E24 - Why High Earners Still Feel Financially Behind

You don’t feel behind because you make too little money.

And this episode is not walking back what we said last week about focusing on income first.

Income is step one.

But income alone doesn’t build freedom.

In this episode of Before the Returns, Jaden breaks down why high earners — even those making $150K, $200K, or more — still feel financially tight despite doing everything “right.”

We unpack:

• Lifestyle creep that quietly erodes margin
 • Why W-2 income gets compressed faster than expected
 • How debt layering reduces optionality
 • The illusion of progress inside retirement accounts
 • Why net worth growth isn’t the same as flexibility

This isn’t anti-investing.
 It’s not anti-retirement.
 And it’s not about budgeting harder.

It’s about understanding that income amplifies your structure.

If your income has grown but your stress hasn’t dropped, this episode will help you see where the gap actually is — and how to think about it differently.

Before you chase higher returns, make sure your foundation can hold them.

If this episode resonated:

→ Listen to last week’s episode on why income comes first.
 → Share this with someone who’s earning more but feeling tighter.
 → Subscribe so you don’t miss next week’s episode on designing financial flexibility.

Learn more at www.jadenzubal.com | Follow @jadenzubal | Join the *Before the Returns Weekly* newsletter

📩 Questions or ideas? Email: jadenzubal.wealth@gmail.com

⚖️ Disclaimer: This podcast is for educational purposes only. It is not financial, tax, or legal advice. Always consult with a qualified professional before making financial decisions.

Transcript

Phase One vs Phase Two

Lifestyle Inflation with Better Branding

Tax Compression for High Earners

SPEAKER_00 0:02

You don't feel behind because you make too little money. And I'm not walking back what I said last week. In your 20s, focus on creating income. That still stands. Because without income, you don't even get to play the game. But here's where most people get confused. Income is step one. It's not the full strategy. An engine is powerful, but without steering and brakes, it just gets you to the crash faster. So if your income has grown, but your flexibility hasn't, if your net worth is rising, but your stress isn't dropping, this is where it breaks down. Because earning more doesn't automatically build freedom. It amplifies whatever structure you already have. And if that structure wasn't designed intentionally, more income doesn't fix the pressure. It exposes it. That's why high earners still feel financially behind. Not because they're failing, but because their growth outpaced their design. And today we're going to unpack exactly where that gap happens. Hello and welcome to another episode of Before the Returns. I am your host, Jaden Zuball. And like I said, today we are really going to focus on that gap. So with that, let's jump right into it. Okay, so last week we really talked a majority of the conversation around solving your income problem. So bringing more value. And we specifically were talking about people in their 20s, 30s, 40s, really getting started with a wealth journey, though. It's this idea that the first thing we've got to do is increase our income. So we need to find ways to mesh the things that we enjoy doing, the things that we're passionate about, with the things that actually bring in money. And they bring in money because they're they're returning value to somebody else. So once we solve the income problem, though, then we have to solve the design problem or the strategy problem. I see it all the time with high-earning professionals that feel stuck in phase one. Or sometimes they don't even notice that they're stuck in phase one. This happens actually probably more frequently than anything else, where I'm speaking with a high-income earner and they are stuck in this idea that we just need to create, create, create, build, build, build, do that forever, and that will solve every problem. And while there's certainly a ton of value to that, and I agree with building as much as we possibly can and focusing on adding value to the world, in fact, it's why I sometimes push against the idea of retirement, because a lot of times what retirement means to people is stepping back from their work completely and just doing nothing for the rest of their lives, traveling, going on vacations, hanging out at home all the time. And it's statistically proven that if you do that, your lifespan is shorter because humans, we need to provide value. We are built, we are hardwired to provide value for other people. So if we can do that, if we can continue to provide value for others, then we can have that value returned to us and we can put that into strategically designed systems that enable us to do bigger and better things and create more financial freedom. Another part of this, though, that people often miss is this idea of lifestyle creep. And lifestyle creep has been even more intensified, I think, in the recent decade, from what I've experienced, where not only are we combating high inflation and just the cost of everything going up all the time and pretty rapidly, we are also combating this information age that we live in, where you can literally buy just about anything you want at any time of the day, no matter what it is, 365 days out of the year. You can get on Amazon, you can get on all these different websites, you can buy anything you want. And it has intensified this lifestyle creep issue a hundred times what it was previously. So what we often do is increase our commitments, you know, in the form of subscriptions and new car payments and mortgages and all these different things that we feel like we need, partly because it's so easy to access today. And the other part is just simply that's what we see all day, every day. So our brains naturally think, oh, I need that too. And that's fine. There's nothing wrong with having good things in life. But we have to have a little bit of thought behind it. In fact, sometimes, you know, I've heard this talked about, but some of the wealthiest people out there, you wouldn't know that they're super wealthy because they're not caught up in the keeping up with the Joneses idea. But that is a part of having a real financial system, is to move past the keeping up with the Joneses idea just a little bit and look at real important things in life. Let's take, for example, let's say you are 27 years old today and you have a household income of$90,000 with$60,000 in expenses. So you have a$35,000 discretionary fund, meaning that is the extra money that gets spent on, you know, going out to eat and all the extra little things you do. And it hopefully it adds to your savings, it adds to retirements, adds to things that you're investing in. So that$35,000 is above and beyond what you were spending for your fixed monthly expenses. Now let's say it's seven years later, so you're 34 years old now, you now make$190,000 a year as a household, but your expenses also increased to$155,000 a year. Well, guess what that discretionary budget is? It's still$35,000. And while that might not sound like a super crazy picture, and it's actually pretty reasonable from you know the hundreds of people that I've worked with over the years, it happens frequently without people even realizing it. Our incomes go up substantially over seven to ten years in a lot of cases. And then if you sit down and you look at the big picture, it doesn't feel like you've progressed at all, right? You still feel like you're in the same boat with the same income, even though in this case they're making$100,000 a year more than they were seven years earlier.

