Plain English Finance

Ep. 8 | High-Income Budgeting: How $200K+ Earners Can Start Building Wealth

• Tre Bynoe • Episode 8

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Are you earning over $200,000 but still feeling like your money disappears too fast? In this episode, we dig into budgeting for high-income earners and why earning more doesn’t always mean building wealth.

We explore key behavioural differences between natural savers and spenders — and the blind spots both groups have when it comes to money management. You’ll learn how to stop relying on unpredictable income like commissions and bonuses to make progress and instead build a systematic, sustainable approach to saving and investing.

If you want to start growing your net worth with intention, this episode is for you.

What you'll learn:

  • Why high-income earners still struggle with budgeting
  • The habits that hold spenders and savers back
  • How to create an automatic wealth-building system
  • Why bonuses and commissions can’t be your financial plan
Tre:

Hello, and welcome to the Plain English Finance Podcast, the podcast dedicated to helping you make smart financial decisions. I'm your host, Trey byo, certified financial planner and chartered investment manager. I'm a financial planner with TCU Wealth Management and Aviso Wealth. For more details or to send in your questions, check out the show notes at my website, trey byo ca slash podcast. And if you wanna learn more about me, start with episodes one and two. Okay. Let's get into the. Eighth episode.

Sierra:

Mm-hmm. So this

Tre:

episode is about budgeting, but it's a little bit different. There's so much budgeting advice for people with struggling people on low income. Um, so I'm gonna do a series on just like a few episode series on budgeting with higher incomes. So this episode is about budgeting for people with a household income from between 200 to$400,000 a year. And I'm joined by my wife, which, hello? Heard?

Sierra:

Yes. Still here.

Tre:

Perfect. Okay. Um, SOIs, what do you think changes when somebody kind of crosses that threshold? When they maybe go from, uh, you know, a hundred thousand dollars of household income? So that's like a couple earning$50,000 each to. Well, let's use like$300,000 as a, as a good middle ground. Um, so they're each earning around 150,000. What do you think changes in their lives

Sierra:

that I, Mike, try to think about the way we budget? Trying to think, oh, what would we. Do differently Or why do we do, why do we do things a certain way? I feel like it would work for anybody. So I'm kind of struggling what would be different, but not with the

Tre:

budgeting. What, what do you think changes in their life?

Sierra:

Oh, I guess depending on the people, they might wanna spend more. That's a good one. Their lifestyle, lifestyle inflation. Not that that's a good thing, but it could happen. Um, they can afford more so. If it's within their means, they could have more, more things, more wants, more needs. I don't know. Um, what changes? Oh, taxes.

Tre:

That's

Sierra:

a big one. Yeah. Um, what else? I don't know,.

Tre:

You, you're right. So there, there's a, a bunch of things that change, um, the way that they, like the stresses around money change. Um,

Sierra:

oh yeah, that makes sense. So like when you're investing, I've heard you talk a lot about when people who have invested$1,000 in the market drop. The the dollar figure moving is a lot smaller than if you have invested 2, 3, 4, 5, a million dollars, whatever. Those market swings are a lot more scary because the dollar figure is higher. Mm-hmm. So you're not losing. You know, a hundred dollars on a thousand, you could be losing$10,000, 20, whatever, however much you have invested in, depending on the market swing. So maybe that too, if they're investing, it's like, okay, now I'm stressed about money because I have more of it, but I could also lose more of it. Yeah,

Tre:

I think, yeah, that's a good point. We'll cover that in investing for this. For this asset level point. Hey, you said what

Sierra:

changed? It's true. It's true. It's true.

Tre:

That is something that does change, not, but that's not based on income. That's based on the amount that somebody has accumulated. Right. So, um. Yeah. So income wise, uh, the biggest shifts are yes, they can spend more. Um, and you very quickly in this income range, you very quickly see where somebody's initial intentions are. Like, you know, when people talk about if you're a saver or a spender, this is where issues with that crop up. So for example, if you are a saver, you'll find that, uh, you are suddenly accumulating too much cash, just simply way too much cash. You're there wondering, what am I doing with it? If you are a spender, you're finding out that I. You are still not being able to save as much. Uh, when you earned$50,000 and you said, oh, I'll save later when I'm earning more. Suddenly you're earning more later is now and you still ain't being able to save. You know?

Sierra:

Yeah.

Tre:

This is, this is that range where you probably realize that you have a problem if, if, uh, if you're a spender, um. And

Sierra:

a problem if you're a saver, it sounds like too, right? Yeah. Yeah. There's

Tre:

problems both, both sides, whatever, both sides. Whatever your

Sierra:

behavior tendency is, is gonna show up more now that you have more money, correct?

Tre:

Absolutely.

Sierra:

Okay.

Tre:

Um, which is why there's plenty and Saskatchewan is a prime example of that because we have a very high number of, uh, people that work in natural resources that make a lot of money. Um. And have a lot of really bad habits to go with it. Uh, just the environment that that is there is very prone to overspending. Um, right. So, yeah. So I wanted this episode just to be around some key principles that you should take away, uh, when you're looking and determining, you know, if you're budgeting properly. Because don't get it wrong. You should be budgeting at every income level. There is not an income level on the planet that you do not have a budget. That you shouldn't have a budget. Those numbers might be really big. You know, if you're Elon Musk numbers are really big.

