Your Salary Structure is WHAT?

"I have started a new job where I get paid 90% of my salary in 5 months. How do I go about planning this without running out of money before my pay kicks in again?" We'll walk you through that question and more in today's Q&A episode! Jump start your journey with our FREE financial resources Reach your goals faster with our products Take the relationship to the next level: become a client Subscribe on YouTube for early access and go beyond the podcast Connect with us on social media for more content Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

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• 0:28Speaker 01

  Para los grandes, para los chicos, para los bajos y los altos, los pacifistas, los valientes, para los optimistas y los pesimistas, los que valoran lo de adentro, para los que están lejos, los que no ven de lejos, y los que no ven de cerca, para los introvertidos y los extrovertidos, para los que piensan y los que hacen, para los que nos mostraron el camino. Coca-Cola, para todos. Compra una Coca-Cola en una tienda cerca de usted.

• 1:06Brian Preston?

  Worried about running out of money? Here's what to do.

• 1:08Speaker 03

  Brett, I am so excited about this because a lot of people have this question. Their income comes in unique spurts and they want to figure out, how do I plan for this? How do I budget for this? And I love that we get to answer these kinds of questions. As a matter of fact, I love that we get to answer all of your questions. It's why every Tuesday at 10 a.m. we do a livestream. We want to load you up and speak to things that you are curious about because we believe that there's a better way to do money. So with that, I'm going to throw it over to you, Creative Director Rebe.

• 1:38Speaker 04

  Yes, Casey asks this very question. He says, "I have started a new job where I get paid 90% of my salary within five months. How do I go about planning for this without running out of money before my pay kicks in again? What would you do in this unique situation?"

• 1:56Speaker 03

  Well, okay, so 90% pay inside of five months. That's unique, right? Like, not a lot of folks, not a lot of locations allow that to happen. But there are a lot of folks out there that have like very sporadic and inconsistent income streams. And it does pose a very real problem for folks. And I think, okay, well, how do I budget? Or these guys say that I'm supposed to be saving 25% of my gross income. But my gross income varies month to month or pay cycle to pay cycle. How do I do this well? How do I think about this well? And frankly, I think that people that are in this kind of situation, Brian, it's even a little bit, it's harder for them. It's harder than just the normal W2 employee who gets the same paycheck every single pay cycle for an entire year.

• 2:40Speaker 03

  So as you've worked with folks in the past who've had like sporadic income streams like this, how have you told them how to tackle normalizing their cash flow?

• 2:50Brian Preston?

  Yeah, when I saw this question, I immediately wanted to go do, jump onto Google, type in KC NFL. Because this, yes, in the past, I've worked with NFL players. And it was quite unique in the fact that they got the majority of their money during the NFL season. And one of the primary things we did for those clients was is trying to set up a budget. And then, once we set up the budget, then determining how we structure the portfolio. So that, because all that money came in at once, but yet you've got 12 months of expenses, even though the income's coming in in five months. So you batch the income coming in, you create the budget for the expenses. And then you just need to structure a cash management plan where at the first of each month or the 15th,

• 3:35Brian Preston?

  you know, the client determines or you determine when you need that money to hit. You have a transfer from your savings/investment accounts of cash, direct deposited right into your banking account that you use to pay bills. Now, the key component of this, though, Bo, is discipline.

• 3:52Speaker 03

  That's right.

• 3:52Brian Preston?

  Is because I'll tell you, if you think about it, if you get paid all your money in the, in five months. Now, maybe this is a big bonus, you know? I will say that if somebody has some long-term incentive options or some other thing like that. But if I was going off the scenario of Somebody who's earning this based upon the work they do. The problem I had with my NFL players is offseason, they're somewhat bored. They train and that's back to the discipline is that whatever you set up in the budget, be realistic, stick to it and then don't, you know, make sure that you're not going too far off of the plan because the thing I always worry about is five months out of 12 of the income, you have to be, you have to make sure that you don't go outside of

• 4:36Brian Preston?

  the lines too often or this whole thing falls apart.