unknown 6:53

Right.

Debt and Lost Optionality

Illiquidity and the Retirement Illusion

Primary Residence vs Investment

Income vs Structure

Roots Before Returns

SPEAKER_00 6:54

So this is a real case of real people that I see happen all the time. Why does it happen? Things like bigger mortgages, so taxes go up because we we bought a bigger house. We pay more taxes because our income increased. So that is something we have to pay attention to. We expand with new cars, more vacations, more everything. And it just naturally happens. And we sometimes it happens slow enough that we just don't realize it. So part of what this means for high income earners is that stress continues to increase as you get older and income increases, because we also increase our expenses. So our flexibility actually goes down. We're not becoming wealthier, we're not generating more flexibility, we're actually generating less flexibility, and we're losing a certain sense of freedom as we continue to go through life. It doesn't matter if we make$100,000 or$500,000 or a million dollars, if we continue to increase our expenses, as the income increases, we're no better off. So it's absolutely possible to double or triple your income and not increase your actual wealth at all. Now let's talk just W-2 earners for a moment. So as a W-2 earner, as your income goes up, your taxes increase pretty substantially in a lot of cases. And there's not as much you can do about that as, say, a self-employed business owner. There's not as many available write-offs, there's not as many things that exist in the tax code that are there to help W-2 earners. So your bonuses get taxed aggressively. As you get raises, your effective tax rate increases, so you pay a higher tax rate on that increased level of income. Now, just briefly speaking for a moment on the tax code, not to bore anybody, but the way that taxes work, because I think this is a very misunderstood concept by a lot of people, is we have tax brackets here in the United States. And as your income increases, let's say you go from 10 to 12 and you work your way up into the 20, 22, 24% tax brackets, that does not mean when you're at the 24% tax bracket, that you're paying 24% on all of your income. Okay, that's not what is happening. You are paying 24% on the portion of your income that fits within that tax bracket. So let's say, for example, that that tax bracket was, and I'm making up numbers here because I'm not looking at those numbers right now and don't know them off the top of my head. But let's say for your situation, that 24% bracket fit from 150 to 200,000 of income per year. That means for that range of 150 to 200, you will pay 24% taxes. So that's on 50,000 of your income, not on the full 200. Okay, so it's it's important to understand that, but it does still have a significant impact. And it's why, especially with business owners, self-employed individuals, there's a huge benefit to being able to write off income and use real estate depreciation and all these things to lower your earned income so that you can completely eliminate whatever amount of taxes would be owed at, say 24%, and you can get it down to you know 12% or something different. So there's a lot of leeway within the tax code, but that leeway is limited when it comes to W-2 earners. And this is where it starts to feel tight, even when incomes feel larger. Then you move beyond the taxes, so you finally received your income, and now you layer in your mortgage and your student loans and your car payments and all your utilities and the phone and the internet and the phone for your kids and all these different things that that start to play in. So we haven't even reached anything catastrophic yet. But you add up all of those things and all of the new things that we continue to throw into that bucket as we get more income, and that's where it starts to become a wealth destroyer in our lives. So it's like sitting on an airplane and you upgrade to first class, but you have to pay for that first class ticket by wearing ankle weights. So now you have to walk around slower, it's harder, it's heavier, everything is just more difficult. So while you've got the illusion of more luxury, your life just became a little bit harder as well and a little bit more stressful. So here's the the uncomfortable part about all those debts, all those extra things that we add in. Debt does not just cost interest. It's not just an interest cost, a fee, or a penalty. It also costs us optionality. Because if we take on more debts, more subscriptions, more things that we are now contractually obligated to do, what that really means is that is less options that we have for our future. Less things that we can invest in, less things that we can do to grow and protect the family. Okay, so let's say we get the debt thing figured out. Now we get to move into we've got a little bit of extra money and we're putting it towards what? We've got 401ks, we have IRAs, brokerage accounts, life insurance, real estate, we have all these different tools, all these different things that we can use. But where do we go? Well, the typical is let's max out our 401k, let's max out our IRAs, let's put our money into the markets because that's what we're told to do. So on paper, now you're starting to win. But how much of that capital is actually usable without fees, without penalties, without friction? How much of that are we actually able to go and get if now we do have a catastrophe, if we have something in life that comes up that is a major setback for us? Let me tell a brief story about my own life here for a moment. And some of you may have already heard this if you've been a longer listener. But in my particular situation, I have twins that are almost seven years old now, both doing very well and healthy today, but they were born three months early. And when they were born, they spent three months in the hospital. So they basically stayed in the hospital until what would have been uh their due date. And they were born under two pounds