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Money and Marriage F.A.Q.

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
June 25, 2021 8:03 am

Money and Marriage F.A.Q.

MoneyWise / Rob West and Steve Moore

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June 25, 2021 8:03 am

Sometimes dealing with finances in marriage can be a challenge. But what better way is there to gain wisdom on how to deal with that challenge than to ask an expert? On the next MoneyWise Live, host Rob West welcomes Howard Dayton, author of Money and Marriage God’s Way, to hear from him the answers to some questions he’s frequently been asked over the years. Then Rob will take your calls and questions on the financial topics you’d like to discuss. That’s the next MoneyWise Live, where biblical wisdom meets today’s finances, weekdays at 4pm Eastern/3pm Central on Moody Radio. 

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Not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota, and Utah. Listen to advice and accept instruction that you may gain wisdom in the future. That's Proverbs 1920, and what better way to gain wisdom than to ask questions? Hi, I'm Rob West, and we'll be doing that today, specifically frequently asked questions about money and marriage. And here to answer them is the guy who wrote the book, Money and Marriage God's Way, my friend Howard Dayton. Then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is MoneyWise Live, where biblical wisdom meets today's financial decisions. Well, our guest is Howard Dayton, former host of this radio program and founder of Compass Finances God's Way. Howard, always a delight to have you back on the program. Oh, I love being with you, Rob. Thanks so much for having me.

Absolutely. All right, Howard, we've got a list of frequently asked questions here, pulled from your book, Money and Marriage God's Way. And I'm just going to dive right into the first one, which is, my husband loves me and is kind-hearted, but sometimes he makes foolish decisions.

Do I have to respect him when he does that? How do you respond to that one, Howard? Well, I've made my number of foolish decisions, too, Rob.

It could have been my wife who wrote this. But first, pray. Pray for God to give your husband wisdom to make solid financial decisions. Then ask your husband if the two of you can meet together daily.

Use this time to seek the Lord, and really frankly, to encourage your husband. And in a gentle way, discuss decisions you're making as a couple. Of course, allow him to make the final decisions for the family. And when he senses that you respect him, that you trust him, he's much more likely to make good, solid financial decisions. And Rob, in my experience, couples will make much wiser decisions if they both routinely discuss the issues together and seek each other's counsel. Remember, the wife is to be helpmate of the husband, and I can't tell you how many times my wife has been enormously helpful in making good decisions.

Yeah. Well, that's such great counsel, Howard. This is a tough one.

But I think as you start in prayer and approach him or her in the right way, allow the Lord to work, and then confidently move forward together, the Lord can do incredible things. And that really leads to the next one, which is very similar, but just basically says, My husband is a control freak. He gives me an amount of money every week that barely covers expenses. He won't tell me anything about our finances, how much he earns and how much debt or savings we have.

If something happened to him, I'd have no clue what we have or where the records are kept. How can I get him to share with me? That's a real challenge. The first thing, once again, is to pray for God to give him a willingness to invite you to fully participate in the finances, then develop a budget for the money that you're responsible for, then ask to meet with him weekly to pray together for God's blessing on the family finances and to review your spending and teach you how to wisely manage money. A husband often is much more likely to engage his wife in the finances when he sees that she's eager to learn and observes her handling money well. And Rob, honestly, most of the answers to money and marriage include the element of prayer. We just need to invite the Lord of the universe into our marriage relationship if we really want it to flourish. And I love what First Chronicles 2011 says, We adore you, Lord, as being in control of everything. And that everything includes our marriage and it also includes our finances.

Yeah, Howard, we've just got about a minute before our first break here. You know, as you well know, money issues are so often about everything other than money. They have deeper spiritual issues at their core. And so how is a recognition of that important as you begin to lean into these issues that you're describing? I think it's fundamental. It's foundational to not only solve the financial issues, but really to have a thriving, flourishing marriage, Rob. We need to have good communication, respect and love one another. Howard Dane with us today, founder of Compass Finances God's Way. We're talking about frequently asked questions about money and marriage.

I'm sure we'll tackle one that you have just around the corner. Then it's on to your calls at 800-525-7000. That's 800-525-7000. Hey, before we go, let me remind you, have you checked out the new Money Wise app?

