Numbers You Should Always Know
Numbers are all around us, some will make a big difference if they change.
Your “Burn Number”: How quickly your bank account will drain if you are no longer making money. Find this number by adding up all of your non-negotiable expenses. It never ceases to amaze me the amount of accomplished people who don’t know this number.
Your cash savings: How much money do you have in savings? In general, we tell people 6-12 months of core expenses, depending on how stable your income is.
Pro Tip: Have your savings taken straight out of your check and into a different bank account. People saving within a checking account that also pays their bills are rarely successful.
The “Go Independent” Number: What would your monthly expenses be if you were suddenly unemployed or forced to take a job with no benefits and had to foot the bill yourself? To find this, take your “Burn Number” and add the FULL health insurance premium (not just the part you pay) and the full cost of any employer provided disability and life insurance to get a baseline. Also add in any professional costs.
Pro Tip: To get the true number, contact brokers to get quotes.
