Rich Girl Roundup: What Do I Do Financially in My 30s?

Rich Girl Roundup! Theoretically at 40, you are earning more money than potentially at 22. So you should theoretically have an easier time. 22, Tony soprano. Your favorite shit. I love the sopranos. I will die on this hill. Welcome back Rich People to the Rich Girl Roundup weekly discussion of the Money with Katie Show. I am your host as always, Katie Gatti Tossan, and every Monday, Hannah and I dig into an interesting money question. But before we do, here's a quick message from the sponsors of this segment. We talk a lot about making smart financial decisions. And for 25 years, Oracle Netsuite has been the number one cloud financial system that high earning companies rely on. But here are some very new, very exciting news. For the first time ever, you can defer payments of a full Netsuite implementation for six months. That means no payment and no interest for six months. Netsuite provides all the financial information you need in real time, all in one place. All that convenience and visibility reduces tedious manual processes, boosts efficiency, and much more. Get the visibility and control you need to weather any storm. Visit Netsuite.com slash Rich Girl. That's Netsuite.com slash Rich Girl. All right, before we get into it today, we actually wanted to do a little follow-up from last week's episode about tax refunds to share some listener feedback that we just thought was interesting and pretty valuable. And you know what? I know we probably should have known that trying to cover a granular tax topic in this fun and conversational format was bound to introduce some plot holes. But for what I thought, we've got accountants in the audience and other people that think about taxes. So y'all wait in and there are basically three primary areas where we heard feedback that I want to run through. Yeah, I think this feedback is important. If you don't carry as much about last week's episode and the feedback we have, I would say you can also skip to around the seven minute mark in the episode and get started from there. Okay, Katie, let's get into it. What was the first piece of feedback? So the first piece of feedback, this was from an accountant named Kayleigh. And this was in response to my aside about escorps and why I was advised by my accountant not to do one given our situation. So Kayleigh and I went back and forth a little bit and she did affirm my choice given our circumstances, but she said a few things about escorps that I thought were just important for anyone that is maybe considering one. So quote, most CPAs make the argument that you'll save 15.3% on taxes, which is the self employment tax. However, that only holds true. Usually if you are filing single and your business is your only income and quote. So she pointed out that since my husband and I both get W2s, although it could be the case if you only had one W2 and a married filing jointly situation that that covers our social security obligation, which is a large portion of that 15.3% self employment tax. So our savings from doing an escorp would basically drop to just the Medicare obligation, which is roughly 3%. And she noted, I thought this was really interesting. You should not become an escorp in New York City specifically. She was like, if you ever moved to New York, don't be New York City. That is not the state. Do not become an escorp. She didn't say why, but I thought it was going to be interesting piece of feedback that all that to say if you are listening and you are interested. I would definitely work with a professional because it sounds like there are so many things that go into determining whether or not this is a good decision or not for your business and your tax structure. You're filing for your business. So I would work with a pro, but it was kind of fun to talk to her about all these different ins and outs. Yeah, that's really interesting. I would love to know why the New York City piece is what I mean after working there for so many years. The next piece of feedback came from someone named Bri, which I really appreciated because I think this was a question that I was also alluding to, which she said. Her family loves periodically checking the IRS calculator throughout the year because they experience a lot of fluctuations in volatility. And so they'll typically check in June and then again in the fall into December October. And then they can address their withholdings as needed. And then they can prepare to put money aside ahead of time if they also need, which was the similar situation that I was in where I was trying to check kind of throughout the year. So I think that is a good call out for people who might be on a stricter budget or really need to plan more for tax planning when that time comes. Yeah, and she had mentioned that it's not necessarily in the end of the year where she would actually change anything because at that point there's so few pay periods left to really make a big difference. Particularly if you are on a tighter budget, you don't have that much coming in. You probably don't want more of it being withheld, but she did mention that it helps them think ahead. So like, okay, now we have more time