I Feel So Behind Financially! (How Do I Catch Up?)

This episode addresses concerns about catching up financially later in life, particularly focusing on those who feel they've fallen behind in their financial planning.

1. It's never too late to start financial planning; age 37 is still young enough to make impactful changes.
2. Establishing a clear financial assessment and goal-setting are critical first steps.
3. Saving 25-30% of income can significantly enhance financial stability and growth.
4. Leveraging tools like net worth statements and financial courses can provide clarity and direction.
5. Starting to save and invest early yields greater benefits due to compound interest, but later efforts are still worthwhile.

1: Introduction

The hosts introduce the topic of feeling financially behind and how to address this concern. Brian Preston: "You ever feel like you're behind financially? How do you catch up?"

2: Assessing Financial Status

Discussion on the importance of understanding where you stand financially through tools like net worth statements. Bo Hanson: "Step one, assess where I am today."

3: Setting Financial Goals

The importance of setting clear financial goals and how to plan for future needs. Brian Preston: "Focus your eyes on the green."

4: Practical Financial Steps

Advice on practical steps to catch up financially, including saving more and managing expenses. Brian Preston: "Focus on what you can control."

5: Tools and Resources

Explanation of financial tools like the wealth multiplier and how they can be used effectively. Bo Hanson: "Every dollar that I can put to work for me can turn over ten times by the time that I get to retirement."

6: Conclusion

Summarizing the main points and encouraging immediate action to prevent further delay. Brian Preston: "Procrastination is not your friend."

1. Assess your current financial status: Start by understanding your net worth.
2. Set clear and achievable financial goals: Know what you're working towards and plan steps to get there.
3. Increase your savings rate: Aim to save 25-30% of your income.
4. Use financial tools and resources: Engage with tools like net worth calculators and financial planning courses.
5. Start investing early, if possible: Take advantage of compound interest by starting early.
6. Reduce expenses to increase savings: Manage your spending to allow for more significant savings.
7. Seek professional advice if needed: Consider consulting a financial advisor to tailor your plan.

"I found you guys recently and am realizing that I need to make some changes. I'm 37 and feel so behind, especially after listening to last Friday's episode (How Real People Become Millionaires). Can I catch up? Is there anything specific I should be doing to help get myself back on track?"

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Brian Preston, Bo Hanson

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Brian Preston
You ever feel like you're behind financially? How do you catch up? Brian, I am so excited about talking about this because so many people out there feel that way, and a lot of folks out there have questions that say, I want to know x about my personal finances or I want to know how I can do money better. Well, that is exactly what we are here for. So right now, we're, we have the team out in the wings collecting your questions, so make sure you get them in the chat so we can load you up.

Bo Hanson
And with that producer, Rebie, I'm going to throw it over to you. Yep. I've got a question from john to kick us off and talk about that very thing Brian mentioned. He said, I found you guys recently and I'm realizing that I need to make some changes. I'm 37 and I feel so behind, especially after listening to last Friday's episode how real people become millionaires.

Rebie
Can I catch up? Is there anything specific I should be doing to help get myself back on track? Well, quick. True, false. Brian, true or false, 37 is old.

Brian Preston
Oh, good. Thank goodness you asked me. I think it's young. That's young. Holy cow.

Bo Hanson
That's not old. So even I think it's great. John, you're saying, hey, I'm at 37 and I feel like I've been behind, but I want to catch up. Is it too late? Unequivocally, the answer is no, it is not too late.

Maybe you didn't make the decisions in your twenties or maybe the decisions in your early thirties that you would like to have made, but it's not too late because there is still some meaningful stuff that you can do. And I think sort of high level, like, zoom out. Big picture. Here are two things that I think would be really, really helpful for you to figure out right now. Step one, assess where I am today.

Now, you say you're behind. You should actually figure out, what does that mean? So I would encourage you, if you've never done a net worth statement, do a net worth statement. Start right now. Today.

If you want to use our template, you can go to learn dot moneyguy.com to see what your starting point is. Well, then, once you've determined your starting point, I would also encourage you figure out what that goal is that I'm working towards. If you work through our know your number course, which is also available at learn dot moneyguy.com, you can kind of set the finish line, set the parameter for this is the thing that I'm working towards. Only after you know, okay, where am I going and where am I starting? Can you then begin to assess am I behind or how far behind am I?

Or what do I need to do to not be behind anymore? But the great news is you still have tons of opportunity, tons of time on your side. Well, I hate if this was asked from the tone of I'm 37, I feel so behind. And then you ask us and we say, no, you're super young. Don't take just our word for it.

