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- [00:07]
Brian Preston
It's a big day. We're gonna be talking about real stories, real people, real strategies, real wealth. We're gonna be introducing Making a Millionaire.
- [00:17]
Bo Hanson
Brian, that is right. I am so excited because they're finally letting us talk about it. We have been planning this for months and months and months and months. We have a brand new show coming out for you guys that we want you to get so excited about and it is coming out in the next few weeks.
- [00:35]
Brian Preston
Well, let's go ahead and just tell them when it's starting.
- [00:38]
Bo Hanson
I know, I set you up to tell them. Okay, you want me to tell them?
- [00:41]
Brian Preston
The premiere date is going to be Monday. No. February 3, 8am Monday, February 3, 8am.
- [00:50]
Bo Hanson
The plan is we will release a new episode every two weeks. So if you aren't used to consuming our content on Mondays, get ready because every other Monday at 8am we're going to have a brand new, new Making a Millionaire show out there for you to see. Well, we're going to do a deep dive sitting across the table from individuals, from couples, from millionaires or millionaires in the making to show you what it looks like when we actually get to apply the abundance cycle. Brian, we talk all the time about the abundance cycle is you want to learn and then you want to apply and you want to grow. Well, the money guy show is where you learn, is where we put all the education out there. But we also want you to see real life case studies of that information being applied to people's actual financial lives and how it can truthfully lead to a great big beautiful tomorrow.
- [01:40]
Brian Preston
Well, I thought it was. What I love about this is that we really are getting to open up the curtain where like we did an episode on Friday and this couple that came in, they were even sharing how their influence back in the 90s was a former financial advisor that became very popular and was just telling everybody, no, no, no, cut. You know, you can't do this, you can't do that. I love that we get to show people empowered in the fact that it's not always the cutting. It's also expanding and thinking about all the things you should be doing or can be doing or even do more to make more memories. Because you've got the numbers and everything's lined up. You just need to give yourself permission. So we're really kind of going in depth to what a real financial planning relationship works and looks like with like fee only financial advisor. So we get to essentially flex the muscle of what we do in our day job.
- [02:33]
Bo Hanson
And I love that what you're going to see is you're going to see people that are at the beginning of their financial journey. Maybe they're just starting out. They're just trying to figure out what they're going to do in their finances all the way to people who are at the financial independence level and some of the advanced strategies around what to do in retirement and how to think about your assets and how to think about decumulation. So our hope is that there's gonna be something for everyone. There's gonna be a lesson to learn in every single episode. And we are so, so excited to get to unleash it to the world so that you guys can see it.
- [03:03]
Brian Preston
But we can do better than just me and you talking about this.
- [03:06]
Bo Hanson
Yep.
- [03:07]
Brian Preston
I think we thought it would be really helpful and the content team did this for us if we gave you kind of a flash of what to expect with Making a Millionaire. Everybody growing up wants to be a millionaire. I want to show all the viewers that, yeah, it is possible. So do you think you can be market right now? No, I have, but no.
- [03:29]
Bo Hanson
My dad really educated me again, like I said, on the value of money.
- [03:32]
Brian Preston
And then it made it harder to.
- [03:33]
Bo Hanson
Just go and spend it.
- [03:34]
Brian Preston
You're a unique situation because we have to come to you where you are. We're triaging your personal situation right now in real time.
- [03:42]
Bo Hanson
Might you be at the stage of your financial journey where it's time to calm down? I'm gonna say, well, I'm say grow up. And then at that point, that's when you get to build your great big beautiful tomorrow.
- [03:53]
Brian Preston
Welcome to Making a Millionaire. Boom shakalaka.
- [04:01]
Bo Hanson
So there it is, Making a Millionaire. We are so excited for you to get to go on this journey with us. If you would like to be on Making a Million, if you're someone who thinks you may want to apply that you can go to moneyguy.com apply and maybe you want to tell your story. You want to have us do a deep dive with you? We would love to do that because we love answering questions. We love answering your questions is why Every Tuesday at 10am we do this live stream where we can load you up. So right now we have the team out in the wings collecting your questions so that we can help you do money better. So with that senior creative. Nope, that's not it. Senior content writer. That's not it.
