a monthly basis. In fact, I just read a stat. It said that 89 % of millionaires who track their net worth on a monthly basis claim that they became a millionaire because that net worth statement actually motivated them to keep pushing forward.

30:40They saw the big changes, they saw the big swings, and that was the big difference for them. So I want you to make sure that if you are a high earner, but you're not rich yet, that you are spending time thinking about your net worth and you are monitoring this. Get big chunks of money into these investment accounts because it is a much better tax situation for you than would be on your income. Your income is getting taxed out the wazoo if you have a high income. I don't want that for you. I don't want you to get nailed when it comes to your taxes. Instead, I want you moving money into these investments because you're going to get a much better tax efficiency than you would just taking that income and sticking it in your checking account.

31:16Investing is a great way to help shelter your money from taxes. And then real estate is another thing that you can look into as well. Now, what are some of the traps that people who are high earners but not rich yet, what do they fall into? Well, first, they are confusing income for wealth, meaning that their income could be a big, big differentiator for their life. It could change their life forever, but they are confusing their income as being wealthy instead of taking that income, a portion of it, and put it towards wealth building activities. Your income does not mean you're wealthy. Where you put that income is what's going to dictate if you're wealthy or not.

31:46And I want you to think about this more and more as time goes on. Let me say that again for some of you in the back. Your income does not mean you're wealthy. Where you put your income is going to dictate if you're wealthy or not. How you handle that income is going to dictate if you're wealthy or not. Not income coming in, because you could spend all that income and you have nothing to show for it at the end of every single year. There have been so many high earners out there who got to the end of their lifetime. They're like, I have nothing to show for this. I worked so incredibly hard. I made all of this money and I have nothing to show for it.

32:16I don't want that for any one of you whatsoever. And so that's really, really important to make sure you're avoiding that. You can earn 300K per year and still have a negative net worth. I think you need to note that. And I think a lot of people don't realize how bad their financial situation can become if they do not get ahold of this. Doctors and attorneys are notorious for being folks who have really high incomes, but are terrible with money. And this is something that I think most of you need to just get a grip on this. You need to get a grip on your financial situation. Automate your finances if you have to.

32:46The beautiful thing about being a high earner is that you can get away with automating your finances and not even having to budget as much as you think you do. So I'm a high earner. I still budget. I think you should budget. But if you really don't want to, you're like, I just do not have the time. then at least, at the very least, automate your finances because that is a form of budgeting that can make sure that you're not really even having to do anything whatsoever. The Henry trap is also falling into the status trap, meaning that you feel as though because you have a high income, maybe your peers around you also have a high income, so you need to drive the fancy car.

33:17You need to have the house with 12 rooms that you don't even spend time in. You need to make sure that you present yourself in the perfect way. Listen, those are traps that you can fall into and you need to know when that is happening. I don't want you to fall into these financial traps, especially when you're a high earner, because you have an opportunity that could change your life forever. So that is the third stage is Henry's high earner, not rich yet. Really, really important that you avoid at all costs some of those traps because you have the greatest opportunity of all, a high income and put it towards future you so that you can retire on the day.

33:49That is what I recommend for each and every single one of you. Let's get into stage four. All right, stage fours are DIWK. Now, this is a PG rated show. I'm not going to say that out loud, but what does it stand for? Dual income married with young kids. And so when it comes to this acronym, this is going to be one that I think for a lot of you out there, folks who have young kids are going to have different financial priorities than folks who have kids middle school and older. And this is going to be where we want to make sure that if your kids are under the age of 10, and a lot of listeners have kids under the age of 10, you want to make sure that you are prioritizing very certain things.

34:28Why is it different? What is the big difference maker here? Well, costs are very high when you have kids under the age of 10 when it comes to overall daycare costs. A lot of people are spending money on daycare that costs more than their mortgage. And so because of this, we wanna make sure that we are focusing on this, honing in on this, and understanding that this can be a stressful time, but it's only a season of life. So this is folks who are married with kids under the age of 10, they are probably the most financially stretched demographic in the entire country. And because they have two incomes that somehow feel like less than one used to.

35:01And so this is something that because they have so many different expenses, there's so many things going on, there's so much happening, and they are probably the most sleep deprived, they're most stressed, and they are the demographic with the really the most, the highest cortisol spikes in the entire country. There's things like daycare, there's things like diapers, there's things like pediatrician visits, you know, kids activities, and there's general chaos that they just have to keep up with. If you want to go out on a date, you got to hire a babysitter for$120. If you want to do anything in life, you got to figure out who's going to watch the kids because they can't watch themselves.

35:32They are under the age of 10 and you really just got to pay a lot more for everything that you were doing. Now, daycare alone could cost anywhere from$1 ,000 to$2 ,500 per child, depending on where you are living. And this is something where you add in a mortgage, you add in two car payments, you add in groceries for a family that continues to grow, and the cost of living, of having a life. And the math really gets messy for folks who are dual income with young kids, because this gets harder and harder. Plus, if you got things like student loans coming in, you got liabilities that you are having to deal with, boy, oh boy, does it become stressful.

