[00:01] financial strategies by income, and $100,000 was the top bracket salary back then. Now, today, $100,000 is the middle bracket of this video, and that's how fast things have changed. I'm breaking down the exact strategies and milestones
[00:15] for three income levels of 50K, 100K, and for the high earners of 150 to $200,000 and up. There are basically three themes for each of these incomes. So, at 50K, the game is about defense and building a solid foundation. At
[00:28] 100K, it's automation and optimization of what you're already working with. And at $150,000 and up, it's about tax efficiency and compounding. So, let's start at the $50,000 per year income level. When I graduated college, my
[00:41] first salary was $38,000 a year working in customer service, which adjusted for inflation is actually pretty close to 50K today. Now, at that time, money was and I think that if you're at this income level, you just have to
[00:53] single dollar and give every dollar a job. The take-home pay at 50K per year is right around $3,400 a month, depending on your state. So, that is your groceries, your rent, and hopefully a little bit of savings. So, the
[01:07] strategy at the 50K income level is all about the sequence in which you allocate your money. There are five priorities I think that we should talk about here. The first is going to be to kill off any high interest rate debt, and in 2026,
[01:19] that also includes buy now, pay later debt. The average credit card balance in America is over $6,000 according to Forbes, and at today's interest rates, that costs people over $100 a month in interest alone. If you make $3,400 a
[01:32] the difference between building savings and simply staying afloat and scarier are companies like Klarna, Affirm, and Afterpay. They're going to now and not pay any interest on it, and you can pay it off in four easy
[01:46] payments. What happens though is that if you stack three or four of these, then of committed future income, which is away from these if you can. If you do have buy now, pay later debts, I would
[01:59] there, and then kill this debt before moving on to priority number two. Number two is to get your full employer 401k match if you have access to it. So, let's say your employer matches 4% of your salary on a $50,000 income, that's
[02:12] $2,000 a year of completely free money. The best part is is that it's a 100% return on your money. So, to be honest, there is no debt payoff or investment or anything on earth that basically guarantees you 100%. So, if your
[02:25] take advantage of it. I know some people will even prioritize this step before paying off debt, and you definitely can because mathematically, it might be the more optimal thing to do. However, for me, I still think that the behaviorally
[02:37] interest rate debt and then start investing. The third priority is to can start off pretty small. You've probably heard me say on the channel worth between 3 to 6 months of expenses. That is still the goal, but if you're at
[02:52] a 50k income level with some debt, then I think a more realistic goal to shoot for is maybe 1 month of expenses saved up. So, that would be $3,400 or your take home pay per month in a high yield savings account first. And even having 1
[03:04] something like a car repair, it doesn't go straight onto a credit card, and you won't undo any of your financial progress. Number four is the Roth IRA. So, if you're making about 50k per year, the Roth IRA is basically your best
[03:17] friend. It's designed for you. You're in a really low tax bracket at the 50k to pay taxes on your income now, but investment returns grow tax-free, any investment gains that you make in the
[03:29] Roth IRA, you won't pay any taxes on. So, it's a really good trade to pay low taxes on your income now, contribute it to the Roth IRA, and then have your investments grow tax-free. The Roth IRA contribution limit in 2026 is $7,500 a
[03:42] most people at the 50k income level may have a hard time maxing that out because that's 15% of your total gross income. Just $200 a month invested into a Roth IRA starting at the age of 25 could still amount to over $700,000 in
[03:56] retirement at historical market returns. The last thing at this level you need to consider is what your time is worth and that's priority number five. 50k divided by 2,000 working hours a year means that your time is roughly worth 25 bucks an
[04:08] decision around where you want to spend your time, you need to think about the fact that 1 hour is equal to $25. So if you're going to do a side hustle, it should at least make you that if not more. While it's nice to earn some side
[04:21] usually isn't doing something like DoorDash or Uber. It usually is a you to increase your salary permanently. If you could increase your income permanently from let's say 50k to 55 or 50k to 60k per year, that is usually
[04:37] weekend. So the goal at the 50k income level, it's not to optimize for the 50k hopefully just a stepping stone to higher incomes and the habits that with what we just talked about, that's going to save you a lot of money in the
[04:52] make more money, you're going to have all these systems in place to keep more really great thing. All right, now let's talk about the 100k level because this number doesn't really mean what it used to. I alluded to that a little bit
[05:06] household income in America right now is around $84,000. That means a $100,000 salary is barely above 20% of the median household income. Now back in 2016, the
[05:18] median household income was around 59k which means that a 100k salary back then was 40% more than the median household income. So 100k might have made you feel pretty rich back then, but these days it just kind of feels fine. Still though, I
[05:31] to get a six-figure salary. Not many people can get here. So if you're at this income level, I do want to applaud you. Most if not all of your survival problems are solved at the $100,000 salary level and you do get some
[05:44] financial decisions. That's enough for rent, it's enough for your groceries and discretionary income. You can save a little money and spend without tracking it, and nothing catastrophic can really happen to you as long as you're being
[05:57] overspend at the 100k level, you might not really feel it, but someone at the bit of their income, since their margins are thinner, that could be the difference between them making rent or not. So, there are three huge moves that
[06:10] you can make at the 100k income level that are going to help you save and grow is to automate your savings before you even see the money, and this is a system the reverse budgeting system. That's
[06:23] savings first every time you get a paycheck. So, for example, if your monthly income is $6,000, and you want to save $600, you would set that $600 aside before doing anything else. Then, you can use the remaining $5,400 for all
[06:37] here is to automate it so that you can't spend it at all, the savings that is, or and in this way you won't even need a real budget because you've already of how much you should be saving, I
[06:51] always like to aim for a 15% savings rate. That means if you are making 6K a month, maybe aim for $900 in savings. However, if you're finding that, say, your current savings rate is only 3% or 5%, you may have to start with a more
[07:03] attainable goal like a 10% savings rate first. In addition, the next time you you set aside is automatically being moved into an IRA, a backdoor Roth, a high-yield account, or even a brokerage account. If you're able to save and
[07:16] invest 15% of your take-home pay, so maybe $900 on a $6,000 a month salary, that's the equivalent of $10,800 per year. Starting at the age of 30, if you're 65, you'll still end up with over $2 million.
