8 April 2012 - Washington, D.C. - President Barack Obama, First Lady Michelle Obama and daughters Sasha and Malia Obama walk across Lafayette Park to St. John's Episcopal Church to attend easter services. Photo Credit: Kristoffer Tripplaar/ Sipa Press
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Unlike many of us, Barack and Michelle Obama are multimillionaires. But, like us, they could make some improvements to their finances.

Recently released financial disclosures shed light on how much money the POTUS and FLOTUS are worth and how they have their assets invested. Without a doubt, legal and ethical considerations restrict Barack and Michelle in their First Family capacity. But if the Obamas were my clients, I would make these three recommendations to improve their finances.

1. Make Your Money Work Harder.

The Obamas hold the majority of their net worth in cash and Treasury notes. As a general rule of thumb, an individual shouldn't hold more than 10 percent of his or her net worth in cash. Of course, that's assuming someone isn't swirling away a pile of dough to pay off a mortgage, endow a new business venture, or fund an upcoming major purchase.

Excess cash isn't making your money work very hard for you. With relatively few stock investments, the Obamas could stand to invest more aggressively by upping their overall stock market exposure.

2. Refinance the Mortgage.

After they leave 1600 Pennsylvania Avenue, the Obamas will likely return to their Chicago residence. If that's their plan, they'd be wise to refinance.

They obtained a 30-year, 5.625 percent mortgage in 2005. But with borrowing rates at rock-bottom lows, Barack and Michelle could refinance into a rate potentially south of 4 percent. That would save them oodles of cash each month.

3. Revisit the Girls' 529 Plans.

Mom and Dad Obama deserve kudos for getting a head start on funding Malia's and Sasha's college education. The Obamas have saved at least $100,000 for each daughter, with the money invested in tax-free 529 college savings plans. But even that won't be enough to cover the costs of college by the time the girls are ready to go off to school.

According to the College Board, a private university education currently runs close to $42,000 per year. Public schools are slightly more affordable; the current average cost of a four-year, out-of-state public university education is $34,000 annually.

College costs are expected to increase 6 percent annually. So even though the Obamas have stashed away substantial sums of money for Malia's and Sasha's educations, they will still have to fork over even more cash, especially if the girls attend Ivy League schools. (Of course, that's assuming they don't qualify for financial aid or take on student loans.)

In addition to upping the 529 contribution amounts, the Obamas should revisit how the assets are invested.

As Malia and Sasha (who'll turn 15 and 12 years old, respectively, this summer) approach college age, the 529 plan dollars should be shifted into more conservative investments. They currently have roughly 50 percent in stocks and 50 percent in bonds. But during the next couple of years, a greater percentage should be allocated into bonds and cash. That way, gains are locked in and the money won't lose value due to market fluctuation and volatility.



Motley Fool contributor Nicole Seghetti is a financial planner and writes about personal finance, retirement, and investing. Follow her on Twitter @NicoleSeghetti.

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h.hughjardon

Is it just me or do their daughters not really look like sisters? The older one looks like barry and the younger one doesn't really look like either of them.....or her sister.

June 02 2013 at 12:46 AM Report abuse -1 rate up rate down Reply
h.hughjardon

Is it just me or do their daughters not really look like sisters? The older one looks like barry and the younger one doesn't really look like either of them.....or her sister.

June 02 2013 at 12:46 AM Report abuse -1 rate up rate down Reply
robbn00

Black people don't save. They spend until they can get welfare

June 01 2013 at 11:15 AM Report abuse -2 rate up rate down Reply
robbn00

They just aren't smart enough to make their money work for THEM

June 01 2013 at 11:05 AM Report abuse -3 rate up rate down Reply
1 reply to robbn00's comment
robbn00

The girls will have to get jobs

June 01 2013 at 11:07 AM Report abuse -3 rate up rate down Reply
robbn00

Of course they are black, so they get special privileges

June 01 2013 at 3:05 AM Report abuse -3 rate up rate down Reply
1 reply to robbn00's comment
robbn00

What DID ever happen to equality?

June 01 2013 at 3:09 AM Report abuse -3 rate up rate down Reply
robbn00

I'm sure the kids will both end up at Wendy's or Burger King

June 01 2013 at 2:52 AM Report abuse -3 rate up rate down Reply
1 reply to robbn00's comment
robbn00

The genes they have to work with.....college is not an option

June 01 2013 at 2:54 AM Report abuse -3 rate up rate down Reply
armandsmith

You have to be kidding me, like we are worried about their finances. The kids well get a free ride to college,, they probably wont move back to the South Side of Chicago just like Clinton didnt move back to Arkansas. Nice to become a millionare being a community organizer and writing a book.

June 01 2013 at 2:06 AM Report abuse -1 rate up rate down Reply
jt2

I doubt Obama would want anyone's advice about his finances. He's so stupid he had a known tax cheat running the treasury. He knows it all.

June 01 2013 at 12:52 AM Report abuse -3 rate up rate down Reply
david

They do not spend any of their own money.Please do not insult me and say they do.

May 31 2013 at 6:48 PM Report abuse -1 rate up rate down Reply
gway1958

Maybe he doesnt hold stocks cause he knows something the rest that hold stocks dont know...like maybe its going in the shitter AGAIN!

May 31 2013 at 6:01 PM Report abuse +1 rate up rate down Reply