Episode four ten, How much Cash should You Have Saved? With Brian Preston of The Money Guy.
Welcome to the Frugal Friends podcast, where you'll learn to save money, embrace simplicity, and live your life. Here your hosts Jen and Jill.
Welcome to the Frugal Friends podcast. My name is Jen, my name is Jill, and today we are talking about cold, hard cash. How much should you have? How much do you want to have? What can it do for you? So many people talk about how sexy investing is, and nobody talks about how sexy cash is. Right, So, but how much should you have? And that's what we're talking
about today with Brian Preston. He is a financial advisor, he's one of the host of The Money Guy show, and he has so much to say on so many topics, so we thought we'd ask him about the least interesting one.
But first, this episode is brought to you by Chippies, salty crunchy goodness that no sandwiches complete without. Kind of like your inbox without the friend letter. It's lacking that extra treat, the little bit of zing that makes you feel better about eating at home. If this is you don't wait to treat yourself to all the freebies, savings tips and spending hacks in our free newsletter called the Friend Letter Virgal Friends podcast dot com. To sign up
get them in your inbox. Chippies the only thing that makes peanut butter and jelly sandwiches worthwhile.
That is offensive, as somebody who makes peanut butter and jelly sandwich every single day of her life. Not for myself always, but I chippies. Chippies are the investments of the snack world, right, So what would cash be.
Just the peanut butter and jelly cash is.
The peanut butter crackers. Peanut butter crackers are bad. They're not a good snack. They're not a good in addition to a sandwich.
Why is this offensive to you?
That?
Were you not serving chippies with your peanut butter and jelly sandwiches.
Not for my child, I serve goldfish.
Oh yeah, that's good. That's fine. That's fine for them.
I'm talking about for grown adults, for grown women. We need chippies and the front letter.
All right, let's talk about cash. We're talking so a lot. When you hear about cash, you hear about save a starter emergency fund save a full emergency fund, and we don't we don't really talk about cash savings outside of that, we maybe talked about sinking funds. We're using different verbiage in this conversation to try and get your head out of the traditional do this do that kind of rhetoric and make you really think about how much cash do I need to be saving in my cit high Yield
Savings account Frugal friendspodcast dot com, slash cit SO. And we're going to do that with our friend Brian Preston of The Money Guy Show on YouTube and podcast. He is a brilliant financial advisor, has a team of forty people you know at their advisory firm, and he just wrote a book after creating free content since two thousand and six, which if you've ever created content, you know that's a long time to be in the game. So he has seen the rise and fall of a lot
of financial fads. He's been in the game for a long time. And he's written a book called Millionaire Mission A nine steps them to level up your finances and build wealth. And so he has spent twenty five years financial planning. So they have over six hundred thousand followers across all their social channels. So we are just going to talk about one part of that. Actually it's two parts of the nine step system, and it's the savings part, so we.
Do get to a little bit of investing.
So we don't want to totally throw you off there, but super great conversation.
Let's get into it.
Brian, Welcome to Frugal Friends podcast. We are delighted to have you on. Even after several technical difficulties, the Internet has still provided us a safe haven for this interview and we are grateful.
Haven't we all had those problems. Any content creator knows exactly. The ghosts of the machine is a real thing. So Jin Jill, thank you so much for having me on. I'm super excited about this.
It's a delight.
I'm so glad we persevered, especially because this is such a top of mine question for people how much should I have saved? And of course we know that there's not some pie in the sky number, but it's helpful to talk with experts on what could we be aimed for because without that aim we're going to be kind of a little bit floundering.
So really, please, this conversation finally happen.
Yes, absolutely, so you were we're talking a little bit about the stuff that's in your book, and it's only like one sliver of it, right, the savings parts. So let's get into that. Though. You say the first step to becoming a millionaire is covering your deductibles, So like, how did you Because everybody says a starter emergency fund should be different for different reasons, how did you land on that and how do we do it?
Well? Look, I'm not the first one to come up with a system on how to handle your money. It's just the but I think it's my thirty years of managing money, doing feeling, financial planning, and then even my own journey from pretty humble beginnings to building wealth, and I started thinking about what actually derails people from just getting out of the starting gates, and really it's the emergencies.
It's the if you look at how many bankruptcies are caused by medical things or medical issues where people can't pay bills, you quickly realize that if you want to give yourself a head start or make sure your journey into financial freedom doesn't get derailed, we've got to cover the big catastrophic risk first. This is why when you see a system that says one thousand dollars or two thousand, that might be enough, but why don't we kind of
make you bulletproof to a degree. And what I came up with is, you know what, the first thing that you could do is just figure out what your highest insurance deductible is, since we're going hopefully a good financial mutant is going to ensure a way any of these catastrophic things. So go right down, what is your deductible on your renter policy or your homeowner policy, your auto policy,
or your medical policy at work. And then whatever the highest number is, that is the number you should have in step one, because that then lets you kind of be protected from the big catastrophic risk that could derail you, and then let you move on to the wealth building part, where you start letting your money work and invest in paying off debt and so forth.
Nice.
What do you usually find is like an average among your clients of what that highest deductible is.
