#15 - Teach Your Kids Money, Business Planning and Weddings! (Q&A)
Our 3rd Q&A, thanks for sending in awesome questions! Keep em coming!
Q1: Why don't we teach kids personal finance in school - the answer was really more about teaching your kids personal finance yourself! They key here is giving your kids some autonomy over their money. Plus - take some ownership yourself, you need to learn too so you can pass on good lessons!
Q2: How to manage cash flows when both members of the household are small business owners - bonus! How to know how much house you can afford:
You want to be spending roughly 20% of your income or less on a home:
Take your income and multiply it by 0.2
this is how much you can afford per year in mortgage payments + taxes + insurance
divide this number by 12 to get the monthly payment you can afford
Use a mortgage calculator like this one to figure out how much of a mortgage balance you can afford
Otherwise you need a financial calculator and need to solve for present value to get the mortgage balance (don’t worry about this step, just estimate in the calculator)
Once you know the mortgage balance, divide it by 0.8 to get the amount of home you can afford
Subtract the home price from the mortgage balance and that’s your down payment! Now you have a goal to save for
Q3: How to know when it's the right time to save for retirement as a business owner? It depends silly! How capital intensive is your business?
Q4: What is an appropriate amount to spend on a wedding? Not a lot! hahaha. Seriously though, examine your thoughts on why you want to spend so much on your wedding - I bet they’re not what you think they are.