This 22-Year-Old Needs a Reality Check… | Making a Millionaire

Summary

Podcast Summary: "This 22-Year-Old Needs a Reality Check… | Making a Millionaire"

Money Guy Show – Brian Preston & Bo Hanson
Date: October 13, 2025
Guest: Cyrus (22-year-old freelance filmmaker)

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Overview

This episode features a candid financial deep-dive with Cyrus, a 22-year-old entrepreneur and freelance filmmaker who has set the ambitious goal of achieving a $1 million net worth by age 30. Hosts Brian Preston and Bo Hanson provide tailored guidance, challenge his expectations, and deliver a reality check on balancing aggressive goal-setting with practical risk management and enjoying life in the present. The conversation is loaded with concrete advice, actionable steps, and thought-provoking reflections for young self-starters navigating wealth building.

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Key Discussion Points & Insights

1. Cyrus's Background & Entrepreneurial Journey

• Entry into Filmmaking: Started by taking photos of high school sports, hustling with part-time jobs, and leveraged networking to secure a full-time gig with a prominent YouTuber (04:08, 04:25).
• Transition to Freelancing: Moved from Florida to Chicago for a contract, shifted from employee to contractor, and now operates out of a shared studio (05:31-06:00).
• Current Setup: Works with various clients, focusing on commercial filmmaking and some weddings; prefers project-based work over too many recurring gigs for flexibility and opportunity (07:36, 31:23).

2. Financial Position at 22

• Net Worth: $51,300 (cash, personal/business, investments).
• Income: Anticipated $120k gross for the year, netting around $70-80k after business expenses.
• Savings: Consistently saves but admits income is variable; splits between recurring and "hunt and kill" projects. Emergency fund at ~$15k (07:04-08:42, 32:56).

3. Aggressive Financial Goals & Reality Check

• Goals: $100,000 net worth by end of 2025; $1 million by 30.
• Hosts’ Analysis: Setting stretch goals is motivating, but lacking realism can lead to disappointment and missing out on present joys (10:30-13:32, 16:19).
  • Quote: Brian: “You can turn a power source for good into a cycle of failure... not because you are a failure, it’s because you set bad goals.” (12:19)
• Math Behind the Target: Would need to save $5,300/month at 9.9% return to hit $1 million by 30—over 90% of his net income, which is very aggressive (14:57-15:20, 15:29).
  • Quote: Bo: “If you want to get to a million dollars, you gotta save $5,000 a month. To be able to do that, you have to start like choking out a lot of other stuff.” (17:46)
• Hosts urge Cyrus to focus on the "why" behind his goals and prioritize balance, underscoring real-life data on millionaire timelines (16:19-17:46).

4. Risk Management Blind Spots — The Health Insurance Wake-Up Call

• Health Insurance Gap: Cyrus has been uninsured for 2–3 years—even while traveling, working out, and living in a major city (19:49-20:32).
• Critical Feedback:
  • Quote: Brian: “You’re willing to jeopardize all of it for what’s probably a $250–$300 a month decision… it seems like a blind spot... it hurts my heart because I see so much opportunity, but I see your flame... getting wiped out.” (22:25)
• Alternatives Explored: Marketplace plans, joining mother’s group insurance, trade organizations, MedShare groups (21:41-28:00).
• Action Item: Immediate priority is enrolling in a health insurance plan—either through his mom, the Marketplace, or another group.

5. Financial Order of Operations and Practical Steps

• Step-by-Step Review: Hosts lead Cyrus through the “Financial Order of Operations”—from deductibles and insurance to debt, emergency fund, and investing (28:00-32:40).
• Emergency Fund: Strong, but underfunded for an entrepreneur; should target at least six months’ living expenses (about $25,000+) considering business volatility (34:01-35:23).
  • Quote: Bo: “A true emergency fund should reflect your current lifestyle... not some hypothetical ‘if I had to cut it down, I could.’” (34:37)
• Investing: Roth IRA maxed in last two years, suggested to continue with monthly automation ($583/month); Solo 401k next as income expands (36:39-48:02).
• Compound Growth Examples: Even “just” maxing a Roth IRA from age 22–30 grows to ~$190k; with consistent investing, surpasses $7 million by 65 (via wealth multipliers) (37:25-41:12).

6. Structuring Freelance/Entrepreneurial Life & Taxes

• Business Structure: Single-member LLC electing S-Corp; paying self a salary, collecting distributions; structured based on peer (studio-mate) advice and YouTube research (43:03-46:10).
  • Critical Reminder: Brian cautions to comply with IRS intent—salary must reflect market value of work done in the business (43:48).
• Retirement Accounts: When income and cash flow allow, Solo 401k contributions make sense—salary level affects allowable contributions in S-Corp structure (46:48-48:02).

7. Lifestyle, Spending, & Future Planning

• Budget: ~$3,500/month including wants, basic living, and taxes; health insurance not factored in yet (28:21-29:13).
• Upcoming Major Expenses: Engagement ring, future wedding, purchasing a car for planned move to Austin—should all be included in cash targets/emergency fund (32:56-34:18).
• Purchases & Savings Strategies: For expenses within 1–5 years, hosts advise keeping funds out of the market—use high-yield savings accounts (52:11-53:07).

8. Mindset: Balance Between Dreams, Discipline, and Enjoyment

The hosts emphasize not sacrificing your “now” for an arbitrary number—enjoy life’s key seasons, recognize when to hustle versus when to pause, and let small, consistent habits work their magic over time.

• Quote: Brian: “You’ll never be 22 again... don’t sacrifice your 22-year-old self... you’ll look back and go, ‘for what?’” (16:19)

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Notable Quotes & Memorable Moments

• [12:19] Brian: “You can turn a power source for good into a cycle of failure... it’s not because you are a failure, it’s because you set bad goals.”
• [15:29] Bo: “This would be 90% of [your income]... there’s a lot of work we have to do to make this actually happen.”
• [22:25] Brian: “You’re willing to jeopardize all of it for what’s probably a $250–$300 a month decision... it seems like a blind spot.”
• [34:37] Bo: “A true emergency fund should reflect your current lifestyle... not some hypothetical ‘if I had to cut it down, I could.’”
• [40:34] Bo: “If all you did was have $190,000 at age 30, and stop saving, that could become $4.4 million. If you just maxed your Roth IRA until 30 and never saved again.”
• [41:12] Brian: “You’re still in the first year of this enterprise... work your strengths, keep betting on yourself, but also shore up your blind spots.”
• [34:01] Bo: “For an entrepreneur, an appropriate emergency fund for you would probably be $25,000 in liquid cash.”
• [43:48] Brian: “If you go wrong, treat [the IRS] with a level of respect... there needs to be a why.”

