Jamie Bosse is a Financial Planner and author with a passion for mentoring and financial literacy. Her newly released book, Money Boss Mom, is targeted at helping parents in their 20’s, 30’s, and 40’s take control of their financial lives. On this episode of CFO at Home, Jamie and Vince deep dive into one of the areas discussed in Money Boss Mom, increasing your Net Worth; building up cash, buying a home, investing, managing debt, and more.
Key Takeaways
- Net Worth
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- Assets - Liabilities
- What you own - What you owe
- Net Worth supports building wealth. Building wealth supports freedom
- Common types of assets
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- Cash
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- When held as an Emergency Fund (3-6 months of non-discretionary expenses). Should be reserved for interruptions in income (job loss, etc), or other true household “emergencies”
- Rule of Thumb - Plan for 1% of your home’s value annually for maintenance costs (can be factored into the emergency fund of accounted for separately
- How to build/maintain an Emergency Fund
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- Build - Automate; have money come out of your account automatically
- Maintain - Hide the money from yourself; keep it in an account that separate from the ones you use for everyday spending
- Home
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- The ability to make a down payment (5-20% of the value) and having an emergency fund in place can be a more reliable indicator of when it’s time to purchase a home than low interest rates, marriage, etc
- Investing
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- Creates “Passive Income” (income that requires minimal labor to earn and maintain).
- The earlier you invest, the more time for compounding to increase the value of your investments
- Rules of Thumb
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- Target 10-15% of your income for long-term saving/investing
- By age 30 have ½ of your total income in retirement savings
- By age 40 have 2X of your total income in retirement savings
- By age 50 have 4X of your total income in retirement savings
- Liabilities (Debt)
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- Rules of Thumb
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- Student Loan debt - Less than your expected first year salary (based on 10 year pay-off)
- Mortgage Loan - 20-33% of your monthly income
- Net Worth Targets by age
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- Rule of Thumb
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- (Age) X (Pre-Tax Income) /10
- (36 Years Old) X ($75K Salary before taxes) / 10 = $270K Ideal Net Worth Target
- Take stock of your Net Worth Annually with the objective of growth over time, while acknowledging the possibility of short term, year-to year setbacks
Resources
Ways to contact/follow:
Contact the Host - vince@thecfoathome.com