[07:29] one that I haven't talked about too much, and that is considering to start an HSA or a health savings account. In this account, you can invest, but you can also pay for qualified medical expenses, and it's actually one of the
[07:42] most tax-efficient savings vehicles because it offers what's called triple tax benefits. First, contributions are tax-deductible, which means that lowers paid in any given year. Second, the growth of this account is tax-free, just
[07:55] like the Roth IRA. And third, withdrawals for qualified medical key. Now, you must be enrolled in a high-deductible health plan to get an HSA, but these plans are actually pretty popular. So, for the majority of you out
[08:08] there, you should be able to enroll. The 2026 contribution limit is around $4,400 for individuals and $8,750 for families. Now, here's the strategy with this. You invest the funds within the HSA, and then you want to pay your medical bills
[08:22] out of pocket and save the receipts. I know that sounds pretty weird. Why would you pay your medical expenses out of pocket when you just started an HSA? Well, that's because there is a loophole. There is no time limit on
[08:34] reimbursing yourself. So, that means you can reimburse yourself against your HSA in the future. So, pretend you contribute $4,000 into your HSA, you invest that money, it compounds at 8% for 30 years, and in 30 years, it's
[08:47] worth about $40,250. Meanwhile, over the same 30 years, pocket with your regular money, and you're saving all the receipts. So, let's say at the end of the three decades, you have receipts for $1,500,
[09:00] decades, you have receipts for $1,500, $2,000, and $3,000. That's $6,500 of yourself for. Well, when it comes time 30 years later, you can hand yourself those receipts and pull $6,500 out of the HSA completely tax-free, no
[09:14] questions asked. And for the other $33,000 in there, it's still there for medical costs, or after the age of 65, it just starts to be treated like a withdraw it from there, too. In other words, it's like you've turned your HSA
[09:27] still got the tax deduction going in, it grew tax-free the whole time, and it comes out tax-free for medical expenses, and and save the receipts so you can out. All right, financial move number three at the 100k income level is to
[09:41] know your number. At 50k, the question is, am I going to be okay this month? But at 100k, I think the question then becomes, when am I done? independent? The number here is easy to calculate. It's how much you spend in a
[09:54] year times 25, and that's the 4% rule written in another way. If you spend 60k a year, your number is going to be 60k times 25 or about 1.5 million dollars. Now, the moment you know this number, every financial decision will get a lot
[10:08] and figure out how long it's going to take you to financial independence. Now, the fascinating part about finance and personal finance is that your retirement rate and not your income. If you're diligent about saving 20% of your
[10:22] income, you can retire in roughly 37 working years, and if you save 30% of your income, that drops to 28 years, and if you save 50%, it's 17 years. The reason this happens is that if your savings rate is naturally higher, that
[10:34] and you need less money overall in order to hit that financial independence number. So, your homework for today, if you make $100,000, 50k, or even more, is to calculate your actual annual spend. If you can figure that out and multiply
[10:48] it by 25 and write that number down, that is going to be your finish line. that to see what that number might look like if you were to reduce your expenses or if you were to increase your income by five, 10k, or maybe 15k per year.