Well, it depends, I mean, because the thing is is that health insurance has gotten to be a harder and harder finance issue for everyone. I mean here in the office, because you know, I'm up to close to forty employees now is that health insurance is one of the most expensive things I pay for and one of the most
hated things that my employees and I pay for. So it's it's ours is even though I'm subsidizing it heavily, it still might be you know, three to four thousand dollars, whereas I think if you work for like a Fortune five hundred company that has that traditional health insurance plan, maybe it's only fifteen hundred dollars. So that's why it is important to actually don't skip the step of saying, hey, let's just do a thousand or two thousand. I'm sure
that's enough. No, actually go pull the documents and see what your insurance deductibles are so you don't find yourself in an oopsey situation, especially if you're in one of those high deductible health plans that put more of it on you so that you can have lower insurance premiums on the monthly basis.
Yeah, it is so interesting because so many people choose a high deductible plan so they have access to a health savings account yep, without realizing like the difference it's going to be in the deductible like our deductible I think is like a hovering around five thousand. That's that's our family deductible, So like, yeah, that's that's quite a bit, but it would cover there's literally no emergency for us
that would be more than five thousand. I think of like things like if your AC goes out in the middle of July, like being able to afford emergency repair. That's like kind of like my biggest concern for my emergency fund. But yeah, it can It's very much can Berry. And I think like the health insurance is probably the biggest that I've seen.
Yeah, I think it's such a helpful metric because historically I have viewed the medical deductible as kind of the baseline for what you should base your emergency fund off of. But it's really helpful to hear you say all of your other types of insurances, even renter homeowner car insurance, these are pieces I have not considered factoring into it. Granted, those deductibles are much lower than my medical, but I
think it's really helpful to pull it on altogether. And you kind of described that as almost like the baseline. I'm curious if there's anything else that you would describe as being a part of these emergency reservesen just mentioned. Sure, I mean, well, a see, but I don't know what's your definition.
You make a good point, though, and this is why in the financial order of operations that my non step system. Of course, everybody who's watching listening this can go to money dot com, slash resources download it completely free, and then of course there's millionaire mission. But cash reserves specifically gets two steps in my system. And what I mean by that we just talked about highest deductible covered is
step one. That's just so your life doesn't get in the financial ditch for an unforeseen emergency that could happen, especially medical or a car accident or something like that. But then that also frees you up. Let's quickly talk about steps two and three. Step two is the employer match.
You know, I'm always shocked. We've done some research, and depend on what study you look at, between thirty twenty to thirty percent of participants or employees that have access to a four to one K don't max out their match. And if your employers offering you fifty cents on the dollar or dollar for dollar matching, that's like a fifty percent or one hundred percent guaranteed rate of return. There's just very few things that are that strong and that
important for your financial future. So that's why that's step two, even before paying off in step three the high interest debt. Now, look, credit cards right now are charging over twenty percent. It's hard to get ahead when you're paying twice as much an interest to your credit card company is what you're
hoping to earn on your investments. So that's why it is important to conquer those those punitive debts as fast as possible, but don't leave behind the highest deductible cover, don't leave behind the fifty to one hundred percent guaranteed rate of return by your employer. But then, of course
pay off those high interest debts. But then that tells me to move to step four, which is that second cash option in my system, which is expand your emergency reserves or rainy day done right, because not all emergencies are the healthcare type or the auto accident. You know, I make the example in the book that maybe you drop your iPhone into the commode by accident. You know, there's things that can happen that cause trouble, or the
hot water heater goes out in your house. You still need to be able to have emergencies the money to cover that, plus what happens if you get laid off and you need something to cover three six, maybe even beyond that if you work in an industry that's harder to cover, or you have more people that are requiring your income that are counting on you. That's why we have two cash reserve setups within the financial order of operations.
Yeah, that's a helpful delineation and kind.
Of the timeline of this can wait when we talk about prioritization, because most of us can't do all of it all at once, and so having some of these other voices helping us to discern what is a good order for my money when it's not unlimited, and being able to define that. Some of it does have to do with being out of work, and some of it does have to do with these kind of nuisances. They're not like you say, a medical emergency, but you still
need to pay for them quickly. I mean like maybe you could be without AC for a little bit of time. You won't die necessarily, but.
You do want to have the money.
You still die in the summer, which is why this is my biggest fear. I would like to know if there are any but from what you've seen with your clients, like, are there any emergencies that have come up or people have had to use their emergency fund where you were like, oh my gosh, I would have never thought of that. I have never thought that as an emergency, like would happen?