Sierra:

He is like, oh, my grocery budget is, he doesn't care

Tre:

about his grocery budget,

Sierra:

400,000, but

Tre:

he does care a month about how much money he is taking out of his personal stuff to put towards a new business venture, right? Mm-hmm. Like, uh, there, there are, you still need to. Numbers are bigger, um, in audit, in auditing, like, uh, for financial audit or financial audits. When you're like auditing a, like a non-for-profit or whatever, um, there is a number that they come up with. I actually can't remember what it's called off the top of my head. Maybe somebody can remind me. I'll remember as soon as we turn off the mics. Yeah. Um, but it is basically. Materiality. That's it. Uh, so it's basically at what point does the number not really matter? You know, like if, if the books are out, you remember like when you was a teller, um, and like if you was out a few pence, it's like, who cares?

Sierra:

Sense, sense. Canada, not

Tre:

a few cents. Uh, if you was out a few cents, nobody cares, right? Like, it's just like, oh, you just write it off and move on. But if you're out a hundred dollars, it's a little bit different. If you're out a thousand dollars, it's a little bit different and a

Sierra:

lot different. They were like, what are you doing? Yeah, exactly.

Tre:

You know, um, they'll put a lot of resources towards finding it, and it's exactly the same. When your Azure income goes up, the materiality changes. So whereas before you was maybe concerned or you should be concerned over what you're doing with$10, a hundred dollars, as the income goes up, that materiality changes. But what can happen is that materiality gets too high too quickly because for example, let's use$300,000. If you're earning$300,000, that's about$180,000 185. If you are. If one person is earning that, that's where you get net. So that's kind of like roughly what will be hitting your account?

Sierra:

Yeah, after taxes and everything. The tax and everything, that's for one person. That's for one person.

Tre:

For two people, it's um, it's about$200,000 between a couple. If they're both earning 150,000, that is not 300,000. Mm-hmm. I know, I know. It may seem like a lot still. It is not 300,000. And so somebody that says or thinks to themselves, oh, I have a 300,000 income. I'm gonna spend 300, I can spend 300,000 a year. No, you can't. No you can't. It is very, very different. Uh, once you, once you factor taxes and things like that, it is not the same. Is this is a trap that actually a lot of business owners fall for, where as soon as they are suddenly dealing with. Like pre-tax numbers. Like they think to themselves, my company made a million dollars of revenue, right? And they're like, okay, well I can go spend$80,000 on a car, not realizing that revenue don't mean anything. First of all, for a business. Like, yeah, it's nice to look at. Profit margin is what you need. Like if, if you, if the company has a million dollars of revenue and has a$1.2 million of expenses, that that was a bad, that was a bad, bad company. It's a really bad company. Much better off the revenue. Yeah, much better to have half a million dollars of revenue and$300,000 dollars of expenses, right? Like obviously, depending on what area the business is in and stuff. But like for most. Most small type businesses. So, uh, it's, and, and that happens very quickly with, with people as their income grows. They just think they can spend all this amount and then, you know, taxes come along and they kind of realize that, no, we can't. Um, they also have other, typically, like their, their goals get a little bit bigger, uh, which means that requires more capital to achieve these goals. Uh, something that. Very often happens is they in increase their lifestyle. Like you spoke about lifestyle inflation. Lifestyle inflation in and of itself isn't necessarily wrong. It's when it happens. I. Without any intentionality. Right. So when you, when it just happens and suddenly you wake up one day, like where, like where did the money go? Where, why am I spending so much? And you have nothing to show for it. It's not like you can say, okay, me spending money here made me happier. Right, right. This was a good decision to increase our spending in this area, and that is what you need to keep. When you get to this range,

Sierra:

it's making me think of, there's a guy who we've seen on YouTube and I think he has a Netflix show and he's, maybe I shouldn't say this, maybe it's copyrighted. But anyway, he asks people. What's your rich life? Yeah, yeah. Because people are like, oh, once I have this money, I've made it. I can do whatever I want. But it's like they'll do these things and I feel like it doesn't actually bring them any happiness. It's just what everybody else does. They're like, oh, look at this fancy car I drive, look at this like super nice house, and I went on this vacation, blah, blah, blah. And then they're looking back thinking like, it's better to be intentional even if you have that income. Right, like if your income's going up, don't just spend, because you have the income, you should think about what you want, your life, and in this range, you still need to

Tre:

think about it. This is not.

Sierra:

I, this is not, I made it money.

Tre:

Yeah, no, this,

Sierra:

I mean, it is like, don't get me wrong, that's, no, it's not.

Tre:

It's,

Sierra:

I mean, it's, no, but they should be happy. Yes. I don't wanna make anyone feel bad.