- [04:44]
Brian Preston
I thought when I saw you grab the sticky note that you'd written it down, but you didn't. I don't know what you Sorry.
- [04:51]
Bo Hanson
Hey, Megan. That's what I'm gonna say.
- [04:55]
Brian Preston
But everybody, I wanna cut everybody off, but everybody's like, where's Ribi? Did we never tell everybody Rebi's on maternity leave?
- [05:01]
Bo Hanson
Yeah, but a lot of people who come here, they don't get to see everything. They're interacted. That's exactly where she's at. But I'm gonna give them a pass. They might not have known that. They might not have known that she was out with the family.
- [05:09]
Megan
They mentioned it like once. I think so.
- [05:11]
Brian Preston
Well, you know, and by the way, Megan, everybody's crushing it. You're doing a great job. But I just also wanted to make sure I filled in the gaps for other things I see in the comments section.
- [05:21]
Megan
Yeah. Also, real quick, before we get started, if you want to learn a little bit more about making a millionaire, you can go to moneyguy.com makingamillionaire and all of the information that we just talked about will be up there for you to look back and read through. All right, you ready to start with some financial questions?
- [05:39]
Bo Hanson
Yes, ma'am.
- [05:40]
Megan
Alrighty. This first one is from Kyle C. He says my wife's job offers a deferred comp plan through her job. What are yalls thoughts on the pros and cons of that? We are already maxing out her 401k and doing each of our backdoor Roths. So what do you guys think about those deferred comp plans?
- [05:59]
Bo Hanson
Yeah. So let me. Why don't you, Brian, you let me define what a deferred comp plan is, how it operates, and then maybe you can talk about some of the pros or cons or how someone decides if they're going to use it. So a lot of companies, when you work for them, say, hey, we're going to pay you x salary per year and this is going to be your income. But you might be at the place that, hey, I actually have a standard of living where I don't need all of that income coming in to be able to pay my bills. I would actually be willing to push some of the income that I earned this year into future years so that way that it's not taxable to me. So I'm going to defer that income to some point in the future. Maybe it's 5, 10, 15, 20 years out. And then at that point in time, I'm going to elect how I want to receive that income. Maybe I want to receive it all as a lump sum when I retire. Maybe I want to receive Equal payments over my first five years of retirement or ten years of retirement. So deferred comp plans allow you to do that. They allow you to push off current year income into the future. Oftentimes you can then invest those dollars so that they grow and you get to control the income stream that you receive later on, often building yourself like a mini pension through your deferred comp plan. But it's not all rainbows and unicorns. There are some things you need to think about and there are some things you should measure before you decide if you take advantage of it.
- [07:18]
Brian Preston
Yeah. Let me first tell you how is this even possible? If you're asking yourself how in the world can you take some of your income, not pay income taxes on it until some future date. How, how does the government even allow this? Well, the way they allow it is, is that you're essentially saying, hey employer, instead of taking this income now, you keep it, put it on your balance sheet as a liability to me so that I don't actually receive the income. So that's why it's not taxable to me now, but now you're going to keep it on your liability side as an obligation and pay me at some point in the future. Well, that problem with that is this is the big risk. Everybody who does deferred comp, look at your company, maybe even go pull the the balance sheet. For your company to see how in good financial situation they are is because if they went broke before your obligation or promise is fulfilled and they paid you back or started paying the income streams, you'd get in line with every other creditor out there. So that's why you do need to at least make sure that your employer is on good stable ground financially. I do like these, especially for any of my clients that are thinking that they're going to retire pre 65 or before 66 or 67, depending upon where their full retirement age for Social Security is. Because this allows you to essentially, as Beau said, create a pension. Now there's a caveat there. You need to go read the rules for your deferred comp because for some of them, say you change your mind or you get laid off or you just decide to leave this company. Some deferred comps do allow you then to start getting paid that money over time, like over a five year period. But some others, their document is written in a way that it just unloads on you all at once and creates a huge tax bomb right as you change employment. So I always tell people, make sure you read all the rules. This is a very personalized decision, but it is great. I've had quite a few executives who. And here's the cool thing, like you choose that five year creating a five year bridge. What if you decide you want to keep working five years in the future? Typically, these plans allow you to kick the ladder out an additional year in the future.
