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StitcherWe love convenience, who doesn’t? We love anything that will make our lives faster and easier; hence, we love cashless transactions but we have forgotten how significant it is to have cash. In this episode, Jen and Jill join Brian Preston of The Money Guy to discuss the importance of having saved cash, whether as emergency funds or for opportunities.
Becoming wealthy is incredibly simple, but that doesn’t necessarily mean it’s easy
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Brian Preston is the author of the forthcoming book Millionaire Mission: A 9 Step System to Level-Up Your Finances and Build Wealth, and founder and host of The Money Guy Show. With 25+ years of financial planning experience and over 617,000 followers across his social channels, Brian empowers people to implement simple financial strategies that go beyond common sense. He has become known for his nine-step system to building wealth, the Financial Order of Operations, which has helped millions of Americans to secure their financial future.
First Step To Wealth
Covering deductibles as the first step to becoming a millionaire is a strategy Brian developed through his extensive experience in financial management and personal wealth-building. Reflecting on his own journey from humble beginnings to financial success, he recognized that unexpected emergencies often derail individuals from progressing financially.
Examining common causes of bankruptcy, such as medical emergencies, will protect you from catastrophic risks. Identify the highest deductible across various insurance policies, such as homeowner and medical insurance, and ensure that amount is set aside. Once this is established, individuals can then focus on debt repayment and wealth growth.
Defining Emergency Reserves
Brian defines emergency reserves as a crucial part of financial stability. Start by covering the highest insurance deductibles to avoid financial pitfalls from emergencies like medical issues or accidents. Maximize your employer’s 401(k) matches, as many miss out on this guaranteed return. Paying off high-interest debt should be prioritized, as this can hinder or derail you from saving. Expanding emergency reserves to cover broader scenarios like job loss ensures one can manage bills during unemployment and seize unexpected opportunities.
Knowing The Right Amount of Emergency Reserves
Maintain emergency reserves but realistically, Brian is not really expecting people to hold 60% of their cash at the expense of long-term investments. 3 months of reserves for those with easily replaceable jobs or dual-income households are great. Single-income households should aim for 6 months or more. During significant life changes like job transitions or family growth, it’s crucial to reevaluate your reserves. Brian emphasizes focusing on personalized financial decisions and filtering out the noise from social media, ensuring you make informed choices.
The Earlier You Start, The Better It’ll Be
Brian recommends that people invest 25% of their income for retirement, a guideline supported by resources available at Money Guy. Saving 25% of your income from an early age can ensure you retire with more money than you make annually. For those starting in their 30s, saving 20% to 25% can still achieve 80% to 100% income replacement at retirement. Starting in your 40s requires higher savings rates to achieve similar outcomes, but it’s still possible to build significant retirement funds. Brian stresses the importance of starting early to maximize benefits
What percentage of your net worth is in cash?
- Brian: 1% but investable assets = 7%
- Jill: 10%
- Jen: 3%
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Thanks so Much for Listening!
Thanks so much for listening. We love love love reading your kind reviews and we especially loved this one from:
I thought I’ve heard it all
But I am loving the tips and new frugality tips I’m learning. I especially love the food and meal planning tips, which is my hardest. Also the resell and eBay’s tips, thank you! Great distinction between cheap and frugal. Keep going! This distinctive frugal mindset has helped us really prioritize how we are spending money, and for me has given me permission to buy some things I really do value, but might have talked myself out of before. Thank you!
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