Plain English Finance

Ep. 14 | Budgeting on $400K+: Why High Income Doesn’t Equal Wealth

• Tre Bynoe • Episode 14

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Earning over $400,000 a year puts you in a privileged position, but it also comes with bigger decisions, bigger risks, and bigger tax bills. In this episode, Tré breaks down how high earners can avoid the most common financial pitfalls and finally shift from focusing on income to building lasting wealth.

This episode is for professionals, business owners, and executives who are in—or approaching—high-income territory and want to avoid lifestyle creep, inefficient tax planning, and financial regret.

You’ll learn:

  • Why high income doesn’t guarantee high net worth
  • The budgeting mindset that scales with income
  • How to use income surpluses without wasting them
  • Why taxes—not spending—become your biggest threat
  • The importance of risk management and having a team
  • How over-gifting and poor oversight can quietly erode wealth

Follow, share, or leave a review if this episode helped you.

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 financial planner with TCU Wealth Management and Avis Wealth. For more information or to send in your questions, check out the show notes at trey byo.ca/podcast. And if you want to learn more about me, start with episodes one and two. Let's get into the 14th episode. Wow. 14. Okay. This episode is about budgeting. The last one that we're gonna do, um, around the income levels, and this one is where, this is kind of a big, big category. We're just gonna do, uh,$400,000 of household income and up.

Sierra:

Okay.

Tre:

So what do you think changes? Well, let's start with what do you think these type of people look like?

Sierra:

Like.

Tre:

Short, tall, stocky. Definitely short. Okay. Just

Sierra:

kidding. Um, I would say probably, I would say probably not what you expect. Maybe, um, I think, not that I'm in the industry, but because like I know I have like kind of an inside scoop sort of thing and worked at a credit union and all that. Like I've seen. Clients before and like members and stuff. And sometimes you think you know who the wealthy people are by what they look like, but it's not always the case, I guess. So maybe like farmers, because they sell, like when they sell the equipment and stuff, they, those checks are really big. I remember when I was a teller, those, those checks were really big. Um, yeah, I don't know. What do they look like? They wear suits too. I don't know. I'm thinking like lawyers, like partners, maybe like a partner of a law firm or like, yeah, so the, someone who owns a business, like an entrepreneur who's had a successful business. Like that's kind of what I would think. Those are like coming to the top of my head doctor. Maybe like,

Tre:

yeah. So the typical people that you're gonna see in this category are gonna be stem. Okay. Yeah. Sales. Owning a business again, the big ones. Mm-hmm. Um, so that's really, I I would say it's sports people and stuff like that, like select like, uh, people with that get their money through eyes and attention. So there's two types of two ways that people typically earn money. You either create value through a business or like a, or stem them type of, uh, topics.

Sierra:

Can you just, sorry, remind, it's like science. What STEM against?

Tre:

Uh, science, technology, engineering, medical.

Sierra:

Okay. Engineering. I couldn't remember. E

Tre:

um, so it's STEM type of subjects or you get, gain money through eyes. Right. So maybe they are a YouTuber. Mm-hmm. You know, that type of where you can, where you get money through eyes. So they're the typical people that you will see in this category. That's really what you would need to do to pursue those categories in order to, to get into this income level. And there is a gap between, you know,$400,000, uh, to$10 million. I've never worked with anybody that makes$10 million a year. Um,$400,000 is actually a lot more common than than you would think. All it really takes is a dual income. A dual income couple, uh, close to mid to late end of their career. Mm-hmm. And this is, is very doable. Mm-hmm. Um, so there's some major things that change in this. And one thing to note that everything that you had been doing beforehand kind of builds you to this point. And part of the major reason why I get people to. Separate out their expenses from their income is because that is what you have to do if you are in when, once you get to this type of income level, and that's because a lot of your income isn't derived from a salary. It doesn't come in biweekly chunks. It is either you get a salary and then a big annual bonus, right. Of. What your salary is plus, or you'll be given stock options in a, in a company or it'll come by the way of a business. So it's, it's lumpy when you get your, when you get your income

Sierra:

insurance, kind of, yeah.