- [09:31]
Bo Hanson
Things that have to happen.
- [09:32]
Brian Preston
So you get to keep kicking it out though, and make the decision and build up your. Essentially your ladder of deferred comp gets bigger and bigger and creates a bigger compensation bridge for yourself. But you got to make sure that you measure twice on this because there's a lot of rules and usually you have to make these decisions really far in advance too. So that's why it typically requires a lot of planning. This is definitely something that when you're, you're like, man, I've never done this. Wouldn't it be nice if I've had. I've dealt with somebody who's done this hundreds if not thousands of times. This is definitely one of those things where you might want to take the relationship to the next level. This is one of those areas where life gets very complex very quickly and you want to make sure you get it right on the first shot at this.
- [10:15]
Bo Hanson
Can I ping just one other thing on one other little question, Kyle? He said we're already maxing out a 401k and we're each maxing out our backdoor Roths. Where in the financial order of operations do you often see deferred comp happen? Like, is it something that someone who's right at the very beginning of their journey should take advantage of? Or how do you know when it makes sense?
- [10:34]
Brian Preston
If you're trying to figure out where in the financial order of operations, this is definitely a step 7 hyper accumulation because this means you're beyond the basic plans. We're way beyond Roth IRAs. We're way beyond just maxing out your 401k. This is for people in very high income situations. And now you're thinking about when you get to step seven of the financial order of operations is what's the three bucket strategy? What am I going to have access to? When do I actually plan on leaving the workforce? How am I going to integrate that into my financial plan? That's why this is a great tool to take into account and use as you do that high level planning.
- [11:09]
Bo Hanson
Love it.
- [11:10]
Megan
Great. Sounds like you've given Kyle a lot to think about. Thanks, Kyle, for your question. Next up is a fun One. This is from GBB Tomorrow.
- [11:19]
Brian Preston
He says, oh yeah, I like that.
- [11:22]
Megan
He says our 11 year old son who has invested his earnings over the last few years is passionate about math and finance and is enjoying millionaire mission.
- [11:31]
Bo Hanson
Oh nice.
- [11:32]
Megan
What is the best place to hold his investments? We know he can open a youth investment account at 13 but until then we're holding his investments in a separate account in our brokerage. Do you have any tips for.
- [11:43]
Brian Preston
Well, I mean this, this. There's so many cool things in this question. First, 11 year old and I couldn't hear if you read this part. Who's invested his mowing earnings. This is earned income making money. Now look for people who just opening up an account for a child and you want to take advantage of their lower tax rate than yours. Custodial accounts are great, the UGMA or UTMA and then before that even you have 529s. But as soon as your children actually learn the value of hard work and they start making money through their labor, their time. I Love custodial Roth IRAs because if he's wired this way, why not you? And by the way, you could prime the pump so and do some type of matching formula. Whether it's 50 cents on the dollar, dollar for dollar. Remember you can't exceed what they make. Your contribution can't exceed what your earned income limit is when you're making Roth contributions. But you could. That way you could at least allow him to enjoy some of the fruit of his labor as well if you did some type of matching formula. But I love priming that pump to kind of really encourage that good behavior of discipline and letting your money work for you.
- [13:02]
Bo Hanson
I love. This is a great example. Even starting at 11 years old, you can use a tool like Millionaire mission. Brian, do you hold the Millionaire Mission thing up? You can even use a tool like this to teach your children financial concepts. It's not so complicated, not so difficult that they cannot grasp it and they cannot get excited about it. So that you can have them beginning to form those habits at a very early age that they'll ultimately take on later in life. In terms of accounts that might be available for. I love that you mentioned the custodial Roth. Whenever it comes to like kids accounts, I always say think about what the ultimate goal for these dollars is. And generally it falls into three distinct buckets. If the goal is for college or for higher education, 529s for a great solution. If the goal is for like retirement or financial independence, custodial Roths are a great solution. Then if the goal is for something more intermediate and term, and maybe it's for the first car or a down payment on the first house or some other goal they want to save for, well, that's where Marugma might be a fantastic solution. So you ought to have that conversation with your kid and say, hey, which one of these goals do you want to fund? Which one of these gets you excited? And it doesn't have to be all or nothing. You can actually have a child who has an UTMA set up and also has a custodial Roth set up. There's nothing wrong with doing that, especially if your child is taking an active role in the process.
