Happy New Year! Like many of you, I have set some goals for this year, and my big ones are-
- Save/invest 25% of my gross income
- Publish a book!
- Finally finish my damn CFP certification
- Shop out my insurance
- Compete in a comeback show in bodybuilding (I haven’t competed since 2014, and am much older/decrepit now)
- Buy a house
- Be much more intentional about business growth
To that last point, Leetown Advisors is almost at capacity for what I can handle on my own, and at some point I will be forced to shut down to new clients (or hire). To that end, I will only be taking five clients per year with less than $1m in investable assets, and ten clients per year total. I started Leetown specifically to help people under that threshold (my fellow Millennials particularly), and I am close to achieving the limits of that goal. For Leetown to grow and provide the best service possible, I also have to hire (and pay) the best people possible. That unfortunately means being more exclusive and selective.
I work with people that make anywhere from $100k to $1m+, and there seems to be absolutely no correlation between income and financial literacy, or having-your-shit-togetherness. What does have a correlation with income, however, is the willingness to ask for help. Higher income people tend to ask more from me (which is totally fine), and I wish that was the standard. As far as general recommendations, below is my Order of Operations, similar to Dave Ramsey’s Baby Steps. Start at the top, and work your way down. If you can get all of this done in 2026, you are kicking ass!
- Understand your cash flow. Where income comes in, when, and what is withheld for taxes, benefits, and retirement. For people with a standard salaried job, this is pretty easy. For business owners or people with inconsistent income, not so much. You also need to track your spending; not out of shame, but to make sure the way you use your money aligns with your values and goals. For some people, this could actually mean spending more! I use Monarch Money for myself and my clients, and it works wonderfully.
- Keep your fixed expenses under 20-30% of your income. This includes housing, transportation, and any related insurance. The higher or more variable your income is, the lower you should be on that scale.
- Keep 1-6 months of spending in savings as an emergency fund. The more volatile your income is, the higher this needs to be. However, if you have a brokerage account (basically a savings account you can hold investments in), you can count the bond portion of that toward this. Personally, I only keep one month of spending, and everything over that goes towards investment accounts (gotta practice what I preach).
- Get your minimum match on retirement accounts. If you have a 100% match up to x%, whatever you contribute you get an immediate 100% return on your money. That is unbeatable.
- Insure against catastrophic risk. Make sure you have health/life/property/liability covered at the bare minimum, and maybe even disability/identity, if it is appropriate for you.
- Pay off all your consumer debt, especially if it is high interest (over 8%). Unlike Dave Ramsey, I don’t shame people for a mortgage or student loans. Pay these as is appropriate over time. I do like to have people mortgage free by retirement, but it doesn’t make sense to take a large distribution from an IRA to do so, since you will pay more in taxes than you would in interest.
- Save 10% in your brokerage account, and invest this money slightly more conservatively than you would an IRA or retirement account. If you need to take money out before retirement, this is where it will come from. You can also borrow against this account, usually for a pretty low interest rate (this is what the super-rich do).
- Save 15-25% total. This number is relative to your gross income, and includes any match you get through work. Once again, the higher your income, the higher you should be on this scale. If you are saving this amount, you will absolutely be fine for retirement (unless you are behind). This should also be optimized across all three tax buckets: taxable, pre-tax, and Roth.
- Max out any other tax efficient vehicles, as appropriate: HSA, 529, and coming in July this year, Trump Accounts! I will write a deep dive on those as we get closer.
- Get your estate plan in order. For most people, that means a will, power of attorney, and a revocable trust (probably). Thinking about kicking the bucket won’t be the most exhilarating part of your day, but it WILL happen eventually, and you don’t want to leave your family to pick up the pieces and pay your probate fees. Dying is surprisingly expensive!
- Decide what impact you want your money to have. For some of the people reading this, you either have or are on track to have more than enough money to support yourself in retirement. The question is how best to use your excess wealth to impact your family and the world around you. There is no award for being the richest person in the graveyard, and I’m sure that you would rather see your family and community appreciate that money while you are still around to see it. This is also a topic for another day.
If you have all these bases covered, congratulations! You are well on your way to Make Life Your Beach. Have a great weekend.