Where Preston would put every dollar on a $200K+ income in 2026

0:00 I was looking at a client's finances last week, combined household income, right around $280,000, and they were both W2 earners. And when I asked them to walk me through where their money was going after each paycheck, they basically said, "Some goes to a 401k, we pay our bills, and whatever is left just kind of sits in checking." That's a4 million household with no real system for how their money flows. And these are smart, successful people. They just never had someone lay out the right order for them. And that's the problem. Every money flowchart that you've seen on YouTube is built for someone making 60 or $70,000. Build an emergency fund, get your 401k match, pay off debt. Now, that advice is fine. It's just wildly incomplete. When you're in a higher tax bracket, the order changes, the accounts change, and the tax strategy completely changes. And the cost of getting it wrong at 150, 200, or even $300,000 plus is way bigger than most people realize. We're talking tens of thousands of dollars per year left on the table. So today, I'm going to walk you through the actual flowchart, the one I'd follow every single paycheck if I were a high income earner in 2026. Whether you're at 150, $250, $400,000, or somewhere in between, this priority list applies to you, and this order matters more than you think. Here's what we're covering.

0:55 First is the foundational steps that you need to get locked in. And then we're going to talk about the retirement account strategy that most high earners get wrong. And then after that, we're going to go over the tax optimization and wealth acceleration layer. That last part is where it gets really interesting because that's where the generic advice completely falls off. Now, the reason I'm making this video is because I work with high earners on wealth planning every single week. W2 employees, business owners, people in that $150,000 to $400,000 plus range, and the same patterns keep showing up. These are smart people. They have great incomes and they're still leaving 30 to $50,000, sometimes even more on the table every single year. And it's because the flow of their money isn't set up right. So, we're going to fix that. The first step is to automate everything. At higher income levels, the margin for error is bigger. If you're bringing home $12,000 or $15,000 a month after taxes, it's really easy for a couple thousand just to evaporate. The psychology is simple. You can't spend money that's already been moved. So, set up automatic transfers so every paycheck gets split into the right buckets the day your direct deposit hits. Your 401k is already handled through payroll, but everything else we're about to cover should be on autopilot as well. That includes brokerage contributions, savings, investments, all of it. This one step alone is a game changer. The second step is to cover your operating expenses and make all your minimum debt payments. At $200,000 plus, your monthly payments are probably higher than the average. Mortgage, car insurance, groceries, all of it. You need to know your number. I don't care if you just use a spreadsheet or napkin. Just know what it cost you to live every month.

2:06 And make sure every minimum payment on any debt is set to autopay. One mispayment tanks your credit score, and your credit score matters when you want to leverage debt intelligently later. We're going to come back to debt strategy in step five. Step three is your emergency fund. I call it a reserve instead of a fund because at this income level, the number looks different. Most people hear three months of expenses and they just stop there. For high earners, I think six months is the right target, especially if your income is variable or you're in an industry that's seeing layoffs. If your monthly expenses are $8,000, that means $48,000 is sitting in a liquid account. And I know that sounds like a lot of cash doing nothing, but this money isn't an investment. It's an insurance. It's what keeps you from selling your index funds at a 30% loss because you get laid off. You can park this in a high yield savings account. It still works in 2026 at around 3 to 3%. Some people on this level also use treasury bills or money market funds for a slightly better yield. Either way, this money needs to be boring. It's there so that everything else can grow. Step four, and this is where it starts to get interesting, your 401k or employer retirement plan is where you need to go next. In 2026, the contribution limit is $24,500 if you're under 50, $32,500 if you're over 50, and if your employer offers a match, you need to be contributing at least enough to capture the full match. That's an instant 50 or 100% return on your money depending on the match structure. Free money, just take it. Here's where high earners need to think differently. At over $200,000 in income, you need to ask yourself, Roth 401k or traditional. Most people just default to traditional because that's what HR told them when they onboarded 6 years ago. But if you think tax rates are going to be going up over the next 20 or 30 years, and I

3:23 personally do, then a Roth 401k means pay taxes now at today's rates and then your money grows taxfree forever. That's a huge deal when your account has one or $2 million in at retirement. Now, if your employer offers a mega backdoor Roth, that's even better. That lets you contribute after tax dollars above the $24,500 limit and then convert them into Roth. Some plans allow you to put in up to $70,000 total per year when you combine your contributions, the match, and the after tax piece. I worked with someone at a large tech company who was only contributing to the standard limit. Once we settle the mega back door, they were putting away an additional $45,000 per year into the Roth. Not every plan has this, so check with your HR or plan administrator. If yours does, use it. It's one of the most powerful tool available to W2 earners. If you're on a high deductible health plan, the HSA is arguably the most taxefficient account that exists. Contributions are deductible, growth is taxree, and withdrawals for medical expenses are taxree. You get the triple tax advantage. Now, the cool thing about the HSA is you don't have to use it right now. You can pay medical expenses out of pocket. You let the HSA grow for 20 years and then you can reimburse yourself later. That withdrawal is still taxfree even decades later. It's a really powerful long-term play. I'm hosting a free live master class this week where we're going to go way deeper on all this. We're going to cover how to legally reduce your tax bill by $30,000 or more. How to restructure your investments and entities the right way and how to actually build a wealth plan that accounts for your specific income and situation. It's live. You can ask questions and we cap attendance so I can actually help people. Link is in the description if you're interested. You can grab a free spot before it fills up.

