Money Guy Show Episode 7 Summary: "Cash Flow Milestones Worth Celebrating"

Release Date: May 30, 2025
Hosts: Brian Preston and Bo Hanson

Introduction to Cash Flow Milestones

In Episode 7 of the Money Guy Show, hosts Brian Preston and Bo Hanson shift the focus from traditional net worth milestones to cash flow milestones—key financial achievements that can be attained earlier in one’s financial journey. Bo emphasizes the importance of celebrating these milestones to maintain motivation and track progress effectively.

Brian Preston [00:00]: "Sometimes you want to know where you are, where you're going. Guess what? Today we got seven cash flow milestones to hook you up."

Bo Hanson [00:12]: "Oftentimes we talk about net worth milestones... but we can talk about some milestones today that maybe happen a little earlier in our financial journey."

Milestone #1: Achieving Cash Flow Positive

The first milestone discussed is becoming cash flow positive—living on less than you earn. This foundational step not only prevents financial regression but also sets the stage for wealth accumulation by generating a surplus from disciplined spending.

Bo Hanson [02:14]: "Once you can do this, you have now flipped the script of wealth building... you're not moving backwards."

Brian Preston [03:10]: "Make some big decisions and really move things in a way that you're going to see results almost immediately."

Action Steps:

• Big Financial Decisions: Adjust major expenses such as housing, transportation, and eliminate unnecessary credit card usage.
• Community Resources: Utilize available benefits like SNAP or affordable housing if income is constrained.

Milestone #2: Saving $100 a Month

Saving $100 monthly is the second milestone, a manageable target that places individuals ahead of over 60% of their peers who struggle to save even $1,000 annually.

Brian Preston [05:11]: "If we can get you saving $100 a month, you are that much closer to being beyond 60% of your peers."

Brian Preston [05:22]: "He turned out to be exactly right. Talking about the wonderful, powerful thing of compounding growth."

Strategies to Achieve:

• Reduce Fixed Expenses: Cut down on unnecessary subscriptions, switch to cheaper service providers.
• Behavioral Adjustments: Modify grocery shopping habits, limit eating out, and conduct pantry audits.

Milestone #3: Maxing Out Your Roth IRA

The third milestone is maxing out a Roth IRA. This involves contributing the maximum allowable amount annually to benefit from tax-free growth and distributions in retirement.

Brian Preston [09:42]: "If you are saving about $583 a month, you would need to max out your Roth IRA."

Bo Hanson [10:14]: "Once you've maxed out your Roth IRA, that means you've completed or you're on your way to completing step five."

Tips for Success:

• Monthly Contributions: Break down the annual limit into manageable monthly savings.
• Flexibility: Utilize the extended deadline (April 15th of the following year) to complete contributions if falling short during the calendar year.

Milestone #4: Saving $1,000 a Month

Saving $1,000 monthly marks significant progress, leveraging the power of compound interest to potentially grow a portfolio to multi-million dollar status over time.

Bo Hanson [11:50]: "If you can just get there, you are well on your way to our 25% savings goal."

Brian Preston [12:31]: "You are in multi millionaire status without having to do anything remarkable other than begin saving early and save consistently through your financial journey."

Long-Term Impact:

• 10-Year Projection: $100/month grows to $18,000.
• 40-Year Projection: $1,000/month can grow to over $350,000, with the majority being investment growth.

Milestone #5: Savings Exceeding Debt Payments

The fifth milestone is ensuring that monthly savings and investments surpass monthly debt payments, signifying a shift from debt servicing to wealth building.

Bo Hanson [15:09]: "If your monthly savings is greater than your monthly debt payments, it means that you are now investing more into your future self than you are making up for decisions your past self has made."

Bo Hanson [16:11]: "According to LendingTree, Americans on average pay a little under sixteen hundred dollars a month towards debt."

Benefits:

• Future Financial Stability: Prioritizing savings over debt reduces financial stress and enhances future wealth.
• Behavioral Change: Shifting focus from past debts to future investments.

Milestone #6: Maxing Out Your 401(k)

Maximizing contributions to a 401(k) is the sixth milestone, providing significant benefits such as tax advantages and employer matches that accelerate wealth accumulation.

Bo Hanson [17:06]: "In 2025, if you are someone who's under 50, you can put $23,500 into your 401(k)."

Brian Preston [19:44]: "These things really are a wealth building hack to really accelerate your journey."

Key Points:

• Contribution Limits: Understand current annual limits and corresponding monthly savings required.
• Tax Benefits: Choose between pre-tax or Roth contributions based on individual tax strategies.
• Employer Matching: Take full advantage of any employer-provided matches to boost savings.

Milestone #7: Investing 25% of Gross Income

The seventh and final milestone is to invest 25% of your gross income. This aggressive savings rate ensures a robust replacement rate for income in retirement, providing greater financial independence and security.

Bo Hanson [21:08]: "If you see if most people aren't starting to save until they're in their early to mid-30s, you can see it's that 25% savings rate that gets you to an income replacement of somewhere around 84, 85%."

Bo Hanson [22:40]: "If you can start saving early and often, you are going to give your future self a lot of flexibility if life ends up happening and have to adjust my savings rate later."

Advantages:

• Income Replacement: Achieving an 84-85% income replacement rate secures a comfortable retirement.
• Flexibility and Control: Proactive savings provide leverage against unforeseen financial changes.

Prepaid Future Expenses and Conclusion

Brian and Bo conclude by linking these milestones to their broader financial order of operations, encouraging listeners to integrate these cash flow milestones with other financial strategies to build a comprehensive wealth plan. They emphasize the importance of discipline, early and consistent saving, and making informed financial decisions to ensure long-term financial independence and fulfillment.

Bo Hanson [24:19]: "Our wealth building journey is slow and steady... you can set your future self up for success."

Brian Preston [26:26]: "Go to moneyguy.com or aboundwealth.com and check out work with us. We'd love to help you with your success and your abundance."

Final Takeaways:

• Progressive Milestones: Celebrating cash flow milestones keeps individuals motivated and on track towards financial goals.
• Resource Utilization: Leverage available tools and community resources to maximize financial growth.
• Ongoing Support: Engage with platforms like MoneyGuy.com and Abound Wealth Management for continued financial guidance.

By focusing on attainable cash flow milestones, Brian Preston and Bo Hanson provide listeners with actionable steps to enhance their financial well-being, build substantial wealth over time, and achieve greater financial independence.