- [14:26]
Brian Preston
By the way, everybody ought to go to moneyguy.com resources play around with our wealth multiplier I went and pulled it with my handy dandy little cheat sheet here. For an 11 year old, every dollar has the potential to become $216.51.
- [14:43]
Bo Hanson
That's amazing.
- [14:44]
Brian Preston
Wowzer. You know, I get excited about every dollar for a 20 year old becomes 88.
- [14:48]
Bo Hanson
That's way more exciting.
- [14:48]
Brian Preston
11 year old $216.51. That's mind blowing.
- [14:55]
Megan
Wonderful. Thank you great big beautiful tomorrow for your question. That's some really exciting stuff. All right, next up we have a question from the head cat. He says, I feel like I'm not being paid enough for the amount of work that I do at my job, but my boss is great and has helped everyone so much outside of work that it makes me feel selfish to ask for a raise. Is this wrong of me?
- [15:19]
Brian Preston
Well, I think you're. I think it doesn't have to be a win or lose discussion, but you're sitting here and I'm going to let Beau fill in some color on this because he's the master of creating the win win scenario. And I like to think that I did this with my first boss at the CPA firm. I know he used to probably dread every client ride that we'd have because we'd be stuck in the car for 30 minutes and I'd use this time to pepper him about career path and where we see the firm going and opportunities that I can make his job easier. And Bo, that's what I want to give you credit for with me you're so good at. You actually own part of the business now. So man, kudos to you for being so good at this is that I always felt like you presented when you wanted more. You didn't do it out of the obligation of saying hey I'm a good employee. Just give me more money. You always presented, hey, what if we do this, this and this? I think it's going to create more revenue here, here, here. And then you made it a win. Win.
- [16:20]
Bo Hanson
That's right. Yeah. I always tried to structure and any sort of, like, I don't want to call it a negotiation because it should not be a negotiation. I think that's a bad term for it. What it should be is a mutually beneficial conversation. That's what you ought to have with your employers. Because it's one thing, if you meet with your boss or meet your supervisor and say, hey, I want a raise, that means I want more money. And if it's the owner of the company, you make less money. That automatically puts you at conflict and misaligns your interests. If instead you can say, hey, I was trying to figure out, I was thinking, hey, if we decided to do this, we moved in this area, we tried this strategy or we used this sales tactic or whatever that thing was, and ultimately it's going to drive more revenue by increasing sales or increasing your revenue growth. Or maybe we're going to cut expenses by figuring out some better way to do something. Hey, I would love to spearhead the initiative to go on this path. Is that something that would be valuable to the company? Well, what I found in my experience and what I see with a lot of our clients is if you can find ways to make yourself incredibly valuable where either you increase the top line, you decrease expenses, and ultimately increase the bottom line, you generally, especially if you own that, will have a much stronger footing to say, hey, this would be something great if I could also participate in the growth. Hey, if you make more money, I make more money. We're on the same side of the table. That's a much better way to approach this conversation than, hey, I think I'm valued up here and you're valuing me down here, and I need you to come to me. I just think that you set yourself up for confrontation that way. So if you can find some way so that it's good for all parties involved, even if it's a supervisor, hey, how can I take on more responsibility? Hey, are there things I could do that would make your job, your life, your day, easier, better, more valuable? Hey, I'd love to take those on. And if you can create a consistent habit of doing that, you become so valuable to the organization that they can't ignore you, they can't possibly not create a path for you to move along in the organization.
- [18:19]
Brian Preston
And then I'll sound like the old man on the front porch yelling at the sky is know where you are in your the time frame too. Because now I am shocked because I'll see in the comments section we even have some loved ones. You find out people haven't gotten pay raises in eight years. And I'm like, and that exists.
- [18:33]
Bo Hanson
That's a different.
