Disposable Income

What is disposable income? It is the amount of money that households have available for spending, saving and investing after income taxes and mandatory payments (i.e. mortgage, food, transportation and health insurance) are accounted for.


A recent survey initiated by Money Magazine disclosed that the disposable income of American households is disbursed as follows:

Travel: 30%

Home and Beauty: 22%

Eating Out: 20%

Clothing: 17%

Recreation: 11%


Did you notice anything missing?  Yes, you got it!  Based on this survey most American households apparently aren't using any of their disposable income  to put towards savings or investments.  We can not expect our finances to grow if there is no system of saving and investing.  


This is  a huge problem that will result in Americans having to work far longer than their parents and grandparents had to.  Let's get in front of this and begin developing a plan to save and invest.

Grow Your Money Tree

It is a fact that most of us will have several hundred thousand dollars pass through our hands in our life time.  You don't believe me do you?  Well lets say you work for the minimum wage ($7.25 per hour), full time (40 hours per week) for the next fifteen years.  If you did that you would have earned $226,200.00.

With that knowledge you and I both most figure out a way to grow our money tree. There are several obstacles that are trying to kill the growth of our tree: bad money choices caused by hereditary and environment, debt, clear understanding, etc.

We can clear up bad money choices with continued exposure to information that will increase your financial literacy. In this post I want to challenge your understanding and debt.

Some people, professional and otherwise, will tell you that you should pay off all of your debt first before you can grow your money.  I believe that this is poor advice for most people.  You should develop a strategy where you are reducing debt, saving and investing for growth simultaneously. Work with someone who can help you develop this strategy

This way your money tree has the best chance of growth.

Also please keep in mind these three principles:

1. The fastest way to increase wealth is to invest.

2. There is a significance in making more money and increasing wealth.

3. When you start to invest don't get discouraged if you are not able to be a part of the "big deal".  A few "small deals" can put you in a position to be part of the "big deals".

Image courtesy of ddpavumba at FreeDigitalPhotos.net

Don't Forget About The Kids!

I recently read an article that stated only three out of ten US parents talk to there kids about money and money related matters.  This is a major issue as we need to produce more financially responsible people.

Financial literacy is a must for our children in today's society. A few decades ago financial literacy for children meant opening a bank account, showing them how to write a check, balance a checkbook and saving. Today true financial literacy for children must be more robust as the financial health of our nation depends on it.  Remember our children will be the next leaders of our nation, which has been in financial turmoil for the past sixty years. If we dont do something soon there might not be a land of opportunity to lead.

The talk about finances with our children is just as important as the "sex talk" although many parents do not see it like that.  How do I suggest to handle talking to your children about money? I am glad you asked.

Well we need to start with the basics - teach them how to save, how to give back to help others, how to write a check and balance the checkbook.  But let's add topics to our discussions - there can't just be one discussion because the topic of money or finance is just too broad - like retirement (including the benefits and drawbacks of 401Ks and IRAs), credit, creating a budget, insurance, investing, entrepreneurship, taxes and home ownership.

If you need some help to understand how these discussions should go, don't hesitate to contact us.