Tre:

I, this, this podcast is about the people that are in this range. So yes, I know there's lots of people not in this range. There's also a lot of people that are in this range. This is the vast majority of dual income professional households will sit in this range. This is not a unachievable range for. A lot of people, a lot of people can hit this range with any level of intentionality towards any career path that they choose, as long as they're intentional about where they're spending their time. If you choose, and this is beside the point, but if you choose a, if you choose to sit in a job. And for sure if that's your goal and you don't want to grow, you don't want to learn, you don't want to do those things, that's fine. But then there's consequences for that. Right? But if you are in a, any job, any field, and you learn as much as you possibly can, and you, you truly try to master your craft, you hit this range, you hit this range. If you're a plumber, you hit this range. If you're electrician, you'll hit like it's not, yeah. Beside. Key principle though, it, this is still a level where you have to be intentional. Um, that I think every level you have to be intentional, but this is a really, this is a, an area that you can get, get yourself into a lot of trouble in. Mm-hmm. There's a lot of people that hit this range and then suddenly go out and buy a 200,000 truck. 150,000 truck. And not just that, they also have the cabin to go along with it and the house because the mor, they bank will give you the mortgage, you know, you have. But high income, great. Give you whatever you want. But having an 800,000 bucks house and suddenly 150,000 truck, and then you have the cabin that's, you know,$300,000, you have nothing left over. There's nothing left over. All your everything's gone.

Sierra:

All the bills, all the bills are

Tre:

gone

Sierra:

because, and then if stuff starts getting, needing upkeep or like, yeah, taxes, the utilities are more, yeah, taxes, all of it. Taxes, property taxes, all that. It's

Tre:

all more. So this is still an area that you need to be really intentional. Um, the way I thought about it when I was, I kind of writing some notes for the, for the episode is I would say like a good baseline is in this range you should be putting at least 20% of your net. Take home pay towards increasing your net worth. Improving net worth. So that should be going towards investments, not paying off your mortgage. Very clear difference like going towards like assets. Um, and I view assets, depending on the topic is kind of context. Context is a little different, but for this sake, an asset is something that puts money in your pocket. So not 20% going towards paying off your cabin. Now 20% going towards paying off your car, your truck, not 20% going to your mortgage, 20% going to something that is gonna put more money into your pocket.

Sierra:

Okay?

Tre:

Real estate investment properties, the markets. A business, whatever it is, don't care what it is. At least 20% of your take home pay should be going towards that. And if you can't do that in this range, you are overspending.

Sierra:

Hmm. Simple as that. That's a good, like, rule of thumb.

Tre:

And I think for, for people with big goals, uh, you could probably be aiming for more than that for people with smaller goals that just wanna get by and not screw things up. Too bad 20%. I know it sounds like a lot of money, but like on it's on$200,000. That's 40 grand.$40,000

Sierra:

a year. A year to just put away Yeah. Put away. Well, or to build your network. Build your network.

Tre:

That's, I dunno. I, I know it's, that's very doable. It's extremely doable. It's extremely doable. Um. So that's what I would say that's kind of the, that, that in this range, um, there are a few things that I would caution people against though. So one of them is, uh, removing the relationship, uh, between income and spending.

Sierra:

Mm-hmm. So that's

Tre:

something that is consistent through all the levels of income when you're budgeting is, and again, really important because the bad habits really come out in this, in this. In this bracket, uh, but removing the relationship so when money comes in, having like a system for it, having a place that it goes, being able to, um, being able to, to know and, and select where your money is going, I guess would be a good, a good way. And again, the numbers get bigger. The amount that you might allocate towards play money might be bigger. Great. Cool. Fine. Doesn't matter. The fact is that you are allocating it. Mm-hmm.

Sierra:

That's

Tre:

what matters.

Sierra:

You're making a decision before and not just saying, oh, my paycheck hit my account, and now that I see it all in my checking account, I'm just gonna go blow it because I feel like it that day and that time you made that decision before saying, okay, I'm going to give myself whatever, five,$10,000 to go. Blow on whatever I want. I can't

Tre:

afford$10,000 a month of this income. Oh no, sorry, I

Sierra:

didn't mean a month. I just meant like maybe a year. I don't know. I was just throwing out a random,

Tre:

but yes, I didn't

Sierra:

say per month. I just wanna be

Tre:

The point is that you are making the decision beforehand. Yeah. And I know people, eh, there's always, there's so many excuses, tons of excuses. Stop with the excuses. There's, there's no excuse. You have plenty of income to do to achieve big financial goals. You have plenty of income to, if your goal is to send your kids to college to do that, plenty of, plenty of income. It's about how you choose to allocate it and what you choose. You can go on a really, really, really nice vacation every single year. What you can't do is go on a really, really nice vacation every single year, have a cabin. Have an$800,000 million dollar home and send your kids to school and retire. You can't do all of those things on this income. There's not enough to go around. You'll, you, you will always feel stressed. So at this level, you shouldn't be stressed around those things. You're doing too much and it feels like you might wanna, uh, you should be able to afford it. You can't afford it. It's not, you don't have enough income. Like it's, it's, it is, it is a high amount of income. It is not an unlimited, you know, do not have an unlimited supply of income,

Sierra:

right?