Brian Preston
We actually have an illustration because we know the savings goal is 25% of your gross income. If the team will put that up on the screen, what you'll quickly notice. Focus your eyes on the green. Now, of course, we'd all love to say we started in our twenties because if you are listening to this or watching this highlight and you're in your twenties, kudos to you. You have the world by its tail, literally.

But for even for your 30, if your 30 something year old self or 35 year old, which is very close to your 37, if you can save 25%, you can quickly see you're well beyond 80%. If you can save 30%, because maybe you are feeling behind and use that as energy or momentum to kind of motivate you to actually save a little bit more. You can get beyond 100% of your actual current income, so you're far from being behind. And then I'd also encourage you and bo kind of hit on some of this focus on he gave you the tools, the net worth statement also then know your number course. But kind of use this exercise of having the net worth statement to know what you can control.

Because there really are two main levers of catching up, is either you cut your expenses, that's going to help you in two ways. It's all, it's going to allow you to have more margin to save and invest, but it's also going to create a smaller footprint. So when you actually do need to live off these assets, you don't require as much because you've learned what enough is for you and your family. The second thing is, is this saving and investing. How do you get more money in?

If you can't spend less, then maybe you have to work more or figure out how you have to create or work harder or work better or smarter so that you're creating more income so you can actually put additional money into savings and investments. What I love is that age 37, it is still, your money is still powerful. Brian, do you have the how powerful? Thank you. We have a great resource.

Bo Hanson
The wealth multiplier. If you go to moneyguy.com resources, this will show for a 37 year old. For you specifically, what can every dollar that I invest turn into? $10. $10.

So every dollar that I can put to work for me can turn over ten times by the time that I get to retirement. So it is still possible at age 37. Now, you might have to make larger decisions than you made at 27, but you can still make small changes that have the opportunity to have a big impact later on. But don't wait. Start today.

Take it seriously today, and your future self will. Thank you. Yeah, and that's the key thing. Procrastination is not your friend. Don't.

Brian Preston
Just because you feel like you're behind, don't take the route of saying, well, I'll just wait. And this is something I'll tackle after I get through this messy middle phase of life. No, this is not a situation that improves over time. It actually gets worse. So take today to be the moment of change.

Rebie
Awesome. John, thank you so much for your question. If you would like a money guy, tumblr. Hey, tumblr day. Because it's tumblr day, and Brian likes to point out that this could be like a coffee turned into a ducky ducky, or it can transform into a koozie.

If you would like it to be that, just email Matt to cash in on that. We don't need. Oh, you have one. You're using it as a tumbler today. It's one of my many beverages.

Bo Hanson
It's keeping this beverage cold. I'm still with the millionaire mission mug. If you want to go to moneyguy.com. Millionaire mission. You can't buy one of these there.

Rebie
But what are you. I didn't know. Check out where the book is. Still preorder the book and get lots of preorder perks. That is true.

But John, if you would like to email Matt to get your tumblr, that's m a t ty.com. All right, that was a book plug, guys. That was not a mic. I love the book. That's the reminder.

Bo Hanson
Reminder. Yeah, I wasn't sure where it was going for a second, but we got there. It is interesting. The people that knew about the perks were the people that were plugged in. So if you were not plugged, if you're not subscribed to the channel, if you're not on the email list, if you haven't let us know you're interested, you won't know about these things as they happen.

If there were some more perks that may come down the pipe. So make sure, because we do try. To let you know. We try to let you know. But you got to be careful.

Brian Preston
I want to give Megan a big shout out. Our weekly newsletter that we send out on Saturday morning. It's gotten so booming. So, guys, I know everybody hates signing up and giving email addresses and stuff for that, but if you will go sign up, I'm telling you, if you're not picking up some type of value, just unsubscribe. I give you permission if not getting value, to unsubscribe.

But I will tell you myself. And I know what we talk about on this channel. I'm like, I can't wait to see this newsletter, like, this weekend, I kid you not. This weekend it was. And I guess I was just right before we.

I was like, did we not send the newsletter? Cause I've gotten where I actually look forward to it on Saturday morning. That and Disney food blog. I kind of wait for those two big updates to come out every, every Saturday. I mean, just being honest.

Bo Hanson
I love it. I do love it, actually. And, yeah, we did. We put a lot of thought and effort into those newsletters that we send out because we, like, are very thankful and, like, we're honored that you would give us your emails. We try to make it worth your while.

Rebie
You can go sign up@moneyguy.com if you're not already. And you always, there's always a tip of the week. And then she even does some specialized q and a shows with time stamps on them. And then it's always got some unique little flair on there. That's Megan loving it.

