This past week the President and Vice-President released their financial disclosure forms as required by The Ethics in Government Act of 1978. Essentially their finances are being completely reviewed by ethics officials to make sure there are no conflicts of interest.

It’s an interesting glimpse into the private financial life of our top politicos, and I think we can take it as a chance to look at what decisions they’re making, and see if those same financial decisions might make sense for regular folks as well.

The dollar figures we’re talking about here are not the numbers that most people can expect in their savings and retirement accounts, however. The Obamas reported millions in assets last year:

The Obamas reported total financial assets valued between $2.8 million and $11.8 million in 2010. That wide range is a function of the reporting rules that allow public figures to disclose their assets within broad bands, such as $100,001-$250,000 or $1 million-$5 million.

So the Obamas have anywhere from 2.8-11.8 million dollars in assets. Not too shabby, but of course most of that is going to be coming from book royalties and other income sources, while only a small portion comes from his income as the President.

So where are they keeping their money?

Treasury Bills And Treasury Notes

The Obamas report having between $1-5.25 million invested in Treasury bills and another $1-5.25 million in Treasury notes. So what does the article say bout those holdings?

They report having between $1.1 million-$5.25 million invested in Treasury bills and another $1 million to $5 million in Treasury notes. T-bills have a maximum maturity of one year, while T-notes have maturities between 2 and 10 years. There were no longer-term bond holdings listed. Maybe it’s just easier and patriotic to stick with Treasuries when you’re the Obamas, but if your household taxable income was north of $1.3 million in 2010, as the Obamas’ was, you should probably give tax-exempt municipal bonds a look see.

So the experts suggest a slightly different tack than they are taking.

Saving An Emergency Fund

Now the president doesn’t necessarily need an emergency fund, but the Obamas do have plenty of liquid cash sitting around just in case. They’ve got between $250,001-$500,000 sitting in a checking account, on which they stated they earned less than $1000 in interest. That means that they’re not really making much interest at all on that money, and they could have certainly done a lot better than that by putting a portion of that money in high yield savings or other investment. In any event, I think regular folks could learn something here by building up a nice cash reserve, an emergency fund, with which they can insure themselves against pretty much any eventuality. Just try to find a place to put it that will earn you a little bit more.

Investments

When it comes to investing I can’t disagree too much with what the Obama’s have done as they’re basically doing much the same what I would have done by passively investing in index funds. According to disclosures the Obamas have between $200,000-$450,000 invested in the Vanguard 500 Index Fund. Why an index fund? Because index funds typically have lower costs, and the one the Obamas are using has an expense ratio of only .06 percent. Since they have more than $10,000 invested, they also qualify for Vanguard’s Admiral shares class which lowers their costs even more as compared to smaller dollar investors.

So what can we learn from the Obama’s investments? That passive investing through index funds can be a good idea to have as a core of your investment portfolio because over the long term your returns will be good and your expense ratios will be lower.

Having A Secondary Income Is a Good Thing

One other thing that I think is interesting from looking at the Obama’s disclosure forms is the fact that he’s making substantially more from his sideline pursuits, than from his day job. Last year he made millions of dollars in book royalties.

While I don’t think most people can expect to make millions of dollars in royalties from book sales, they can still take a queue from our commander in chief when it comes to having sideline income. I’ve become a big proponent of diversifying your income in order to help mitigate the risk of a job loss or other problem. Whether it’s starting a blog like I have, or starting a small business on the side, having secondary income to fall back on is always a good idea.

Take Advantage Of Tax Breaks To Invest

Come tax time we all make sure to take advantage of all the tax breaks and exemptions that are available to us, and the President is no exception. One thing he’s done is to take advantage of his self-employed status as a freelancer and book author in order to invest in a SEP-IRA pre-tax. The disclosure forms show that he has between $100,000-250,000 invested in his SEP-IRA.

If you’ve got a sideline income you may be eligible to invest in a SEP-IRA as well. Even if you’re not, make sure to take advantage of tax advantaged retirement savings accounts like our President has. Invest in accounts like the Traditional IRA, 401k, or the post tax Roth IRA if you want to tax diversify.

Saving For Your Kids College With Tax Advantaged Accounts

The Obamas have saved between $100,000-250,000 for their kids college education costs in one of Illinois 529 education savings plans. As long as the money is eventually used for qualified college expenses there won’t be any tax due on the withdrawals – so in that respect it’s a good decision.

While the Obamas are to be commended for saving up for their kids college, experts point out that the 529 savings plan that they chose isn’t necessarily one of the lowest cost 529s. There may be quite a few other lower cost 529 plans out there, as well as other options for savings that some folks may be eligible for – like using a Roth IRA for college savings. Make sure when saving for your kids college, to search around and find the most cost effective option for you.

Being Debt Free Is A Good Idea

The Obamas list no liabilities on their disclosure form, so essentially they are living debt free. The Bidens, on the other hand, have 6 different liabilities listed, including a home equity line of credit. Personally I’m with the Obamas on this one. Living debt free is the way to go! Now if only they felt so strongly about having our country be the same way – living on a budget – not spending more than we make!

What other lessons do you think we can learn from looking at the disclosure forms of our leaders? Are they making sound financial decisions in their personal lives? What do you think they should do differently?