Well, I mean they're like, we just did our annual wealth survey for all of our clients and we asked them and I think this this is probably a little different than what you mean, but I still think it's a pretty cool thing because it shows the power of having cash as well as having resources and following a good system. Is like we ask clients, we say, money
is no more than it's just a tool. That is, it's not it's not something that you centralize your life, but it is a very effective tool to help you fulfill things. And we asked our clients what are the things that money is a tool, have really helped you with? And one of my favorite things was how many in vitro fertilization people shared that they they had they were
having troubles growing their family. That so that in its own right, that's an emergency because we all know that there's, you know, this season of life that you're you're, you're, you're, you're having children, other things, And I think it's so awesome that you know, what if something like that happens in your life, and it's nice if you have resources or you have savings so you can figure out where
to prioritize your life. Of course, there's always the cash as a wealth builder as well, so I think about even in my own life, and I detail this in Millionaire Mission too, is cash can be a contra wealth builder, meaning contra in the fact that people just don't think about it. It's a sleeper, but when everybody else is broke, think about collapses of like two thousand and eight with a great recession and the stock markets getting beaten up. I have a friend who bought five thousand dollars worth
of applestock in two thousand and eight. That's now where he still owns it. By the way, I can see his accounts and it's worth close to half a million dollars because he had cash to buy when others didn't. I think about the fact that, like this building that we're recording it, I was able to buy this because we had cash because during the pandemic the current owner, the owner before us was kind of nervous about some things. So it's not uncommon that cash can be that sleeper
wealth builder. But you don't even get those opportunities unless you're at least practicing having cash reserves. I'm always shocked, and you'll probably keep up with this stat too. Bank Rate every year releases what percentage of Americans cannot come up with one thousand dollars? And you know, I start annoying this team here because I'm like, have they released it yet? Because you can set your clock it's going to be around sixty percent of Americans can't come up
with one thousand dollars. This year it's fifty six percent. So I'm just telling you the majority of our peers are not keeping cash and that that really, you know,
limits your ability to build wealth and resources. And I even think people are good with money make a mistake because they think they have access to cash, so they'll instead of actually having cash reserves, They'll say, well, I have an investment portfolio that could always liquidate, or they think I have a home equity lot that I could at least write a check off of and I'm telling you I've been there, done that, made those mistakes. You
won't to actually have legitimate cash reserves. That's why it gets two steps in our system.
That's such, that's such a new concept, like not an emergency fund, not just for bad emergencies, but for emergency
opportunities because that like something similar happened to us. We had we are airbnb hosts, and when Airbnb went on the stock market, we had the opportunity to buy it at IPO and like we're not connected in any way, like we don't have the opportunity to buy IPOs ever, so like we had cash that we could just you know, buy some of that, And yeah, you're right, Like that's we should have it for emergency opportunities as well, like unforeseen opportunities. What a what a great refrain.
Yeah, I think this is one of the unique things, and this is realized. I actually work in the industry. I have my own journey that I've built and I've tried to share. I've thrown the kitchen sink at sharing all these unique things that I've kind of picked up with myself and my clients. Because I think that that is a contra or a different mindset than most people think about cash. They think about it's boring. You know, cash is trash, but not not if you really understand
the power of having resources when everybody else doesn't. That's why in the book, I actually I say that cash is like the air we breathe. We all take it for granted until you're underwater. And that's the truth. That's the reality that most Americans get themselves into that situation. So you cannot don't respect the access to cash or having the actual cash on hand.
So how do we know when it's time to decrease or increase the amount we have in cash? As life of alves because there is kind of a law of diminishing returns, right, So like, how do we gauge how much cash to be saving?
Yeah, we're having that keep point cash. The whole purpose is, yes, it can be a wealth builder, but also it's just to keep your financial life out of the ditch. So you have to you're right. I mean, I don't want everybody to have sixty percent of their money in cash waiting for the next failure, because you'll be waiting a long time. Typically, markets in the financial world is up eight out of ten years, so you actually do want to make sure that you're growing your wealth and investing
for the long term. So when people ask me how much, and that's why I spent on an entire section of how to do rainy day done right, is that think about these type of things. Are you three months or you six months? You hear all these financial commentators say three to six months, but they never give you the clarification.
And I'm willing to actually go a little beyond common sense on this, and I always say, look, if you're like an accountant or an engineer, and there's jobs in every town and you could replace your job very easily. It's a very portable job. You know, three months, especially if you're a single person, you probably could do three months cash reserves no problem. If you live in a household where both spouses work and have good incomes, you can be closer to three months, because if one gets
laid off, you've got the fill in from the other spouse. However, if you live in a house where maybe one spouse is stay at home raising the kids and then the other spouse is out there working, you probably want to go six months and beyond. If you're if you work for a company and you're in a high paid job, and your job you know, hey, look I make a great living, but it's very focused in this geographic area. Or maybe it's going to take me nine months to go get a new job because of what I do
is so specialized. Have cash reserves that reflect that risk that's sitting out there, or you know, so there's you can see you can triage very quickly where is your risk at based upon this three to six months, and
then we even give the guidance. As you get close to retirement, you might see that your cash reserves actually swells up to eighteen months and beyond, because then you walk through a whole new risk where now you're worried about, Hey, next time the market goes down, I no longer can't just say, well, it's all right, I'll just buy through it.
I'll just keep working. It'll be okay. You're now going to deal with the psychological impact of hey, I'm no longer working, I'm living off of what my financial resources do. This is going to hit me emotionally different than it ever has before. So you need to have a little extra cushion in cash, so you don't make any of those emotional reaction decisions that we see so often when we're researching this type of stuff.