Tre:

It's, it's not a steady, it's not a steady income if you are. Any of those fields. Um,'cause you'll probably be a partner of a firm if you're in professional services. So therefore, if you, let's say you own an engineering firm, then bigger checks are gonna come once or twice a year. Mm-hmm. They're not these monthly or biweekly paychecks. Right. So in order for you to not go through these huge ups and downs of spending, guess what You need to have separated out your income. From your expenses, right? Mm-hmm. And you can't have your income dictate your, your expenses. But there is a few key principles in when it comes to this, this group. Uh, the first one is that at this point, you can pretty much afford to do everything that the average individual would want to do, but you still can't afford to do it all at once.

Sierra:

I'm seeing a common theme. People are probably like, well, maybe not everybody, but some people might be like$400,000 plus. Like, you must be doing it all. I was like, well, maybe they don't think that. I don't know. I kind of thought that. I was like, that sounds like so much, but yeah.

Tre:

Yeah, and what you'll find is that as well, you've, you've seen it like as, it, it's not as much as what, what you think when you are earning it, right? But a lot of people in this group will get to, you know, 50, late fifties and be like, where did it go? When you look back through your career, you think, okay, well I made last 15 years, I made 400,$500,000 a year, and. Where is it? Mm-hmm. Um, and that's a lot to do with lack of planning or, or things like that. So, but you can, you can, there's lots of things that you could afford to do. One thing I would say, if you take nothing else away, and you're in this category, is that you are throughout. Society teaches you that you are like, your income is very important, right? Like you, almost a lot of people measure their self-worth to some type or, um, maybe self-worth is not the right phrase. They, that's the measure they use to determine how good they're doing in their finances.

Sierra:

So like for success sort of thing?

Tre:

Yes. For like financial success, it is tied to your income. Okay. I would say it is really, really important at this stage to shift that, uh, to financial success needs to be tied to your net worth, not your income. Mm. Your income is very irrelevant. Uh, and we'll get into why, but. And this is where people that are, that when they get tripped up, when you see the big paychecks going to to movie stars and sportsmen and they end up broke, and you're like, how the guy was making$2 million a year, how do you end up broke? It's because they. Tie their spending mindset to their income,

Sierra:

current income,

Tre:

not to their net worth.

Sierra:

Yeah.

Tre:

So a really easy way to understand that is, you know, I'm making$2 million a year. Can I afford a$2 million house? Well, no, you can't unless you have, you're making$2 million a year, you should be able to pay for the house, right? So you can't afford a$2 million house until. You can afford a$2 million house. So overall I would, I would just say that somebody in, I mean in upper this end, like, you know, millions of dollars a year instead of thinking that their income can buy whatever they want to buy, I think after their basic living and a, and like a good standard of living, right? Not. At the bare minimum, you have the income, you can afford a good standard of living.

Sierra:

Mm-hmm.

Tre:

Um, Shaq, you know who Big Shaq is? Mm-hmm. Okay. I think he, he said it great. He said that, uh, best advice he ever got was to take his income. Take half of it, that's the governments, and then take half of it again. And that's his. And then he said the best people will take half of it again and put that aside and live on what's left during their like MBA career. And that gave him enough to then go out and be able to make. More money now because he owns businesses. Right? He could funnel it towards that.

Sierra:

It's like these young guys don't realize if you are in sports that your career is, you're not working till 50 sixties. You're working till you're, I don't even know, like thirties maybe.

Tre:

Yeah, ex. Exactly. And that's, that's a key thing that a lot of people don't, uh, in, in this, you're, it is such a blessed position, I guess, to be in, but it can all be taken away just by hurting yourself. Right. So that's for upper, upper end. The more regular people you see in this type of income, a lot of them at this point are pretty decent with money. Mm-hmm. I would say a lot of them have had to. Earn it. And that's there's a reason that a lot of lottery winners end up broke is when you don't have to earn something. Your relationship with it is a little bit weird. Same with people that inherit lots of money that aren't already pretty wealthy.

Sierra:

Mm-hmm.