Singing your praises, Megan. I think that was the closest I've ever seen Megan kind of blush. I mean, they got there almost. I love it. All right, are you ready for the next question?

Brian Preston
Yes, ma'am, I am. All right. Keaton's question is up next. It says, my wife and I are 22, and we're following the food. We're both working full time.

Rebie
And on number five, we opened our first roth just last night and are feeling overwhelmed with all the choices. What do we do? Oh, man. You have shown, by the way, just because I have it right in front of me. For a 22 year old, every dollar has a potential to become $66.

Brian Preston
Close to $67. It's right there on the rounding point. So that is the fact that you guys have already made it to step level, step five of the financial order of operations. This is the exciting one. This is that tax free growth opportunity.

You are absolutely crushing it. And I also hear you coming from a family of not having money growing up, and my parents idea of investing was CDs. I kind of felt like this whole world of wonderful world of finance was overly complicated. But let me tell you, there is a better way. And I'll let Bo kind of share.

If you can figure out how much you can save and invest and when you'll need the money, there's something that can solve all your problems. Yeah. And you ought to go ahead and give yourself a pat on the back, just even at this stage. Cause you've done a few things very, very right. One, you said, I'm following the financial order of operations.

Bo Hanson
If you're hearing that and you don't know what that is, go out to moneyguide.com resource. You can actually download the deliverable. It is a nine step back to. Being able to wave the whole page. Oh, I just noticed.

We took them out. It is a nine step, tried and true process that tells you exactly what to do with your next dollar. So you have a process that you're following. That's step one, give yourself a pat on the back. Step two, you said you opened up a Roth Ira.

So you did this last night. You've already narrowed down the types of decisions and the world of decisions you have to make, because you had to choose where you opened that. Did you open it at Fidelity or Vanguard or Charles Schwab? So you've already kind of like. Like, narrowed in that thing.

Now you got to figure out, okay, how much am I going to save? We're going to advocate that I max it out this year. If you're under 50 years old, you can put $7,000 into your Roth IRA, which is incredible. So that's how much to save. And now comes the big question, okay, what do I invest in?

Where do I put it? Well, Brian already alluded to this. If you can answer two questions, how much can I save, and when do I think I can need this money? You can solve the investment problem. You can answer the investment question by using what are known as target retirement index funds.

These are funds that are set to allocate automatically based on a specific date. So let's say that you think you might want to retire in the year 2060. And let's say that you opened your Roth IRA at Fidelity. You could go look at the Fidelity Freedom 2060 index fund, and you can put all of your contributions in that fund. And right now, while we're a long way away from the year 2060, it's going to be very, very aggressive, going to have a lot of stock exposure.

But as we move through time and as you get closer and closer to that target date, it will naturally get more conservative for you. So this is a great tool for folks that are just starting out on their wealth building journey to use to begin building their army of dollar bills. The only thing I'll close it out with, you notice he said index target retirement fund. That's different than the more expensive target retirement funds. We're actually like the index variety.

Brian Preston
And then the second thing I always hear criticism on is people say, man, they're just too conservative. I would encourage you. The three biggest providers are vanguard investments with their target retirement funds, fidelity with their Fidelity Freedom index funds. And then Charles Schwab has their own version of target retirement index funds. Go look at all three of the varieties.

If that's where you do your due diligence and research and figure out which ones kind of have the right glide path. And what if you, if you're hearing that term for the first time? Glide path means they start off super aggressive and then they get more conservative as the years roll forward and you get closer to that age of when the money will mature or be available to you. Just look at those asset allocation changes and see what reflects your desires, your goals, and then good luck, because you're crushing it. 22.

Being at step five of the financial order of operations. Don't forget, when you get to the level of success, complexity will come your way, and hopefully you will remember the abundance cycle. Love it. Fantastic. Keaton, if you would like a money guy tumbler, we would love to send you one.

Rebie
Just email Matt. It's just mattoneyguy.com, and we'll work on getting that sent out to you. Thanks for your question. All right, Michael's question is up next. It says, my wife, who's 25, and I, who's 28, are nurses and going to graduate school.

Our employer will be paying tuition. However, my wife and maybe myself can't work for the last year of classes. Is it okay to pause investing while savings and saving so we do not go into debt or while saving? I think he means to say pause investing while saving. Okay, so walk me through it again.

Bo Hanson
So 25 and 28, they're both nurses, but they're in graduate school. Yeah. So that last year, it looks like with the course responsibilities, it's going to be hard to, like, work for, for her, for sure. And for him, it's gonna be hard. To go out and generate income.

So is it okay to not be saving? To not be investing? To not be investing. So there's still gonna save. And I think that's a really interesting thing that I kind of messed up there that Ruby corrected on me.

