Wealth is greater than income

One of the biggest points that I like to highlight in money conversations is emphasizing the difference between wealth and income.

Wealth is defined as your net worth; the total value of all your assets, minus your liabilities. Income is defined as your salary; the money you receive in exchange for your time/goods/services. Unless you’re got a huge inheritance, wealth takes a lot of time to acquire. Income, however, is earned immediately. Continue reading “Wealth is greater than income”

How much money should I have in my retirement accounts?

A topic that often comes up among financial discussions with my friends is what an appropriate 401K net worth is.

A general rule of thumb is that you should have about one year’s worth of salary saved for retirement by 30. This should account for salary growth as well – if 30 is a few years away for you, factor in some growth in your gross income. However, for me and my friends who are still quite a while away from 30, early benchmarking has been a challenge. Continue reading “How much money should I have in my retirement accounts?”

What does it mean to retire early?

I recently stumbled across this very interesting graphic that shows, in one image, how long it will take you to retire.

It’s so simple. If you want to retire early, you have two basic options: spend less, or earn more. That’s fine enough, but what does it really mean to retire early? When I tell my friends and family that I’d like to retire before 40, most of them picture an image of me sitting in a boat on a lake, fishing (which, by the way, is something I would never do for fun). Continue reading “What does it mean to retire early?”

What to do if your company doesn’t offer a retirement plan

A friend of mine is about to start a new job with a company that offers no company retirement plan. This is a tough situation to be in, mostly because it means that saving for your retirement is now in your hands. Most companies make it easy – you set your contribution amount, and you get that money taken out of our paycheck before you even see it. What do you when this isn’t the case? Continue reading “What to do if your company doesn’t offer a retirement plan”