Tre:

Again, that, that I, I've seen that it, it's, uh, their relationship with the money is kind of strange. Yeah. Versus somebody that had to build a business and, you know, they. Worked at this, uh, mechanic shop and had to put everything into it, blood, sweat, and tears went through, the ups went through the downs, and now they, they're earning a good income from it, right? So that's very different. So I'd say that those people that are in this range, a lot of them have habits built already. They're, they're relatively, they can kind of understand what they can afford if they've been through. The bad times and they're probably saving a little bit for on the side, so they're on a good set, right? Like I think most people get by here though, is where the decision is to whether you want to try to optimize and be as efficient as possible, or if you're willing just to, let's be, I guess, um. Because it does make a huge, huge difference here. Okay, so in this range, the biggest impact to your ability to build wealth? Generate wealth is tax. There is no. Bigger impact to your life than the tax Man.

Sierra:

It's funny because I was thinking when you were starting this episode, the other episodes, you're like, what do you think is different? Or for budgeting? And I think both. I've said taxes and this one I didn't. And you're like, this is the tax episode. Yes, of course. I'm like, they were a suit. I dunno.

Tre:

Uh, yeah, no, this, this is the tax one. This is, this is the one where the taxes add up really, really quickly. And don't get me wrong, I am, I understand taxes. I'm okay with taxes. I believe what I say to clients is I will try to posi make your life in a way that you'll pay the minimum legal amount of taxes that you owe. If you would like to go after the facts and give them a donation. You go right ahead, but it's not gonna be because I didn't do my job. Yeah. You know like it's right.

Sierra:

You're gonna tell'em this is what you have, this is what the government requires of you. You have to pay this. This is

Tre:

the amount that you pay. Why pay more than the government requires you to pay unless you want to. And then. Outside of your tax return, you go right ahead and do it. But when it comes to how we plan and position your life, we want it to be as efficient as possible when it comes to, when it comes to taxes, and that's where you start looking at looking at things like, okay, are we, should we be leaving? Money, it should be leaving money inside of a corporation instead of taking it personally. Should we be starting to think about family trusts? Should we be thinking about estate freezes and putting it into the next generation? Uh, you know, we are looking at individual pension plans for, for professionals and, and things like that. We're looking at ways to, to be more efficient. And this is honestly, this is where insurance, like life insurance and things like that actually have a part and. My goodness. Like whole life policies and stuff like that, oversold to the wrong people.

Sierra:

But you're like maybe here. I think

Tre:

everybody in my industry kind of knows that there's some sleazy companies out there that sell this like even like infinite banking type. Anyway, that aside there, this is area this. No, this is different. Oh,

Sierra:

different. Okay. Sorry.

Tre:

Uh, but this is the area where those type of instruments can ha, can actually have a lot of value. Uh, we will do later episodes on those, but this is when you start to look at those type of things and you need to look at how your whole finances is structured. Structured. But this episode's about budgeting, so we'll come back to some other stuff, but what do you think changes with their budget?

Sierra:

Well, obviously they're, um, apart

Tre:

from the numbers going up,

Sierra:

yeah. The numbers are going up. Um, what changes? They probably don't, I wanna say like the, I'm scared to answer the way you're looking at me. I'm like, oh, I'm gonna say something wrong. Maybe the way they budget for certain things is, doesn't matter as much. Um, like I am thinking, like groceries and stuff, like those ones where it's like, yes, that costs a lot for, for people maybe in the 100, um, 200 whatever thousand dollars incomes. Um, because it's like a, what's it called? Sorry, I'm blanking on the name. Um, disposable. Disposable spending or disposable income that you can spend on those things. It's like, I don't know. I'm going on a little tangent here and you're just staring at me and I'm just, help me out, please.

Tre:

Okay. I would say nothing really changes in the way that they should. Better.

Sierra:

Okay. Can somebody please listen to this episode and tell me, was that a trick question? Was he setting me up? Tell me.

Tre:

I, I, I would, I would argue very much so that nothing really changes. You still need to assign yourself an amount of spend. You still need to like, yes. You're not gonna be worried about the smaller stuff.