• 4:39Speaker 03

  Yeah, I think I would be a proponent in terms of setting this up. Again, behavioral finance becomes so key here. I would think about how you could gamify and outsmart the system. I'm going to use some really round numbers here. Let's say that your annual income is $50,000 and I'm only doing this because I can do the math in my head and on the calculator that I have in front of me. Your annual income is $50,000, but it's going to come in $10,000 a month for five months. You cannot live as though your income is $10,000 a month. What you have to do, you have to take $50,000 a year, divide that by 12 and so it turns into about $4,100 a month. So if it's me, what I'm going to do is every time one of those paychecks hit, I'm going to put it in a separate account. I'm going to put it over here in a high yield savings account sitting there and then every

• 5:21Speaker 03

  month from that savings account, I'm going to have $41 hit my checking account and I'm going to budget off of that and I'm going to live off of that and I'm going to save off of that and I'm going to pretend like my income is only $4,100 a month and what is going to allow me to do is not let my eyes get bigger than my wallet and that $10,000 comes in and I live like I make $10,000 and then I'm going to have seven months out of the year where no income is coming in and I'm in sort of like an uh-oh position. So I think if you have to set some sort of system up like that to protect yourself, there's nothing wrong with that. And then just like anything else in personal finance or in life, the muscle memory will set in. Once you've done this for a year, two, three years, then it'll just become a natural cadence

• 6:03Speaker 03

  in terms of how your cash flow works, even though it doesn't flow in like nice, even systematic chunks.

• 6:08Brian Preston?

  That's why I think automation is your friend. You know, structure as much of this to be, you know, systematic and automatic, meaning it's You're paying the bills automatically. You're doing the savings and the transfers to different accounts automatically. And just make sure you're sticking to the budget. And then I like having the separate accounts. Meaning have the paycheck go into the account that is not the account that you pay all the bills or do your living expenses out of. So that way you have separation. So you're doing exactly what Bo said. You're turning the five months of income into 12 months of transfers that feels like your monthly paycheck is actually X versus being that five lump sum, much bigger twofold of what you normally get paid.

• 6:52Speaker 03

  Yep.

• 6:53Speaker 04

  Great answer. Casey, thank you for the question. Hope that helps you out.

• 6:58Speaker 04

  Next up, we've got a question from Then and Again. It says, "I have a weird money psychology question. I was gifted a lot of shares in one company. I will receive more in an inheritance. I'm attached to these shares because my grandparents worked at the company. And I'm having a hard time selling. Someone talk me into it. I know diversification is the way."

• 7:24Speaker 03

  So this is not an uncommon thing. A lot of times, folks, you know, especially folks that are like second, third generation financial mutants. Their grandparents or their parents will come up with the idea, "Hey, when Junior's born, we're gonna go buy 100 shares of X. And that's gonna be Junior's that one day they're gonna end up with, or maybe we're gonna pass that along." Well, then it does become this sentimental thing. Hey, I've had people like, "Oh, you know what? I know when I have a baby, I'm gonna have to buy a lot of like Johnson & Johnson goods. The baby wipes and the butt paste and all this kind of stuff. And so I'm gonna go buy shares of Johnson & Johnson. So that way every time I'm going to the supermarket to make a purchase, I feel like I'm paying myself as a shareholder. And then one day I'll gift that to the kids, so on and so forth. And so it does become a bit of an emotional thing. Now, here's what I would say.

• 8:09Speaker 03

  There's nothing wrong with money being emotional. There's nothing wrong with holding on to an asset that has sentimental value to you, so long as it does not derail your other financial planning goals, your other financial priorities in life. And so if these gifted shares are a substantial portion of your net worth, let's say that your total net worth is $200,000 and these shares represent $100,000 of that, then yeah, I would argue that you have a concentration risk inherent in these shares. And so one of the things I would think through is if it's going to be really, really difficult to sell it all today and diversify because there's some sort of emotional tie, is there something we can do to remove the emotion from it?

• 8:52Speaker 03

  First of all, you said you know you're going to get inheritance where more of this is going to come. So it probably matters less about holding on to those shares today because you know there's still more sitting in the background that's going to come your way. So I would think through, is there a very non-emotional systematic way I could begin to exit this exposure? Just like a dollar-cost average into the market or into a position, can I dollar-cost divest out of that position over time? So that way, it makes the sting hurt a little bit less. And then I'll determine what's an appropriate number for me. Maybe it's 5% of my net worth or 10% of my net worth. How do I then sell that position down in a tax-efficient way so that I'm not risking my entire financial picture by holding on to this stock that maybe I know is not the absolute best thing for me?

• 9:37Brian Preston?