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Important Timestamps

• [02:10] Start of Cyrus’s story and goals
• [06:02] First review of net worth and entrepreneurship financials
• [10:30] Dropping out of college, supporting rationale
• [13:32] Million dollar goal—reasoning and reality check
• [14:57] Monthly savings required for $1 million by 30
• [19:49] Risk management: health insurance blind spot emerges
• [28:00] Financial order of operations walkthrough
• [32:56] Emergency fund deeper dive
• [36:39] Roth IRA investing strategy
• [43:03] Business structure (LLC/S-Corp, salary, distributions)
• [46:48] When to launch a Solo 401k
• [51:29] Aggressiveness in Roth IRA investment allocation
• [53:14] Homework for Cyrus: health insurance, emergency fund, and automating savings

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Practical Takeaways / Homework

1. Immediate:
   • Obtain health insurance—rejoin mom’s plan or use Marketplace/trade group programs.
2. Short-term:
   • Build emergency fund to at least $25,000 to cover 6+ months of living expenses and upcoming known costs.
   • Automate monthly Roth IRA contributions ($583/month).
   • Consider Solo 401k (employee + employer contributions) as income allows.
3. Planning:
   • Think 3D for big expenditures (car, move, marriage): Model “dream,” “down-to-earth,” and “doo-doo” (worst case).
   • Keep short-term savings in high-yield cash, not in the market.
   • Carefully set S-Corp salary, reflecting fair market value.
4. Mindset:
   • Recalibrate expectations—set goals, but don't let them steal joy from the present.
   • Let consistent, systematic investing work; don’t be lured by hustle culture highlight reels.

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Closing Thought

This episode powerfully illustrates the balancing act facing young entrepreneurs—between chasing ambitious dreams and making prudent, sometimes unglamorous, decisions to secure their financial foundation. The Money Guys equip Cyrus (and the audience) with clarity, practical steps, and a healthy dose of reality—all while championing the importance of both long-term planning and living fully in the present.

Transcript

[A]

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[B]

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[A]

Well, I can tell you a big part of this health is wealth change for me is that I've been stacking these behaviors that maximize health and happiness. But I also run a business so I know how stressful all this can become. I like it when things are streamlined so that's why I don't mind sharing that for the past year I've been a card carrying member and paying subscriber of AG1 every morning and I've been so happy that I can knock out so many good things. That's the vitamins, the minerals, the probiotics. All with one great tasting drinkable scoop of supplements.

[B]

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[A]

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[B]

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[A]

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[B]

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[C]

Learn [e-mail] I told Megan the goal was a million by 30.

[A]

What's the power source for all this?

[C]

I just feel like you don't hear a million by 30 much.

[A]

Mm mm. There's a reason you don't. I love stretch goals, but also want to make sure they don't kill the spirit that made you as well. You can turn a power source for good into a cycle of failure. And it's not because you are a failure. It's because you set bad goals.

[B]

When did you get to town?

[C]

Yesterday.

[B]

Yesterday?

[A]

Oh, I need a koozie.

[B]

Have you been to Nashville before? I get a koozie when someone says, oh, hey, what do you do for a living? What do you say?

[C]

I would say a filmmaker.

[B]

Filmmaker, awesome. How'd you. How'd you get into that?

[C]

Honestly, I feel like my entry into it is different from most people because I'm young enough that, like, I came into it almost kind of seeing the way paved from YouTubers.

[B]

Okay.

[C]

Whereas most people, it was like, oh, I'm all about the art and like, that sort of thing. But I actually saw it as a possibility to make money and, like, be in that world. And so I just like dropped out of school after a semester and just like dove in.

[B]

Okay, so how. So how you said, I'm young enough. How old are you?

[C]

22.

[B]

You go to college, said, hey, this isn't for me. I'm going to stop doing this. YouTube was your foray into filmmaking? Is doing that your full time gig?

[C]

I would say that YouTube was how I taught myself.

[A]

Okay.

[C]

And a lot of, like, the people I looked up to were YouTubers that were kind of doing like YouTube filmmaking. So, like short films, stuff like that. And I actually started with photography first.

[B]

Okay.

[C]

So I have a running background. So I went back home and I started taking photos of track meets. And that was like my first way of making money. And I was just shooting all the, like, local high school sports. Love that. And making nothing.

[A]

Okay.

[C]

Had like part time jobs at a gym, just like different things just to survive. And then I actually met the guy I was talking about. He was one of those big YouTube filmmakers that I watched. I met him out in Chicago and.

[B]

Like, shooting at a sporting event or through something?

[C]

No. So I actually went to a different film premiere that he was a part of and introduced myself. I asked him to go for a run and he was just like shocked because he expected everyone to talk about photos the whole time. And so he was like, yeah, let's go for a run tomorrow.

[A]

That's awesome. Make an opportunity.

[C]

He gave me a full time job like three months later.

[B]

Let's just let that be a lesson right there. You saw an opportunity to, like, network and then you created this really interesting way to peacock yourself. And that was the door in to you even being able to like to now turn this into a living.

[C]

Yeah.

[B]

That's awesome. All right, so he gives you that first full time job. Is that what you're. Gimme some timeline. Is that what you're doing now? Like, are you still working for him with him or.

[C]

No, not anymore.

[B]

Okay.

[C]

I do a lot of work with him.

[B]

Okay.

[C]

So we have a shared studio space in Chicago with a few other guys and we all do projects together. So he's kind of like the bigger one in terms of like Internet personality out of the space. He has two different successful YouTube channels. So I work on both of those with him. Just like as a contractor now, but I do a lot of like commercial filmmaking. I still shoot weddings here and there. Kind of just like take whatever gig comes. So I moved to Chicago from Florida February of last year, 2024. Okay. And I did a full year contract with him and then went full time.

[B]

Freelance, second march from Florida to Chicago. And the reason that you moved to Chicago was like for this job.

[A]

Awesome.

[B]

And so that was a one year gig. And then what happened at the end of that year?

[C]

We agreed to keep working together on a contractor basis. And I stayed in the studio. I started paying rent instead of being his employee. So we have a very affordable space actually.

[B]

Okay, great.

[C]

So not between five guys. It's like 250amonth.

[B]

Oh, that's great. For studio space.

[A]

Right.

[B]

Let's kind of like level set. Right. Because here you say you're 22 years old. You were kind enough to share some of your financials with us. We put together just like sort of a loose net worth statement for you. And this is what we can see, that at 22 years old, you have a total net worth $51,300, which is for a 22 year old is wild. I think most folks that at your age in the country right now have like a negative net worth, like they are below zero. So you are in a fantastic spot. You have about $19,000 total in cash. You have about 19, $20,000 total investments. And then because you are, I want to be clear, you're self employed. Like you work for you. There's not another, you don't have another job. It's just you right inside your business, you have another 12, $13,000 in cash. So when you transitioned from Florida to Chicago, you had like this one year contract. It's not exactly a salary, but you knew you had some money coming in since that's gone away, how has the. I'm going to call it the hustle, the hustle of entrepreneurship been. Have you been able to like drum up new business and find new clients and find new projects?

[C]

I mean, it's a roller coaster for sure. I. So March was my first month as fully self employed. It was, I feel bad saying like a low month because two years ago I would have dreamed of this money, but it was like five grand type of month. And then April and May were my two highest months ever at like 14 and 15K.

[B]

Okay.

[C]

So it's kind of just like up.

[B]

And down now when we, when you throw these numbers out, like five grand in March, 14, 15 or this is like top line revenue. Is this prop. Okay, top line revenue. You're sending out invoices, getting money back.

[A]

How much of this is reoccurring versus hunt and kill?