Sierra:

Yeah, that's what I was, but

Tre:

you should still allocate, just the numbers would be bigger, right? Like your personal spending would be bigger. The trust fund kid that has$50 billion in his account. I don't think there's any trust fund people with that much money, but you get the point. It's still going to allocate an amount or should be allocating an amount to spend because if you don't allocate an amount to spend and what your lifestyle is, you don't know where the risks are. So let's say I am worth$5 million and I'm living on my. Off my investments or whatever, or I have like a risky job. Let's say I'm in the oil field. I own a company in the oil field. Lots of ups, lots of downs. How much money do I need to keep in cash for safety net for in case my business folds very quickly or I need to shrink? Mm-hmm. Well, if you don't know these numbers, you don't know, which means that you can't allocate everything else appropriately. Your. Friend comes with you for a, and wants to start a business and buy some property, how much money can you allocate towards that knowing full well that you need to prioritize the friendship over the money. So you have to go into it willing to lose the money? Mm-hmm. Or how much can you afford to lose? Right? So things like that only come if you still. Allocating resources appropriately and you're allocating money to spend.

Sierra:

Mm-hmm.

Tre:

And that's the key thing here, is that nothing really cha if you do it properly, if you manage cashflow properly, the numbers just get bigger. As your income goes up, as your income changes the way that you get income, none of that will impact your personal finances. It might impact the way that you run your business side of things,

Sierra:

or maybe like the structures that you use, because I was almost gonna call you out and be like, so are you saying we did these three episodes and really we could have just done one. It's like, here's how you budget and it applies to everyone, and you're like, let's split it into three episodes. And people are like, Ugh. Anyways. Well then that's some

Tre:

small stuff. Yes, yes. Yeah. But technically no, you're right.

Sierra:

It's kind of like, it is kind of that way. It's like, here's the, well, you love this word framework. Here's the structure of it. But there are different parts that certain people in this income range would use that others wouldn't. Like you said the. Um, like just the planning side, like certain estate things and trusts and all those things. I mean, somebody with a lower income might not be looking into those planning parts. No,

Tre:

and I would say that where you would be focusing your efforts would be on different sections, right? Yeah. It's like in a lower income section, you'd probably be focusing on. The money going out of like the house account, right? Yeah, like a house account. When you get to a upper, like as your income goes up, you'd be focusing on money that's going from your like personal spending type range, right? And as you hit these income levels, you should be allocating enough to that, that you should be covering all of your, your wants and needs at this point. So then really you should be focusing on everything that's happening outside of your personal. Finances. Mm. Because these type of individuals are under a ton of stress, right? You're thinking of their C-suite executives. They are, uh, building stuff. They like these, uh, running a business. They have payroll to me, they, they have. Their mind needs to be elsewhere. Yeah. In order to maintain this type of income. If you, I mean, imagine you're working with a lawyer that's, you know, you're being sued for something as a, they're defending your company and then. You hear that they're going through bankruptcy themselves? Yeah. Where do you think their head is gonna be at? Well, it's certainly not gonna be on your case defending your patent, right? Yeah. Like from a, from a, from a rival company. So when you are in these type of roles, you, you give a lot to these type of roles, and that means that you need your personal stuff to not be the stressor. Yeah. If you are, I'm, I will categor if I find out my lawyer. Is struggling with finances, can't put food on the table, is up to his eyeballs in debt. I know that's where his focus is. Yeah. It's not gonna be on my stuff. I need you to be focusing on my stuff. Yeah. Same for the CEO. If you are, if the CEO E is worried about the guy coming to foreclose on his. Porsche sitting outside, is he focusing on the company, growing the company properly? No, he is not. So if I'm the board, I'm thinking get rid of this guy. I, I am or girl I

Sierra:

good save.

Tre:

I it, it is at these type of, at these type of jobs, the focus cannot be on your personal finances. It can't be on your credit card there. So that needs to be, that needs to be done, dusted, and you move on and don't think about it. Yeah. And the way to do that. Is with a, is with a framework.

Sierra:

Mm-hmm.