[11:03] relationship going to change. Let me know in the comments what your financial watching, and I'd love to hear what it is, and I'm sure other people would, too. All right, now let's get into the last bracket, which is the $150,000
[11:17] of sophisticated strategies that you can employ in this higher earning income range. Your largest expense at this income bracket changes a lot. I would say across the board, it's no longer going to be rent or transportation. It's
[11:29] usually taxes. The marginal tax bracket at this income range is going to be around 24% to 35% and most of the time it's going to be above that 30% number. So, the more in taxes that you can save here, the better your compounding will
[11:41] speaking of compounding, we also want to prioritize the safety of our money at higher of an income, capital preservation starts to enter the strategy. All right, so the first move you can make at this income range is the
[11:54] backdoor Roth IRA. You might have heard this if you make more than 150k per year, but at 153 thousand dollars in income if you're a single filer, you can no longer make a full contribution to the Roth IRA and past 168k, you can't
[12:07] contribute to one anymore. To fix this, many high earners opt for what's called a backdoor Roth IRA and that works in two steps. First, you contribute to a traditional IRA since there's no income limit for it and most importantly, you
[12:19] have to do within your brokerage account is click the button convert it to a little bit tricky is if you already have an existing traditional IRA with funds invested. At that point, you would have traditional IRA funds as well as Roth
[12:33] IRA funds and so you need to be careful and avoid what's called the pro rata rule. I'll leave a link on a resource on how to do the backdoor Roth IRA as well below. If you're able to do this successfully though, it's one way to
[12:46] really shelter your income from your overall tax burden. Another type of mega backdoor Roth. This is something to take advantage of, namely big tech companies like Google, Microsoft, Meta
[12:59] leave a full list of all the companies offering a mega backdoor Roth in the description below so you can check that out after this. So, here's how it works. actually contribute beyond the normal contribution limit of 24,500 dollars per
[13:13] year. So, first you would contribute that amount, the 24.5k into your normal 401k and then Amazon for example, they set up their own after-tax account for working there. This allows you to contribute 42.5k more dollars to an
[13:28] after-tax account, and then from there you do an in-plan conversion to a Roth. you're someone who has access to this, you are contributing up to $67,000 of account, and this is going to really help you generate that wealth over time.
[13:43] to this, but if you do, you definitely should take advantage. The second move range is just simply diversifying your portfolio. There is a high earners playbook from the Henry Finance Reddit, and I will link this also down below in
[13:57] the description, but they suggest having 80 to 100% in equities under the age of 50 with a small allocation of 5 to 10% in alternatives like precious metals or crypto if you're comfortable with that. After you're 50, you want to adjust it
[14:10] downward to 70% or 60% in equities to reduce volatility and preserve capital. even consider adding in international ETFs, which have been performing pretty recommendation from this guide is pretty spot-on. I've shared channel before that
[14:25] the younger you are, the more risk that you can take because you're in this older that you get, the more that you want to actually start protecting that wealth. The third move at this income range pertains to you, especially if you
[14:37] have what's called RSUs. RSU stands for restricted stock units, and if you work for a company that offers you RSUs, it's a really great benefit because not only incentivizes you to stay at that company longer. A huge percentage of people
[14:50] earning 150 to 200k or more get there through an equity package like RSUs from compensation from a public company. Now, here's the thing about RSUs in particular. RSUs are taxed as ordinary income when they vest, whether you sell
[15:05] them or not. So, that means the IRS will treat it like a cash salary. So, say you have 100 shares vest when your company stock trades at $200. That's $20,000 of W-2 income whether you touch the shares or not. So, the move is just to have a
[15:18] strategy for this, and the default is for a lot of people to sell the RSUs as they vest and redeploy the money into a diversified portfolio. If you hold the RSUs and the share price increases, then you will owe capital gains when you sell
[15:30] the stock in addition to the tax that you already owed when they vested. The this as well and they want you to diversify if you have more than 1/3 of your total investments allocated in your company's RSUs. As a general statement,
[15:43] that's usually correct in order to avoid being too concentrated, so that's also to consider at this income range is what your tax bracket will be when you retire. For most people at this income, the answer is that your tax bracket is
[15:56] right now. With your current tax rate being between 24 to 35% or more, if you think in retirement it's going to be lower, then your traditional 401k contributions should be prioritized. Maxing a traditional 401k at $24,500
[16:11] saves you roughly 8 to 9.5k in taxes this year at your marginal tax rate. And then when you retire, if your tax rate is closer to zero, then you are winning on both ends. So, if you have a pre-tax 401k plus a backdoor Roth, that's
[16:24] deferring taxes when your rates are the highest right now. You're also going to get that money tax-free from the Roth IRA, and that's going to be really nice should save you a ton of money throughout your high earning years, and
[16:37] I hope that you maybe employ some of these strategies. All right, guys, so those were the best financial strategies for all these income ranges in today's video, and if you want to watch the OG video on the financial strategies for
[16:50] video on the financial strategies for 40k, 75k, and $100,000 in income level, I'll see you guys in that video or a future one on the channel. Thank you again for being here. I appreciate you. Have a great weekend. All right, peace.