[C]

I have only a few recurring jobs that kind of bring that like baseline to like around three to four grand. And then everything else is kind of like hunt and kill.

[A]

I see business profit of 60, 67,500. Is that including your $35,000 salary or is that separate? So you're actually over 100,000?

[C]

Yeah, that would be after the salary.

[A]

So you're, you're actually making close to six figures then, or. Right.

[C]

At six figures, I would say gross this year I'll probably do like 120 ish, 120 gross.

[B]

But after you. All your expenses and everything.

[A]

Yeah, take out all the business expenses.

[B]

What's the net net amount? Probably close to that 65, 70 mark. Right.

[C]

Taking out salary as well, or no?

[A]

Well, no salary is because you're, you're a small business owner. So you kind of, you know, when you're doing business analysis, a lot of times you have to, you have to strip out the business owner. So you're, you're kind of the business owner. So you, you kind of start lumping. What do you take a salary? What is the net profit that flows to you and you. That way we can kind of see what is the ultimate benefit for owning this business, both for your labor and for being the owner of the business.

[C]

Yeah, I would say roughly somewhere between 70 and 80.

[B]

70 and 80.

[A]

Okay.

[C]

Yeah.

[A]

So that's why that profit, business profit is probably counting some of that salary as well. Okay, that makes sense. That helps me out tremendously.

[B]

And you said that March is the first time you've been on your own. That was your first, like, hey, without being off that contract work.

[A]

Right.

[C]

Yeah.

[B]

So some of this is even still trying to, like, figure it out. Like, we're estimating that it's probably like 70 to 80.

[C]

Yeah, it's all over the place.

[B]

But it's all over the place. You said baseline. Maybe like revenues, like, three grand. But then there are months, like, June and July. We have like, 14, 15,000.

[C]

Right.

[A]

How did you make the decision to go from. Do I go the traditional path of I go through four years of college, go to a filmmaking school? Not saying anything's wrong with that, but at some point you're like, no, I'm going a different route. Give me some. Some color on that.

[C]

It's a funny story because I was straight A student, like, honors list in that semester at school, and I was actually doing a double major in film and finance.

[B]

Oh, wow.

[C]

So I've always been obsessed with personal finance. Sixteen years old, I read like, rich dad, poor dad, like, just dove in my school that I went to. I went there to run. And I had a basically career ending injury that removed my athletic scholarship. And it was a private school, so I was going to go into a decent amount of debt for it. Like I said, I had seen these people online that were making real money with filmmaking. I was like, well, I'm just going to give it a shot. It honestly felt like a smarter decision than staying in school and going into debt.

[A]

Did you give yourself a timeline?

[B]

How was that received by the family?

[A]

I mean, that's got to be a hard thing.

[C]

I mean, my mom, she really struggled with it. She was like, what was all this work for? And I told her, I was like, if anything, it should show that if I just apply myself in a different direction, it's going to work. And after a few tears and a few hard conversations, she admitted she was like, I know that you'll be great at whatever you decide to do. So I still have support for sure, but it was tough in the moment.

[B]

Well, I love what you did is you did a cost benefit analysis, right? Hey, here's the cost. If I go pursue the traditional education and what I've discerned is that it's going to be hard for me to overcome that cost. I'm likely going to be a better spot not doing that. I think more and more people are arriving at that conclusion, that based on the path they want to go, maybe the traditional education route is not the best fit for them.

[A]

But I don't want to let him off the hook. I want to know if this was a jump, a leap of faith, or did you give Yourself a timeline and have a path. I want to know how deliberate this was or how much of this was luck.

[C]

I would say a lot of it was luck. And the people in my life try to tell me it's not and that it was like the work ethic. I will say that in the moment, it was kind of just betting on myself.

[A]

So you didn't have a timeline of how long you would give this dream a go? Before I went back to school, I.

[C]

Felt confident that in within four years, I'd make it work.

[A]

Okay.

[B]

How old were you when you dropped out?

[C]

18.

[B]

18. So you were fresh four years in. Now we're kind of at that mark. Right. So as you sit here now, you've made it through these four years, and now you've. I mean, you've got. Obviously had. Got revenue coming in. You're able to support yourself. What are some of the goals that you have? Can you kind of give us some. Some flavor around that?

[C]

I have aggressive goals, and I like to set goals that are pretty scary. At the beginning of this year, I wanted to have that number be six figures.

[A]

Okay.

[C]

For net worth.

[B]

So by the end of 2025, we want $100,000 net worth.

[C]

Well, that was the goal in January. We've had to recalibrate so far. Okay. I told Megan before that the goal was a million by 30.

[B]

A million dollar net worth by 30.

[C]

That's like dream goal.

[A]

What's the power source for all this?

[C]

I would say both of those numbers are very round numbers. And I know a lot of people's goal is a million, and I just feel like you don't hear a million by 30 much.

[A]

There's a reason.

[B]

You don't.

[A]

Does that give you anxiety? Because, I mean, if you set big goals so there's no anxiety or stress that you ought to be. You don't get to live for today because you have these big goals. I'm just trying to get into your mind a little bit. I love stretch goals and audacious goals or whatever you want to call it, but also want to make sure they don't kill the spirit that made you as well. If you disconnect them too much from reality, you can turn a power source for good that is done so much with talent and taking opportunities and chances into a cycle of failure. And it's not because you are a failure. It's because you set bad goals. That's why I'm trying to get to the why.

[C]

I would say I set that goal probably two years ago before I Even had an increase in income.

[B]

And so at an even crazier spot, time to set that goal.

[A]

All right.

[C]

And I would say that, honestly, most of my journey over the last two years has been instead of going harder and pushing more financially, it's more about, like, I've had an increase in income and realizing that that's not necessarily the solution for the problems. More money doesn't necessarily fix all your problems in a way. So it's been a lot of, like, recalibrating and focusing on, like, what do I want out of life beyond just the money.

[B]

So let's talk about those that. What are those goals? We're going to give you some thoughts on a million by 30, for sure. Outside of the money, what's a million dollars at 30 years old do for you?

[C]

I've always liked, not necessarily fire, because I don't want to retire early. Like, I enjoy working. I enjoy what I do for work, But I don't want to have to take jobs I don't want. I've seen people that have had to work really hard while their kids are growing up, and I would love to be on the other side of that and be kind of able to spend more time with kids as they're growing up.

[B]

Do you have any kids right now?

[A]

No.

[B]

No.

[A]

Do you have a spouse?

[B]

Are you married right now?

[C]

I'm not married. We're discussing an engagement in the next, like, six months or so.

[B]

Oh, congratulations.

[C]

Thank you.

[B]

One of the things I think is interesting is we said, okay, look, Cyrus came in and he said, this is where I am today, and I have this goal of this is where I want to be. I want to have a million dollars by age 30. I said, okay, well, what would it take to make that happen? And we actually did the numbers for you. We actually did the math. If you look today, right now, you have $51,000 total net worth. And if we want to get to a million by the time we're at 30, do you know how much that means you would have to save on.

[C]

A monthly basis with my income as it is right now? No, no.

[B]

I'm just telling them mathematically to go from 51 at 20 at 21, 22 years old to 1 million by 30. How much you got to save a month to do that?