Tre:

But there are some other things that, uh, they would be, would be looking at. So charitable giving is a big one. Something I'm a big believer in. But the way that you would give to charity changes. Hmm. And you should be. We'll, okay, another episode coming for that one. Uh, but you should be structuring your finances in a way. Again, as I said, tax is the biggest thing. Well, I was thinking give charitable

Sierra:

giving. It's like you get a tax receipt and stuff, even like,

Tre:

but the way you give is really important. So if you are gonna give, I would rather, there's three parties briefly. Three parties. When it comes to a charity, there's you who's giving the money. There's the charity and there's a third one,

Sierra:

government.

Tre:

The CRA.

Sierra:

Yeah,

Tre:

so there's those three in the relationship, and you get to decide how, by the way, that you give, who gets what? Share. Right? Guess who I would rather? Get the smallest share, but you can't guess the government. So if, as I said,

Sierra:

the government isn't all bad, right? No,

Tre:

absolutely not. But the minimum legal taxes that you have to pay, the amount of tax that you are, that you have to pay legally, and that, that means planning for it in this, uh, range. You also need a team categorically. If you're the person that you think that you are, you're good on your own, and you don't need a personal liar. Y you should be getting one. You. You don't need an accountant just because you can do your taxes. Again, your time is better spent somewhere else. You need a financial planner. Yes. Because you cannot put the energy and time into doing it properly. A business consultant. Yes. Because if you're going to try to maximize the amount of time you want to be as efficient as possible, which means you need somebody from the outside looking in and helping you. These, these type of advice people. Come into your life a lot more in this, in this age bracket as you try to maximize your personal earning ability. Right.

Sierra:

Wasn't there somebody who you said actually hired like a personal assistant who, like even that not

Tre:

business personal assistant. This was a personal, personal, there's lots of people that do that, but somebody I knew Yeah. That hired a, uh, it was an advisor and they, but they decided, they did the math. It made sense to hire a personal, personal. The system for doing it, not for business. Yeah. Just feel the day to

Sierra:

day because, yeah, I just think about all these things that we do, and again, they're like, they need to be done. There's absolutely nothing wrong with them, but it's true. Like who's like, oh, I can't wait to do my laundry. Like, nobody's excited about that. And yeah, if you, if your time is better, spel, oh my goodness. If your time is better spent elsewhere, then why not? Like, I don't think there's. I feel like that's a smart move if you can do it right.

Tre:

Well, I'm obviously biased, but Yes, I agree. I think that it is, is is a smarter move to offload the things that,

Sierra:

or just like mundane things that need to get done like that. Yeah. That need to get done for everybody, but. You can spend your time. I mean, if you're a researcher for some rare disease, you're not gonna be like, oh, sorry guys, gotta close up the shop for a few hours. I have to go fold my towels. Like that sounds crazy to me. You know? Yeah. Like,

Tre:

you're right, a hundred percent. And that's exactly what you, that's where your fin finances should be going. If you're in it,'cause you can now afford it, you can afford to have a cleaner, you can afford to have a garden. You can afford to do these things. So that,'cause you're, if you still have a family, pretty much, you have two worlds. You have your family and your work. So if you're not working, you want to be spending it with your family.

Sierra:

Yeah.

Tre:

Because they're the two big parts of your life. Yeah. So make sure you do them. You know. Don't

Sierra:

regret it.

Tre:

Don't regret it. So, yeah. Um. Okay. And then the other thing was the risk part of it. And this is where the risk management comes into play. And if you are a business owner, and let's say you have this income and you have, you have yet to ensure your business from bad, bad events. Take your income and put it towards that, like take less. So for example, let's say I run a shipping company and I don't have cybersecurity insurance.

Sierra:

Oh boy. Yeah.

Tre:

Like really go and reevaluate your risks because protecting it. Sometimes worth it. Often it's worth it, uh, because of the, the impact. And I think this is a, this is an area that people miss a lot, especially when they've grown a business themselves. So a good example that I can think of top of my head is a cleaning company. You wouldn't think cleaning companies are very profitable, but they can be very profitable.

Sierra:

Mm-hmm. Anyway,

Tre:

this cleaning company, it was doing about one and a half million dollars of revenue. Uh. Profit margin was almost 40% like owner compensation, incredible income, great income, but they weren't insuring themselves appropriately for people getting injured.