Tre:

So, um, that's one thing. If, however, you are a saver. So that's for the spenders. If you are a saver, a little different, my goal for you would be to stop stressing about the emergencies that you once stressed about. So often what happens is when people are savers, it's because you know, like either they truly, I dunno what to spend the money on. That's one category. And then you need a system to make sure you are getting that cash to work right? You should not be sitting on, I. A whole year's worth of expenses in your checking account shouldn't happen. If that's happening, you need a better system. You're doing something wrong. Um, but for those people that are, are saving over fear, it does get to a point where it's a case of, okay, you need to switch. You need to switch this style from saving to investing because

Sierra:

mm-hmm

Tre:

what you are worried about is no longer an issue. Good example, a furnace breaks. Right, so at this income you have$15,000 or assets, like$200,000 a year hitting your account, right? It doesn't matter if your furnace breaks, if you're a saver, because if you're a saver, you've already likely con, you're likely controlling your expenses. Yeah. Why are you smiling?

Sierra:

Because I'm thinking, I'm like, I'm such a worst case scenario person, so I'm like, I feel like you're talking at me. And I'm like, yeah,

Tre:

yeah.

Sierra:

I'm like, what if this, what if that? What if? What if the house burns down? What if? Yeah. Then

Tre:

you'll deal with it. You know, like it is just you. You do not need to plan for every single scenario, and the money that you use for that scenario certainly doesn't need to come from a savings account.

Sierra:

You

Tre:

know, you know, like right.

Sierra:

You know, that's a bad habit of mine. I love to like store

Tre:

you cash in

Sierra:

random accounts, and you're always like, how many, like where is this cash and what are you doing with it? I'm like, uh oh. What if I,

Tre:

I always say, what if you what? What if you what you what? Tell me I, please tell me what could happen. Happen.

Sierra:

Listen,

Tre:

every single property gets all their. AC units and their furnaces blown at the same time. Plus, we need to go on a vacation. Plus I lose my job for six months and need to find something else to work. Plus both cars break down. That's what, that's your, you need to have time for that.

Sierra:

You never know. You'd never know.

Tre:

So, and

Sierra:

I'm ready with all my checking.

Tre:

Yeah, great.

Sierra:

With the bits of cash here and there.

Tre:

Uh, yeah. So if you are that way inclined, you don't need to worry about those things. Those things. If you have accessible, you should have accessible money. Right? You can, like, if those things happened, I would pull money out of our portfolio, right? Mm-hmm. To.

Sierra:

Yeah. Or like, doesn't need to say or use a line of credit or whatever makes sense. And, and that's

Tre:

what I mean, that's actually what we use for an emergency fund. I, I hate cash just sitting around doing nothing. So I limit the amount of cash that we are, we are allowed to have. And you are still going over it, but

Sierra:

let's just say I'm at max capacity all the time.

Tre:

Try to limit it more. Um, but we set a ceiling on them at cash and then I make sure that. We, again, we revisit it often. Fortunately, I'm very strict with the amount of cash that I keep. Um, personally, the way that we run our finances, and I teach others to run it, run it, is that, um, we, we have everything, like everything is joint, but there's money that you get to spend, like, you get an allowance, I get an allowance to spend on whatever we want. And then we have a, like a house account that all the bills get paid out of. Um, even the allowance gets paid out of that account. Uh, groceries, all of it. Uh, our entire cost of living

Sierra:

Yeah.

Tre:

Uh, comes from this house account. Um, I feed the house account with our income and then everything else gets invested.

Sierra:

Yep.

Tre:

So I that the income account is a separate checking account, is where all our income goes into, and that goes down to zero every single month.

Sierra:

I know that's stress.

Tre:

We have everything in our, in our house. How?

Sierra:

I'm like, it's not, what if you guys, it's gonna, we're gonna have an overdr fear for what? How? Yeah. It's just your rational, I know you're talking about fear and stuff. I'm like. Our friends joke that I'm always like, I'm scared. You know, I let fear run me and it's not good, but it's true. So,

Tre:

but that, that is a change that needs to happen, right? Mm-hmm. Because it stress, it causes you undue stress that you do not need to be worried about, uh, at that income level. So it's important that. You move past that, right? That, uh,

Sierra:

and having the plan does, I shouldn't say like, I'm laying awake at night, scared of what ifs and all the, and what could go wrong and what we'd use to fix it. Not at all, but yeah, I sh Sorry, I kind of lost my train of thought there. Sorry mom brain. I'm like, it's gone. Okay. It's okay. Sorry. I dunno where I was going.

Tre:

Um, so yeah, to separate the relationship between spending, uh, stop stressing, uh oh. The other one was to lose individual spending categories for personal spending. I. So the way that, and the way that we operate is that CS gets an allowance. I get an allowance that we can spend. I can't, it's not for me to tell CSUN what she wants to use her money for, and it's not for her to tell me what I want to use mine for. Um, what we don't do though, and'cause people overcomplicate budgeting, is we don't have a separate category for clothing. Right. We don't have a separate category for. Tank fast sweets, which by the way are great if you are, if you're looking for sweets. Harry, bro, if

Sierra:

anybody wants to make Trey Happy Tank fast, Sweetss. If you're like, oh, I, I just wanna make Trey's Day, just go to Walmart in the. In the candy aisle, there's a like hairy bow packet and they're called Tang Fast sticks. They're his favorite. You'll win'em over.