to be putting this money aside because we are expecting that in April, we're going to have to pay a bill of X dollars. And so it kind of gave them an extra few months. So yeah, the head is point, but that was interesting because in my life, I'm always like, ah, you know, that's probably overkill. Why would you keep checking? But it's a really good use case for doing so. So we wanted to include it. And finally, this was an interesting one. I just thought it was like, whoa, what a mind. But this is when we listened her named Jose and he writes, you can also get a tax break if you're single, but only if you are a rich single taxpayer. So we made a joke on the show about how the United States is the only country where you get financial benefits from being married married filing jointly tax breaks. And he pointed out that we went back and forth a little about it. There's this funky nuance wherein if both members of a couple earn $578,125 or more. So $1,156,250 together, but where the income is coming from each person equally or at a point above $578K, the married filing jointly tax burden is actually higher than if they were single. So in that instance, two single people, both earning that amount would pay $192,970 in taxes each. While the married couple would end up paying $193,407 each. So I just thought that was a really fun little quirk where two exceedingly high earners may want to be aware of that. And at that point, you're probably working with an accountant anyway. So it's obviously not going to make or break the bank. But I kind of was just of the mind that you always under all circumstances are going to get a tax break if you're married. And that's clearly not the case for the point 1%. When I make a million dollars with my husband, we'll take this into account. See, you say that so jokingly, but this is part of that. This is part of the mental rewiring we always talk about. And it is not talking about these things as though they would never happen. Expansive mindsets people. All right. Well, before we move on to the roundup, this week's upcoming main episode is about investing in private companies and startups. So I am a total noob when it comes to this stuff. It was very fun to dig into my first angel investment. And we have three guests for this one. So it's going to be a really interesting conversation. Okay. Henna on to the roundup. How are we today? I'm good. When we think about a expansive thinking, you know, I was thinking about how the mega millions kind of reset recently. And so I decided, oh, I'll go buy a ticket because you know, that's when the fewest people are buying them. So I actually, I think if you radically have a higher chance now than when it was that billions amazing. If you won, how much would you give me? We answered this question on the original roundup a couple of weeks ago. Yes, but I've never asked you how much of your billions you would give me. It's just like a pal just just a buddy. Do you want to know something? I actually had the thought that I was like, I don't know that I would quit my job. I think that I would quit in like the W two cents, but I think I would just privately invest in you and like just keep us working together. Oh my gosh. I would be very bored very quickly if I didn't have something agreed. You know what you could do is you could buy money with Katie from Morning Brew and you could be the CEO. You could be my boss. That was a real thought that entered my mind. And I don't even have to win the whole draft pot to do that. Let's go pick a winner, please. I only need to win like 20 million to be able to live out my life the way I want and do that investment. Only 20? Girl. I am higher when I said this before. I know. 10 is normal. What is the quote from succession was like 5 million is a nightmare. They're talking about, I guess like Greg getting some money from the family and only wanting like 5 million is how I'm like 5 million is a nightmare. Greg, you can't do anything with 5 million. I was like, oh my god. I'm so proud. Let me learn that from myself. Man, if you want to give me 5 million. I know. Let me take 5 million for a spin. Okay. So this big question. Yes. Came from Erica Jay. What do I do in my 30s financially? There is a wealth, huh? Of info for what I should have done in my 20s. But what about this decade? Do I keep investing? Like what do I do? I just know that Katie is going to be like, well, Hannah, I'm only 28. So I'll let you start this question. How old are you again? I'm not answering this. Okay. Well, you can start. You can start because you know, you're so old and wise. There are some words I would use on you right now. If we weren't on people complain when we swear and we can't afford negative reviews. So it's true. I haven't won the millions yet. Okay. It's really true that nobody tells you what to do when you're in your 30s. But it really reminded me of the sandwich generation that we talked about in the recent episode about when you're in your 30s, you're approaching the age where you might be taking care of your own children. Well, also having to maybe start taking care of your parents or even your grandparents. To me, it seemed like there was no real work around on how to optimize