Sierra:

Ah.

Tre:

And so like their

Sierra:

employees kind of thing, or their

Tre:

employees, somebody like slipping, like the, just like the liability, right? And it's like, yes, maybe the liability coverage you had when you was a$50,000 company and things were at that point was enough. But as you expand those type of. Those type of liabilities come higher and higher and people will, if they do get hurt, they are significantly more likely to go after a bigger company than a smaller company. So as you expand, this is a really good place for you to be putting your money and it might take some adjustment.'cause I know for me. Uh, even getting additional like disability insurance and things like that was like, oh, this, like, it's kind of expensive. Is it worth it? But ultimately you have to think to yourself, okay, if something does happen, it's now a lot of income to lose. That may be you was banking on for the next 10, 20 years.

Sierra:

Yeah. That, well, I mean that's insurance in general. It's like you're paying for the peace of mind because you don't know. I understand.'cause it is, it is. Not fun knowing if you don't use it, you lose it or whatever. But it's like, yeah, you can't, yeah. Get over

Tre:

it. You just, yeah. Have the money to do it and just cover yourself.

Sierra:

Yeah, just, yeah,

Tre:

for sure. Yeah. And then lifestyle C Creep. I know I've said this in every single one of them. It still applies to this, this. Income range, there's always gonna be somebody with spending more than you can. Yeah. It's always gonna be the bigger bow. There's always gonna be the bigger house, the bigger cabin, just as it was in prior ranges. You have to find contentment.

Sierra:

Mm-hmm.

Tre:

In some level of consumerism. And it doesn't matter if your numbers are bigger, as long as you can truly afford it. Go get the nice car as long as you have all the. Everything else in place.

Sierra:

Yeah.

Tre:

An important thing that you have to understand though, is that this, at this level, this type of income is one major event. Major event away from disappearing. So making sure that your plan isn't, I'll deal with that tomorrow because I have all the income. It's a case of I deal with that right now.

Sierra:

Can you expand on that? I'm a little lost.

Tre:

You know, there's, uh, that meme going around. Actually, this will be. I think in a month. So maybe it would've come over then. Um, but the Coldplay concert,

Sierra:

oh, with the CEO and the Yeah. Affair.

Tre:

Guess what's just happened to his income? Right. He was probably making well over a million dollars a year plus lots of things. How's that doing for him now?

Sierra:

Yeah. You know, or scandal, like not,

Tre:

I mean the, the morality of that aside, but it, but it's in all, in, in all aspects. You're a lawyer. Suddenly there's a, a charge against you and something happens and you get disbarred.

Sierra:

Yeah,

Tre:

guess what? All that income's gone. You're an accountant. Something happens. Something's, something's, it's just you are one. You are always one. Any event, you are one major thing away from it'll, it'll disappearing. So just make sure that you put your, you set the foundation properly. Don't put it off. Don't put it off just because you think you can always do it later. Mm-hmm. Like put it, don't put it off. Don't, just, I don't know. And I, I feel, I feel like I, I'm thinking more of like, um,

Sierra:

doom, doomsday,

Tre:

sorry. No, it's not, it's not doomsday. It's like, but I'm thinking of more professionals and stuff, um, that you are, that there's, there's regulatory things around it, right? Like

Sierra:

Yeah, I do see what you're saying. It's like. It, there's two sides of it. It's like that makes sense to me and I'm like a very what if person, and I love to be prepared and all that stuff. But at the same time, it is kinda like the sound of. Don't panic if you hear you're only one event away from losing it all. I don't know. That just sounds very like scary. Oh, hopefully it, but you know what, maybe that's what people need to hear and they'll be like, oh my goodness, I need to like, prepare or think more about it

Tre:

and preparing could look differently. There was, uh, one person, he, it was a YouTuber, in fact, talking about what he did, um, made millions and he found a guy. Like a planner, whatever, and gave him$2 million and basically said,'cause he was a gambler, and basically said, I will not touch this. I don't want like, this is,

Sierra:

hide it.

Tre:

Hide it, basically. I don't want anything to do with it. Invest it. Slow, boring.'cause he likes to, like, he was into crypto and all this stuff, et cetera. I, I wanna

Sierra:

know who this is, but I'm not gonna ask right now.

