Brennan Schlagbaum doesn't like to keep much of his net worth in cash accounts. He'd rather invest it all.
"I try to get rid of my cash ASAP," the 31-year-old self-made millionaire told Insider.
Schlagbaum and his wife Erin didn't always have money to invest. They spent five years paying off about $300,000 worth of debt, including a $234,000 mortgage on their home in Cincinnati at the time. After they became debt-free in 2021, they started stashing as much of their incomes as they could into index funds.
Today, in their mid-30s, their net worth is approaching $2 million — about a quarter of that is tied up in their new home in Arlington, Texas, which they own outright. A good chunk of the rest is invested in index funds across retirement accounts and a taxable brokerage account, which Insider verified by looking at account screenshots and a copy of their personal balance sheet.
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Schlagbaum has the luxury of not needing to keep a lot of money in an emergency fund. For any unexpected expenses, "our cash flow can handle that," said the CPA, who quit his accounting job in 2021 to focus on his financial education business Budgetdog full-time.
Plus, for any medical emergencies, he and Erin have a robust health savings account (HSA) that they can tap into at any time. With this type of account, you can contribute and invest pre-tax dollars, your contributions and earnings grow tax-free over time, and you can withdraw your money tax-free to cover qualified medical expenses.
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"We have the ability to pull that money tax-free at any point in the future," he noted. "It gives us a lot of flexibility."
For now, they're opting not to touch that money and instead pay for medical expenses out-of-pocket, meaning the account is acting more so like an investment vehicle (but with tax-free growth and other tax advantages).
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Investing is a core reason they've been able to accumulate so much wealth — and it's how they plan to build generational wealth — so Schlagbaum is always looking for opportunities to put his money to work.
When it comes to managing his money, "I have more of a CPA mindset," he explained. "You look at the balance sheet — look at all your assets and liabilities — and ask, 'where do I position my assets to make the most money?' That's how I've been trained to see it, and I see cash as such a weak asset."
If you keep your money in cash accounts, "you're going to lose to inflation," he added, which was more true than ever last year when inflation peaked in June 2022 at 9.1%."
Schlagbaum, who used to keep about $10,000 in cash reserves, says he's bumped that number down to $5,000, which he keeps in a checking account.
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He doesn't consider it an emergency fund. "It's more so to pay bills and just to float things," he said. "With our flexibility — partly because of the HSA, partly because the brokerage account is so big now, and partly because of other liquidity reasons — I don't have a need to keep an emergency fund."
That said, it's important for most people to have an emergency fund of three to six months' worth of expenses that is accessible, which means having that money in cash. However, you don't want to have more than you really need sitting in this fund — experts typically recommend putting anything extra in an investment account, where it can grow significantly more than it would in a savings account (even a high-yield one).
Unless I'm looking for a specific opportunity, I'm probably getting rid of my cash ASAP.Brennan Schlagbaum
Schlagbaum is essentially taking that advice to the extreme; he recognizes the power of putting your money to work and, since he's confident that the cash flow from his business and HSA funds can cover any emergency that arises, chooses to invest as much of his income as possible.
"I used to have an emergency fund," noted Schlagbaum. "But our wealth is growing and the game kind of changes as you get a little up there."
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The only time he'll save up cash is if it's for something specific, like a real-estate syndication, which is when investors pool money to purchase a property. He invested in his first real-estate syndication in 2023.
"Usually, the minimum deposit is $50,000 to $100,000 for most syndications, so you have to front that money," he explained. "I saved up for that deal. But outside of that, unless I'm looking for a specific opportunity, I'm probably getting rid of my cash ASAP."