[C]

I'm not sure.

[B]

Well, we did the math for you, and the answer, and this is assuming a 9.9% rate of return, you got to say 50, $300 a month in order to be able to move from where you are. To that step. So let me pause there for a moment. How much are you currently saving towards that goal on a monthly basis?

[C]

I would say on a monthly basis, somewhere between 2,503 grand.

[A]

Your total, by your own estimation, you're somewhere between 67 to $70,000 of total income. This would be 90% of that.

[C]

Yeah.

[A]

So I think if you just look at it through those glasses, we go, wow, there's a lot of work we have to do to make this actually happen.

[C]

Yeah.

[A]

You said something earlier that really struck a chord with me because I've heard so many successful people, you think money can do so much for you until you start getting it and then you're like, oh my gosh, it's not solving the problem. Choosing a number of a million dollars or 2 million, 3 million. You put whatever number you want, you'll get there and realize it is dagum empty. Now, look, I'm not saying, don't mishear me. Getting your first $75,000 a year, enough income coming in, reoccurring that you can cover paying for your family, paying your rent. There is definitely happiness or something good from that. But the incremental increase beyond certain levels, it just, it starts diminishing if you don't have the rudder of why tied into it. When I see these goals like a million by 30. First of all, the odds are just not there. We covered on the show and I think I try to share this type of data to free the young person who's. Because we're in this hustle culture, social media, where everybody's showing you their highlight reels. It's not tied to reality. The typical millionaire is 49 years of age and had 27 years of building and saving slowly to create this. So to put yourself at a million dollars at 30 is doing something extraordinary. Now, that's not to say you can't do it, but I just don't want that to diminish or extinguish that flame of excitement for life and enjoy the present moment. There's so many things that I have sacrificed for the goal without understanding I'll never be this age again. You'll never be 22 again. You'll never be, you know, think about you and your soon to be significant other spouse. You'll never be 25 without kids again. You know, these are things you have to put yourself in this present mindset to maximize so that when you do get to be my age post 50, that you go, job well done. Not because, imagine you sacrifice your 22 year old self, your 25 year old self, your 35 year old self. From a ritualistic standpoint, you'll look back and go for what and I think.

[B]

About the sacrifices that would be required in your life to attain some sort of goal like that. You were kind enough to share with us your P and L for the business. So you were able to show us, like we could see total revenue since January of this year, total expenses. So we can kind of track your profit line. And you can see that like you mentioned, like March, not the absolute best month from a profitability standpoint. But then April was great, May was great, June was strong, kind of settled down, right? But you can see right here, your total profit from January through August of this year is about $42,000 of like total profit. That's all the money available for you to pay yourself. Well, you just said, man, or we showed you that if you want to get to a million dollars, you got to save $5,000 a month. To be able to do that, you have to start like choking out a lot of other stuff that means like no gym membership, no travel. No, we haven't talked about, like, if you've already funded engagement ring and wedding and like all those sort of things, there'd be a lot of stuff that you would have to give up in order to be able to achieve that goal. Not suggesting that goal is impossible, but it's pretty aggressive based on what we're seeing now. And that's why we're like harping so much on what the why is. Because sometimes it's worth it just to kind of pause and triage and assess. Okay, where am I right now? And is where I'm at right now. Okay, and then what small changes can I begin making? So I told you, hey, in order to do this, you got to start saving five grand a month. The very next thing I'm going to say to you is, now you got to go figure out how to get more clients. You got to go work more. You got to go, you know, you got to go hustle, hustle, hustle to do that. So I think we should take a step back. Okay. If we're going to do that, you know, we have, especially for young people that are starting out, we say, hey, a great tool that you can use to navigate your financial life is the financial order of operations. And I just thought it'd be helpful if we kind of just like went through the financial order of operations for a moment. So, you know, step one, financial order of operations is highest deductible covered. And we want you to list out your health insurance deductible, your auto deduct, your homeowner's deductible. So just run me through those really quickly. Do you know what your highest deductible is?

[C]

Yeah, well, honestly, all of those are not necessarily like in a factor right now because I think I told Megan. So I don't have health insurance.

[A]

Oh. Oh, no. Why?

[C]

I've been off of my mother's plan for two, three years and she still have insurance. She has it through work.

[A]

And why aren't you on that insurance?

[C]

Not sure.

[A]

Because, I mean, typically that's one of the big things that came out of the legislation is if you're under 26 years of age.

[C]

I mean. Yeah.

[A]

Half of our young employees are still on their family insurance plan.

[B]

So for two or three years, no health insurance.

[C]

Yeah.

[B]

You travel?

[C]

I do travel.

[B]

You do sports.

[C]

Yeah.

[B]

You work out.

[C]

Yeah.

[B]

You ride a bike.

[A]

Yeah.

[B]

You do a lot of things that would present an opportunity for you to somehow potentially injure yourself.

[C]

Yeah.

[A]

Do you feel like that's wrong? Do you know it's wrong? What? To not have health insurance with all these things? Do you feel.

[B]

Let's not say wrong. Let's not say wrong, but let's say risky.

[C]

Yeah. So that was one of the things I wanted to come to you guys with is I've looked into health insurance and obviously being self employed, like market plans are pretty expensive and being like a single guy currently, I haven't felt terribly like terrified. But I will say that you feel.

[B]

A little bit invincible.

[C]

Not invincible, but I know that it would be smart to have some sort of like emergency coverage. And I just am not sure which direction to go.

[A]

Do you know why most Americans file bankruptcy?

[B]

Number one cause of bankruptcy in this country?

[C]

Medical debt. Yeah.

[A]

Do you think most of those people thought that they were going to get an accident because you're in Chicago?

[C]

Yeah.

[A]

You ride a bike in Chicago?

[C]

Not often. Mainly walking.

[A]

Okay.

[C]

But okay. Yeah.

[A]

Okay. I'm trying to look. We are.

[B]

Okay, let's pause for, let's, let's, let's triage some solutions here.

[A]

Right.

[B]

Obviously you mentioned Marketplace. Right. That's a place you can look for medical coverage. You said your mom is still covered on a group policy. And you being a child under the age of 26, you could potentially be on her policy as well. Right. That's an option. Do you know how much is your mom right now? Do you have like siblings and it's family coverage or is it just her on the policy by herself. Do you know the answer?

[C]

I know that she's paying for just her.

[B]

Just her.

[C]

We were once on it, and then it was. I'm pretty sure something made it more expensive.

[B]

Sure, yeah. When you go. When you have a group policy, if you go from just covering yourself, the employee, to doing like an employee and a spouse or employing family and kids, it does increase the premium. Do you have any idea what that premium increase was?