Do you have any recommendations on how often someone should reevaluate this number? Is it an annual kind of thing? Is it just at every job change, at the birth of a kid? When do you think this should be reevaluating?
You just laid off all. I mean, you just named off of a lot of the key things. It is obviously when big life things are happening, job changes, growing family, you know, or something is changing in your household. But also, I mean one of the habits that I talk about because I always say, make the good habits as easy as possible so that you can automate your wealth building. I love having the habit of doing an annual net worth statement. So every year when I do my annual
network statement, automatically, I'm looking at where cash is. It's just like when we were show prepping, I knew I was having this interview. Interview. You guys asked a question about cash reserves and how I process that personally, and I was like, that's no problem, I have that right on my network statement. I'll be able to share that and I think that's why it's an important habit if you are monitoring your net worth, because not only will it help you with cash reserves, it will know how
your dettload is. It will let you know how your assets or your investments are performing relative to your income. There's all kind of cool metrics and dashboards you can use to just make sure you're financially in a healthy and a good spot.
Yeah, this next question might come as a little bit of a curveball, so that's all right, do with it what you will.
But some of this conversation is making me think back to the times that I was full time social work, and I know we've got a lot of teachers listening and people who just are not high income earners, and I remember when that was, when I was fully in that space hearing conversations.
Like this and being like, yeah, that'd be great.
I'd love to have all of my insurance deductibles paid and all of my three to six months extra in case I'm out of work, and all of these things. But it feels so unattainable. I'm curious if you've got clients like what you say to them, And of course sometimes it can just look for ways to earn more.
But are there any.
Pieces that you've utilized to help people kind of move through these steps? If the steps feel like, man, it's going to take me so long to get to that point, what would you say to that personally?
This is a great question, and this is one of the things I focus on a lot in the mindset because I think all of us who work in personal finance, especially the content side of it, we focus on the math a lot. I think we're just naturally math minded people, but that's only half the equation. You also have to have the mindset right, and I think that, especially in the current there's a lot of voices on social media. We just did a whole show yesterday on is the
economy Doomed? Because it just seems like there's this doom speak everywhere and everybody. It's hard to be an optimist when you're struggling financially. So I always tell people this is why it's important to know what the next small decision you can make. And that's why I did create a system is because you know, you think about math. Going back to math minded people, pimdos the reason it's so awesome when you think about the order of operations.
You have to solve math this way to get the right answer, and a lot of ways finance is the same way. That's why I try to give you what to do with your next dollar. So if you are feeling overwhelmed with the journey, because if you're thinking about man, I have not only we call it the messy middle where you got the family, You're short on time, you're short on money, and all these things are pulling on you, and you're like, oh my gosh, how am I going to conquer this when I have so many things that
feel like they're working against me. If you can know just what small decision, what's the next thing to focus on, you won't get overwhelmed by all the other stuff. Now let's get to the actual nuts and bolts of how do you actually do this. That's why I love that, like step one, and I know we spend a lot of time on that's just going to keep you protected. It's safe, but it's still going to let you move on to step two, especially if you're a teacher or
somebody else. What I love about this is because later in the book you'll see I have a savings and investment rate, but everybody's going at the cuff. They'll they'll be like that's high, you know, cause I say twenty to twenty five percent, Like, how do you do that? Well, I say, well, wait a minute. If you have household income under two hundred thousand dollars, you can count your
employer match. And a lot of teachers have pension contributions that are you know, eight to twelve percent of their income is going in to fund this pension. We're right there. We just cut what you're portioning you have to save and invest down to maybe ten percent or somewhere between ten to fifteen percent. So that'll lets you get back to that step two, and then you can look at the debt. And then I love when we get into the roth iras of like step five, because then you know,
it doesn't take a lot to move the needle. Did We did a case study on a recent show for somebody out of very modest income, but they still reach
seven figure status. Because if you just will do something, just start the process of letting compounding growth, you'll find that ninety four to ninety five percent of your terminal meaning your account value at retirement, is the growth, not your investment it's the growth, but you have to actually get the initial investment in, even if it's a little bit. I don't care if it's fifty dollars a month. Just
do something because it builds on top of itself. But you have to start the process somewhere.
It's such a beautiful reality for us medium income earners that we can still find ourselves decades down the road with a significant amount of money because of investing, and particularly investing for retirement, which you started to talk on that, and I'm curious if you have more to say about percentages of income that you would recommend people invest for retirement.
Why those percentages? What's kind of the baseline there?
Yeah, and I know I keep throwing it back to my website, but we really do try to give away tons of free stuff so people can have these answers to help them through their journeys. On money Go dot com slash resources, we have a deliverable titled what twenty five percent can Do for You, And what we do
is it's kind of a chart. It's really cool how it's laid out in a grid system where it will show if you're saving twenty five percent by age that will replace at retirement, and you'll quickly see that somebody who's in their twenties, if you're saving twenty five percent, you're going to retire with more money than you actually make, meaning it will replace greater than one hundred percent of
probably what your retirement income is. So that maybe that means you can dial it down, But if you're starting your thirties, you're going to see that, hey, probably somewhere between twenty to twenty five percent is still going to get you somewhere between that eighty to one hundred percent replacement of your income at retirement. And then if you started your forties and beyond, there's still a chance forties
is not a disaster. You're going to be able to replace sixty percent, and you stack on top of that social security, you're going to be okay. But you ought to at least have some type of metric to know what savings rate will replace what, and I think very few financial content creators are showing that mass so that way you can kind of know what every dollar can do for you and kind of you know, looking your own situation and figure out how you're going to apply
this on your sete avings. Obviously, the earlier you start, the better and easier. This is so maybe somebody in the twenties can start somewhere around fifteen percent, but if you start at forty forty five, you might have to save and invest greater than twenty five percent. So there's there's a whole behavior as well as an action report to show you what to do.
