GMR 4: Financial Seasons of Life and Common Questions

 

EPISODE 4
There are different seasons in life and each has different financial challenges.  It's important that you know how to prepare for and navigate through each of these seasons.  We'll discuss each season and answer some of the common questions relevant to each.


Show Notes

Financial Seasons of Life

  • From single to married.

  • Having children.

  • Empty nesters - grandchildren.

  • Retirement.

  • Legacy building.

 

Common questions:

1. When should I focus on removing debt?

  • Always aggressively remove consumer debt.

  • Teach kids to avoid debt.

  • Find unique ways to remove debt quickly.

  • Don’t borrow for anything that isn’t appreciating in value.

  • Pay off student loans as soon as possible.


2. How much do I need to have saved at different times in my life?

  • Save $1000 then increase to 1 month of income ASAP.

  • 3 to 6 months of a bare-bones budget.

  • 6 to 12 months of a bare-bones budget for the self-employed and business owner.

  • 15% to long-term saving - may need to do less when you have kids and one income.

  • More aggressive as you get older and kids move out - higher income potential is usually in 50's and 60's.

3. Retirement planning, when and how much to invest?

  • Starting early to take advantage of compounding.

  • 15% through your working life will typically lead to millions (30-70).

  • Especially important if you get a match at work.

  • Use tax advantaged savings accounts - ROTH / Traditional IRA / 401(k).


4. How much should I set aside for my kids college expenses?

  • Should your kid go to college? Or is a trade school more suited?

  • Tuition - consider inflation (doubles every 9 years).

  • In state - lower cost.

  • Out of state - higher cost.

  • kids can contribute through scholarships and work.

5. When should I buy a house?

  • A house isn’t for everyone.

  • How long will you live there? Repairs, interest, selling costs…

  • If you hold for 5yrs or more, it will often be a benefit, but not always

  • Typically need to wait till after the 3-6 month emergency fund is set aside.

  • Consider the potential costs to home ownership.

  • HVAC repairs.

  • Fence repairs.

  • Appliance replacement.

  • Foundation.

  • Hail damage.

 

6. What About Insurance?

  • Without adequate insurance your financial plan is in jeopardy.

  • Health and disability will protect you in case of major medical or long-term disability.

  • Term life insurance - lower cost higher coverage.

  • 10X your salary - provide for family needs or spouse retirement needs.

  

Summary

Your financial plan should include:

  • Savings to prepare you for future seasons.

  • Proper insurance for protection (life, health, disability).

  • Emergency Fund to protect your budget.

  • Cashflow planning - monthly budget to meet needs.

 
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