Here's what I think really, really matters at all stages of life. Are you living below your means? Like, are you. If you're making x dollars, is the amount that you're spending the amount that's going out the door some number less than x dollars? That's the important part of wealth creation, one of the three ingredients that we call discipline.

If you've got that down, I would argue that you're doing pretty good. Now, it is not uncommon through stages or seasons of life for things that get a little bit leaner. Or maybe there's a requirement that we have to build up cash for some reason, or maybe we're just not quite as frothy in the income. I would say in this situation specifically, if you absolutely cannot save, or if you cannot invest and there's no opportunity for employer match, there's no free money out there, and you're still working on building that emergency reserve, I'm going to say, okay, you got to do what you got to do. But I would encourage you to really, like, look at it hard.

Are you certain? Are you certain I can't do $20 a month to a Roth? $50 a month to a Roth. Maybe $100 is a cup. Are you sure that there's no way that you can be investing?

Because at 25 and 28, even just a small amount of money, it may not be as much as you were wanting to save, it may not be 25% of your gross income. But if you can just save a little bit, even through your leanest times, you're going to build up some muscle memory that when you do graduate, when you do get to the other side of your education, when you do start making money, you will have built that muscle memory that allows you to go into full on wealth building mode. My notes that I wrote, and I love what you just did because I'm going to amend mine a little bit. I wrote, yes, it's okay. In this temporary season, as long as you have a healthy level of fear, meaning that you know you're doing something wrong, or not wrong, but less than ideal.

Brian Preston
Meaning that you're in this season of life where you're investing for your future by making sure your shovel of your career and your income potential is maximized and increased. So I love what you just said. Though, you said, how about you still keep something going? I don't care if it's $20 a month or so, because what that's going to do is a whisper in your ear every month. Hey, you're not doing everything you're supposed to, but you're at least doing something.

How about a nudge towards are you at the point now where we can take this back up to full speed ahead? And so I love that yes, with fear is my answer. It's okay that you have to pull back, but put a little reminder there something that's going to be a teaser. So dollar 20 a month, dollar 50 a month, whatever you feel like you can do that doesn't jeopardize your financial household, do it. The second thing is you have to ask yourself, and I already kind of know the answer, but I'm just going to give you the context so you can put yourself through this entire exercise.

Will there be a benefit and a positive result from this sacrifice or this moment in time? Well, obviously, if you are making a sacrifice, so you and your spouse, y'all are both in nursing school getting the graduate work, so you will have a bigger earning potential down the road. That's a solid yes. But there is a second part of this question, because I see people all the time and I see I'm going to pick on your coworkers, the doctors, because they have the exact same problem. They go through medical school, then they go through their residency, and they're getting paid nothing during the residency.

And then they get the floodgates of income open up after they kind of get out there. And what is the first thing they do? A lot of times you would think the ideal thing is go, man, what a blessing. I make up some money coming up now I have to think what was, what was the opportunity cost or what was left behind while I was focusing on my investments. I mean, my education instead of investments.

How do I go rectify that and bring it forward? That is what should be thought of. But a lot of times, what is, man, I've been in school. It's time to reward myself and let's go. I've earned this.

Let's go get that BMW. Let's go get the luxury vehicle. Let's go get the nicer apartment or house. Don't fall in that trap. I want you to think about in terms of how do I catch back up?

I turn this positive into a true positive versus just increasing my lifestyle drift to the point that you've now not only hurt your future self, you've actually increased what your expenses are necessary to even cover the basics. So don't fall into that trap. Will there be a positive benefit and a positive result? That only happens if you actually take that higher income and turn it into higher savings. And in the future, make sure you stay on the positive side of this.

Rebie
Yeah, good stuff, Michael. Hope that helps you out as you think through this. We're grateful that you're here and that you asked the question. So we'd love to say thank you and send you a money guy, Tumblr, if you'd like. Just email.

Matt. That's m a t t.

Okay, Andrew's question is up next. He says, what are the pros and cons of a will versus a trust? Can you speak to that a little bit? Okay, so we get this question all the time, because I think a lot of people hear buzzwords when it comes to, like, estate planning or when it comes to estate documents or that sort of thing, and they get a little bit. A little bit confused.

Bo Hanson
Right. So a will is a document that you have drawn up that says, at the end of my life, this is what I want to have happen with all of my things and my things being people that I care about, or my things being stuff that I own or businesses or real estate or that kind of thing. Your last will and testament basically says your wishes. A trust is actually a tool. It is a type of.

I'm going to say account, but account doesn't do it justice. It's a type of entity, a registration with an entity. Yeah. That can be part of your estate plan. So it is not, do I need a trust or do I need a will?