36:06No wonder folks in this generation or during this age cannot afford homes because housing has also outpaced things like income. And so we want to make sure that we are thinking through this first. Now, what are some of your top priorities if you are dual income married with young kids? Well, number one is you want to protect your income first. So making sure you look at term life insurance or disability insurance, those are non-negotiables. So I want you to decide, hey, I need to make sure that I'm getting term life insurance because if anything were to happen to us, we need to protect our income first.

36:35So term life insurance at Policy Genius is the number one place that I would recommend. It is the one that I think is the most powerful. It is the easiest. And so they've been a show sponsor for a long time. So check out Paul's Genius if you have not already. That's where I got my term life insurance. That's where my wife got her term life insurance. And so for all of us, it is very, very important to make sure you do this. Now, I keep my term life insurance under my family trust. That's where it currently sits. But for you specifically, you don't have to do that. If you don't have a trust in place, just make sure you have it is the big, big thing.

37:04Also, disability insurance is for folks who, if you were to get injured or something were to happen to you and you were going to lose one of your incomes, this at least helps you with a percentage of that income, if not the entire income, depending on what type of insurance you have, helps you cover that as well. So if you need to make sure that you are protecting yourself with disability insurance, that's going to be very important. Number two is your emergency fund becomes increasingly important the more little kids you have in your house. so I continue to increase my emergency fund each and every kid that I have so I usually like to have a minimum of six months in my emergency fund and then each child that I have I will increase that minimum amount over that time frame and so that's just my SWAN number my sleep well at night number you can decide what your sleep well at night number is but the minimum you need to have is six months because if you have a job loss or you have an issue that comes into play you want to make sure you have a six-month runway to take care of all the bills take care of all the kids stuff and make sure that your family's lifestyle is not changed dramatically from you losing a job.

38:04That emergency fund helps protect you against life and also ensures that you can continue to build wealth without having to dip into your 401k, your Roth IRA, or any other retirement accounts. That's not the thing I want for you. And so we want to make sure that we do that. Number three is don't stop retirement contributions and use kids as an excuse. You need to make sure that you are still taking care of your retirement because you're going to put a burden on your kids later on down the line if you are not. And so this is not the last thing that you take care of. It is the first thing that you should take care of within your budget.

38:31And so making sure you do that is very important. Number four is if you're thinking about your kid's college or your kid's future, start a 529 plan. A 529 plan can help your kids when it comes to college savings. And even if it's a very small amount of money, because you have 18 years or because you have 10 years or 12 years, however old your kids are, you have this longer time horizon for this money to compound. You can invest those dollars and it'll eat into a big chunk of where your dollars are. Now, if you're trying to think through, where do I open a 529 plan? Mine's at Fidelity. I just got a flexible 529 plan.

39:01I invested in the S &P 500 and that's just the way I have it structured. You can open it wherever you want. Vanguard has some great ones. Charles Schwab has great ones. Fidelity has great ones. Those are the three places that I would look for a flexible 529 plan and it can be very, very helpful. Next, and this is a big one, is to make a daycare cost exit plan. So at some point in time, Your kids are going to graduate. If they're in daycare, they're going to graduate from daycare and they're going to be done and they're going to go into school. Unless you send them to private school or you send them to other schools that are going to cost money.

39:32If you don't do that, make an exit plan. Well, we have all this money that we are about to save. What are we going to do with this? And what I would highly recommend is once your kids are out of daycare, you take that extra check of cash and you start funneling it to your future, putting it in your retirement accounts, putting it in your brokerage account, start investing those dollars and start to build up that portfolio and that base even more. If you already have your base in place and you've continued to invest over time, taking a bigger chunk and putting it towards that so you can achieve financial freedom even faster is by far one of the best things you can do with those dollars.

40:03But when does daycare end? Ask yourself that question. And then what does that margin unlock? How much margin is left after daycare ends? Run the math, do the numbers, and then identify where that money is going to go. See, people who never get ahead with money never identify when some of these windfalls do come up. They never identify where those dollars are going to go. And if you do that, like, for example, the extreme couponers out there. If you're an extreme couponer and you're saving all this money on groceries and you're spending hours and hours and hours, but you don't identify the savings of where that savings is going to go, it's just going to get commingled in your checking account.

40:34You're going to spend it again. People never get ahead if you don't identify where money needs to go. And so I recommend that you do that. Now, the trap for a lot of folks here is to put the pause on financially while the kids are young. You're going to put the pause on for your retirement accounts until your kids get older. No, you're missing out on some precious years if you do that. And you are really, really doing yourself a disservice by doing that. Instead, even if it's smaller amounts of money over that time frame, making sure that you get dollars invested is very, very important. Do not interrupt your compound interest unnecessarily.

41:07Do not interrupt your contributions unnecessarily. The key is to just keep buying. Just keep buying more investments. I don't care if you have to reduce it down 20%. just keep buying more because you do not want to pause or stop. It will make a big difference in your money. Now, if you're someone out there, you're like, I live in a high cost living area. I know I'm going to have kids one day. Maybe one of the things you want to do is you want to try to achieve COSFI before you have kids. That is a great goal because if you achieve COSFI before you have kids, well, worst case scenario, whatever your COSFI number is, you at least know, hey, my retirement will be covered.