[A]

I bet it's less than $300 a month. Let's suppose for a moment it's less than $300 a month. We have made a catastrophic mistake. You have so much talent, you have so much going on. Bo is being nice to you. But I'm sitting here and I'm not. Mad's not the right word, but I'm just frustrated that you have all this talent, you're doing all these great things, but yet you're willing to jeopardize all of it for what's probably a $250 to $300 a month decision. And when we're talking about goals of $100,000 by end of the year, a million dollars by 30, we can't come up with three grand a year to make sure that I don't. One day on a Tuesday at 3 o', clock, because I didn't look left before, I looked right or something like that, and I get taken out and then I never recover. I mean, that. That bothers me because it seems like a blind spot. And I see a lot of financial mutants do this, that it just. It hurts my heart, it really does, because I see so much opportunity. But I see your flame. I keep saying you're a flame or extinguished, but I just see it completely getting wiped out. Not because you're gone. I'm not talking catastrophic and death. I'm talking catastrophic financially because you just can't recover because you have a $30,000 lien on you and you're not able to go buy the equipment because you're a filmmaker. Is that a cheap thing to go out there and buy equipment? Or is it.

[C]

It was not. No.

[A]

So, I mean, there's probably some capital that goes into that.

[C]

Yeah.

[A]

So do you have insurance on the equipment?

[C]

I do.

[B]

I'm not worried about myself. I'll protect the equipment, but I'm not worried about myself.

[A]

What, valuable the equipment or you?

[C]

I am more valuable personally.

[A]

But we're going to be naked on my insurance.

[C]

My gear has gotten hurt much more often than I have once.

[A]

Better to Be lucky than good.

[B]

It's a lot easier to replace the equipment, the gear than it is replace you. When it comes to financial planning, you've heard us talk about this in the show. There's sort of like this financial planning pyramid that we sort of walk through. And on the pyramid, you think about sort of the baseline is like, cash flow and spending. We get our first paycheck, and we got to figure out how do we allow that to, like, pay our bills. That's like basic budgeting. You're four years in to be an entrepreneur. So you figured some of that stuff out, right? Like you figured out how to have money coming in, how to have money going out. You're able to do that. Well, the very next tier, once you just can keep the lights on, is risk management. By being uninsured for the last couple of years, you've just, like, blown through that. It is the single thing that can derail you. All the ambition in the world, all the goals in the world, a million dollars by 30, all this one guy, get married, have kids, all these things. Amazing goals to have. But if you've ignored the glaring risk management issue, then you've put yourself in a pretty precarious situation. Now, you may not need it. You may not have a catastrophic injury. There is a chance that you will not have a bad outcome, and there is a greater chance that you will have good outcomes based solely on the mathematics. Does that still mean that you would play that game? No, absolutely not. Because the risk that one bad outcome is not worth it, even if it may be low probability because you're young and you're healthy and all these other things. So it's a risk you have to insure against. But what's great is there are a number of ways where you sit right now to consider that. Obviously, we can talk about Marketplace. We can go look at the different types of policies and what that coverage is. We already talked about. Another solution that may be available to you is hey, mom, if you were at open enrollment, because most open enrollments happen around October, November, December of each year. Hey, mom, will you just see how much it would be to add me onto your insurance? And guess what, Mom, I don't want you to pay for it. I'll write you a check.

[A]

I'll venmo you the monthly difference plus 20 bucks because I just love you. I mean, this is how simple this could be. At least that would be step one.

[B]

There are some trade organizations where you can even get group insurance through that.

[A]

If you were a member because we're both members. I'm a member of the aicpa. I'm also a member of this group called NAPFA which are fee only financial advisors. I have disability insurance through both NAPFA as well as the aicpa because they usually link up. It's not that these trade organizations offer the insurance. They link up with somebody and they say, hey, we're going to give you access to all of our members, but you got to cut us one heck of a deal. So we have, I have life insurance through aacpa, I have disability insurance through a lot of these things. But you can also get health insurance because I know especially like the, the Professional Photographer association, it's a known problem that most of your members are small business owners. What's a big risk that small business owners have is health insurance. So they offer not only equipment insurance, not only cyber insurance, but also health insurance. Introductions. I think about a lot of our employees. There are groups, they're not Med Share type plans, but they are like, I think of like there's a Farm Bureau around here that offers. So every state has unique things that might not be on the exchange, but they're still health insurance, they're catastrophic protection. And then that last one is Med Share plans. You could get with like minded people who just don't like how health insurance is handled in America. So they've created alternative paths where they say, hey, let's take. What is insurance in general is that a group of people get together and say, hey, I don't think we'll all get injured at the same time. So let's start pooling our money as a resource to figure out how we can protect each other from catastrophic events. I mean that's the basis of what insurance actually is. And those things are cheap.

[B]

Thinking through the financial planning pyramid, obviously, you know, risk management is a big piece of it. You gotta, you gotta solve that, right? If I were to ask you what your burn rate is right now based on what you spend, how much does it cost you to be able to do the things that you do and kind of live the life that you want to be living at this stage, 3500 is.

[C]

3500 is what I told Megan in them.

[B]

All right, So I don't do public math very good. So I'm gonna do 3,500 times 12. So you gotta be making $42,000 a year after taxes just to be able to like cover rent, groceries, utility, all that kind of stuff. Right?

[C]

That's 3500 is also paying taxes.

[B]

Okay.

[C]

On a quarterly basis.

[B]

Great.

[C]

And that's also like, there's wants included in that. That's not as low as it could be.

[B]

Okay.

[C]

That's a generous.

[B]

So you, you actually wrote this down for us. You said, okay, rent's about a thousand, groceries are about 450. We're banking quarterly estimated payments of about 875. And so we do have some miscellaneous wants and needs in there of about 1200 bucks. And that's I got in here, Jim. Car maintenance, eating out, those sort of things. So this is kind of like it's pretty good, Pretty good budget, right?

[C]

Yeah.

[B]

There. There's no health insurance in here, but in the very near future, there's going to be health insurance. Now you have two options for that. You can either take health insurance out of your miscellaneous wants and needs, or you go make more money. And I think that the thing is going to be you got to make more money.

[C]

Right.

[B]

So 42,000 needs to be baseline. How easy is it for you to hit that? You said based on your recurring, you have, you know, three or $4,000 in top line revenue coming in. So you're close ish. To being able to hit that. Or you need some of these one off side projects to be able to do it.

[C]

I mean, those like recurring jobs are like maybe three days of work per month.

[B]

Okay.

[C]

So it's pretty easy to hit. For example, this month it wasn't hard to hit over ten grand. It just depends on the time, time of year.

[A]

Honestly, you only started this in March. Yeah. So, I mean, this is, I mean, can we pause for a moment? I've given you a hard time, Cyrus, I really have. But I mean, we are a little over six months into this thing. Just so you know, as an entrepreneur to entrepreneur, my first year out, I made $17,000 for the entire year. Horrendous. I mean, so. And I always tell people, you bet. If you can't hack it the first three years, I don't care how good you are, you might just not make it. It doesn't mean you didn't have talent. It didn't mean that you didn't have a good business idea. It just means you didn't have enough time to make it through the crud of what happens when you start a business, because there's an attraction period for you in six months to already be profitable. Man, that's pretty freaking incredible. Again, $3,000 a month of reoccurring in the first six months. I mean, what I would be curious. You have to be careful because it's a trap. Because you get too much reoccurring, there's not enough to go shoot for the sky on bigger things. But it's nice having enough reoccurring that it covers all your stuff. Are we to think that in six months in the future you'll now have $6,000 a month of reoccurring or is that not the way you're setting your business up?