Yeah, I love like so the common thought is to just wait and then invest more later, but the math is so inverse, Like, if you invest that like twenty five percent in your twenties, you can invest less and less and less down the road, and overall what you put into your retirement is going You're going to save so much money by investing more in your twenties and
thirties than waiting till your forties. That's so what we did was we invested like fifty percent of our income in our twenties, and then we had our kids in our thirties, and then we just kind of like cut that like all the way down to sometimes not investing at all. And we're still gonna be okay because we
invested before we had kids. So I know a lot of our listeners don't have kids yet, and it's a great time to use all that money that you would be spending in diapers and just train yourself to live without it. Now, train yourself to live without it.
In chapter I have a chapter called bullying point. Now that sounds like I'm saying bowling. I don't know why I can't say boiling, but I'm trying to talk to you out because people they give up way too soon. And so I use the chapter that sits in between steps, you know, when we get to step seven and beyond where you're getting, beyond the basics. I want to motivate people because I feel like if you're younger, you need to kind of know how important those early years are.
So that's why we have a case study in the book. And it's not like I came up with this. I see this all all over the place. I remember the first time I went and talked to a high school class. I had some curriculum from a credit union that I was using, and it made the same point. You take somebody who saves and invests from twenty to thirty, meaning ten years only, and then you compare that to somebody who starts saving and investing at thirty. All the way
to age sixty five. Even though the person who saves from thirty to sixty five is go save like three times the amount that the person saved from twenty to thirty, they just can't catch or beat the person who saved and invested from twenty to thirty because the value of time is just so powerful. Really to your point, Jen as you were kind of sharing that, and that's why we always tell people back to the website I hate
and help it. But if you go to money go dot com slash resources, we have our wealth multiplier and what I like to show people and you see it on this koozy is if you knew like a dollar for a twenty year old is worth eighty eight dollars, it has the potential to become that. A dollar for thirty year old only has the potential become twenty three dollars. A dollar for a forty year old only has the
potential to become seven dollars. A dollar for a fifty year old that's where I'm at, only has the potential to become three dollars. You'll look at money completely differently, and that's why if you're anywhere in between those ages, if you'll go to the website. We actually give you the wealth multiplier by every age, so even for your babies. So if you have like children and you're like, well, I want to make sure I'm saving something for them, you know, so they can take advantage of their one
hundred plus multiplier. Let's do it. Because that's why I think when you're young and you're in your twenties, you're broke. I always broke as a joke through most of my twenties. Plus life's pulling at you. So you're like, I just this. I can't do this. The system's working against me. But if you just do fifty dollars a month, it would change your life. I mean that's where I had an economics teacher in high school. Whatn't part of the curriculum.
I detail this in the first intro chapter of the book. He came in one day, and I don't know if it was out of regret or if it was just he had learned this concept of compounding growth. But he goes, Guys, if every one of you would save one hundred dollars a month, you'd be a millionaire by the time you
were retired. And I was working at the Heartys drive through at the time making three dollars and eighty cents an hour because I'm old, and I remember thinking I could save one hundred dollars a month even making three dollars and eighty cents, and that put me on this journey to think about what money can become in a completely different way. While everybody out there is saying you can't,
you can't, you can't, the system stacked against you. Meanwhile, I have a teacher sells me one hundred dollars a month is going to change my life. Sign me up.
Yeah, Oh my gosh, that's amazing. I have one last question, and this one's mostly for me. What percentage of your net worth would you say is reasonable to have in cash? Or what is average? Or should I not be asking that question?
Now?
This is something I thought about this question, and I want to I want to clarify this a little bit. And the fact because I thought about that net worth is one thing and then investable assets is something completely different. Because like if I told you as a percentage of my net worth, my cash is probably one percent or less,
so that seems really small. But then if I clarify that and I say my cash as a percentage of my investible assets, meaning like IRA's four one k's, you know, my taxable accounts, all the things that you think about that you go live off of in retirement, that number seven and a half percent. So you see how there's a little bit of clarificate, because I mean it gets this is what I make the point on the show all the time. Money becoming wealthy is incredibly simple, but
that doesn't necessarily mean it's easy. And what I mean by that is is you get more and more successful, your life is going to get complicated naturally, even if you're trying to keep your life as simple as possible. So you take somebody like me. I started this journey off very simply no money and started the process. But now if you saw my tax return with all the k ones, the commercial real estate, the multiple ventures, the forty employees, you know, it's just that's why my situation
is different. But I want to make sure a highlight. Don't get caught up in as a percentage of net worth. Look at it in terms of what cash can do to replace the expenses of your life. Know what your burn rate is, know what your monthly household cost is, so then you can have the cash to use as a resource when you need it's that's really the purpose of it is to cover those those desperate times, but also to keep a little bit once you get to step eight of my system, I don't want you hoarding
cash waiting for those great opportunities. I want this to be kind of an amplifier after you've built the financial foundation underneath you through steps one through seven. But I do like step eight having a little extra cash, especially if you have employees or people counting on you. You've got to protect yourself and them so that the uncertainty doesn't take you out.