41:45I may have to work a little longer than I wanted to, but my retirement will be covered based on hitting COSFI early. That is one that I think could be something for a lot of folks who have young kids. But progress doesn't have to be super fast at this stage. This is a stage where it gets messy. This is a stage where you can be okay without progressing super aggressively like everybody else. You see people on Instagram, you see people on TikTok, you're comparing yourself to them because they have these high net worths. Progress is gonna slow down a little bit. It's gonna be less than what you think it is.

42:14And really, I want you to tell yourself that's okay. to slow down your progress a little bit during the season, but just don't let it be permanent. Don't let it be permanent where then you just get used to this and all of a sudden that daycare money comes rolling back and you make it rain on a couple of vacations and then all of a sudden you make it rain on a couple of other things. No. Let's make sure we're putting those dollars in the right spots and we're making sure our future selves are prioritized. Put those in to wealth building activities. That's what I want you to do. Let's get to stage five.

42:44The next one is one income households with kids or SIWK. So this is going to be the income supporting a household with children, but they only have one specific income. Now, this is two distinct situations that could be happening here. Either a married couple with one income where one person stays home with the kids while the other person goes to work and they are the breadwinner of the household and or someone who is a single parent going at it alone. Now, these are two situations that you want to make sure that you understand you actually have some different priorities when we're thinking about this.

43:16Now, the finances look very different in terms of how they got here, but the constraints are absolutely the same when you are looking at these two different households. Now, for the one income married household, the decision to have a spouse stay home was usually the right one for the family. You had a conversation about this, you thought about this, and you're like, hey, I don't want somebody else raising my kids. I want to make sure that I'm staying home with the kids if it makes sense financially. we may have to cut back in some areas, but we are willing to make that sacrifice in order to do this.

43:43Now, the other situation is the single parent household. Maybe you had some sort of situation happen within your life, and so you are a single parent. And that could be for a number of different circumstances. We don't have to go into each and every single one of those, but it is gonna be one where you have it a little more difficult in the first instance. Why? Because you don't have childcare just built into what you're doing. You don't have somebody else there who can always help you out while you go out and earn your income. So your stress is going to be a little higher. Your budget constraints are going to be a little bit different.

44:11But at the same time, you're still going to have to deal with some of the same things that we are talking about here. Now, the first thing to note is the emergency fund is critical here. You must have that six months in place because you only have one income coming in and your entire family is depending on that income. So if that income goes away, you must have that emergency fund in place and you must have it take care of your financial situation. Number two is the working spouse must maximize their retirement contributions. There's only one shot at this and you are the only person who is working through these.

44:42And so making sure you maximize those contributions can be powerful. But a lot of folks don't know this, that you can have something called a spousal IRA. So even though you have one working spouse, you can also have a spouse open up a Roth IRA who is not working and they have the ability to do that even though they don't have the direct earned income. Because they are a stay-at-home parent, The IRS allows you to have a spousal IRA. And so you can actually both have retirement accounts, which is a really, really cool hack. We talked about this recently in Master Money Academy, and a lot of people didn't know this existed.

45:13But a spousal IRA is a great option for those, even if you're not working, to have a retirement account in place. Term insurance, especially for the working spouse, is essential. You need to make sure that you absolutely have term insurance. You have a whole family, depending on you, for income. And so go to Policy Genius, make sure you get that term insurance. Disability is also going to be a big deal here. You want to make sure that you have both of those if you can, because if you lose that income, really, you've got to make sure that you are protected. Four is I want you to build a bare bones budget.

45:42You want to make sure that if you only have one income coming in, the budget becomes increasingly important, especially a line by line item budget. You're going to have to spend more time managing money than if you are a two income household. And you want to make sure that each and every single one of these dollars is accounted for. You know what's going out. You know what's coming in. because if you do not do that, and if you are not on top of your money, you really can't make the adjustments, and you got to make adjustments on the fly when you only have one income. You got to do it quickly, and so that is something I definitely want you to do.

46:10And then for single parents specifically, there are things like tax credits that you have in your favor that I want you to take advantage of. Things like the child tax credit or the EITC or the dependent care FSA, all of these are going to help you, especially if you are a single parent. You want to make sure you take advantage of as many of those tax credits as possible and really, really focus in on your budget. It's going to be very, very important for you specifically because you don't have additional help. Now, what are the traps a lot of people fall into when they are in this situation? One is they survive the month and call that a success.

46:44I don't want you to just survive. I want you to thrive when it comes to your money. And so we need to focus our time and energy on figuring out why we are just trying to survive and why we are just trying to get by. For most of you out there, if you're overspending, that's one thing. But for most of you, if you're living paycheck to paycheck, then looking at our income equation and trying to increase our income can be very, very helpful. I've seen people, for example, there's a guy on TikTok that I follow. And he's married and he has kids, but his wife wanted to stay home. And so he works his day job.

47:15And then at night, he drives for Uber Eats. And he kind of documents step by step how much he makes every single night on Uber Eats. and I watched that and I'm like, man, this guy is working so incredibly hard just to provide for his family and I think it's very interesting. I've seen the same thing where the wife is a breadwinner and the husband stays home and she works her butt off to try to increase her income so that they can live the life that they want and I think that is a powerful thing to think through is being a stay-at-home parent. I don't want you to ever feel as though you're someone who is not contributing because you are.

