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Speaker 1: A big thing is people that want to plan for
Speaker 1: their kids.
Speaker 3: Yeah, whether it's college savings, whether it's when they want
Speaker 3: to they put life insurance on their kids. You know,
Speaker 3: there's there's a variety of different ways that people can
Speaker 3: save money for their kids.
Speaker 1: Right.
Speaker 3: So somebody's coming to your office and they just got
Speaker 3: married and they have a baby on the way, right,
Speaker 3: talk talk through the process that you would educate them
Speaker 3: as far as the different ways that they can actually
Speaker 3: set their children up.
Speaker 4: I mean, like you said, there's a lot of ways,
Speaker 4: because there'll be just a newborn baby, right, Well, probably
Speaker 4: wouldn't start entertaining the conversation of putting them on payroll, right.
Speaker 5: Yeah, talk about more. I'll come on the back end
Speaker 5: and talk about that partuct that might.
Speaker 1: Be an audit audit red flag.
Speaker 4: Yeah, but I think one of the ways that you
Speaker 4: can always obviously set up a custodial accounts in the beginning.
Speaker 1: What that means is right, it's kind of joint ownership.
Speaker 4: You can control it intil the kid reaches a certain age,
Speaker 4: and so deciding what do you want to do for
Speaker 4: the kids.
Speaker 1: So do you want the kid to go to college? Right?
Speaker 4: Do you want to say able to buy their first
Speaker 4: property at a certain age. I like to start with
Speaker 4: the end in mind, with the target, and then from
Speaker 4: there we can figure out the best investment vehicles are
Speaker 4: the best options. One of the things would definitely be
Speaker 4: opening up a custodial broker's account. Another thing would be
Speaker 4: also getting a life insurance policy on them as well,
Speaker 4: because insurance is based off agent health and when you
Speaker 4: do design it the right way, there are ways where
Speaker 4: you can have something called high early cash value, or
Speaker 4: you can have ten pays or twenty pays and while
Speaker 4: your commissioned as an agent. If you get compensated that way,
Speaker 4: it goes down. That is the best thing for the client. Right,
Speaker 4: Those are two fundamental things that I would do because
Speaker 4: I mean at that age, right, being able to get
Speaker 4: a policy and getting a custodial account.
Speaker 1: And people don't realize the number one.
Speaker 4: Thing in investing that you have you have it to
Speaker 4: your advantage is time. Right, So being able to get
Speaker 4: that started, you know, literally from day one, is a
Speaker 4: super advantage for sure.
Speaker 1: About five twenty nine, I'm not against five twenty nine.
Speaker 1: I mean there's some tax benefits from it, but they
Speaker 1: just became sexy again.
Speaker 5: Yeah, they did because you can convert them to now.
Speaker 4: Yeah, so I'm not against I think five twenty nine
Speaker 4: are great vehicles. I just like to optimize for flexibility.
Speaker 4: I think that we just live in a very different environment.
Speaker 4: I think when I was in school, when I was
Speaker 4: in college, and that you hear things like, oh, that's
Speaker 4: not a professional, that's not a career, and people might
Speaker 4: not be going to college in the same way that
Speaker 4: they are now with the advent of certain technology.
Speaker 1: But I'm not against them. I think they could be
Speaker 1: you could turn.
Speaker 2: To it yeah, so just because I want to just
Speaker 2: consto it before you jump outmah agmah preferential, or because
Speaker 2: like you said, you're thinking of the end in mind,
Speaker 2: and there's different levels of control you can have right
Speaker 2: at eighteen, Yeah, controls over.
Speaker 1: So what's your think?
Speaker 4: I think if you're passing down the methodology, right, that's
Speaker 4: that's that's a big We didn't talk a lot about it, right,
Speaker 4: but like a big part of all of this is
Speaker 4: as you're doing, as you're setting this stuff up, like
Speaker 4: you don't want to just do what you do, what
Speaker 4: you're you didn't have for your kids. You want to
Speaker 4: educate them so they have the methodology and the mindset
Speaker 4: on why you did it right. And so for me,
Speaker 4: I think, even though you're giving up control at eighteen,
Speaker 4: if you did what you were supposed to do in
Speaker 4: terms of like advising them at every step, especially once
Speaker 4: you were able to put them on payroll, Hey, this
Speaker 4: is why we're doing it.
Speaker 1: This is what we're going to use the money for.
Speaker 1: I could have just given you the money.
Speaker 4: But the reason why we're putting you on payrohch I'll
Speaker 4: let you expound upon reason why we're putting you on
Speaker 4: payrolls because this is what it means for our business.
Speaker 4: And this is tax tax free income to you. And
Speaker 4: now we can invest into the rock Diray and now
Speaker 4: to stick your thunder.