Speaking of multipliers, something that is not full of unsod certainty.
It is, but in a good way.
Significant percentage of this episode the bill of the week.
That's right, it's time for the best minute of your entire week.
Maybe a baby was born and his name is Williams. Maybe you paid off your mortgage, maybe your.
Car died and you're happy to not have to pay that bill anymore.
That's bills, bffalo bills, Bill Clinton. This is the bill of the week, So Brian.
Every week we ask our listeners and our guests to share with us their bill for the week, and we would love I have yours.
I thought about this because you kind of got you. Guys were very generous. You gave me heads up about this, and I gotta tell you my answers improved since y'all very transparent shared. We had some technical problems the first time we try to do this. I had two answers. I had the personal finance answer for I think most people out there, and then I have any of your entrepreneurs or business owners that are out there. I have
a little tip and it's not endorsed. I don't get paid for sharing this, but I can't help because I'm just so excited about it. And that's how nerdy I am. But for everybody, I think you really ought to automate your bill pay process. So when I think of bills, I think of automating your bill paid, just like I talk about inevitable automatic wealth building with your investing. I think that if you can set up as many of
your bills to be paid in an automated fashion. I think about my utilities, I think about my insurance policies and other things. I have those things and I get notifications. Because I'm that nerdy, I actually want to see what the numbers are but I do make them pay automatically because I think that if I can automate that thing, all those processes, it will make my life easier for my business owners. Something I've discovered. I was having the
worst time with some of my bigger vendors. They wanted me to pay them ach. I reached out to my bank and I said, hey, I need to start paying these people ach and they are like, well, that's hard for businesses, we don't necessarily do that. So I started doing research and I found this company, and I found out all these big fortune five hundred companies use it too. It's bill dot com and it is It is revolutionized how I'm paying bills to all my vendors. Now, I
guess I get no endorsement from that. I get no fees, no affiliate. I don't do any of that junk. But it's just when I find something that's cool, I tell people. So now I have one of my administrators, we can do all this stuff. So those are my two bills of the week.
Yes, we have been paid via bill dot com before.
That is a legitimate recipient, that expensive for relative to the time. Like now I find myself like if I'm stuck at an airport or I'm stuck somewhere, I can just open up my bill out and then I'm like paying vendors left and right. And truthfully, I think all the people who work with us love it because they're
getting paid quicker. Because in the path I was batch bill paying, I was putting everything in a Nila folder, you know, right by my administrator, and then once a month I was coming in there like Ebenezer Scrooge and writing checks and sending them out to everybody. Now it's just as they come in, they get paid, and I feel like I'm just more efficient and automated.
And I like that.
Back to that automate and make your wealth building journey inevitable. It doesn't just have to be on the investing, it can be on the bill pay as well.
Yeah, it's crazy. As people who have personal finance podcasts and as listeners of personal finance podcasts, we think that everybody has their bills automated. That's like step one. And then I listen. Then I listened to other I was listening to ramit Seti's podcasts and he had a couple on who did not have their bill. They made quarter million dollars a year did not have their bills automated. Thanks, and I was like, it's still not not everybody does it.
So if you're listening to this and you assume everybody does it, don't tell your friends to go automate their bills. We can't reach everyone. We all have to work.
Thanks for making you go look at a bank's financial report and you'll realize, no, a lot of people haven't automated a lot of things in their life because they're bouncing checks, they're you know, they're they're they're paying all these mispayment fees. There's all kinds of things that you will just avoid yourself that heartache. If you can automate your life.
If you all who are listening want to or have worked smarter, not harder, or you've got an app called bill dot com, or you are a bill, you've.
Helped your friend automated bill.
Yes, visit Frugal Friends podcast dot com slash bill, leave us your bill. We are ready for it. And now it's time for the line round.
So that last question for the interview is kind.
Of a.
Teaser, a teaser if you will to the lightning round, and it is what percentage of your net worth is in cash. Let's get vulnerable.
This isen's vulnerability. We call it the lightning round pot.
It's vulnerability round is what it really is.
Brian will like as I shared kind of earlier, net worthwise is probably one percent, but if you look at my investible assets, it's seven and a half percent. But I have forty employees and a lot of people counting on me, and that's not even counting the cash in my companies. So it's just me sharing. But I also shared earlier in the interview that I use cash as as an opportunity builder because I'm beyond step eight of the financial order of operations.