each. So they had significant medical issues, lots of things that we went through emotionally, financially, across the board. It was just a really stressful time. But we came home from that hospital visit and we had significant medical bills to also deal with. We had things that had to be handled. Well, the way that I handled them is not by using a 401k. It's not by drawing money against, you know, selling a home or whatever. What I did is I used life insurance policy loans. Because in that case, that was a liquid, easy-to-access asset that solved the problem, put us back on track. In fact, we got some pretty significant discounts through the hospital because we paid up front. And then I was able to circle back around and do other things and get the family back on the pathway that we needed to be on. But the reason I give that example is because it's important to understand that not all assets are created equal. They don't all do the same thing for us, they're not all going to get us to the same place. So there is a time and a place for each of these kind of assets in our financial picture. Because if you focus primarily or solely on 401ks, IRAs, things like that, what you've done is you've you've built yourself a nice vault of money that you also can't do anything with till you're 59 and a half. You have very limited options with that money. And then this starts to build the illusion, the illusion of wealth. We see those balances growing, things are looking really good, we feel like we're doing better. But guess what? Catastrophe comes up, we get in a car accident, we have a medical problem, something changes in our lives, and we're still limited. We still don't have a lot of access to capital without significant penalties, without other issues that will come up. So a rising net worth is not the same as rising flexibility. Now, I often also hear people talk about their primary residence being the biggest investment they'll ever make. And in some cases, there is some truth to that. Like homes do hold a lot of value. I'm a real estate investor. I strongly believe in real estate as a really, really solid asset. But I would separate my real estate investments from a primary residence. Because a primary residence is in most cases still a significant liability for a lot of people. Okay. Because what's not accounted for in that big picture is all of the maintenance, all of the things that we're doing to care for that primary residence. In many situations, we don't really make a lot of money on our primary residence. I'll use, I'll use my grandparents actually as an example of this. My grandparents bought their house, you know, decades and decades and decades ago for, I believe,$13,000. Well, when my grandmother passed away a few years ago, at that time we sold her house. And when the house got sold, they sold it for around$440,000, I believe. So going from$13,000 to$440,000 sounds really nice, right? Now throw what inflation did to that into the mix, and throw all of the money that they put into that house over the, you know, the decades they lived there and the remodels they did, you know, all the maintenance that came into it. They they really did not make any money on that house. Okay. And we're talking about 50 plus years that they owned it. And they really didn't make any money. Owning real estate can make you money, but using it solely as a primary residence, a lot of times when people make money on it, on a primary residence, there's a little bit of luck that plays into that, a little bit of timing that plays into that. Like I'll be I'll be completely fair, you know, building a house in 2020 here in Utah, now if you were to get rid of that house, you're actually going to make some money. Like the timing of that worked. But over the long stretch, 40-50 years, you're not always making money. So real estate is not the 100% guarantee this is a perfect investment and we are going to make money on our primary residence. It's not one size fits all. So all I'm saying with this is that we just have to be intentional. We need to be intentional about where we put our money and the timing that we choose to put it in certain places. That's why on the last episode we talked about putting your energy, your time, your money into yourself first. Build up your ability to have a good income, then start to focus on these other assets. But now that we're focusing on these other assets, we still have to be strategic about how we do it. So high income earners typically do exactly what they're told. They earn more, they invest consistently, and they upgrade their lifestyle responsibly. But what gets missed in all of this is the tax strategy and planning, the liquidity strategy, and what I would call exposure mapping. How much exposure do we have to different risks in our lives? And are we actually prepared for those when they come up? And I say when, not if. Things are going to happen. I can pretty much guarantee every one of you listening right now can think back into your life and come up with a few different things that have happened that were not expected. It's just the way life is. So increasing income does not automatically equate to freedom. And if our structure is weak, then stress and pressure will intensify. But if we build a strong, predictable structure, we can reduce stress and we can reduce pressure, which frees up our time and our energy to focus on the things we actually care about in life. So you likely don't feel behind because you're irresponsible. It's not that you're trying to make poor choices with the money. You feel behind because sometimes your growth outpaces the strategy or the design that you're currently working with in. Income comes first, and then we need to follow that with structure. So before chasing high returns, make sure your structure and your foundation can actually hold whatever it is that you're building there. If you enjoyed this episode, please consider liking, subscribing, and sharing. It really helps the channel grow, and we appreciate all the support.