47:46You're saving the household tens of thousands of dollars every single month, if not every single year. You are saving so much money for your household. And so you want to make sure you're working together as a team. But if you are a single income parent, it's going to be even more important to budget so you know where the leaks are and you know where you can make adjustments on the fly. Or you're just going to realize pretty quickly you got an income problem and you need to increase your income. Now, financial progress at this stage feels a little slower, but consistent moves can really compound over this timeframe, especially if you have a long time before you actually are going to retire.

48:19Consistent moves will help you dramatically. And the goal isn't to fix everything when you feel as though you have some leaks in your budget. The goal is to fix one at a time, then move on to the next one. If you try to fix everything at once, you're going to feel like you're not making progress. I want you to fix one thing at a time. Personal finance is all about moving the dial slowly up and boiling that frog slowly. That's what it's all about. Once you do that, it's going to feel less stressful. You're going to feel less anxiety around money. And instead, you're going to make way more progress and ensure that you continue on the path.

48:50All right, the next one is married with older kids. So if you have older kids in your life and you have kids in middle school, maybe you have kids in high school or they're in college right now, then you're going to have financial complexity that is going to be shifting over time. So you're not going to be dealing with some of the smaller stuff. You're not going to be dealing with the big ticket items like daycare and those types of things. You are going to be dealing with A, college is obviously a big ticket item, but you're going to be dealing with death by a thousand different expenses. Because when your kids start to hit middle school age, you're just going to have a lot more expenses that are going to be popping up.

49:24So daycare is gone, but activities are going to pop up. You know, sports, if you are in travel ball or anything like that, I know how expensive that can be. I played AAU basketball from 13 to 18, and I just remember my family traveling, you know, every single week. And we'd fly across the country. We'd be in a different hotel every single weekend. playing basketball. And it was one of those things that I remember. I look back, we were a middle class family and I look back at my family and I say, man, that was probably a financial strain on my family to have to do that. And I think for a lot of you, your financial complexity could be shifting that way as well.

49:54Kids are getting cars. Additional car insurance could be there. Maybe you're getting them cell phones and you're adding them to cell phone plans. So a lot of the recurring expenses are starting to build up and college costs are arriving. They're getting closer and closer and it might be a stress for you and your family to make sure that you find a way to pay for that or you feel obligated to pay for this. You're likely also at your career peak as your kids get older because you could be at your highest earning potential with older kids unless you had kids really young. And so you feel as though these are your years where retirement is no longer an abstract concept.

50:28You're getting closer and closer to the time where you want to make sure you are retiring. And so for a lot of folks in this situation, your budget is getting lighter in some ways, meaning daycare is getting removed, but heavier in others because you have additional car insurance, you have those additional cell phone bills or other priorities. How old do kids get cell phones now? 13, 14, 12, 11, 10? I don't know. But everything starts to feel real. And everything starts to feel real. You feel as though you're losing time with your family, you're losing time with your kids, they're getting older and older.

50:53You're like, did I take enough vacations? Did I did I raise them right in the first 10 years? Did I ensure that I was doing the right things with them? Have I spent enough time with them? You start to ask yourself all these different questions. And so the priorities that are going to pop up are going to be a you're going going to want to spend more time with them, but B, you want to make sure you're giving them and setting them up in a right way. And so let's talk through some of these top priorities for families who are in the married with older kids scenario. First thing is I want you to have an honest college conversation.

51:20How much are you funding and how much are they going to be responsible for? Are you going to fund anything at all? Because really, in reality, you do not want to sacrifice retirement contributions to save for your kids' college. This is the biggest mistake that I see people make is if you are sacrificing your own retirement for college contributions, you need to reevaluate how you're doing this. Okay. It is very, very important to a, when a plane is going down, you put on your own oxygen mask first, then you can help others. And the same goes for your money. There are no loans for retirement. There are no ways for you to ensure that you are going to retire no matter what outside of social security.

52:00And you're going to live on a very thin retirement if you just rely on that. So instead, you need to make sure you're taking care of your retirement first, then you can help take care of your kids if there's money left over. If there's not money left over, they got to get student loans or they got to pay for their own college. And I know that sounds like tough love, but it is because that's the way this has to go. And that's the way you have to handle this, okay? Number three is you need to get completely out of consumer debt. Like if you have any consumer debt left over, buy now, pay later, if you have credit card debt, if you have student loans, even as you get older, All that stuff needs to go.

52:32It's not student loans aren't consumer debt, but it's just a debt that you need to get rid of. All that stuff needs to go. The older I get, the less likely I am to even like take on a car payment or anything like that. All that stuff needs to get out of your hair so that you can focus on the things that are most important to you and start to A, save for retirement, B, save for college, C, save for family memories. Because as your kids get older, you want to make sure you're prioritizing some of those memories and they're old enough to actually remember them and experience it and go through all that kind of stuff.