[C]

It kind of just depends on my preference. And I've tried to avoid recurring for the sense of all of the bigger jobs like they. I know they come and I know.

[A]

When they come because they turned into a job. Is that what it feels like to you?

[C]

Yeah, I don't want to tie up all my time into because the recurring projects tend to be the ones that you don't love to do, whereas the one off ones are more fun and bigger budgets, they are just one off. So I would say my plan was to get it around five grand reoccurring.

[B]

Okay, love that. So when we look at your net worth statement, you have a really healthy cash bucket. You have about $19,000 in personal cash. You have about another 12, $13,000 in business cash. So if you said that your burn was $3,500 a month and I just take 3,500 times six, it's about $21,000 would be like a six month living expense. So I love. Okay, step one, deductibles covered check. Step two, employer match. You are the employer, so you don't have to worry about that one. Step three, high interest debt. On this net worth statement, I don't see any like high interest debt. Do you have any debt at all?

[C]

I don't have any debt.

[B]

Oh, it's amazing. Debt free at 22. So then we go to step four, emergency fund. And that's awesome. Okay, so you've got 21,000 is what I kind of modeled. You probably carry a little bit extra because of the business. So you're kind of right there at a fully funded emergency fund, which is so exciting. That means once you've made it through steps one through four, then you get to the exciting stuff, then you get to start building and you get to start thinking about how you're going to grow towards that future $1 million.

[A]

Now wait a minute, I think you. Because Cyrus has given us some breadcrumbs here. There's $19,000, but he said he's about to be engaged in the next. Now I'm not trying to spill the tea on ruining a surprise for your significant other. But is she okay just not having.

[C]

An engagement ring in terms of those numbers. So like the 15,000 in savings, that's what I consider my emergency fund. I wanted to ask you guys if that should be higher because right now it is around three to four.

[A]

What do you think we're going to say?

[C]

Yes.

[A]

Why do you think we're going to say yes? Because I love it when people ask me questions that they know the answer to. That's by the way, called a rhetorical question.

[C]

Yeah. So.

[A]

I figured why do you think we think it's going to be higher? I want you to answer this question because I think you have it in you to tell me why $15,000 is.

[C]

Not enough because of what I do for work and being self employed and not having guaranteed.

[A]

I knew it.

[C]

Income.

[A]

Great instinct. He knows it, you know. So what should that number. If we keep going, we'll go therapist route versus financial planner route. What do you think that number should.

[C]

Be based off of a 3,500 burn rate? It should be.

[B]

I would argue let's take that 3500 burn. Let's just add some health insurance on top of that. So let's assume that your real burn rate is probably closer to like 3,900. I'm just using 400 as a placeholder, right?

[C]

Sure.

[B]

Let's add to 3,900. So I just take 3,900 times six months because you are a solo income earner and it's going to be somewhere between like 23, $25,000. So for an entrepreneur, I would say an appropriate emergency fund for you would probably be $25,000 in li. Liquid cash.

[C]

Okay, I want to explain my Reasoning for the 15 and how I came up with that was that that 3,500 burn rate, like I said, is being generous and that's living the lifestyle I want. I've always heard that emergency fund is your necessities covered per month. And my necessities are like 2,500 to 3 grand.

[B]

It's a great exercise to work through. If I had to live off of spam and ramen, could I do that? But realistically, a true emergency fund should reflect your current lifestyle. Hey, to live the life that I want to live, to give me enough coverage to make it for six months, I don't necessarily want to have to cut down to the quick now what happens in those events because we've worked with clients who've lost jobs or they lost a big client and they had to go there, they end up doing that. But what that does is that six months at this level of spending, when they. When they actually live down here, it actually gives them like seven, eight, nine months. Does that make sense? So we would rather you model it off the way you're actually living than some hypothetical, oh, if I had to cut it down, I could. Does it make you nervous to hear that we would say you probably need about $10,000 more in your emergency fund?

[C]

Not necessarily.

[B]

How would you anticipate getting there?

[C]

Like I said, so everything in terms of income is seasons for me, especially in Chicago. So, like, winters are slow, but the fall is big. So I know that I have big months coming. So I would just kind of attack that in the next.

[A]

You'd hustle during those months.

[B]

I get it when you say, I know that the. That the fall is big. Isn't this your first fall?

[C]

Second.

[B]

Second fall in Chicago. Okay, so you've. At least you've done this once before, and it was big last year. So you're supposing the same thing would likely be true this year.

[C]

Yeah.

[B]

Okay. Got it. Step one is we got to get the emergency fund up. Well, remember, we kind of started with the context of, hey, I want a million dollars by the time that I get to 30. And in order to do that, I need to be, like, investing, like, growing $5,300 a month. We've already uncovered, based on your current base burn, 3,500. We need to make at least $400 more so that we can have health insurance. Then we need to make at least more on top of that so we can start adding this emergency fund. And then once we do that, then we can move on to the next step in the financial planning pyramid, which is investing and building and growing. And we can go from step four of the financial order of operations to step five. So are you currently, like, saving to a Roth? Putting money on a Roth? And I see that you have a Roth ira. How are you currently handling that?

[C]

I maxed it out this year and last year.

[A]

Okay, Is that just a one off?

[C]

It was when I had bigger months. I just do it and just take care of it.

[B]

And for entrepreneurs, I don't hate that strategy now. I wish that would have been done after you had the fully funded emergency fund, but now, you know. Right. And so that's great. One of the things we love seeing and we encourage all of our entrepreneurs to do this while it's easy to think through. Okay, man, when I get these big. When I have These big months, I have a lot of profit, low expenses, then I'm just gonna do these like big dumps in and that's great. That's again, a lot of non linear income is required to do that. But what's great about being young is would you recognize it does not take a whole lot for you to be saving on a monthly and consistent basis to make a huge impact.

[C]

Right?

[B]

Like it doesn't. It's not like you have to be saving $5,000 a month right now to be able to, to live the life you want to do, to hit these goals that you said. To be able to be selective in the work that you do, spend time with your future spouse, spend time with your future kids. If you can start the behavior of saving early and systematically, it's amazing what can happen. And we said, okay, well if we can just, if we can triage Cyrus situation and kind of get him through the financial order of operations to the point to where he's just maxing out his Roth IRA. And I think the number is $583 a month. So again, we got to pay for health insurance, we got to get emergency fund. But if we could just get you to where every month you could put $583 a month into your Roth IRA. Just doing that at your age gets really, really exciting. And while it may not be a million dollars by age 30, what it turns into by age 30 is pretty exciting. Look at this. We said that if all you do starting right now, you got 51 net worth, but you just started investing in your Roth. That's all you did. Max out your Roth every single year, you'd be at $190,000 by 30. Now this is why this gets us excited. That's not a million, but a million is sort of superfluous, right? We say that for most folks when you're working through the milestones you want to hit on your financial journey, if by the time you get to 30, you can have about one time your annual salary in investable assets, in liquid assets, you're doing pretty good. So at 31, if you're making 190 grand at 30, that's pretty awesome. Like I would say that the business has worked. You were now successful at that point. But if you have almost 200 grand built up by age 30, how's that make you feel?

[C]

Yeah, I mean I've always said that. I know the million number is a very big goal, but I know based off of what I've done so far and Maxing out the Roth at a minimum, I'll be fine. Like, I know that by 65.