  So I'll basically play the part of summary because Bo just stole all the great meat off of that question bone. I wrote down success with or without stock, meaning how material is this? That was the part where Bo was saying, does it impact your life? I wrote down, spread it out. Just like Bo was talking about dollar-cost averaging, you can also spread out, meaning you don't have to do this all at once. It's not all or nothing. Why not make this change over a period of time? And then the last thing, I think this probably is a little new, is that when you get gifts from family, there are expectations even if they're not told to you. So I would encourage you, make sure you know what the family members who gave this to you. Now, that doesn't mean you have to do everything that they tell you,

• 10:21Brian Preston?

  but I would at least want to know what the family expectations are with this gift so that you can try to navigate that, keep the relationships happy, but also keep your financial life in a better place. Because that's something, look, we've had experiences where...

• 10:37Brian Preston?

  Look, if you're from Atlanta, there's a lot of Coca-Cola people out there. If you're from Columbus, Georgia, there's a lot of Aflac people out there. So I imagine a lot of you guys, no matter where you're from, there's some corporate story where great grandparents, you know, got into the shares way early and now every generation passes it down. That's why those expectations probably need to be discussed, but then lay it against all those measurement tools that Bo laid out with, if this is going to ruin your life if that stock does poorly, then you at least need to come up with some way to balance those expectations and you living your best financial life.

• 11:12Speaker 03

  And then another thing that I would just think there is you said that these shares were gifted to you. Well, if that's the case, then the basis in those shares carries over. So there's a big chance, there's a good chance you have like large embedded gains in this holding if it's been something that's held for a long time. There's nothing that says you can't even be creative in terms of how you dispose of this. Let's say that you're someone who happens to be charitably minded and every month you want to give $500 to charity. Well, instead of giving $500 in cash every month to that charity, that organization you support, you could begin donating this appreciated security. Well, that way there's no tax bill, you're using it for good, you're carrying out the wishes of your loved ones and it's allowing you to right the ship on your financial life. So it doesn't mean that you just have to sell it to be able to correct it.

• 11:55Speaker 03

  There are strategies that you can employ to slowly shift this through time in a super tax efficient and goal efficient manner.

• 12:04Brian Preston?

  And then that's probably a great segue into, I see so many people when they get sick, they immediately say, well, we got to start gifting the assets out to our loved ones. Let's put the, change the title of the house. Let's, you know, go ahead and start gifting these shares. You guys do realize in estate planning, look, the exemption is, is pretty big. Now, look, it is expected to go back in 2025, but right now it's well over $13 million per person. So for a couple, it could be over $25 million. That, that's big and you get what's called a step up in basis if you die with appreciated holdings. Whereas when you gift, it's exactly what Bo said, the basis goes with the gift, meaning you have to pay the income taxes as the recipient of it.

• 12:48Brian Preston?

  So just pay attention to that. That's why I always get on to people when they, they start changing titles and, and making gifts without really understanding what they're creating and the taxes.

• 12:59Speaker 04

  Good thoughts. Then and again, thank you for asking that question. We appreciate you being here.

• 13:04Speaker 03

  Oh, you know another great thing that you could do? You can subscribe right now to the channel to make sure that as we put out all this new information, you're up to date when new content comes out. So if you are not subscribed and you're renting your seat right now, the purchase is super, super cheap. All you gotta do is hit that subscribe button and you can hang out with us every single week.

• 13:23Brian Preston?

  Ruby, I feel a little bit like Bo today. Cause I've got a Starbucks coffee in front of me and I wanna, I wanna thank Caleb. You know, this, this is actually spot on, nice cup of Joe right here. And I, you know, it was even though when I was sending the instructions, it was not very clear.

• 13:39Speaker 04

  I did laugh because you were not being clear at all.

• 13:41Brian Preston?

  And then me trying to correct it while I'm dropping my daughter off at school was just in the spell check. Americano, I don't know if it's just, if I'm spelling it wrong or if it's just not recognized by Apple phones. The alpha, that's not an element.

• 13:53Speaker 04

  He wrote American like three or four times.

• 13:55Speaker 03

  Awfully close to Americans. Maybe it's not a coincidence.

• 13:57Brian Preston?

  Yeah, so I kept saying American. I want a cup of American. And that's not, that's not what I wanted. So I appreciate it. But that's if you're wondering why I look like Bo sans the mustache.

• 14:08Speaker 04

  I like how that's what looking like Bo is. I don't know how you feel about that.

• 14:12Speaker 03

  You know, Caleb did not bring me coffee this morning. Did you know that? He brought you coffee. I, I got here super early, had some stuff I had to knock out before we recorded. So I went and grabbed my own this morning. Caleb didn't bring me one.