53:01Know your actual retirement number. So we have a free calculator. If you go to mastermoney.co slash resources, that helps you find your exact retirement number. Now in this resource, it's so cool. We just built this out and it does it automatically for you. But in the retirement number resource, you can go in there and you can look at, hey, this is how much I want to have in retirement. This is how much I currently spend now. And then you can put in your mortgage amount. You can put in your current debt payments, for example, and it will remove those out of the equation if you plan on having those paid off.

53:29It's going to factor in healthcare. It's going to factor in the inflation rate. It's going to factor in so many cool different things. And I really, really highly recommend you testing that out if you have not done the retirement number calculator yet because it's very detailed. It's going to give you the exact number and it's going to tell you how much you need to save every single month to hit your goal based on where you are currently. It is so cool. I'm so proud of it. I'm really, really excited for you to try that. So just go to mastermoney.co slash resources if you don't know what your retirement number is.

53:57Also, start the aging parent conversation. If you have aging parents who you have not talked to them about what their wishes are, what you want them to do going forward or what they want to do going forward, start to have the conversation with them because you could be in this situation where you're having to deal with aging parents and kids getting older. College costs and aging parents could mean that instead of being in a situation where daycare costs are gone and so you're spending less, you're actually even spending more because you're dealing with both sides of that coin. So start to have that conversation and start to talk about what you think needs to happen.

54:27Also, Some of the traps that people fall into at this stage is, again, funding college instead of retirement. Do not do that. I can't say it enough because there's way too many people I see that do it, and you really, really cannot do that. There are loans for scholarships in college. There are no loans for retirement. That's what they fall into is if you're married and you have older kids, don't fall into that trap. Make sure you spend some time with them. Make sure you get off your phone. Go out. Take some vacations with them. Put some money aside to take, even if they're cheap or free vacations.

54:56just spend some time with them because they're not going to be under your roof much longer and you're going to regret it if you don't. Let's jump to break and we'll get to the next one. So stage seven is going to be the OFFBs. What does that stand for, Andrew? Over 40 and feeling behind. So we have a lot of listeners out there who are over the age of 40. They found our podcast past the age of 40 and they said to themselves, man, I wish I knew this information sooner. I I get these messages all the time and these emails all the time. And they say, I just feel like I am behind with my finances. Well, guess what, my friends?

55:30We made an entire life stage just for you because there's so many people who fall into this camp of over 40 and feeling behind that they are really not even understanding where they should start. They feel like they're so far behind. They're like, I don't know what to do next. Is it too late? Well, guess what, my friends? It is never too late to get your ball rolling. It is never too late to start saving for retirement because you can make a dramatic difference in your entire financial situation just by getting started today. Guess what? The best time obviously was to start 10, 15, 20 years ago, but that didn't happen.

56:02So instead, we're going to focus on the things that we can control, which is the here and then now. And so what I want you to do is you can have any family structure. Maybe you had young kids and you felt as though you just couldn't save extra money. And so that was the excuse that you told yourself over the course of the last five to 10 years. and now you're in this situation where, hey, I'm making a little more money. My income has increased, but I just never got started. So if you made some mistakes in your 30s or you just never had this financial education, man, we wish this stuff was taught in school, but it's not.

56:29I wish this stuff was taught in school. And now there's legislation that's passing where it's gonna happen more and more and hopefully it just gets passed in every single state. Some states are doing it now. But maybe you feel as though you're just behind and you have some consumer debt in the picture and social media is telling you that everyone is getting further ahead than you. you still feel like I'm just living the same exact lifestyle I have for the last 15 years and I haven't gotten ahead whatsoever. What are some of the top priorities for folks in this scenario? First is to stop the comparison.

56:55The number one thing that is going to absolutely kill your progress is if you keep comparing yourself to other people who have maybe made a little more progress than you. You're going to have friends who you graduated with. You're going to have family in your life who are going to be doing a lot better than you. And as time goes on, that's just the way life works. You cannot hold that deep inside of you. Instead, you need to start by focusing on the things that you can do. I want you to, number two, build a written plan. A written plan that can help you step-by-step know exactly what to do next.

57:25Join Master Money Academy. It is a place where we literally do this for you. We help you step-by-step build out your plan so that you know what you need to be doing next. If not, hire a certified financial advisor or financial planner who can help you out with this plan. a fee-only advisor, a fiduciary that can help you with this plan and help you step-by-step know what to do next. My ultimate goal is to make sure that you know where you're going and what you're supposed to be doing next. And if you don't know what that is, then you're never going to be able to make some progress. And so right now, you've already wasted enough time.

57:58Right now is the time to get started and to get the ball rolling. Next is I want you to cut out every single expense that isn't building towards the goal. Any expense that just really is one of those things that you feel as though this is just a waste of money, not building towards my goal, it's not helping me with my financial priorities or my priorities to spend more time with my family or my priorities to reduce my stress and anxiety or my priorities to increase my health. If it's not falling into some of those categories, your big priorities in life, then I want you to cut it out. Cut it on out because that's gonna be the easiest way for you to find some things that you don't really need to be dealing with.