4:37 Step five is once your retirement contributions are rolling, let's deal with high interest debt. I'm talking about anything above seven or 8%. Credit cards are the obvious one here. If you're carrying a balance at 24% interest, paying [music] that off is the single best guaranteed return you're going to get anywhere. And here's where I differ from the generic advice. If you got student loans at 4% or even a mortgage at 3 and a half%, the math is you're better off investing where you can earn 8 to 10% and letting the low interest debt ride. You're essentially making a spread, but I'm going to be honest. I personally don't love carrying debt. So, if paying off that 4% loan frees up cash flow for the next steps and let you sleep better, then do that. Just kill the high interest at first. Step six. After your 401k is funded and high interest debt is gone, the next dollar goes into a Roth IRA. In 2026, you can contribute $7,500 if you're under 50, $8,600 if you're 50 or older. Now, here's the thing that most high earners don't realize. If you make over $165,000 as a single filer or $246,000 married filing jointly, you can't contribute to a Roth IRA directly. The income limit phases you out, but there is a workaround called a backdoor Roth.

5:27 You contribute to a traditional IRA with after tax dollars and then you convert it to a Roth. It's completely legal. The IRS has acknowledged it for years and it takes [music] about 15 minutes to set up with your brokerage. It's a minor inconvenience, but your Roth IRA is the most flexible retirement account that you have. Your contributions can be withdrawn anytime without penalty, which gives you some liquidity, and the growth is completely tax free as well. I use my Roth for higher growth investments because every dollar of upside in that account will never be taxed. If something 10x is in my Roth, then I keep all of it. That's where I want my biggest potential winner sitting. Step seven, and this is where my FO chart breaks away from basically every other person you're going to see on YouTube. A portion of your investable dollars should be going into Bitcoin. Now, crypto broadly, not all coins, Bitcoin specifically, there's only going to ever be 21 million Bitcoin. That's a hard cap written into the code. Meanwhile, the government can print dollars whenever they want, and they have been, and they will continue doing so. Since 2020, the M2 money supply has increased by over 40%. That's your purchasing power being diluted in real time. Bitcoin is a fixed supply asset in a world of infinite money printing. For high earners, especially is a hedge against the very system that's taxing at 32, 35, or even 37%. Now, I'm not saying to throw half of your portfolio into it, but a consistent allocation somewhere between 10 and 25% of your investable cash while through dollar cost averaging, that's [music] the approach. I buy on an exchange and then once a month I move everything to cold storage. That means a hardware wallet that I physically control. It's not sitting on Coinbase.

6:38 It's not on an exchange where some CEO can freeze your funds. It's in my possession. If Bitcoin makes you nervous, it's probably because you haven't spent enough time understanding what it actually is. And I totally get that. I've got other videos on this channel that go much deeper. But at a minimum, understand that this is a 5 to 10ear hold. I don't trade this, I just accumulate it. And at this income level, you can afford to allocate a meaningful percentage without it keeping you up at night. Step eight is real estate. And I don't mean buying a house to live in. I mean buying or controlling a property that produces monthly cash flow. There's a couple ways you can do this. If you got capital for a down payment, you can buy a rental property, a duplex or a small multif family. House hacking is one of the best strategies for your first property. You can live in one of the units, rent out the others, and your tenants cover your mortgage. That's exactly how I got started. I bought a 4-unit property, lived in one unit, and the other three cover my entire housing cost. That alone was saving me over $2,000 per month that I could deploy into everything else on this list. If you don't have a down payment yet, or you want to start generating cash flow faster, that's what I call the bridge method. You lease a property with written permission from the landlord.

7:29 You furnish it. You list on platforms like Airbnb. And the spread between your rent and your expenses, and your booking revenue is your profit. I've had clients do 10,000, 20,000, even $50,000 plus per month with this model depending on how many properties are running. But here's the piece that most people miss, and it's why real estate is so powerful for higher earners specifically, and it's depreciation. When you own rental property, you can depreciate the asset and use that paper loss to offset your income. And if you do a cost agreation study, which reclassifies parts of the property into shorter depreciation schedules, you can accelerate that deduction significantly. I've worked with clients who picked up $60,000, $80,000 or more in their first year depreciation deductions on a single property at a 35% tax bracket. That's 20 [music] to $28,000 in real tax savings. That's money that stays into your pocket that would have otherwise gone straight to the IRS, and you can funnel those savings right back into this flowchart. Step nine, any remaining investable cash is going to go straight into a taxable brokerage account. There's no contribution limits, and there's no special tax rebate here. Long-term capital gains, anything held over a year, are taxed at 0, 15, or 20% depending on your income. That's way better than your ordinary income rate. I keep this account simple. I'm talking S&P 500 index funds, maybe QQQ for tech exposure. It's tax efficient, low fees, and I don't have to think about it. So, here's the full picture. Your paycheck hits, automation splits it immediately.

8:33 Operating costs and debt and minimums are covered. Your emergency reserve is funded. Your 401k is capturing the match, ideally with a mega back door Roth if your plan allows it. Your high interest debt is gone. Your Roth IRA is maxed through the back door. Bitcoin is being accumulated weekly into cold storage. Real estate is generating cash flow and tax benefits through depreciation. And the overflow compounds into a taxable account. Most high earners I talked to are doing maybe two or three of these steps and they're skipping the ones that save the most in taxes and build the most long-term wealth. If you're earning 150, 200, $300,000 plus, and your money strategies basically contribute to the 401k and hope for the best, there's a massive gap between where you are and where you could be. That's exactly what we're covering the free master class. We go deep on the tax strategies, the entity structuring, the real estate plays, all of it. And it's live so you can ask questions about your specific situation. You can grab a free spot. The link is in the description. If this video helped you see the full picture, share it with someone you know who's earning wealth but doesn't have a real system for where their money goes. and drop a comment telling me which step you're working on right now. And if this video was helpful, please give it a like and watch this video next at the almighty algorithm recommends. Thanks for watching.