Well, we are not at step eight or be so, so this is this will just be vulnerability for Jill and I. So for me, it is three percent, which is we just finished a two year renovation. We bought two years ago. We bought a fixer upper, and we reserved cash in order to cash flow renovations, and we just finished up those renovations. And so I went from having this large cushion of cash for several years to now just having three percent. I almost feel naked. It's
very It makes me feel very vulnerable. This is my vulnerability around. I went to the bank this morning because we had a we had an insurance check that we needed to deposit, and I looked. They gave me the receipt with my updated balance before and after, and I'm like, ah, it's just so little.
But do you have your deductibles covered?
Like?
Do you still have to.
Have my emergency funds not in that account? So yeah, I have my emergency fund.
Are you not counting that as part as this this three percent?
No?
I am, okay, I am, it's just like the amount, so spoiler, this is not the best practice. But we kept that money in our regular checking account, like our spending checking account for years, so that's why it felt. But I never counted that money as spendable money because I knew what it was for. I guess not everybody can do that. That's why we tell people to keep it separate, but we did not. So yeah, but now that money is just all gone and everything looks like a regular account and it feels but.
You feel pressure. That's the important part. I mean, I tell people I think all through life, that's why we talk about the messy middle of life is that I think it's it's common everybody thinks when you go through like a system like financial order operations, it's going to be steps one, two, three, four, five, six, all the way through nine as you're just walking up a set
of stairs. But I found you'll go from to step five and then you'll bounce back to step four because of a home renovation or something it's or maybe you get laid off. There is going to be volatility or change within your whole process. So I love the fact that of what you just shared, Jen, is that you still you feel it's low, and you feel some pressure that's going to make you self regulate and probably fix this or get it back on to where you feel comfortable that much sooner.
I know. But now I have to figure out what is comfortable because I have the emergency fund right. I just am so used to having like quite a bit of money in the churn.
Only there were the resource to spend money.
Holds up his books for them.
It is tough to define your enough, I think, because I think when you're so dead set on save, saving, saving for this, then it can feel difficult to then move your mindset into investing and not touching it and not having those numbers available to you. My current percentage of net worth that I have in cash is ten percent. That's more reflective of my entire net worth than it is about me making poor decisions. So that ten percent
is just what we need. I've got my three months of living expenses and oll of our deductibles covered with that amount, and the net worth just isn't that high at this point in life.
So that's the.
Amount of cash we need to have.
But you're still in your early thirties, Yeah you got you have four months.
Sound, you still have so much time to catch up. I think you're in a great place. Jill. Don't be too hard on yourself. The big thing is you're doing something for sure.
Appreciate that. Well, you've plugged a lot already.
But we're gonna to be one last chance to tell our people from you.
I promise, because I see content like that and you're like, oh my god, this is just an infomercial. But we really have tried to give away so much free information because it's all we call it the abundance cycle. I just want people to come get as much of the free stuff as they can because it is self serving. I mean, if you do this well enough and you reach a level of success, there is you know, other asks that come. But while you're in the growth part,
take the free stuff. So that's why I'll give two plugs. Of course, moneyguid dot com is our main hub, but if you go, if you add slash resources tons, that's where all the free stuff lies. And then of course right now, I poured my life in soul for the last few years into Millionaire Mission. We've been creating digital content since two thousand and six, when I started podcasting. I've never done traditional media like a book, but I really instead of and it's my philosophy of back to
that abundant cycle, I didn't hold back. So this isn't one of those things where you have to buy the book and then I tease you into hiring me before you get the actual nuts and bolts and details. I actually give you the actual answers. I mean, if you go through this book, everything that is just like you guys are just talking about if the mindset part, you know, you feel like you're trying to figure out the math of it. But I'm very hard on the mindset and
the fact that I'm such a sentimental sap. Now that I've gotten older and I realize what money can and cannot do, I'm trying to tell people in each phase of your life to still live your best life, but dazzle your basic life if you can't afford much, because it just goes so fast. So there's a balance between the math and then that the journey, and I really
try to pour that in. So if you get a moneyg dot com slash millionaire mission, I really do hope people will see that perfect intersection of both the money and mindset. And then if you're really if you just want to be nosy, the last chapter of this book, because it ties into Yall's question about cash reserves and other things, tells you exactly what I do with my money.
So and I even pick on people. When you read that chapter, it says, did you actually read the book or did you just go jump to the back to see how I.
Nice?
I loved that your basic life. I want you. I want you to have a hat that says basic with that, don't all do it?
I mean I was talking to my wife about this is that you know sometimes and look, I'm all about the all inclusives and going on those romantic trips. But sometimes all you need to bedazzle your basically life, just go on the evening walk, you know, when the weather's good and everything's green and you're in the spring. That costs absolutely nothing, and you'll find that you might have just as good of a time just having those conversations.
I think about this past weekend. We have a warranty claim on a mattress, so we loaded up the entire family and we're riding around to these different stories trying to find these different versions of this manufacturer's mattress so we can get it. And I told my wife the end day, I was like, you know, I know that that was not what the kids would think would be a fun day, but there was actually some fun. You know,
it's just good family time. So just as I say, time in the market is more important than timing the market, spending time with your family is more important than the money you're spending on expensive vacations or stuff that likely they'll forget.
Yeah, so true.