for all of those things and make all of those things possible unless you were actively saving for those situations like child care or elder care or hoping that, you know, your loved ones have set up policies for themselves. So I guess my question to you would be for people who got kind of their financial life together in their 20s. What do you recommend now? Well, it's a great question. And I think I kind of went down that same vein when I was noodling on it because there's this notion that you should have life more or less figured out by the time you're in your 30s. And all your 20s are for being free spirited. And by the time you're the clock strikes midnight on your 30th birthday, you better have a minivan, a mortgage, a real person job, you better know what direction you're going in. I know I certainly feel that way sometimes. So I think financially the 30s are a bit of an interesting decade because it is statistically, as you mentioned, it's the one where you're most likely to have a few major things happening. Buying your first home, having your first kid, or if you had a child in your 20s, they might be at that daycare age. And that's obviously quite expensive. So, and you said people changing their jobs too is most likely to happen in there. I think that's at the tail end of your 30s. Yes, it's like you're most likely to make a career change. So it can be a very tumultuous decade. And I don't think it really fit squarely into any one box. Though, that is why to me it's a bit hard to square with the stereotypical notions of what each decade is like. How are you supposed to go from your carefree 20s and you're spending everything you earn on international travel and you're living in a New York City walk up to like suddenly flipping a switch and you're now financially prepared to buy a house and have a kid. And it's like what? It's unrealistic. Like the answer is you're not. Those two stereotypes, those two puzzle pieces do not fit together perfectly. If these things are supposed to start happening when you're 30 or 31, it's like there's got to be more of a glide path here. And so I guess to me what your quote unquote supposed to do when your 30s probably comes down to building on what you did in your 20s. So some people in their 20s in low cost of living areas or who have family money, let's be real or have really high paying jobs or maybe even all three. They might be buying homes, having kids such that their 30s are actually more about maintaining the status quo and saving for retirement. Like yeah, a lot of the big stuff is now behind you. You might be now in the phase where the kids are in elementary school and you have college on the horizon, you know, in the distance, but you're not trying to do so many of the big things all at once. Whereas some people in their 30s have not begun saving for anything yet. And while I wouldn't say there's really a rush to buy a home, like I don't think someone should feel like they have to do that in their 30s. Kids are a bit of another story in the sense that there is an inherent biological limit, not to medically generalize, not a doctor, but you know, it's not something you can really put off. So I think that those were some of the things that first came to mind to me is. It feels like a time when prioritization becomes more important. And I think with how long people are living and working today, I think you can kind of think about your 20s and 30s almost as just one continuous period for sorting out your financial priorities. Hell yeah, I'm going to call it my young era. There you go, except my young with some money era. My 20s was that you got no money era young with some money. Yeah, so like whether or not you do want to buy a home and therefore need to prioritize saving for it, whether or not you want to become a parent and therefore need to prioritize it, whether you want to retire earlier or not and adjusting. So obviously it's not as easy as being like, yep, want to do all three. Okay, magically now the money's there, but I think the answers to those questions are probably actually more impactful than your chronological age itself. Yeah, that makes sense. I mean, I wrote in my notes about like you want to think about the long term goals and where you might want to pivot, whether it's that career trajectory or it's about maybe you don't want to biologically have them and adopting is what you want to, you know, whatever that is. One of the things that I also wrote was you've been dotting all your eyes and crossing all your teeth with your finances. It might be a good time to revisit your fi number and your progress over the last couple of years and decide if this is the decade when things can really start to snowball things can really pick up momentum. Because I know you know we've talked about this like the data shows those first 10, 15 years are really when the biggest chunks of progress can really be made. So I would say that and then just kind of piggybacking off of figuring out your life priorities. We are also we just did that episode on elder care and I don't feel like it's too early in your 30s to really reevaluate your needs, whether it's like a state plans or insurance or wills or whatever