Tre:

I'm now gonna get clients bringing them in, hoping that it makes me happy.

Sierra:

Well don't, okay, let's be reasonable. He's already doing his best. That's not gonna change anything.

Tre:

Um, yeah, but, but I don't have a separate. Budget item for those things, right? Like, it's like, mm-hmm. I, you are in charge of yours. You decide how you wanna spend it. I'm in charge of mine. I decide how I wanna spend it. Once it's gone, it's gone. If we wanted to increase it, we have that conversation at the beginning of the year and we review our entire budget for the year. And we don't think about, it Doesn't matter. Don't think about it. Um, and that's an important part in this income range, is to make sure that you have systems in place. Because it's very likely that your brain power would be better used somewhere else.

Sierra:

Yeah, I think that mental real estate thing is such a huge, people talk about it a lot now, mental load, all those things. Like if that is taking up your brain power, oh man, I feel like that would just be exhausting. Yeah. To constantly be thinking about even, even if you're not a w you're thinking about it, there's no way. It's not in the back of your head, like even subconsciously, where if you don't have any system or any budget, I. Yeah, I can't imagine it would stress someone like me. It would stress me out so much. I don't know if that's the same for a spender. If it causes them that emotion,

Tre:

well, there, there'll be a part of it because you, you know that like there's the guilt side of it. I deal with, I see that a lot where people like. Or they'll come to me and say, oh, I did this. I know what you're gonna say about it. Right. It's like, you know, you, you, yeah. Like

Sierra:

the shame that might feel. Yeah. You

Tre:

clearly know that. Um, and there's some people that I'm like, no, heck what? Like the, that's typically the, the saver types where it's like, oh, I did this, and you're like. What do you mean? Why are you upset about that? Go spend more, like, the only reason I'm taking so much money from you, uh, from your accounts is because you don't spend it. If you wanna spend it, go spend it. You've met your own targets, you've met your, you've met your goals. Like yeah. Now it's lifetime to enjoy it, like ease up. Uh, you don't have to be so worried about it. So it, it really depends. There's, it is funny'cause people, people will make so many excuses for the way that they. Manage money. Mm-hmm. And I can very easily, like when people make excuses, I just think of all the people that. Uh, in their same income level. Completely different financial position. Yeah. Like completely different. And I'm just like, people that you think, this isn't a choice. I am telling you now it's a choice. It's,

Sierra:

yeah. And to make it decision. But the problem is when you don't make the, the way, the way we do it is we make the decisions all at once. Yeah. What happens is people, I've heard people and like talk to people who do this, where let's say, uh, convenience is a big thing for them, so we're gonna get like food out or something, and it's like, oh, we'll, we'll pay for delivery, but they haven't like. Thought about it before, they're just like, in the moment, this is what I want, so I'm doing it. All those small things you do when you're like, oh, I just want this expensive coffee today and I'm gonna do it, but I don't have any like. Budget set. You know, I just look at my account. Yep. I have money in my account. I'm gonna go do this. I feel like that's where, oh, you don't even look at

Tre:

their account, but you sure.

Sierra:

Yeah, yeah, yeah. Right. Like it, it depends on, I'm just using these as small examples of those small things where every time you have to make a decision like, oh, do I have an enough to do this? Can I do this? For all those tiny decisions, that would be dumb. Things

Tre:

that you have better. Better places to spend your

Sierra:

decision making

Tre:

power on. Yeah,

Sierra:

for sure. And I think, but I think that's where people are like, how on earth am I supposed to, like, you know that that attitude you were talking about where it's like, this is out of my control. It is what it is, life is happening to me. Mm-hmm. It's like, no, actually you are completely in control. You are just. Maybe doing it inefficiently or maybe you're not making decisions in the right order or whatever the case is. Yeah. You're not thinking about it ahead

Tre:

of time because again, you, you talk about like paying for delivery fees and be willing, like you can set your budget for stuff to be whatever it is like

Sierra:

that. Yes. I'm not saying any of those things are inherently wrong. I at all, I don't care what people spend their money on at all. It's just that if, as long as it's a decision

Tre:

that you've made Yeah. Ahead of time and it's not just a. A reaction to the way that you're feeling in the moment.

Sierra:

Right, right. And that's the, because that's where you fall into bad patterns of, and that's where you're, you realize you wake up one day and think. I have nothing to show for. I have this income and I have nothing to show for. It's because these company I work in marketing, I know these companies, they like to, they want you to do those things, right? Like they Starbucks wants you to feel like that's your third. Home or something. I can't remember. Yeah, it was the, the place you visit.

Tre:

Yeah. Yeah.

