AAR21 - 5 Ratios to Understand Your Financial Situation
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You can find Evan's custom home buying spreadsheet by going to http://Einvestingforbeginners.com/homebuying
In this episode, Evan Raidt and returning guest Dave Ahern dive deep into essential financial ratios crucial for maintaining and tracking your financial well-being.
They discuss various topics, including savings rate, cost of needs ratio, the importance of emergency funds, net investment ratio, debt to income ratio, and a bonus segment on partner income ratio for couples.
The discussion emphasizes the importance of using these ratios as guidelines for personal financial improvement rather than strict benchmarks and advises against comparing oneself to others.
The episode also touches on the practical aspects of managing these ratios, including setting up automated savings and handling joint finances responsibly.
00:00 Introduction and Guest Welcome
00:31 Understanding Financial Ratios
01:49 The Danger of Comparisons
04:59 Calculating Your Savings Rate
06:18 Gross vs. Net Income
09:03 Cost of Needs Ratio
16:32 Emergency Fund Ratio
21:32 The Importance of an Emergency Fund
22:59 Understanding the Net Investment Ratio
25:16 Calculating Your Net Worth
30:08 Debt to Income Ratio Explained
37:14 The Dangers of Buy Now, Pay Later
39:53 Partner Income Ratio in Relationships
43:18 Final Thoughts and Practical Tips
Timestamps are generated by artificial intelligence, and are not 100% accurate depending on the platform used for listening.
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