Well, thank you so much for joining us, Brian.
This has been well, I'm glad we made it happen. This was a blast. Y'all were a lot of fun and thank you for being so generous with your time and let be on the show.
Yeah, thanks for being here.
I'm still thinking about that emergency funds, not just for the negative emergencies, but for emergency opportunities. And yes, it's niche. It's not something that you need or is even one hundred percent advisable to do with your emergency fund unless you're in a really good place financially. But that is something that we have done before and we're able to do on a whim because of having that emergency fund.
I think you've really got to have cash reserves for a while before you start going on a limb thinking, oh, we haven't had a rainy day in a while, so I'll just use this for you name it.
I'm thinking once in a lifetime opportunities, like buying real estate in two thousand and eight, once in a lifetime opportunity, buying commercial real estate in twenty twenty, once in a lifetime opportunity.
Yeah, but again, you've got to have a pretty good understanding of the economy, what's happening your money, the type of risk that you can hold. That it's not as not common advice that I would give to every person, and I would call that cash reserves, not dipping into your emergency fund, because if your emergency fund is there for your true emergencies, the life threatening things that can go on, we do not want to be compromising that cash.
This is so true, This is one hundred percent true. But I still love the refrase.
Yeah, yay, yeah, yes, And I think I love how he was saying, once you get comfortable having that cash, once you've exercised that muscle and you kind of understand the seasons of your cash flow.
Yeah, having some extra cash lying around can be helpful.
Absolutely. Thank you so much for listening. I hope that you got something out of this conversation about cash, and if you did, we would love it if you would leave a review. We love reading your kind reviews, kind of like this one from l John T fifty five says, I thought I've heard it all. Just happens to be five stars. 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 tips. Thank you. Great distinction between cheap and frugal. Keep going. This distinctive frugal mindset has helped us really prioritize how we're 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, Thank you, el John T fifty five. I'm so glad that you're finding some fresh perspectives. There's so much that has already been said but is still worth repeating. But then it is helpful when you find some kind of like new perspectives or new ways of saying it that help some of these concepts click. So I'm glad you found that here. If you all are listening, you've liked the show for a while, or even you've liked it for a short time, and you haven't left a
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We love free. And once we hit one thousand reviews on Apple, we're going to let you vote on what treat we should reward ourselves with, just.
Like what are you about to give away?
We're gonna we're gonna reward ourselves or the little treat and we're gonna let you.
Pick it, and you can only pick it and pull what our little treat's gonna be, and you're getting the friend letter friend letter.
So definitely Frugal Friends podcast dot com get the friend letter, See you next time. Frugal Friends is produced by Eric Sirianni.
Speaking of cash Jen yesterday, I so I keep like actual cash. I mean, I'm sure most listeners know that when we talk about cash emergency fund, we're keeping it in a high yield savings account.
Yeah.
None, we're earning it dollars.
Yeah, but I do have some actual cash in my home.
That you hid in your Christmas box so they can find it.
Lol.
I forget if I actually did that. I don't think I did, because Eric was silling everyone. Yeah, well no I have. Well I'm not gonna tell you exactly where I keep it, but I keep it in a safe space.
I'm here all I could take it from me?
Huge show.
Can we walk there now?
We're not with our not with our microphones. No, it's not close enough to touch right now. Anyhow, we've been selling. Eric and I have been selling a lot.
I don't know. We're just going on a rampage.
He's selling a lot of different music equipment so that he could buy a different thing of music equipment.
And I don't know, as we've as.
We've gotten to the end of our innovation and clearing out the garage and cleaning that up, we've just like been selling stuff on Facebook marketplace. So I finally thought I should count that, I should see how much money we have there. And because we've just been like shoving cash into where I it is, that we keep it.
Not close enough to touch right now, yeah, not behind the Neon sign.
And I laid it all out on the desk and counted it, and it was twenty five hundred dollars.
Wow.
I know this is like over a year of selling things, but still, but then I kind of got a little bit sad because I realized that that's what I need every single month to cover my mortgage and utilities. Like it looked like a ton of money on the table, and I'm like, I need this amount, Like this would just cover one month of me living here and using the water and electricity.
We did that when Travis sold his motorcycle, he got two thousand for it, and I was like, this covers daycare for two months. Yeah, in two months, this is gone.
And like what took us about a year of selling things on Facebook Marketplace would only cover one month. However, it also could highlight the flip side of that that you can bring in that amount of month, that amount of money monthly to be able to keep covering that. And then it just makes me feel like money space.
You can't there's a limit, right, you can't sell everything. You can't keep selling exactly. Yeah, and it took that long to get that amount of money. But yet, yeah, jobs can pay. It could be more than that. It could be a fun experiment to sell. Have a goal just to go through your house and sell as much as you can to pay for one mortgage payment. You're like, I don't want to go through and sell in basement
wrink places. Too much work. What if your goal was just to sell enough to earn one mortgage payment and then once you did that, then you got rid of everything.
Yeah, it's fine, right, there is an engine sight. You don't have to keep going with it.
There you go. There's a fun little challenge. Wow for June and July. There's your summer challenge right now, of it. Have fun