58:34Look at the big three. Look at your big expenses. Are you overspending on housing, food, transportation? What are some of the things that you are overspending on? Get rid of it. Get it out of your life. You're going to feel so much less stress around money when you start to do this. Once you start to cut that stuff out, now it's time to get aggressive. And we need to make sure that we are maxing out our retirement accounts and we're maxing contributions aggressively, including catch-up contributions after the age of 50. And so if you have a 401k, your Roth IRA, an HSA, we're getting as much money as we possibly can into these accounts and we're investing as much as we possibly can.

59:09Because the only way to multiply money is to get our dollars invested and allow compound interest to get to work. And if you haven't started yet, now is the time to start so that you can get the snowball rolling. It's very, very important. And then increasing our income during this stage, if you feel as though you're behind and you feel as though you have not done enough, I would highly recommend you focusing on increasing your income because that's what's going to help you truly, truly, truly the most. Especially if you don't have your foundation built yet, your first 100K, your first$150K, your first$200K.

59:39You want to get that foundation built up as fast as you possibly can, and your income is going to be the biggest catalyst to that. It's going to be the biggest way to get your dollars rolling and fall into that. Now, what are some traps that people in this scenario fall into? One is they give up because they think it's too late. I'm going to say this over and over and over again. I don't care how old you are. I don't care if you're 52. I don't care if you're 62. It is never too late. You need to make sure that you are starting now and getting the ball rolling because it's never too late to make a big difference in your retirement.

1:00:12Number two, let me, and you know what? Let me pause for a second. Let me give you an example of this. We had somebody, a listener, who reached out to me. She was 48 years old. And Deanna, if you're listening, shout out to Deanna. She started to listen to the podcast in 2021. When she started listening, she had zero dollars to her name. And she took extreme action from listening to the show. She first started to invest her dollars. She opened up a couple of retirement accounts, started to invest her dollars. Then she started to catch the real estate bug and she realized, oh, I can start investing in real estate and really accelerate my path to wealth.

1:00:45And she started to buy rental property after rental property after rental property. And by the time I had a conversation with her, she had four different rental properties, cash flowing thousands of dollars every single month, just over the course of three years. And her net worth grew to a million dollars just in a few couple of years. She took her income and she started to take drastic action. And I believe anybody in this world can do this. Listen to our episode with Justin. He changes financial life in two years. Now, sure, these may be some drastic scenarios. I show you these examples to show you that you can do it.

1:01:16You can make a change in your financial life and it's very important that you know that you can do it. Let's jump into stage eight. Stage eight is folks who are close to retirement. Now, these are gonna be the folks who are five to 10 years out from retirement. They are ones where the decisions they make today will have an impact on retirement security more so than almost anything in the world. And this is the highest stakes financial season outside of the dink window that I think most people have. Income is likely at its peak when you are close to retirement and your house may be close to paid off or completely paid off.

1:01:48The kid are launched or they're almost there. They're out there in the real world or they're in college. And for the first time in decades, there's actual margin in the budget for a lot of folks who are getting closer to retirement. The question shifts from how do I build wealth to how do I protect my wealth? You're going from the accumulation stage to the preservation stage. And this, my friends, is where the shift is going to happen. Because when you are in the accumulation stage, you are go, go, go, go, go, go, go. And now you're planning for the preservation stage. So there's a number of things that you can do to make sure that you are on top of this.

1:02:18Now, income is likely at its peak during these years. This is the timeframe where you are making the most money that you have ever made in your entire life. And if you are in a position to be able to protect your money, you want to make sure that you are taking as much of those dollars as possible and putting them towards your retirement so you can live the best possible life that you want to live. And so because of this, there are some priorities that I want you to put in place. Number one is I want you to make sure you have a financial protection plan. One of the things that I want you to understand is that financial protection becomes increasingly important the closer you get to retirement.

1:02:49It is super important during your earning years, but as you get closer to retirement, the last thing I want to see to happen to anybody is for them to get a huge chunk of their retirement wiped out. And as scams get better and better, this is something we need to make sure that we have in place. So the first thing I want you to do is get DeleteMe. DeleteMe is a service that goes and they remove your personal information from data brokers online. See, the business of data brokers is what they do is they take your information. And when they have your information, they sell it to other people. Now, they don't care who they're selling it to.

1:03:21As long as they're making money, they'll sell it to scammers out there if they need to. So if someone gets a portion of your information, like they get your name and your email address, if they go to these data brokers, these data brokers can sell the rest of your information to them and they can go open bank accounts in your name or they can open up other accounts in your name. So DeleteMe protects you against that. And so I highly recommend you get DeleteMe. If you go to joindeliteme.com slash PFP20, you can get 20 % off of DeleteMe. And that, my friends, is one of the best things you can do for your financial situation, especially in 2026, when these AI scams are advancing every single day.

1:03:55So please go to DeleteMe and make sure that you are getting your personal information removed online. If you're like, I don't know if I need this, go and Google your name or your address or your phone number and quotations and see what pops up. You're gonna see all these websites, these random stupid websites that have your information on there that you need to get removed. DeleteMe goes and removes those for you because there are thousands of different websites that my name was on that I had to get removed and DeleteMe did that for me. Now, there are some that I like to keep on still. Obviously, I am in a public figure.