because as I have learned in your 30s, you could just pull your neck like bending down to pick up something like literally getting out of a car. So Hannah is Kaiser's favorite favorite customer. I think so, but it's never too early. I feel like to just start reevaluating all of those things as your health progresses. Can I add another thing on that too? Yes, that I love Chelsea Fagans take on this. We're sure talk about how which I'm so guilty of this. And this is actually partially why I stopped drinking is because I would get a hangover and it would last like a week. So I'd be like, what is going on versus you know, you're 19 years old and you're like, I'm invincible. And she always jokes about how these jokes about when you're in your late 20s or early 30s, how you're like decrepit and your body's falling apart. And she has this amazing tick talk. Maybe we can find it and try to link it, but she's like, no, dude, your 30s are amazing. Like that's when you're coming into your own. That's when you have more confidence potentially, but you know, you've you've been an adult for a little bit. Like you probably are a little bit closer to knowing what you want. And she's like stretch babe. And I worry so much that like in our humor of being like, yeah, elder care because you're in your 30s now. Well, that is that is serious, you know, that is true. And you know, making sure your health insurance policies are up to date. These are all good ideas. But I also think it's like this is also such a positive time in your life. And you're still so young, like you probably want to think about it still as well. I guess what I'm saying is I'm not negating the young. I just think that there are a lot of things that happen in your early 30s. Like if you are going to have a child, like your body will change in ways that it's never going to change back to. I have noticed significantly how my energy levels or my soreness or whatever have been impacted by getting older. And while there are so many benefits to aging, like it's a gift to be able to get older. I do think that to your point, I can't go out and like dayduring, that's just not a thing. It would take me like four days to recover. So I do think we have to be realistic that some things in our lives are going to change physically. And there are some people I follow who are in the best shape of their life now at 40, which yeah, is not discounting. Like how amazing it can be, but generally we kind of live in our teens and 20s as if we're like invincible. And I think our 30s is when we start to realize, oh, maybe not so much. Maybe not. It's like I slept weird and now I can't move. Oh my god. Didn't you remember I slept weird and then my neck had like an issue for three weeks. Oh yeah, you were taking meetings horizontally. Like you'd call it and your head would be like, oh my god. And I think she's like, it didn't even do anything. So I also want to mention too that part of the reason I think these decades take on such as significance is because they're kind of all back. Stopping or rather leading up to the same end point, which is like age 65. In the long term financial planning that we're doing. So obviously, if you're saving more at 25, then like you have to do less work later. But it's not like that's necessary. You don't absolutely have to start. Then in our recent save rate episode, we were talking about how the 35 to 40% save rate number is so powerful, because even someone who starts at 40 could still retire on time with 40% save rate, which is high. But theoretically at 40, you are earning more money than potentially at 22. So you should theoretically have easier time, 22, 20 soprano in your favorite shot. I love the sopranos. I will die on this hill. So I was at that as well as the fact that I think there's the economic model of consumption that's really interesting that basically says there's no such thing as a flat save rate. And it actually, you know, when you're in your 20s and 30s, they make a pretty compelling case for spending the money on setting your life up and investing in yourself and your life. And then when you, you know, at the end of your 30s, when you're really looking 30 years down the line and starting to plan for that. So two competing schools have thought absolutely. And if you can afford to do both, do both. But there is kind of something a little self-defeating about someone who's like, oh, I have to save for retirement. And so they're not actually building a life in the here and now. Like they're not having a kid or buying a home or doing the things that they would like to do to set their life. Because like, oh, I'm so focused on making sure I have enough at 65. It's like, but you have to, you also have to build the life now. And I think the economic consumption model is quite interesting for that reason because it basically presumes that up until age 40, you're not saving anything. You're basically just plowing it into building a life. And I mean, look like today, there are a lot of factors that are against people up until their time at 40. So I think that that makes a lot of sense. I do want to bring it back to all tactical things aside. You've said in episodes before, is that your life is