How much of my income should I live on?
Gus Tucker: We should be living on between 40 and 50% of what we bring home – that’s all your living expenses. The reason we can’t save sometimes is we’ve got too much going into living expenses and debt and not enough going into savings. So this process is gonna force you to take a hard look at where your money’s going and look, a simple hundred dollars saved a month for 20 years is about almost $70,000 at 8%, which is what 8.8%, which is what the stock market has done for the past hundred years.
Will Social Security be enough for me to live on when I retire?
Gus Tucker: The average social security payment is under two grand and the highest payments, a little over three grand social social security was never meant to be the lion’s share of the greatest amount of your retirement number. It was designed to cover about 40% of what you might need. The rest of it was to be covered by your personal savings.
What is compound interest?
Gus Tucker: The power of compound interest. So you could read this slide. It’s talking about the growth potential of money over time by compounding, which is interest paid on your deposits and all the interest paid. There are two kinds of interest. There’s simple interest and compound interest.
Simple versus compound interest. What simple interest in that farmer example, he borrowed 50 bucks, right? 7% is 3.50. So let’s say he brought that money over a number of years every year he would have to add 3.50 onto the balance. Compound interest is I’m gonna add 7% of a balance every year.
Listen in as Gus shares more financial tips on how money works. Click the link for more information.