1:04:22I'm in the public space. So there's websites I keep my name on, obviously. But for those of you out there who need your personal information removed, I want you to get that removed as fast as possible. Two is you need to make sure you have a password system that is really secure. I know this sounds obvious. You can use one password or Google Password Manager, but you got to get sophisticated when it comes to the way that you're doing that. Three is freezing your credit. Making sure that you freeze your credit is going to be a huge, huge deal as you get closer to retirement. I highly recommend every single person does that.

1:04:49Number two is to max out everything, including catch-up contributions. This is the sprint. We're getting closer to retirement. We need to have a plan in place. And so we're going to max out our catch-up contributions if you are there. Now, if you're someone retiring early in your 40s or maybe even your 30s, then you don't have the advantage of catch-up contributions. But if you are someone in your 50s, really, really want you to look into this. Also, as you approach or get closer to retirement, I want you to have a mortgage payoff plan. I don't want you having a mortgage when you're retired. It's just one of the rules that I like to have is that having a mortgage, like sure, if you got that 2.5 % interest rate because you bought a house in 2020, I guess.

1:05:26But outside of that, if you have a normal interest rate, I want you to get rid of that mortgage as fast as you possibly can. Mortgage-free means you're going to be less stressed, less anxiety, and less liability in the middle of retirement. Get long-term care insurance if you feel as though you need it. It's very complicated, and a lot of times it's overpriced, so you got to understand it first. But if you feel as though you're going to spend time in a facility, then look into long-term care insurance if you want to have control over where you go. That's, I think, one thing that most people think through.

1:05:53Stress test your plan. So you're going to go from the accumulation phase to the preservation phase. I want you to stress test that plan and understand what your withdrawal rate's going to be. We're having an episode coming up, by the way, on withdrawal rates, so get ready for that. But I also want you to understand where you're going to land when it comes to building wealth and making sure that you have, you know, what's going to happen with a market crash or if you have a health scare or you have early retirement, what's going to happen there? Use our retirement number calculator. It has a lot of this built into it.

1:06:19If you go to mastermoney.co slash resources, it has a ton of this built into it so you can utilize that. Also, making sure you finalize your estate plan. Having a will in place. If you will have over a million dollars in net worth or a business, have a trust in place. Healthcare directives, all that stuff needs to be in place and have conversations with your loved ones about it. Don't just let them get surprised on who's getting what and all that kind of stuff. No, people who are good with money communicate about money. They communicate about what's gonna happen with money and you need to make sure that you're doing that.

1:06:48Now, spending this new margin on lifestyle upgrades instead of the finish line is the biggest trap I see people fall into. Maybe you have some new margin where like kids are finally not your liability anymore. Although there's a lot of kids who rely on their parents even in adulthood now. But if you have kids who don't rely on you anymore and you take those extra dollars and you're behind on retirement and you don't put them towards retirement, that's a big, big, big mistake. Instead, I want you focusing on getting closer to retirement. Stage nine is folks who are retired. And folks who are retired, the goal is achieved, the paycheck stops, and now the plan has to actually work in real life, which is a completely different skillset than accumulation.

1:07:28And so for a lot of you out there, you went from the accumulation phase and now you're in the preservation phase. And here's what your financial life looks like. Instead of having this extra income coming in, you got a fixed income. Maybe it's from social security. Maybe it's a pension if you have one or it's portfolio withdrawals. You're doing the 4 % rule or maybe the 4.5 % or 5%. and you've decided that's a big thing. Healthcare is also a big concern for you when you have that in place. And sequence of returns risk is very scary. This is one where the psychological shift from saving to spending is harder than anybody else ever tells you out there.

1:08:00It is one of the hardest things to do. Like, I want everybody to just think about this for a second. You get to the point in time where you've been working your entire life and all of a sudden you get there, just close your eyes. And you get to this point in time where all of a sudden you have to draw on your retirement accounts. You don't have an income anymore. My eyes are still closed. Are yours closed? Okay, good. You don't have an income anymore and you are trying to decide, well, I got to start withdrawing this portfolio. That's got to be a scary thing to do. Okay, you can open your eyes now, but that's got to, well, if you're driving, don't close them, but that's got to be a scary thing to do.

1:08:38Getting over that psychological hump and starting to think about this right before you retire can be very, very helpful. I think working through it can be very helpful because a lot of people struggle with this. So some of your top priorities are to A, build a withdrawal strategy. I just did this with my parents. I'll probably do an episode talking about this a little bit on the portfolio I built for my parents and then the withdrawal strategy we're building. And that's going to be something you want to stick to. Which accounts are you going to draw from first, at what order, at what rate? Then I want you to optimize social security timing.

1:09:06If you have not claimed it yet, or you're waiting to claim it, you can optimize when you're going to claim it. Are you going to claim it at, you know, 63, 67, 60, 70. What are you going to do? Next is to plan healthcare costs in real time as a real line item. Our retirement calculator helps you do this, but I want you to make sure that you have those healthcare costs in place. The average person spends$300 ,000 in retirement on healthcare as a couple. So it's a big deal. It's a really, really big deal. Now keep enough in growth assets to fight inflation is another big thing you need to do over the course of the next 30 to 40 years.