Tre:

And, uh. Yeah. And it was the, and that's what he did. That's, that was his plan was basically, Hey, uh, this is my insurance policy against myself almost. Yeah. The reason I have this money is'cause I'm kind of crazy. I know that about me. Take it, hide it. You know? And that was what he did, right? That was his way of setting a foundation. Before, you know, because he knew that ruining could happen.

Sierra:

But again, I, you know what, I just wanna point this out of course,'cause I'm the psychology girl on here. Is that you mentioned he knew that about himself. It's like no matter what income range you're in, if you ignore those things about yourself, like he could have very well just been like, yay. Like. I'm just gonna pretend that, or like not have that awareness. Mm-hmm. And not do that because he was the one who went out and did it like nobody else. His planner wasn't like, Hey, gimme this money so that you don't go and blow it like he gave it to, I

Tre:

mean, and maybe he did, so maybe it was his parents or something. It was was like, hey, but like at

Sierra:

some point he realized that to be true and he took steps. So of course I'm like, that's kind of where my mind is going. You have to know these things. Like I just think personal finance and behavior are so intertwined. It's like. They're one and the same to me. Like who you are is directly tied to how you manage, view, feel, think about money. I think it, I think it is. But anyway, sorry. It's a little

Tre:

No, I, I agree. I agree with you. I agree a hundred percent. It's, um. Self-awareness is very, very important. Mm-hmm. Because

Sierra:

regardless of the income,

Tre:

yeah.

Sierra:

Basically, like you said in the other one, it's like you have the system like know, know yourself and how you feel about money and how, what you think about money even like, I don't know, we've talked about that in, uh, the earlier episode. I can't remember. It was like the, one of the first ones we talked about, like my viewpoint on money. It was kind of like a scarcity mindset and understanding that about myself, it doesn't mean that I necessarily have like changed that about myself, but I'm aware of it, so I recognize it and can make decisions differently to like counteract that. Mm-hmm. Preference, if that makes sense. So depending on what side you're on or what, what you feel or think about money, you'd have to.

Tre:

You can do things to balance yourself out. Yeah. And that's, that's part of the reason that I assign the, like the spending amount, right, is because you don't want. It's not all about tomorrow, you know? Mm-hmm. It's not all about saving for this event that it's like, okay, once you've taken care of that, it's important to also

Sierra:

enjoy, like, enjoy your life, enjoy

Tre:

it. Right? And not just put everything off tomorrow. And that's why we set that amount where it's like, this is not going into savings, this is not being invested. This is to be spent. Um, so that's

Sierra:

sometimes I still don't spend it, but I'm like, I just know. I don't know what to spend it on.

Tre:

Yeah. So yeah, one of those things. Anyway, uh, last point is gonna be the making mistakes with money, because you have it, it can be very easy to ignore the small things. Really good example is going into business with people that don't, that maybe you wouldn't have. If let's say you have$10 million and you have a million dollars that you can burn. It doesn't matter. It won't impact your life. Mm-hmm. And your brother comes to you and says, Hey, I have a million dollar idea. It can be tempting to just hand it over without proper oversight.

Sierra:

Mm-hmm.

Tre:

And it's really, really important to still have that oversight in some capacity.

Sierra:

Hmm.

Tre:

Even if it's not you, maybe you need to be getting your team to do it.

Sierra:

Uh, my question is like, why I guess not. Just why?

Tre:

Because what will, what will happen is people will end up making, uh, money pit like decisions. So let's use that example for that, of that brother comes to you, needs money. He then takes that million dollars, goes, puts it on a down payment for a really big. Property that you never looked at, you never did due diligence for. He then comes back to you in six months and says, Hey, I don't have the cash, and the, the roof's done. And he says, I need a hundred grand. You go, okay, well here's another a hundred thousand dollars. Then he comes back to you and says, oh yeah, the basement actually needs redone. That's another, you know,$800,000. Okay, well I'll give you that. It, it just, it compounds, and you have to understand that. Uh, business and gifts and anything like that is all received in the individual that's receiving it, receiving those things mindset. So if that person. If that individual doing that property, this is their 10th one and they're very comfortable with it and it's a million dollars, and they're used to handling that type of money and that type of properties, they're going to deal with it significantly better than the individual that has never done it before.