Sierra:

It was like homework and Starbucks basically. Yeah. That's the, that's, they want you to feel like that, and they want you to feel special when you go get their coffee. They want you to feel like you have to do it. It's who you are. It's all these things. They're working on your behavior. If that's important to you, that's totally fine. You just have to. Like you'll an anticipate that about yourself. And I think, of course for me, I'm really into psychology and uh, and self-awareness, and I think a lot of budgeting is knowing yourself first. Mm-hmm. Knowing your behaviors, like you said, spending spender saver, right? Like whatever, what is important to you? All of these things are actually, you kind of have to know yourself and everybody thinks they know themselves like very well, but I would say a lot of people don't actually. Pay attention to either the things that are important to them or the way they make decisions. Well, they don't honest with

Tre:

themselves. Right.

Sierra:

Yeah. That's another one. People like we've talked about, the truth sometimes hurts, but it is, but at the same time it's that it, it's that kind of paradigm where it, depending on how you look at it, yeah, the truth might kind of hurt, but at the same time, now you haven't, you've opened your eyes. And you can change things, you can make decisions differently.

Tre:

Or you decide that this is really important to you and you see the trade-offs and that's great. You know? Yes, true. Like, but, but like to do it honestly at like, Starbucks is a great example. People like, I love, I love it when like supposed finance gus talk about like, oh, just like, don't buy Starbucks. Cut out coffee. Cut out coffee. That coffee. Yeah, it's, and let's say it's$5 a day and that does add up. If you were in this income bracket,$5 a day is not going to be what puts you over the edge or not.

Sierra:

Mm-hmm.

Tre:

Systematically not, not allocating funds to that and knowing what you're sacrificing for. That will. They, they're, you know, five,$10 a day is, that doesn't matter. It really doesn't. It's kind of

Sierra:

irrelevant almost. It is. It's like if you, if you know. That information, which you will know before if you're like, I am an avid Starbucks person, I'm collecting my stars, man, I don't know if we're gonna have, I don't know if any of this stuff is allowed to be talked about, like copyright and stuff. I'm sure it's fine anyways, whatever. But, or like Tim's your, you buy your coffee out every day. You know that about yourself. To change that behavior is a. A lot of a bigger ask than to say, okay, I'm, because I like doing that, I am going to make sure I plan for it. You know, my food budget. If that's how you do it, that's how we do it, is going to consider the fact that I wanna spend seven to$10 a day on that outing. Cool. Make sure you

Tre:

do it ahead of time.

Sierra:

Exactly. And maybe you're like, okay, on the weekends when my friends wanna go out and party, I'm not gonna do it like one weekend a month or whatever. Like, or not.

Tre:

Maybe you can do it all.

Sierra:

Maybe you can, you know. But you know it when you do the numbers.

Tre:

Exactly. It's about, it's not about the numbers, it's about the process of making sure that you are calculating this ahead of time.

Sierra:

Because,

Tre:

and that's for the spenders. And I know I've spent more time talking about the spenders. Uh, but yeah, we're

Sierra:

not trying to hate

Tre:

on the spend, we're not trying to hate on the spenders. They keep the economy going.'cause if it was not for them, it would not be as thank spenders. Um, so yeah. Yeah, just, it, it, this is an important. Income bracket to nail those tablets and to make those decisions. Um, the other thing that I wanted to bring up was that the, the way that you are saving, the way that you are putting money aside should not be reliant on one off influxes of cash. So really common thing that people do, uh, in this income range is they'll live off their salary and then they will say, okay, I'm going to invest my bonus. Mm.

Sierra:

Yeah.

Tre:

No, no, no, no, no, no, no, no, no, no, no, no. You invest your salary, you live off the small amount of your salary, and then when the bonus comes, you go blow it.

Sierra:

Ooh,

Tre:

do not. Rely on bonuses on influxes of cash that may not happen to reach your financial goals.

Sierra:

That's very fair though. I think because you're going at it by saying almost something that is, obviously building your net worth is a priority. Yes. Like that should be a priority. So if you are saying, oh, after everything else is done, I'll. Build my net worth. It's never gonna happen.

Tre:

No, it doesn't happen. There are companies out there that they, it's so dumb. So, uh, there's one company, I'm, I'm not gonna name names or anything, uh, but a specific company that they provide their employees a, like a percentage check, right? For retirement spending. It's like, uh, like let's say you have an income, uh, of$200,000 and they will contribute. They'll give you a check for 7% of that at the end of the year, not into RSVs or anything. You can do it at what you want, but it's just cash. Yeah, just cash. It's for retirement savings. So they say to the person, Hey, this check for retirement savings, uh, go save it for retirement. I'm telling you, I wish I had the numbers, but I know like just the. The situations that I've seen people money, they do not go and then they do not go and then put that money into an RSV. And then go match it themselves. So they have a 14% matched pension? No, no, no. They don't do that. They go and they spend it on stuff. There's always something. They might go put part of it, right? They get a check for$25,000. They might go put a, a small part of it towards it. And then there's an excuse. There's always an excuse for the, for the rest of it. Oh, well we can go on vacation with this funds and,'cause there's a large influx of cash. Don't do it. No, don't do it. Not okay with. Make sure you are saving systematically in a proper way that meets all your financial goals. And then then big bonuses, then big one-off checks. If you are a spender, then you can go blow it, right? Yeah. You need to make a system that will work for you, not the other way around.