1:09:36That's a big one. And then get intentional about legacy and how you want to spend your legacy. But also, one thing I want to note is that we're going to be living longer over the course of the next 30 to 40 years. AI is going to help with health care dramatically. It's going to change the way that we live. And so if you are someone who is retired, you need to stress test your portfolio if you live an extra decade, just in case, because that's going to be something to note as time goes on. And we want to make sure that we are on top of it. Okay. So that's a big one too. If you don't have an advisor who put this withdrawal plan in place for you or someone who knows what they're doing, make sure you talk to one and just get a financial plan put together.

1:10:12I think that's one of the best things that you can do when it comes to just thinking through this stuff. Okay, let's get to the last stage now, stage 10. Now stage 10 is going to be an interesting one because this is newly divorced or widowed. These are folks who used to have someone in their corner, used to have someone to spend their life with and now they don't. And in this stage, there are going to be some things that are going to shift in your lifetime. Someone whose financial life got restructured against their will, or at least against their original plan, this could happen at any age. From age 32, you could be 62.

1:10:46And the defining characteristic of this is not age, it's the sudden shift from having a shared financial system to having to do it on your own. Everything is a transition at once when you're in this stage. Income may have dropped significantly, that could be one thing. you may have the house as a question mark you may have joint accounts being separated you may have you know legal fees or asset splits if you are someone who is getting a divorce or if you're widowed you may have life insurance proceeds you're trying to figure out what to do with that or you have estate processes or you have social security survivor benefits to navigate there's so many different things that you could be worried about here and so this is one that has a lot of different things that you need to prioritize i'm going to give some for both scenarios then i'm to give a couple things that I want you to think through when it comes to being divorced and when it comes to being widowed.

1:11:32One is do a complete financial inventory immediately. Your accounts, your debts, your insurance policies, your beneficiaries, your assets. You need to know exactly where money is coming from before you make this decision. Number two is I want you to update your beneficiary designation now. Your 401k, your Roth IRA, your life insurance, your estate plan, All those different things need to happen. If you are a solo saver, I want you to rebuild the emergency fund. If you don't have one in place or maybe you just didn't have one set up, I want you to rebuild it and make sure you have that six months on hand.

1:12:05And don't make any major financial decisions for the first six to 12 months. If you're grieving or you are in an emotional state, don't make any decisions. Take some time for yourself to heal. Take some time for you to try to heal. I'm not saying heal in terms of move past it. I'm saying heal in terms of just getting yourself in a position where the most important thing is you right now. It's you making sure you understand what to do next. And if you feel as though you need some help, get a fee-only financial planner involved, a fiduciary that's going to be looking out for your best interests and making sure that you are doing the right thing overall.

1:12:41They can help you step by step. Don't get someone who's going to try to sell you IULs or sell you a bunch of life insurance because you don't have somebody who depends on your income now. it's got to be someone who can really, really help you navigate this stuff. Now for folks who are divorced, I want you to understand every piece of the divorce decree financially. The QDRO orders or retirement account splits or tax filing, all that stuff, you need to understand how that works and who's going to keep the mortgage on the house, what are your liabilities coming into play, what are the costs of all of this.

1:13:15You need to understand every single one of those. For those who are widowed specifically, Don't rush those decisions. Give yourself six to 12 months to get your bearings before you do any of this stuff and understand Social Security survivor benefits and know that you can roll a spouse's IRA into your own also. Okay, that's gonna be another big one. The trap that a lot of people fall into in this scenario is they try to make permanent financial decisions during temporary emotional states. And I don't want you to do that. Or if you try to keep a house you can't afford because you want stability, that's another big thing.

1:13:45That's a big no-no that a lot of people fall into. Or giving away too much in a divorce settlement when it should be split in a certain way, don't do that either. And then don't hand off money to the first financial advisor who calls after a spouse passes. Please, you got to do your homework, you got to interview people, and you got to understand who is the right person for your scenario. So this is just another one that I really wanted to dive a little deeper in. Listen, thank you guys so much for listening to this episode of the Personal Finance Podcast. What a fun episode, diving into a bunch of different scenarios.

1:14:16Really appreciate each and every single one of you being here. If you want a step-by-step financial plan, you want to feel more clarity with your money, and you want to understand where you're going and knowing that you have a path going forward, then I highly encourage you to join Master Money Academy. We have a seven-day free trial linked up down below in the show notes for podcast listeners. And during that seven-day free trial, go take some of the courses, go check out some of the conversations we're having in there, go join a mastermind if you got one going there, and go join a coaching call with me, a Q &A session where you can listen in, you can ask some questions and see if it's right for you.

1:14:49See behind the curtain during that seven-day free trial. If you don't like it, no harm, no foul, no hard feelings whatsoever. I truly appreciate you just listening to this podcast and cannot thank you guys enough for listening to the show. So appreciate each and every single one of you. Really excited for some of the stuff that we have going on. And again, if you want five minutes every single week where you can learn more about money, join the Master Money newsletter. If you go to mastermoney.co slash newsletter, that's the spot where we are giving you five minute tip every single week all about money and it's a great place to be completely free would love for each and every single one of you to join the newsletter there again thank you guys so much for being here and we will see you on the next episode