Why High Earners Still Feel Broke (And What to Do About It) – Episode 680

This transcript was auto-generated and may contain errors.

[00:01] Welcome to the prosperity podcast Prosperity thinkers welcome to the podcast we’re gonna be talking about why people with high incomes still feel broke and Here’s the deal if this podcast was aimed at the audience of Use cash only Dave Ramsey audience. They would sit there and they go. Oh, that’s got to be a total lie and If this was at the audience of why people with high incomes still feel broke and we were only talking to billionaires They would actually say well, okay I understand this audience is for the people that are still rising that have some net worth that have some momentum and also, maybe Transitioning down the hill a little bit as you’ve mentioned before Kim. So Kim First let’s talk. Why?

[01:00] Do people feel that way and then we’re gonna unpack the mechanics and then help Well, it is interesting with what the definition is of high income or upper income in the United States Because it really doesn’t take much. I don’t know the exact statistics, but Typically that 140 hundred and fifty thousand a year space It puts you in the top 5% and then I’m gonna guess probably around 250 space puts you in the top 1% And so that’s been a space that I’ve operated in for a long time just because of our family and the fact that we own two businesses and people in that space Especially if they’re entrepreneurially oriented, maybe they don’t literally own a business, but they’re entrepreneurial thinkers

[01:46] they’re often sales people or just people that control their income to a certain degree are Typically also Providing a lifestyle for themselves that is eating up every single bit of that income and so they have high income, but they don’t have what they can see as the ability to build any type of wealth and Then you layer in the fact that all financial planners are focused on assets and or management which Translates to the consumer side as net worth and we’ve talked about this before Where all the focus is net worth that doesn’t affect your day-to-day Lives, it’s cash flow that affects that but if you’re not feeling like you can save anything from the cash flow that you’re earning You’re really gonna feel stuck

[02:37] And so this is the space that we can make such a difference in and it’s not talked about by most typical financial planners and financial advisors because one They want to get straight to investments, that’s where all the sexy stuff is and two it is not only in a guaranteed realm, but a very small amount of Impact realm. So for example, you take a family making quarter million dollars a year Maybe the typical financial planner they’re interested in that five hundred thousand dollar IRA that they have or that other account that’s maybe at their brokerage and Currently in Robin Hood, for example, and it’s you know, whatever six figures That’s what the typical financial planner is interested in

[03:25] But that very family if caught at the right time Can on a monthly basis make such a difference in their lives by stepping back off that investment realm that everybody else is focused on and Do two things one Realize that all families are on parallel paths of both investing or accumulating if you will assets and Protecting those assets So when you just identify that area of asset protection People will commonly default to oh, it’s legal structures, right wills trust that kind of thing It’s insurances car insurance home insurance, maybe even liability umbrella insurance and those are Absolutely critical aspects of protection. But again back to the two parallel paths, right? We’re going up the mountain

[04:29] Nobody is guaranteed the success at the top of the mountain Things can interrupt that success and there’s some obvious ones like death a disability lawsuits Market corrections, right a job loss for a period of time, etc but because we’re on those two parallel paths if Fairly early on we can understand that by building the protection path alongside the asset accumulation path and Utilizing one of the insurance spaces that is a when w-h-e-n as opposed to an if so Car insurance if insurance right home insurance if insurance health insurance even if I have a problem and I need coverage disability insurance It’s an if insurance but life insurance is a when insurance w-h-e-n because death is a guaranteed event

[05:27] and so if you’re looking at these parallel paths and your understanding that the protection component can be built alongside The accumulation component as you’re heading up the mountain Then as you head down the mountain and what would typically be called retirement the protection component becomes so valuable because it can guarantee income Every now and then I’ll have what I call parents of clients on my phone So my typical client younger family entrepreneurial, etc But I’ll occasionally get their parents and they’re typically in their 80s and It is always amazing to me shouldn’t be but it’s always amazing to me like it’s like I need the reminder all the time right that People in their 80s. They don’t want to have their finances be complex

[06:24] they want their finances to be simple and guaranteed and so if you build the protection component alongside the asset Component or the investment component if you will Then when you’re in your 70s and 80s and you’re coming back down the mountain you can guarantee lock in and simplify That cash flow control Because what I’m learning from these types of people that I get to talk with every now and then is The only thing that matters is that paycheck that shows up every single month like clockwork Obviously Social Security is a part of that But what else can we do when we’re in our 30s 40s and 50s and 60s to build in that? certainty that Simplicity and even that guarantee that when we’re in our 70s 80s and 90s and hundreds

[07:23] Because that’s going to become very common these days Our Paycheck shows up like clockwork every single time unaffected by stock market gyrations real estate crashes and and You know positive rises, etc And it is truly Simple to do it doesn’t take a lot of time. It doesn’t need to be overly complex But it takes the knowledge that you can build both the protection component and the asset accumulation Component at the same time in a way that they will benefit each other not harm each other That’s so good. Okay, I gotta give you full disclosure on something One I’m hoping that you didn’t hack my computer. Okay, that’s the first. So here’s not I didn’t I didn’t share with you my Meeting prep notes and I prep for all of these I

[08:21] Work on the topics and then I do the prep notes for it. And of course, I use AI tools There were three three only three points to cover What did it talk about lifestyle inflation Kim talked about check Complexity so aiming for simplicity over complexity Check okay the last one and it’s something we’ve talked about before and we’ll have to do this on another episode Which is why people with high incomes still feel broke is because of taxes That’s another episode We’ve talked about this but Kim how cool that you that you were totally on track And if we did have more time for the episodes, of course, we would do taxes You’ve kept it simple You’ve kept it on track. You’re helping the people that are

[09:14] That are in the driver’s seat looking to be helped For you listeners if this resonated with you, make sure you smash that follow button the subscribe button and If you do have questions, there’s an email Questions there’s an email specific and special Unique for you, which is hello at prosperity thinkers calm Thank you for listening to the prosperity podcast to take control of your money and have it work for you visit prosperity thinkers calm