[B]

By 65. Okay. Not by 30. By 60. Because we agree you're not planning on checking out at 30, right?

[C]

Correct.

[B]

So this idea of I got to do all this stuff so. So early may be a little misplaced, because I would argue if you had to make a choice right now, today, and all you have is the money coming in, I could either manage my risk and buy health insurance, or I could max out my Roth. Which one do you think that we're going to suggest you do?

[C]

The health insurance.

[B]

The health insurance, yeah. But if you can just get some money working, some money saving, what that's able to do for you in the future becomes really, really exciting. And then what's even greater is, you know that at age 30, when we think about, like, the wealth multiplier, if all you did was have $190,000 at age 30, do you know what that turns into by the time you turn 65 if you don't save anything else? It's wild. We know that the multiplier for a 30 year old is 23. So just that $190,000 is on the way to be $4.4 million. If all you did. I'm going to reframe this. If all you did was save max out your Roth IRA from this year until age 30, and then stop saving $4.4 million, think that you and your spouse and the future kids would be okay, like, four and a half million dollar portfolio.

[C]

Yeah. I mean, we'll see what inflation does over the next 40 years, but.

[B]

Okay, you know, let's go. Let's just. Okay, then let's say at age 30, you don't stop doing your Roth.

[C]

Yeah.

[B]

What if you just keep maxing out your Roth all the way to 65, you know what that turns into? $7 million. Yeah, just. And look, our goal is we want you to save 25% of your gross income. But rather than you trying to save all of that right now, today, or as Brian pointed out, 95% of your gross income, just doing something as simple as starting early and being okay with that puts you well on the path to, like, $7 million by the time that you get to retirement age.

[A]

Realize, Cyrus, you're still in the first year of this enterprise. So when. When Bo asks you all these questions, how we're gonna do this, I think it's back to your original thing that got you here, is, I'm gonna bet on myself, because you're still in the gr. I love it working with entrepreneurs when they start hitting their stride and things start popping. And I think you've got that coming. I really do. So I did the math. I was like, okay, so Bo just showed you $7,000. You're already doing that. You've already told us you did it last year, you did it this year out of order. So we need to do more. And so if I add more, I was like, well, the next thing, if you're doing the financial order of operations, we're gonna talk about maxing out retirement. Well, you're self employed. We could talk about solo 401ks, other things. So any type of 401k, you could do 23,500 plus the Roth IRA up until, you know, his income starts getting over the threshold. And then we could consider doing a backdoor Roth contribution, just putting that amount of money for just the next eight years. If you just did a 401k plus your Roth, you would be like $483,000 by the time you were 30 years old. So not a million, but holy cow, how much was that? 483. $482,851.

[B]

You know what that turns into based on a wealth multiplier of 23 $11 million.

[A]

As an entrepreneur, I mean, you're starting to catch some success. How are you structured? I mean, what's all the business things that you're doing? Are you like a sole proprietor? Are you a C corp or an llc? How have you structured the business? Is that okay to talk about that?

[B]

Well, I was going to ask, do you have around that obviously, being a new entrepreneur, a relatively new entrepreneur, you're still pretty early on. Are there questions that we might be able to answer for you that would be valuable or be helpful as you're thinking about building this business?

[C]

Yeah, I mean, so I am an LLC that's electing as escort.

[A]

Okay.

[C]

And so that's where the $35,000 salary comes in. So like I was telling Megan, I, for the most part, what I do is that salary, once taxes are taken out and everything, it becomes a not livable number for me. I tend to like 25, 2823, 2400. And I just save that. And then I live off distributions.

[A]

Now, who told you to structure that way?

[C]

I just went down a deep dive of YouTube videos.

[A]

But do you know the why? Why, why do. Why do s corporations have to have salaries?

[C]

So last year I was just solo single member LLC and had to pay a substantial amount of taxes all at once. And I knew that I wanted to do just self employment tax on the salary and then just pay.

[A]

So let me. Because I working in public accounting preparing taxes for over 16 years. I do want to. Because I think this is something really important for business owners to understand. It is a unique thing when you have a subchapter S, you're putting yourself in two silos. You are the employee of this firm and then you're also the owner of this endeavor. You're supposed to. If the IRS would tell you this, I'm just telling you. So you keep yourself on. Ask yourself what would Brian tell me to do in this scenario? Well, I'm going to tell you to do what? Pretend the IRS is sitting across the table. What would you have to pay somebody to do your job within the business as the employee of the business doing the work within the business. And if you can honest that answer that honestly, the IRS is going to be okay with it. That leaves Cyrus, the business owner. Yeah, there's going to be a premium that you get for taking an investment going a path less traveled. And if it worked out well, the IRS has no problem with you just paying only income tax on that. But if they find out that you're shortchanging them on the labor and working in, they have a problem with that. Because just looking to see if we can avoid payroll or self employment taxes. They kind of frown on that as being the why. It doesn't mean that you don't try to balance it. But I just want you to always. That's why I think I was a good CPA is that I would try to educate my clients to know the why so that we could honor what the desire for the IRS is. But also think about as a business owner on how we maximize this tool of being both an employee of the company as well as the owner of the company. When you're dealing with entities that can just legally take your stuff if you, if you go wrong, treat it with a level of respect. Don't be cavalier with it. Don't just because you saw a YouTube video where somebody said you can deduct anything, you know, because there's all kind of videos out there. What was the react we did to a TV show which I thought was so good, Schitt's Creek. I loved how they set that up. Whereas like he was deducting facial cleansers, he was deducting lamps in his house. Don't fall prey to that culture. There needs to be A why? And if you can structure your business that way, you're going to be so well served in the long term.

[C]

I picked that salary number based off of some of my fellow studio mates and what they were paying themselves. And they had larger gross incomes than I do. So that seems reasonable.

[B]

$35,000. Yeah. That does not seem. That doesn't seem unreasonable to me, not knowing a ton about your industry, but I don't think that seems out of line. An escort, probably, or an LLC electing as an escort probably makes a lot of sense from a business structure standpoint. So I'd say you did. You thought through that. Well, what else could we answer that might be valuable for you?

[C]

Yeah, I have a few written down.

[A]

I love it.

[C]

Okay. It's funny. My first question was, is my emergency fund strong enough?

[B]

No. You guys answer next question.

[A]

No, but, Tumbo, I mean, out of here.

[C]

Okay. So as being my own employer, at what point, in terms of my business's income, does it make sense to do a solo 401k?

[A]

Oh, look at that.

[C]

I know the concept of being able to put into it as the employer.

[B]

And the employee financial order of operations is the guide for you on this. I think step one, you got to build up your Mercury fund. You got to get through step four, I think then you get to step five, I think you got to be maxing out your Roth ira. Great. Once you've done those things, if you find and I've still got some discretionary income, I can go open up a Solo 401K. And what's great about Solo 401Ks, Brown already alluded to this is not only can you do salary deferral contribution, but you can also do employer profit sharing contributions. But one of the unique things about being an S Corp is that your retirement plan contributions are only going to be based on the salary that you pay yourself. So if you pay yourself a $35,000 salary, you can defer 23,500, and then the profit sharing will be based off that $35,000 salary. So the answer of when does it make sense to do that is when you have additional capital that you can save and invest for the future. And the beautiful part is now they've gotten easier. You can go back in time with solo 401ks now, meaning, like, even if you don't open it this year, you can open it next year for the prior year. And some custodians allow you to do Roth solo 401ks where you might not actually get a benefit on the tax side this year from doing a pre tax salary deferral. But you can do a Roth salary deferral. And if that makes sense in your circumstance, it could be a fantastic planning.