- [18:34]
Brian Preston
Because like we in our organization, we give pay raises, we look at things every year. But I've had situations and this person, I would talk about this because I think they would even say, what was I thinking? Somebody had been here for five months and we had a year end and they asked if they could have a meeting and they kind of said they wanted a pay raise. And I had to remind them. I was like, where do you think you are in this career journey? Because in the first five months you barely know how our processes work. Yes, you have a strong aptitude, but you have to have enough time to kind of absorb into the system. Because there is a balance. In the beginning of an employer relationship, your employer is giving you a lot more than you're probably giving them. Most people don't start day one and start adding tremendous value to a company. It takes a while to kind of absorb practices to get good at it, become proficient at something. So don't. If you've only been there for a few months, go in and then demand a pay raise when you might be at the beginning part of the learning cycle. Just be careful. I know there's a lot of content out there saying that you can't get ahead unless you do this, that, and there, it's just. But be very self aware of where you actually are in that value add because there's, there's what, what we always say is value. What you receive, price is what you pay. A lot of times that's what happens with wages as well, is that you have to make sure that you understand what is the value of the whole relationship as well.
- [20:02]
Bo Hanson
I love it.
- [20:03]
Megan
Great. Thank you the head cat for your question. All right, next up we have one from D and J. They say, can Brian and Bo share what helps them switch over from saver to a spender? Some background for context. I'm 36, married with a three year old son and have about $2 million invested in mostly index funds.
- [20:25]
Bo Hanson
Nice. Hold on. 36, 36 with $2 million invested, you're crushing it. I mean objectively, not knowing where you live, anything else you have going on. If you have $2 million saved up at the ripe old age of 36, you are crushing it. So let's pause there for a moment. But also you got a three year old so you're kind of like messy, middling it also, right? Like you, I bet you have a lot of different stuff going on every day and you probably feel this tension. Okay, I want to. I've made these decisions thus far in life to get me to where I am, but I also have these other priorities as my kids get older. I want to create memories and create experiences. I want to be able to spend some of the money. How do I balance that? Well, I'll tell you one of the things that I figured out early on was I was able to free myself of the spending guilt once I hit my 25% number. Once I knew that whatever my gross income is, If I'm saving 25% of that gross, if I can start doing that early enough, I'm going to set myself up to be able to write my ticket for my financial future. If you don't believe us, we have a Deliverable, you can go to moneyguy.com resources and download the deliverable. What can 25% do for you? That's not the name, but that's what we call it. What can 25% do for you? And show you if you can start that behavior early on, by the time that you do get to retirement, by the time that you do get to financial independence, you get to pick and choose the lifestyle that you leave. Well, if you are here at 36 years old and you've already got to the 2 million dollar mark, I would begin asking the question where am I going? What's the ultimate finish line that I'm working towards and do I need to keep running at the same pace that I have been running or is it okay if I slow myself down?
- [22:08]
Brian Preston
I always get nervous when sometimes when we do content, I'll have somebody in the comments or in the live streams just say I'm 27, we make half a million dollars a year we've already built up and I'm like well that's great but you haven't turned that big shovel into enough assets or army of dollars working for you. But that's not necessarily the case for somebody who's 36 years old and 2 million. So I don't want people to shut off the savings or feel too comfortable too soon. So I'm usually trying to get people, especially early in their career. Make sure you focus on the make wealth before you de risk and start doing the maintain wealth behaviors. But somebody who's 36, 2 million, I want to encourage you, I think you ought to go ahead and run the numbers. One of the things we have, if you go to learn.moneyguy.com, we have the know your number course. And I think it would be a great illustration and exercise for you is because when you put your numbers in, you put in your assumptions on when you want to retire, put in your rates of return, be conservative with it, so you just don't get this thing to run crazy on you because you have so much money at such a really early age. But then you need to kind of know the stats after you see the numbers. I want to remind you, this is something that kind of you, because you did specifically ask the question, how did me and Bo get from this? And I don't mind sharing. Part of my journey was, is that I realized that I was doing so good at being disciplined and saving. And I'm proud of those decisions because I couldn't tell you what dollar or what specific decision I made which is the one that has led me to this great situation. Yes, some big decisions had big results, but there was a lot of little things that led to big results, too. So I'm very happy with every one of them. But when I started