• 14:22Brian Preston?

  You know, that's probably because you didn't respond to the, the, the slide chain.

• 14:26Speaker 03

  To which I have now updated him. The answer's always yes. If you're ever bringing coffee and coming in, does Bo want coffee? Answer's always, if you're ever coming to visit and you just wanna know, what does Bo want today? He probably wants a cup of coffee. You know, I'm just throwing that out there.

• 14:37Brian Preston?

  That sounds like an entitled answer versus be showing appreciation and actually responding to the, to the slide thread.

• 14:46Speaker 03

  Hey, thanks for being you, Caleb.

• 14:50Speaker 04

  All right. Well, on that note, all about your coffee habits, um, you ready to do some more questions?

• 14:55Speaker 03

  Yes, ma'am.

• 14:55Speaker 04

  Just making sure. Jonathan has one for you. He says, I'm 43 and the rule of 55 is interesting for flexibility. Should I roll my Vanguard IRAs into my 401K to have that option?

• 15:13Speaker 04

  You're gonna have to say what the rule of 55 is too.

• 15:15Speaker 03

  Yeah, well, the answer is, Jonathan, because we're really good financial advisors, is it depends, right? Should I do this? It's very difficult to say, well, your unique situation, does this make sense? So, let's talk for a moment about what the rule of 55 is, and Brian, then you can talk about like the applicability, like how will Jonathan decide? Essentially, we know that with retirement assets, 401Ks and IRAs and Roth IRAs, generally speaking, we can't access those assets penalty-free until age 59 and 1/2. They are built and designed to be retirement assets. So, you have to make it all the way to 59 and 1/2 before you can start pulling those out. Except, there is an exception. If you retire from the company who held your 401K in the year that you turn 55, you can

• 16:00Speaker 03

  begin withdrawing assets from your 401K plan without paying a penalty. You're still gonna have to pay ordinary income tax if you're pulling out of the pre-tax portion, but the 10% penalty goes away. So, we tell people often, hey, it's, you're 54, man, if you could just stick it out until next year, then you'll be able to access those dollars if you're gonna need them for part of your retirement planning. So, a lot of people don't realize that, and so, they might decide, oh, okay, I'm retiring, and I'm 56-years-old, I'm gonna roll my whole 401K into an IRA, not realizing what they've really done, is they have now encumbered those assets where they can't get to them for a few more years. So, rule of 55 is a fantastic planning opportunity for those who are thinking about leaving the workforce before 60. So, then the question is, one, Brian, does it work?

• 16:45Speaker 03

  Can I just roll IRA assets into a 401K? Well, that, will I then be allowed to use those at 55? And then, how do I know if this makes sense for me? Is this something that I should do?

• 16:54Brian Preston?

  Did Jonathan give us his age?

• 16:56Speaker 03

  43.

• 16:57Brian Preston?

  Oh, he's, oh, this is, we gotta wease.

• 17:00Speaker 03

  We gotta, well, I said it depends.

• 17:02Brian Preston?

  So, that's why, I mean, I will tell you, Jonathan, and Bo kind of alluded to this, but it's just worth clarifying, don't do this, because I didn't, if you're, if you're in your 40s, you do this, you work for this company for seven years, and then you leave at 50-years of age, and then think you're gonna come back, and you'll have this basket of funds at 55 that you get access to. No. Key part is it has to be the year that you turn 55 or you have to be over 55. So those are, those are key elements. The second thing, look Vanguard is one of the low cost providers. We talk about fidelity, we talk about Schwab and we talk about Vanguard as being some of those low cost providers that let you have great access to index funds and really create a lot of opportunities.

• 17:44Brian Preston?

  A lot of 401ks, I mean, it's no coincidence, I think, by the same discussion that the largest 401k providers for employers is fidelity is at the top of the list, but then Vanguard and Schwab are up there as well. So, because they're good at being low cost plans, but that does not mean that your 401k is the equivalent because there's still a lot of 401ks. We see them for, you know, a decent amount of time where you don't know if it's the golf buddy or the college roommate or whoever it was that set up this plan, but it's expensive, it has poor investment choices and it's just not very feature rich or as useful as maybe some of the things you can set up when you, you've started funding your IRA or did your IRA rollover after you left your last job.

• 18:29Brian Preston?