[A]

Opportunity long term, you know, and our savings goal is 25% and for most 20 year olds that's very 20 somethings, that's very aspirational because we don't, I don't really count that you're going to be able to get to 25% that young. But I think you do have the opportunity. And just what I was using in my assumptions, once your business income plus Your salary is $122,000. If you take 25% of that number, it's pretty much the salary deferral portion of the Solo 401K plus the Roth IRA contribution. That's amazing. So if you just a base level as you start separating from what your living expenses are, hold yourself accountable to at least be saving and investing 25%.

[C]

Recently my car broke down in Chicago and I'm lucky enough to be in a position where I don't need it. So I'm selling it for dirt cheap and I don't need a car or car insurance or car insurance. So saving money there. I'm looking to purchase a car coming next summer because I plan on moving to Austin where I'll need a car. Okay, do I aggressively save enough money to buy something in cash or do I do the 238 and just like get a smart car loan?

[A]

Have you done any 3D glass planning? You put a lot in that question. I mean you said, hey, I don't need a car now, but I probably will in a year from now. I'm also going to be moving to Austin. We know because we have the additional context from the earlier in the conversation. Going to be getting married. You got a lot of things that are about to change again and you load it up. I can't answer that, but we could model that. You really do need to get a spreadsheet out and start modeling, hey, this is what I got going on now. But in a year from now, this is what I'm going to have. Two years from now, this is what I think. Three years. I wouldn't go too much further than three to four years, but I would start and then I'd do the treatment. For those who don't know our content, when I say put on my 3D glasses, I want to know the dream plan. That's where everything's crushing it. Everything's working. Run a spreadsheet with those scenarios over this three to four year period. And then I want to have the down to earth. This is what I think will happen. Even with some bad things from life happening, but good things happening. And then don't skip the doo doo plan because what happens if you move to Austin, you know, and all of a sudden your work dries up, but you've gone and financed this car even with 238 and it all is just not working out like you thought. I'd rather you be able to address those things on paper than in reality. Do you have something to add to that?

[B]

No, no. I think you appropriately laid out all the variables that would change. I do think that what will make sense is you will have to increase your emergency fund higher than what we suggested. And then at that time you'll have to make the decision, okay, are we married? Are we living together? Can we be a one vehicle family? If we can't be a one vehicle family, do I need to buy a car? What kind of car do I need to be? Will I be using it for work? Based on the price of that car, is it something that I can pay cash for or is it something based on interest rates and the cost of the car where 23, 8 makes sense? So it's like you need to start saving for additional capital now, but you won't be able to answer the how question until you actually get there and fill in some of those other variables.

[C]

My next question is in terms of my Roth investments, how aggressive should I be inside of that account? Because I've just been doing like spy vti, but I'm not sure because obviously there's tax benefits to that account. Should I be more aggressive in that account or is that something to just keep in my brokerage account?

[B]

I think that being aggressive inside a Roth makes tons of sense. Right? You want to, you're super young, you want to maximize your tax free growth. So buying a really low cost index fund, US Large cap, whatever, makes a ton of sense. Another thing that you could consider again based on your age is a long dated target retirement index fund. If you were to go pick a Vanguard or Fidelity or swap something out to like 2060, 2065, the vast majority of that holding is going to be in US Large cap anyways. It's going to be a low cost S&P 500 index. I don't think there's anything wrong with that right now with where you are in your wealth building journey. I don't think I'd be thinking about allocation at all. I just want to be thinking about how much can I save and start putting that money to work.

[C]

My next question, I have a lot of questions. Sorry. In terms of like the certain purchases that I know I'm going to make in like 12 to 18 months, for example, not necessarily what I'm about to do like a car or a ring, because I already plan on keeping those in my high yield savings accounts that I have at SoFi. But let's say like down the road I know I'm going to buy a house and I have a down payment. What's the timeline where it makes sense to keep that money in a brokerage account getting bigger returns than a high.

[B]

Yield savings account in our view, probably 60 months. And I'm being, I'm being very specific there, but five years or somewhere around that is probably the threshold. So if you think that in the next five years, four to five years, you're going to be using the capital for a down payment or some intermediate term expense, I think there's nothing wrong with just parking it inside a high yield savings account. Once you get past that four to five year time frame, then I think you could probably use a brokerage account. You could dollar cost average and you could allow those dollars to potentially have some higher earning potential.

[C]

That was my last question. So awesome.

[B]

Are you ready for your homework? I bet you can't guess what the first one is.

[C]

First one is calling mom.

[B]

You need to call your mom. You need to get some sort of health.

[A]

How much do you offer extra to Venmo? You know, you give her 20 bucks, 30 bucks, 50 bucks.

[B]

You know he's enterprise, he's going to ask for a discount. Mom, I know this cost you 200, but I'll offset the cost by 100.

[A]

He's going to use that love consideration to get a discount.

[B]

You could obviously look at group insurance on your mom's plan. You could go out to the marketplace and you could look at coverage there. And you could also look at some sort of medical sharing program.

[A]

Medishare is better than nothing.

[B]

So having some sort of insurance coverage in place makes sense. Next thing is, we think you ought to build up your emergency fund to get it to a fully funded six months of living expenses. That's going to be $25,000 to have a fully funded emergency fund, but then also need to think through am I going to have some of these other intermediate term expenses. So maybe that 25,000 needs to be even a little bit higher. Based on the move to Austin and the automobile and that sort of thing. One of the things we'd love to see you do is turn on monthly automatic savings, even if it's just maxing out your Roth IRA at the 583amonth, or if you can't do that, just starting at 100 bucks a month just to get that money working for you systematically. As you close out this year and you look at your total profit from the business, it may make sense to begin investigating solo 401k or sep IRA, some sort of retirement plan contribution as a means to create some tax incentivized growth and then really put together a plan around what next year's car purchase looks like. Okay, how much? What will be my circumstance when it's time to buy the car? And if that is my circumstance, what's gonna be the best means and mechanism to get the car and what I need to do between now and that point to be able to do it?

[A]

Bo, if other people want to come on Making a Millionaire, what do they need to do?

[B]

If you'd like to be a guest on Making a Millionaire, you can go to moneyguy.com apply or if you want to check out any of our free resources, go to moneyguy.com resources guys, I'm.

[A]

Your host Brian, joined by Mr. Bo and of course, Cyrus. MoneyGuide team out.

[B]

Making a Millionaire is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners at 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 Making A Millionaire. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment or legal advice. All investments involve a degree of risk, including the risk of loss. The guests featured on Making a Millionaire are not clients of Abound Wealth Management at the time of recording. Their participation should not be considered a testimonial or endorsement of Abound Wealth Management.