I've created 100+ financial plans in the last 24 months.
High earners. Hard workers. Great careers.
And I keep seeing the same mistakes over and over again.
Here are the 10 most commonly missed opportunities financially for high income 30-50 year olds:
So few actually understand the accounts they have access to.
Roth IRAs/backdoor Roths, 401(k)s, HSAs, etc.
Most do not know what they can use, the order of priority, and how to best utilize them.
This is an easy way to get you more money long term.
Whether this is:
You are losing part of your income by not taking advantage of these.
Take the free money you are getting by electing these options.
Very few people I come across have invested well at all.
They have lost tons of money speculating on individual stocks, crypto, etc.
This is a recipe for disaster.
The average person knows so little about investing but for some reason they think they can pick the individual winners.
Most have significantly underperformed if not lost money investing.
Stop making it so hard on yourself.
I am not someone to say that you should avoid all debt.
Debt can be a great tool when leveraged well.
However… many take on too much debt for a house an or car and it kills them financially.
Keeping your fixed expenses low so you have extra funds to invest in a must if you want to be successful.
I get it, growing your income is not easy.
You have to put time in, focus on growing your skillset, etc.
You can’t just show up, do the bare minimum, and then expect to rise the ranks.
The most important thing you can do financially is grow your income.
It's more impactful than investing well for the first half of your adult life for sure.
For many people in this age range, they are holding a lot of cash.
From an emergency fund, to house savings, to whatever other short term goals you have, you might have $50k-$200k in cash.
Holding this at a bank with .01% interest is not wise.
Move these funds to a HYSA, money market fund, etc.
4% on $100k = $4,000
Don’t miss out on that interest.
For most high income earners I work with, they are paying anywhere from $100k-$500k in taxes a year.
That is a ton in taxes.
You need to be doing tax planning to ensure you pay the least amount of taxes in your lifetime.
Keyword: LIFETIME
Not just this year.
This could be:
This is just the start and basics for non business owners. For business owners, the list gets way longer.
By risk, I don’t mean speculating on investments like small crypto coins.
I mean, the mix of cash, bonds, equities, etc.
So many young people moved to 5% treasuries recently to lock in that rate.
But.. 5% on long term money is not the goal.
Plus… these will move down and you are going to have to reallocate later.
With investing, think of time frame, goal, and use by date.
And invest according to that.
If you are not going to use these funds for 30-40 years, you should be considering equities and mostly equities.
Insurances are not fun to talk about or to pay for.
But they are incredibly important and impactful.
Let’s say you are driving home today and hit a doctor and he can’t work again.
And let’s say you are being sued for $2mil.
What would you do?
Well you would see your liability max on your auto policy.
And let's say that's $100k.
You would potentially be responsible for the other $1.9mil.
This is a huge risk and something that happens more than you think.
You would want maxed out auto liability coverage and umbrella insurance on top of it to protect you.
You want to consider the following insurances:
So few in this age range really spend time thinking deeply about their goals and what they want.
It’s really hard to accomplish something you do not plan for.
Let’s say your goals are:
You don’t want just one savings account for all this.
You want separate savings accounts or buckets with the name of the goal.
Then you need a plan on how much to save monthly, yearly, etc to get there.
You need a financial plan!
Financial Advisor