Sierra:

Someone who's like, have this great idea and maybe

Tre:

a million dollars isn't a lot to you. But it's 10 times the amount of money that individual has ever seen in their life. It's through their eyes. And the same with gifts. And people can over gift very easily when you have the assets to do so. Um, they'll buy, they'll buy a, a house for their, a big house for their siblings. You can't really afford to the ongoing maintenance. Yeah. And they will buy. You know,$20,000 watches to this person and that person, despite that being the most expensive thing that person owns. And maybe it makes you feel good, but it actually isn't a good thing for the receiving person. Mm-hmm. And people in this income can forward prey to that. And the worst case scenario is those individuals around them get entitled.

Sierra:

Mm.

Tre:

Um. And then you have a whole other issue because then you have money that. Causes friction and it's typically within family and it's typically within families where one person in the family has done very well for themselves. Mm-hmm. Uh, and the others are still struggling. And I'm not saying not to be generous and to help and to give, I'm saying be careful of over gifting.

Sierra:

Mm-hmm. Or like think about how you're gifting as well, or what you're going to gift and yeah, that makes complete sense again,'cause it's like money, unfortunately. Unfortunately, it just is tied to everything. Yeah, it's tied to everything and yeah, I, uh, like we sometimes list, oh my goodness, sorry, I'm really struggling. I didn't do enough warmup before. Sometimes I say like, unique New York, before we start these episodes anyways, sometimes we listen to Dave Ramsey. Is that him? Yeah. Yeah. Sorry. And uh, I've heard a few people call in and say that about their. They've kind of been the one to earn a lot or like, and the, like, they've done well for themselves and then their family is like, well, you should do this for us. You, you need to do this for us. You need, and it's, yeah. It's, it's

Tre:

a really hard spot to be in. It's

Sierra:

really hard. Yeah.'cause you feel like, obviously they're your family. Like Yeah. Just listening to those stories, I could see it being really difficult for somebody in that position. But you're right, it's like the receiver. Their perception of money is important to consider.

Tre:

Yeah, it's very important to consider, but yeah, that's, that's, we'll leave it there. That's, um, that's really the, it is a little different than the, other, than the other income levels because you have a significant amount of surplus if you let that surplus happen. Mm-hmm. You can live a really good life, a really nice life, uh, if you let it happen. If you. Again, if you decide to inflate your lifestyle to meet this income just like everybody else, you'll be broke. I would rather be the individual earning a lot less with no debt than a person earning a million dollars who is, has a negative net worth and struggling to make payments like it sounds crazy. It happens all the time. That does sound crazy. It's, um. I would just much rather be the individual that is happy and spending within their means and getting to treat family and friends. You what they say. I gotta,

Sierra:

I gotta throw in a saying. The best things in life are free. Right?

Tre:

Well, I dunno about that.

Sierra:

Okay. Let me say this. It'll be more comfortable, but like you've said it before, that the things people mostly want is. Freedom or to do things with their family or like realistically, those are the things you want to use your money on. So it's like,

Tre:

just make sure you have those covered.

Sierra:

Yeah. Yeah.

Tre:

But anyway, that's it for this episode. The next episode is on what we do. Okay. So this is the one where we're gonna look at. Uh, my investments, what, what the, what's in it? The philosophy behind my investing philosophy. And you are gonna help us with that.

Sierra:

I'm really not looking forward to that one.

Tre:

Okay. Well, we've fallen into the trap. I just do everything pretty much when it comes to the investing piece. I've tried to get you involved a little bit more and you kick and scream. Uh, yeah. So this will be interesting. I'm excited to go through a fun fact with you. Oh, a fun fact.

Sierra:

Fun fact,

Tre:

fun fact. Okay, perfect. Um, we'll see you in the next one.

Sierra:

Bye.

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Tré Bynoe CFP®, CIM®

Host
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Sierra Bynoe

Co-host