Speaker 1: But you leave something on the both for me, bro,
Speaker 1: So I think it's for me.
Speaker 4: It's about the education, right, I mean, control is control
Speaker 4: is great, but at the end of the day, like
Speaker 4: I was mentioned, I was talking to this lady on
Speaker 4: the plane who has adult children, and she was just like,
Speaker 4: your kids are gonna be your kid. You can only
Speaker 4: do so much, so much right in my opinion, You know,
Speaker 4: when the first eighteen years of life, if you did
Speaker 4: what you were supposed to do, they're gonna take what
Speaker 4: they're supposed to take and they gonna do what they
Speaker 4: want to do. So I'm personally I don't need control,
Speaker 4: at least me personally beyond.
Speaker 1: The age of eighteen.
Speaker 5: Yeah, And one of my favorite strategies that I don't
Speaker 5: think enough people utilize is hiring their kids into their business.
Speaker 5: What most people do is they make money, they pay
Speaker 5: taxes on that money, and then they pay their kids,
Speaker 5: which is okay, it's a good start, but I think
Speaker 5: it's a better way to do it. You make money first,
Speaker 5: then you hire your kids into your business. And when
Speaker 5: you do this, you're able to pay each of your
Speaker 5: kid I'm sure I'll have to hurt this before up
Speaker 5: to fourteen thousand, six hundred dollars each per child, and
Speaker 5: your business receives the fourteen thousand dollars tax deduction as
Speaker 5: if you pay anybody else. And your kids can receive
Speaker 5: this fourteen thousand, six hundred dollars tax free because the
Speaker 5: standard deduction wipes out their income. They don't have to
Speaker 5: file a tax return. You don't have to send number to
Speaker 5: TA ninety nine, you have to send in W two.
Speaker 5: None of that. They get that fourteen thousand dollars tax free.
Speaker 5: And then if I were you, they don't, I would
Speaker 5: take seven thousand of that fourteen thousand and put it
Speaker 5: into a roth Ira for them because they probably need
Speaker 5: all the money right now. And if you do this
Speaker 5: from when your kids of age, I recommend, don't you
Speaker 5: know you can start hiring your kids and your business
Speaker 5: at their eighty seven because that's when they can actually
Speaker 5: do work, you know, answer the phones, clean up the
Speaker 5: office stuff like that. If you do this from when
Speaker 5: your kids at age seven to when your kids at
Speaker 5: age seventeen. That's the cut off or hiring your kids
Speaker 5: into your business. They will have about one hundred and
Speaker 5: thirty one hundred and forty thousand dollars of tax free
Speaker 5: money in their wroth.
Speaker 1: Ira.
Speaker 5: Not to mention you, they've been learning from you as
Speaker 5: a boss for the last ten years. So not only
Speaker 5: are you teaching them, are you paying them for the work,
Speaker 5: but you're teaching them entrepren neural skills at the same time.
Speaker 5: So I think this is a great way to save
Speaker 5: money or taxes of your business, pass down tax free
Speaker 5: wealth to your kids and help them get a head
Speaker 5: start on entrepreneurship at the same time. And I think
Speaker 5: that more people should take advantage of, you know, hiring
Speaker 5: their kids and their business and giving them the ropes
Speaker 5: the supervaluble.
Speaker 2: At seventeen, they're probably going to make the biggest financial
Speaker 2: decision other than buying the house, which is am I
Speaker 2: going to school?
Speaker 1: Yeah?
Speaker 5: And now you get your own money to make that decision.
Speaker 5: True now because you can go to school on my
Speaker 5: time for one hundred thousand but no, no, you got
Speaker 5: one hundred and twenty thousand dollars. You can use that
Speaker 5: for college or what I'll plan to do for my kids.
Speaker 5: I would say like this, this is the c capital
Speaker 5: you need for your business. We don't need to go
Speaker 5: find outside funding or find investors. You have one hundred
Speaker 5: thousand dollars to put towards that business idea. I'll be
Speaker 5: the CFO of the company. I'll help you to puy
Speaker 5: the money into your business. But I want my kids
Speaker 5: to have options on what they want to do. Instead,
Speaker 5: happened to take the traditional route.
Speaker 1: So what's the conversion that you can find twenty nine
Speaker 1: to a row?
Speaker 5: Oh yeah, so with the five to twenty nine plan,
Speaker 5: the problem that I used to have with it is
Speaker 5: that that money needs to be used for college or
Speaker 5: you or you have to pay taxes on the earnings
Speaker 5: from that money. And let's face it, you know, eighteen
Speaker 5: years from now, like college might be less of a
Speaker 5: thing than it already is today.
Speaker 1: And so if they.