seeing how big the number was going to be, I realize you see that stat that 80% of millionaires, whether it's Millionaire Next Door, whether it's Ramsey Solutions or even our own millionaire survey that we do every year, and even the surveys we did on all of our financial mutants out there, the stats are incredibly clear that somewhere between 75 to 80% of millionaires are first generation. Well, that stat only works if you understand how fleeting wealth is or building resources. And the fact that second generation, meaning your kids and your grandkids, you know, it's going to go away very quickly. And that's why the stats show 70% for your kids, 90% for your grandkids. The wealth evaporates. It goes away. So if you have that knowledge of where your money's going, you do the homework, you actually do the know your number course. You know the data and stats that I just shared with you, I think you'll have a different perspective. You'll say, look, I have now a balancing act. Just like it was discipline that got me to this point by making these small decisions or saving this money. Now I need to be disciplined with knowing, hey, if I can't take this with me, what can I maximize to make sure that I don't have regrets at any decade that I live. And that's why I like memories over stuff, especially with kids, because I still want to encourage you because if you're doing this at 36 and you have a young child, make sure you're building scarcity in their life. I always like that with like first cars, don't go get them a new super nice car. You know, I like that I got my daughter to pay half for the, the first one. Make sure you, you are building some type of scarcity. You're giving them the understanding of how money works, that you're, you know, doing matching funds when they start working their first job, make them go work fast food in high school, all those type of elements. But then also make sure you're loving on them with memories, great trips, invest in their education, all those type of things. And I think if you go through those exercises, you'll come out and be in a better place and you'll also have a better understanding. That's why, you know, when I, when I talk about Millionaire Mission, all of you financial mutants, you're like, I knew everything in the book except for the final two chapters. And I'm like, yeah. Because we've been doing this content since 2006, I pretty much have shared everything I possibly can know. And it starts probably sounding over and over. But the last two chapters I did spend a lot of time thinking about what is wealth? What does it mean to me? What is it? What have I done to change my mindset so I can understand these things? And D and J, hopefully that helps. So my experience can help you navigate these waters as well.
- [26:25]
Bo Hanson
And then sometimes it's helpful to have a coach. I mean, obviously where you are, you've done a great job of accumulating and building. Sometimes it's nice to have someone in your corner saying, hey, it's okay if you spend money. Hey, it's okay if you back down the savings. I mean, Brian, you and I both in 2024 had some large capital outlays for some things that we were each doing individually. And we would have conversations around that, hey, I'm thinking about doing this thing, I'm thinking about buying this thing. Yeah, okay. No, it makes sense. If you can have that sounding board, if you can have someone on your side telling you, hey, it's okay if you upgrade this, if you spend the money here, if you back down the savings here, because it still aligns with your long term financial plan, sometimes having that person in your corner can be incredibly valuable. As financial advisors, it's one of our very favorite things to do. I mean, we love telling people, yes, save, save, save, invest, invest, fest. Grow, grow, grow. Yeah, that's wonderful. But, man, it's so fun when we get to say, hey, you know what? Now let's spend some money. Let's create those memories, let's have those experiences. Let's do those things that you've saved up for. For all of these years. So having a voice of reason in your corner, communicating that to you can be incredibly valuable. So maybe now would be a great time to consider taking the relationship to a next level.
- [27:38]
Brian Preston
Yeah, I mean, well, we all have blind spots. I did make a big purchase last year, and I was just gonna go make a sale and create a ton of capital gains. And Bo was like, because I was paying cash. And Beau was like, isn't that transaction three months in the future or four months in the future? And I was like, yeah. And he goes, it's kind of like a quarterback. Why don't you lead the ball where it's actually going to be? Do you really need to create all those capital gains at once, or could you be saving in the background still take on some of those capital gains? I was like, you know what? You're right. And you saved me a decent chunk in taxes, because if I would have sold everything when I put the contract down, I'd have probably been pretty ticked off when I paid that tax bill and those extra dollars, when that was just a blind spot that I had. I was. Because in my mind, I was. It was the better decision just to do it all at once. But in hindsight, and I like to think with your improvements, that we've kind of had some really good discussions on that stuff as well.
- [28:36]
Bo Hanson
Absolutely. 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 information, informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment or legal advice. All investments involve a degree of risk, including the risk of loss.