Sierra:

Yeah.

Tre:

Right? And you should, and at this point, you need to know this about yourself because a saver, you can do that. I'm telling you right now, if you're a saver, you can do that, but you'll be doing both anyway. Be, you'd be, you'll be saving, you'll be saving every paycheck. You

Sierra:

thousand dollars. What if I, yeah. And

Tre:

then what

Sierra:

if I need in your car? I better put this on. Then you get,

Tre:

and then you'll find a way to make it$30,000 because you've still been saving too much cash. Like it is just, you have the complete opposite problem. You just added to

Sierra:

your savings account.

Tre:

You complete opposite problem. So that's, that's a big thing that in this entry app absolutely should not be relying on on influxes

Sierra:

income. Income in this income

Tre:

bracket. Yeah. Should not be relying on, and you

Sierra:

said age something, so I just wanna,

Tre:

yeah. Income. You should not be relying on, on bonuses and stuff to meet your financial goals. Um, and then one other thing I did want to make a comment on was combining finances. So I already mentioned that like me, me and you, we have separate accounts that we can spend out of that. Um, we determine how much we get, uh, at the beginning of the year. Again, we, this is all set out in advance. Um. All of our accounts are joints though. Mm-hmm. So this is, I would say, uh, when it comes to being in a, like being in a committed relationship, I could not imagine not being able to trust my partner.

Sierra:

Yeah. I think that's like a much bigger problem. You ha

Tre:

you do. And I would say if you are in this situation, you should be looking at getting counseling. I, I would say that there are, when

Sierra:

you say in this situation where you can't trust, where you can't trust your

Tre:

partner, right? Like your partner is on, when you, it feels like you are on two different pages where you feel like you're having to hide money from your partner because they're just gonna spend it all. Like there is something fundamentally wrong with their relationship. Most marriages break down over money issues.

Sierra:

Mm-hmm.

Tre:

And this income bracket is not immune to that. I've seen people below much larger incomes than this. It's. If you, if you want to achieve big financial goals and your partner is not on your same, on the same wavelength, it's very likely you'll just grow apart.

Sierra:

Yeah.

Tre:

Or you'll be stuck in a unhappy relationship because you'll continue somebody's, somebody's gonna be unhappy. Right. Like if, and this is, I, I, if, if I could wave a magic wand for everybody's relationship and have them be open and honest and willing to talk about money in an nonjudgmental way, I.

Sierra:

Yeah.

Tre:

It, it really is an area that is, it's so sad when I see couples not on the same page about money, because it's not, it doesn't have to be this emotionally charged conversation. Like

Sierra:

I think what happens is people will add, this is again a, sorry, a little bit of a psychology thing where people. In when they look at something, they add meaning to it. Mm-hmm. So a common thing is to say like, um, I'm overspending. That in itself is just a statement. I'm overspending. That's the truth. I'm, I'm spending too much. But then what happens is the emotion they're telling themselves, that means I am impulsive or this, like, I'm, I'm trying to think of words that you, well, it'd be like, I'm an,

Tre:

I'm an idiot. I can't control things. I'm a child. I'm like, because it, it feels, yeah. I just start

Sierra:

guilting and sha yourself. And, and that always translates, it always translates when you talk about something and emotions are coming up. There's something else going on where you're either creating meaning that isn't there, or you're right, like you need counseling or whatever. Like maybe there is some of that and, but you can still change it. Mm-hmm.

Tre:

And this age gap is prone to that.

Sierra:

You keep saying age

Tre:

gap. Age gap. This income range is prone to that because people in this income age are typically good at what they do. They're in like a growing part of their career and they feel like they should know.

Sierra:

Yes, typically intelligent people. I think that's a big one too. Yeah. Yeah. People think, again, like I've, I've watched people talk to you. I've, and of course I know Tre very well, I wanna say better than anybody else because I married you. But, um, and I've watched people talk to you and I can see them almost. Trying to impress you sometimes or to be like, look, I'm not like the rest of'em. I know what's going on. Like me and you, we like you. Don't worry. I'm not a stupid with money or whatever, and, but I just know you are Like, first of all, I don't want you to feel that way with me. I'm, I can tell you wanna help always, even when you're teaching people like you want to help. It's just that I think people. Don't wanna feel dumb for not knowing. It's

Tre:

like, yeah, because it's, they, they feel so much guilt, right? It's like they're like, especially when. To me, it's so easy and obvious. Mm-hmm. It's like that with anybody that has a career in a field. You become an expert in that field. Yeah. You're like, I

Sierra:

do this every day. And

Tre:

it's easy. Right? And then you think to yourself, you look back and you think, why can't, why can't any everybody do this? But you don't realize that you're an expert in this field. So it is become easy for you. You do, you would not expect if, if you was a, you know, world rounded engine designer, that person would not expect somebody to come off the street to be as good as them.