Speaker 5: Don't want to go to college, then you have to
Speaker 5: now pay taxes on that money. But the rule is
Speaker 5: today you can convert I believe us up to thirty
Speaker 5: six thousand dollars of five twenty nine money into a
Speaker 5: wroth ira and not have to pay any taxes on there.
Speaker 5: So like if your kids at eighteen say, hey, I
Speaker 5: don't want to go to college, you can convert that
Speaker 5: money to a wroth Ira and they can continue to
Speaker 5: grow tax free, which is a huge flexibility option for
Speaker 5: kids now. So now five twenty nine, planers like, hey,
Speaker 5: if you don't want to go if you don't want
Speaker 5: to go to college, I can either change the name
Speaker 5: to another child, or I can convert it to a
Speaker 5: wroth Ira and they could continue growing tax free forever,
Speaker 5: which is pretty big.
Speaker 1: Yeah.
Speaker 2: And so this is I mean amazing information. One of
Speaker 2: the things that people always ask us about is asset allocation, right,
Speaker 2: and so in order to do these things, to have
Speaker 2: these strategies, they have to know how to spend, how
Speaker 2: to say where they put. So what is the recommended percentages?
Speaker 2: I guess case the case, but just an overarching theme
Speaker 2: of what asset allocation will look like.
Speaker 4: Yeah, even just even just even cash flow personal finance
Speaker 4: every Yeah, So I mean, just to your point, depend
Speaker 4: on how much money you make, do think you need
Speaker 4: to be paying yourself fifty percent of that for like
Speaker 4: for general expenses. But the average person, I would say,
Speaker 4: let's keep your necessities right, You're you're housing your cars,
Speaker 4: all that stuff, builds utilities, but ideally around fifty but
Speaker 4: no more than sixty percent, right, Like between that fifty
Speaker 4: to sixty percent range is pretty decent. Then fifteen to
Speaker 4: twenty percent of your money for like you you know
Speaker 4: you you're you're once right, being able to travel, dining out,
Speaker 4: entertainment like those things that could be very variable, right,
Speaker 4: And then another fifteen to twenty percent for allocated for investing.
Speaker 4: Now as your income increases, right, we want those percentages
Speaker 4: to flip.
Speaker 1: Right.
Speaker 4: So for example, like you know, they said the average
Speaker 4: retirement age is sixty five, but when you really the math,
Speaker 4: the reason why the average retirement age of sixty five
Speaker 4: is because the average person makes fifty thousand dollars in the
Speaker 4: United States, right, meaning they did everything right, they can
Speaker 4: maybe allocate ten percent towards investing in saving, which means
Speaker 4: that's gonna take them thirty plus years accumulate a million
Speaker 4: dollar nest egg. But if you make one hundred thousand dollars,
Speaker 4: you've doubled your income. And if you just doubled your
Speaker 4: savings rate from ten percent to twenty percent, now you
Speaker 4: can put away four times more money.
Speaker 1: Right, So I think one of the.
Speaker 4: Keys is as your income increases, strategically increasing your savings rate.
Speaker 4: Because here's the thing, even if your lifestyle does increase
Speaker 4: as you make more money, as long as you've increase
Speaker 4: your savings rate, you're always guaranteeing and banking banking in
Speaker 4: the fact that I'm now going to increase my investing
Speaker 4: as well. But to start out, I think those are
Speaker 4: great percentages. But as your income increases, I think you know,
Speaker 4: of anything above six figures, I would try to get that.
Speaker 4: I would try to get those necessities down to like
Speaker 4: closer to fifty percent, maybe even less, and then continue
Speaker 4: to increase the saving and investing allocation so that you
Speaker 4: can just get to your target faster. Because retirement has
Speaker 4: nothing to do with age. It has everything to do
Speaker 4: with assets. It's a number. You don't have to be
Speaker 4: sixty five, right, It's like, oh, I got a target,
Speaker 4: now this is the number. How can I get there
Speaker 4: as fast as possible? You get there as fast as
Speaker 4: possible while being a good steward over your finances.
Speaker 5: How do we get tricked into thinking that sixty five
Speaker 5: is like now I want to do whatever I want
Speaker 5: to do in life, like you know, like my knees
Speaker 5: barely work like like, So we always tell our clients, like,
Speaker 5: retirement is not an age.
Speaker 1: It is a number.
Speaker 5: The faster we get you there, the faster you can
Speaker 5: like do whatever you want. So it's about more, you know,
Speaker 5: financial freedom than it is about retirement, because it's just like,
Speaker 5: how when at what point do I have enough money
Speaker 5: when my investments can pay me out to live my lifestyle.
Speaker 5: And at that number, if you want to stop working,
Speaker 5: stop working. But I just think that we as a people,
Speaker 5: as a coach, you need to get away from that
Speaker 5: sixty five and now I can live my life. Life
Speaker 5: is meant to You're meant to do more than that.
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