not a dress rehearsal. And I think that that speaks heavily to people who are so is focused on the future that they're not thinking about now. And so if you're in your 30s, where you're in a good spot, you're actively saving for the things you want to save for. Don't forget to live a little. And I saw this tweet last night that I just want to mention because it cracked me up. It was like, if you are dead set, is it called an X now? Oh, and a zit, a zit, clown world. I saw a zit that said, I can't even say it. It sounds like yeet. Yes, yes, it does. I saw a yeet that said, if you are so focused on saving 80% of your income, because you hate your job so much that you need to retire in 10 years flat, I have a suggestion for you. Get a different job where it was like, there is a bit of a solution here that is not necessarily, oh, I have to rob myself of all fun in the here and now. It is possible to get a job that you enjoy that can make this journey a little bit more enjoyable. I always really loved the fire rhetoric and was very much in the camp of like, I need to get reach financial freedom before I'm allowed to experience any ounce of joy or happiness or freedoms, if I'm not financially independent, none of it matters. And it really was through that process of doing work that I liked that I was like, oh, actually, that was not the only way. Like, I want to be able to produce income for myself and build confidence in that skill and to be able to produce income doing work that I love as opposed to let me just hoard and accumulate as much as possible, as fast as possible, that way I'm bulletproof and never have to make income again. You're, I mean, you're kind of close to your FI number. I feel like in the funny thing is that you're like, so how much would you invest in money with Katie for me to keep doing this if you win the lottery? Like, I don't, I think you really come full circle here of, you know, not having a hoard, but also being like, what do I enjoy? It's about, yeah, security, but I think I was talking to Tara the other day, who is, I don't know that we've ever formally announced this, but we're doing a project with Tara Reed and she's the CEO of Apps Without Code. And we're talking on the phone about money and like taking an income as an entrepreneur as she is. And she was like, I feel like your approach is very much like, let me save and invest in safe ways as much as possible so that I can basically reach the amount of money I need to never have to work again quickly. And that, that will give me confidence. And I was like, yeah, that's pretty much it. And she goes, see, I'm trying to develop confidence in myself that like I can always create income. I can always generate opportunities. I can always create something of value. And I was like, whoa, what an interesting reframe because it shifts from being, I got a hurry, hurry, hurry to get all this behind me and to do it as fast as possible versus I'm really realigning my own approach to life. So I think that there's something there as well in this conversation about, it's like, it doesn't necessarily even have to mean that you're at some certain benchmark, just that you are investing in your own growth such that you're human capital and such a kind of dystopian way to think about yourself. But it's kind of accurate that that is probably the most valuable thing you have in your 30s is your human capital and what you're capable of. Yeah, I would probably side with you, which is where I'd rather have like the nest egg set up. So I have the freedom to do whatever. But I like the idea of thinking about your potential as the thing that you are nurturing for your 30s because that is when you usually typically have professional experience under your belt, you may not be in like a C-suite position, but this is where you can really supercharge that if that's something that matters to you. Yeah, isn't there that list of people that didn't do the things that they're known for until they were in their late 30s like Oprah or like 50s? Yeah. Yeah, there are so many people that are like world famous today that didn't really get their start until their late 30s or later. I actually want to ask you based on that question. I know you and I have had conversations about like the Forbes 30 under 30. I think Tara has actually been featured on the she is 30 under 30. Do you feel like this question or having this conversation reframes how you see that because you're going to be 29? I'm running out of time to get on Forbes 30 under 30. Everyone is that you're supposed to be like, I don't care anymore because the 30s are equanimists or equanimity. Man, I don't know though, I would like to be on that list, but I'm a list, I'm a list lover man. I've always been that way. I'm like if there's an honor list, there's a list of 4.0 students, if there's a list of people doing cool things, I want to see my name on it, but that's a conversation for my therapist on that note. Well, you're at the top of my haters list so you get that one. I am the president of the I Hate Hanna Club. Please, I said no more. All right, that's all for this week's Rich Girl Roundup. We will see you on Wednesday to talk about investing in startups. Bye. Bye.