Sierra:

Yeah.

Tre:

But in my industry, not everybody

Sierra:

builds engines. Not everybody has. Right. I thinking even example of like someone who does that or works with cars and is very like high. Like high up in their career in that regard, whatever, like a mechanic or something or building engines and you know, all these intricacies and stuff with engine and someone walks up to you and is like, Hey, I know what's up. I drive a car. Yeah. And they're like. That would never happen. Not the same.

Tre:

It would never happen. But people do do it with finances because they just, they use money all the time. So they just believe they should understand all the ins and outs and the way that it relates, the emotional connections and relating that to the investing pe like people just assume they should know this and it's ludicrous. It's crazy to think in a world that has been create made so complicated that people would just know this, uh, especially if you don't have an interest in it, so. Mm-hmm. People do that to themselves. They just think to themselves, I'm a, I'm a doctor, you know, like I'm a, I'm a, I'm great at what I do. I make 800,000, which we'll get into a different, different episode, but I make a ton of money and they feel like they should just know how to manage. I. Money, like wealth management properly. Yeah. And it's just like, it's just, it's a different skillset. It, it, it really is. And it is something that you have to learn. And this budgeting at this level is the first step to learning how to manage that properly.

Sierra:

Like,

Tre:

as I've already said, like spending money not an issue. It's like spend it as long as it is a choice, as long as you are, you have the systems in place to meet your other goals. As long as you know what you are giving up to spend it and you're okay with it, then spend it. You know, like don't feel shame over it. But that's only once you've done all the work. And like a challenge I often give to savers is. Like to spend it, you know, like either to be giving money, to be giving more, like, to try to help with that attitude towards money.'cause it's the, the same principle. It's like you, you need balance. You always need balance. And it's just this age gap is when this age cap keeps percent age gap. This income bracket is when people start to feel like, Hey, I've made it. Like I've, you know, I've reached big goals. I'm in the top. It's probably the top 5% of incomes in Canada. Like you've met, you've reached just, you've done well, you're doing great. It's mm-hmm. Just when all the bad habits come out. So you wanna make sure if you're in this range. You got it nailed down because you will, you will look back 10 years later and be like, either you squandered it and you wasted it, or heck yeah, I've accomplished what I wanted to accomplish. I'm happy with where my funds went. You know? And either way, you just want to be okay with the decisions that you've made, and that doesn't come from burying your house, burying your house in the sand, bury your head in the sand. It comes with making decisions, being intentional and. And owning. Owning what you don't know. Learn, be willing to learn what you, what you need to know, and just moving on with life. Enjoy it. Mm-hmm. You know, like it's just, uh, I,

Sierra:

it really is that simple. It's so easy, right, guys? So easy.

Tre:

It is. It doesn't have to be hard. Do you know how much, how much time do we spend on budgeting a year?

Sierra:

Oh, it's true. Like the budgeting part of it. It's just, yeah, when people have all these feelings, the shit and behaviors and they're like, oh my gosh, this is overwhelming. But it is one of those things where it's like, just start here. And yeah, and the first

Tre:

time it took us a little longer and it takes me, like when I'm teaching somebody this, depending on how they're doing it already, it will, it takes me, you know, for three, four hours of going through it with them, but it now takes us less than an hour a year. Right?

Sierra:

Yeah.

Tre:

To do our budget for the entire year, then don't have to think about it again. Like it is. It is not something that I want to be spending my mental real estate to deal with. Mm-hmm. So

Sierra:

at all,

Tre:

I felt like this episode went on a lot longer. Really long. It was a lot longer than I wanted it to be. Anyway. We'll cut it off there. And

Sierra:

ads. Should we offer any resources in the show notes, like maybe some, like, would that be helpful if we talked about like certain, um. Like, I guess we use certain things for like our food spending. I think we'll do a

Tre:

different episode entirely on the actual budgeting process that we use and like maybe walk through, I. Like the types of things we have in our house account and the way we have things automated and

Sierra:

yeah, I think that would be really helpful.

Tre:

So I think we'll do that. I'd also maybe'cause thing about our budget, like we use Excel and we don't even use like a template for it. It's literally, I'm telling you, when we try we, when I say we keep it simple, it doesn't

Sierra:

look pretty. We keep it

Tre:

so simple. No big budgeting. Spread nothing. It's just a very simple excel names of stuff in column A and amounts in column B and a sum and some automatic, yeah, automatic transactions at the end of it. So simple options or whatever. So simple. But anyway, yeah, I think that's what we'll do. We'll do a, a specific episode on that. Um. In the next like few episodes.'cause the next one I wanted to do was the higher income. So the next episode will be budgeting, um, but for a higher income of about 400 to$800,000.'cause things do change in that, in that as well. Um, because what you can do does drastically increase. So we'll talk about, talk about that in the next episode.

Sierra:

Perfect. Okay, well stay tuned then.

Tre:

See you next one. Bye.

Sierra:

Bye.

People on this episode

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Tré Bynoe CFP®, CIM®

Host
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Sierra Bynoe

Co-host