  So that's the part that rolls into the, it depends as you have, you can't skip doing the homework. Don't skip leg day. You've actually got to do the work of making sure you understand what you'd be rolling it into. Now it is, it makes it much easier. Maybe the company you work for is a Fortune 500 company and it is one of those equivalent plans that fidelity, Schwab or Vanguard. You still do the homework of looking into the plan to make sure it's, it's as low cost as we're talking about, that there's not some expensive fees that are attached to it. And then I think you just have to build it into your financial plan. And you know, this is part of that complexity that we say, find you. You don't have to go looking for it. It's just as you're trying to figure out how you land the airplane and how you actually

• 19:11Brian Preston?

  start using the resources, go from saver to a spender of what you've been building for these decades. This is definitely part of the plan and I would encourage you, if it gets too complicated, don't feel like you have to figure this all out, you know, yourself and be the first one that creates and invents this path. Hire somebody who's done this hundreds, if not thousands of times.

• 19:32Speaker 03

  So you're saying it depends on, is it the right decision? Meaning, is my current 401k as good as the IRAs? The other thing is, is the timing right? I'm 43, I don't necessarily have to do this. I could also carry out this strategy at 53 and it would still be just as viable. And then the third thing I would just add out is, would doing this now and today open up other planning opportunities? If you're someone who's maybe, you can't do Roth contributions directly and you can't do backdoor Roth contributions, maybe rolling over the IRA today would open up the ability for you to backdoor Roth? So, it's just like you said, you gotta do the homework, don't skip leg day. Make sure you understand the implications of the decisions you're making and make sure you're making the best decision for where you are right now in your financial journey.

• 20:16Speaker 04

  Excellent. Jonathan, great question. Thanks for being here as always.

• 20:20Brian Preston?

  Yeah, I think, I think that's gonna be our new thing. I've always been doing it, but I think it's just when we talk about doing stuff that you don't want to do, that's leg day. Cause nobody who exercises likes doing exercises like, well, you're a weirdo.

• 20:33Speaker 03

  I'm just saying, well, here's what, here's what's interesting. If you don't skip enough leg days, you know what you actually start to come to love?

• 20:39Brian Preston?

  What?

• 20:39Speaker 03

  Start to come to love leg days. You know what I mean? Like, you kinda get excited, like, if you do the hard stuff, you kinda like, oh man, the hard stuff, I kinda enjoy this stuff.

• 20:46Brian Preston?

  I can, I can, I'll play the other side. Is that, there is, I saw a video that there was no better, like, exercise than like, doing squats because it engages some of the biggest muscles of your body and it's exertive. But it is hard. I mean, especially you put it under heavyweight, it's hard. And I think that you, that's what people don't understand. It's not always about the cardio of running on a treadmill or doing that stuff. You can get just as much of a sweat by putting yourself underweight. And it does stink. I mean, it's one thing, I mean, if you hold a dumbbell and you're doing curls and stuff, that, you know, yeah, it feels heavy, but legs hurt sometimes. So I know that you're one of those freaks, you and Arnold Schwarzenegger and Lou Frigno

• 21:29Brian Preston?

  and all those guys, but for the average man...

• 21:32Speaker 03

  You're still in the same category as Mr. Olympia and the Hulk.

• 21:35Brian Preston?

  For the average man, just trying to stay above ground, you know, so we can enjoy life and maximize healthy living, leg day is skipped by many people. That's why, you know, so I think that that's, I like that saying, is that if you're going to request homework and homework that's hard, that's don't skip leg day.

• 21:55Speaker 04

  Okay, great.

• 21:56Speaker 03

  She says, okay.

• 21:57Speaker 04

  Great. I just didn't know, I didn't know we were gonna go there.

• 22:01Speaker 05

  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.

• 22:28Speaker 01

  Para los grandes, para los chicos, para los bajos y los altos, los pacifistas, los valientes, para los optimistas y los pesimistas, los que valoran lo de adentro, para los que están lejos, los que no vende lejos, y los que no vende cerca, para los introvertidos y los extrovertidos, para los que piensan y los que hacen, para los que nos mostraron el camino. Coca-Cola, para todos. Compra una Coca-Cola en una tienda cerca de usted.

• 22:58Speaker 06

  Espolón Tequila, balanced, delicious, 100% acave, 0% ego. Just add ice, lime, and your mouth. For a real margarita, ride the rooster.

• 23:08Speaker 07

  Espolón Tequila, 40% alcohol by volume, 80 proof. Copyright 2026, Compaq America, New York, New York. Drink responsibly.