What most often happens is someone says, I have a trust that is mentioned or defined in my will. So the will is the thing that says what's supposed to happen. The trust is an intimate entity or a structure, an account that you use to carry out the wishes that you want inside that trust document. So most often, we don't see it as an either or. It's usually a both.

Brian Preston
And. And they work in conjunction with one another. Yeah. And what will happen is when you do a trust or beneficiary designations, those type of things now work outside of the will. They.

They will kind of sit in front of the will. And a lot of people like that, especially if probate or the cost of death is expensive where you live. I know that's such a weird thing to say out loud, but it's true. Or you have somebody who you're worried about being incapacitated. If you have cognitive issues or you're worried about becoming disabled, a trust can be a great resource or registration setup with the document behind it to tell people, hey, no, this person has access to work for my benefit or have access to my assets.

So it works great ways. But then you'll still probably want to have a will. Not only because a lot of times, real estate or just the things that are sentimental in your life, you'll want to have something to speak on your behalf, to kind of clean things up behind. So it's not an either or. Even though you just kind of need to know what the boundaries, limitations of each of the documents are so you can go know how to use them appropriately because they each have a place.

I mean, I would say most estate documents that we're working with, people have both. They have the trust, they have their wills. It's definitely not an either or. It's more of making sure that there's a purpose and a plan for every dollar that you're managing and in control of. Now, the question that you posed was, okay, pros and cons.

Bo Hanson
Now, realistically, I'm going to say that if you have an updated will that accurately reflects your wishes, there is no con to having a will in place. There's no downside to having one. If you have a will that you did 20 years ago when your kids were little and your financial circumstances have changed and the people in your life have changed and the family situation has changed, well, you could have a bad thing. The con could be a will you need to make sure is updated periodically as your life changes. But outside of it becoming stale, I don't think there's a downside.

Brian Preston
Probate? Well, okay, yeah, wills have probate, you know, so whatever jurisdiction you live in, where you live, matters on how estate documents are executed. But you would still. Even someone who's using trust to avoid probate would still need a will, right? They would still have a will.

But you can say, okay, well, if I know that wills have this downside, how do I. Can I get creative with the titling or structure of these assets that I think that I don't want to either have the expense of probate, or I don't want to have the time wasted waiting to go through probate and get those letters of testamentary? Now, we could think about a trust, because maybe also you have to die with a will. Wills only become effective when you die, whereas a trust can be set up to where it's very effective, even while you're living, but maybe incapacitated. So that's why I think that there, it's not an either or, it's back to they're both very effective, but they do completely different things.

And this is why, look, we kind of walk people through and this is probably a great way to kind of close out the question. When you're at the beginning of your journey, you just don't have a lot going on, you know, that's why it's important to do that exercise or doing a net worth statement. Make sure your beneficiary does designations on all of your retirement accounts is good, but then your life gets complicated. You get married and then you have children. And by goodness, if you, when you have children, you better have a will because the guardianship and what happens to your kids is so important.

But then you keep progressing. And by, you realize, man, I'm not worried only about my kids and my assets. I'm worried about how do I have access or how do I make sure that I still have some type of control. But. But people can speak and manage.

That's where the trust will kind of then slide in. This keeps getting more and more complex. You notice we're keeping talking about complexity. That is what success creates. And once again, like most things, I can give you as much free advice, but you're going to quickly realize, man, how do I get this into my personal life?

You know, I have all these unique things and I'm completely different from my neighbor who's also successful down the street, but they're structured differently. Welcome to the wonderful world of financial planning and in the abundance cycle. And this is what a good financial planner who works with an estate attorney is. Hopefully going to be able to navigate a lot of this stuff. Good stuff.

Rebie
Andrew, thank you for the question. We appreciate you being here. Would love to send you a money guy tumblr as a thank you. Since it's tumblr day, just email Matt to cash in on that. It's m a t ty.com.

Brian Preston
But this is why our job is fun. Because everybody is like, you know, comes in as a, with different fingerprints or different snowflakes. They're all unique. And it's that type of stuff I was sitting there going through in my brain thinking about wills, trust, and for such a morbid topic, it is kind of fascinating to think of all the things that are going on there. Love it.

Rebie
You are in the right profession. Love to see it. It's like a jigsaw puzzle. The money Guy show is hosted by Brian Preston Abound Wealth Management is a registered investment advisory firm regulated by the securities and Exchange Commission in accordance and compliance with the securities laws and regulations. Abound wealth management does not render or offer to render personalized investment or tax advice through the money guy show.

The information provided is for informational purposes only and does not constitute financial tax, investment or legal advice.