You can get it in your app store today. Just search for Money Wise Biblical Finance. That's Money Wise Biblical Finance. And we'll be right back. Welcome back to Money Wise Live.

So glad to have you with us. Joining us today, Howard Dayton, as we talk about money and marriage, specifically frequently asked questions. And Howard, just before the break, you were talking about how to approach a spouse when things are out of control. Perhaps you're not being invited into handling the finances.

Perhaps there are questions that are going unanswered or he or she is making foolish decisions and wanting to know how to approach that. You know, you were saying prayer is such a key element of that. You said how you approach it with a willingness and an openness to discuss it. Keeping God at the center is obviously critical. And as we think about these things, Howard, it can seem like that whether it's the husband or the wife, that the budget is being used to constrain or control. And yet when there's a bigger vision about where God is taking you as a couple, what your values are, what your convictions are, and money then is the tool to accomplish those with the budget being just the daily handling of the money to pursue those things, it does reframe it a bit, doesn't it?

Oh, absolutely. I mean, it should be viewed as, as you said, as a tool that will help accomplish what's really on our heart as a couple. And Rob, it fundamentally gets down often down to the perception of the spouse toward the other spouse. And I think the two anchors are found in Ephesians 5, in Ephesians 5, 25, it's husbands love your wives as Christ loved the church, now get this, and gave himself up for her. It's a sacrificial love that the husband should have for his wife. On the other hand, it's really clear in that same passage that the wife is to respect her husband. And if the wife doesn't feel loved by the husband or the husband doesn't feel respected by the wife, that's where one of the symptoms is that your finances, your conversation around finances become frayed and arguments and everything else that flows from that because it doesn't have that basic foundation of love and respect. Yeah, such a great point. All right, let's get into a few more of these frequently asked questions related to money and marriage. Here's a tough one, but pretty clear from a biblical perspective. It reads, my wife wants me to co-sign for her brother who filed bankruptcy a couple of years ago.

He's trying to start a business. I don't feel good about it. What do you think? I don't feel good about it either.

I had a feeling. Don't co-sign. You know, they did a study and they found that 50% of those who co-signed for bank loans, guess what? They ended up making the payments.

75% of those who co-signed for finance company loans ended up making the payments. And if you co-sign, guess what? You're likely to make the payment on that loan that you co-signed.

And that's not all. Your credit may be trashed because the lender normally doesn't communicate with you once the borrower is behind on the payment, when the payments are laid. And by the time they get around to ask you to, you know, pony up and pay, it's too late to protect your credit. So co-signing is risky business, makes you legally responsible for the debt of another.

And by the way, scripture is pretty clear. Proverbs 17, 18 warns us it is poor judgment to co-sign another's note to become responsible for the debt of that person. And by the way, that means to me that parents shouldn't co-sign for their children. We decided not to do that for their first car or whatever. And by that, we model that scripture says co-signing is dangerous.

And in our family, we just don't co-sign. Yes. I like that. So practical and helpful.

All right, let's move to the next question. This one says, Howard, I love my husband. He's a great guy, except that his middle name should be spender. He simply can't control his spending and our credit card debt is off the charts. It's killing our marriage.

What do you recommend? And this is heartbreaking and all too common, isn't it? It really is.

I mean, it wipes the smile off my face as we're talking. If he recognizes the problem, ask him if the two of you can meet weekly to discuss the spending of the family and ask him if he's willing to allow you to keep control of the budget. Provide him with a reasonable weekly allotment. He's free to spend in any way he likes, but at least you've got those core expenses covered. And frankly, if it sounds like it's a serious problem, I don't know if he would admit that it's a problem. But if he does, I would really encourage him to seek counsel from somebody that can help him bring it under control. And certainly I would suggest that they meet together with a budget counselor.

And I know that MoneyWise has some great experienced budget counselors that are available for people to meet with, Rob. And she should always focus on continuing to respect him and praying for the Lord to improve his spending habits. Nagging won't get the job done.

It will not help the situation. But prayer and approaching him in a sane, gracious way is really important. Well, that's such wise counsel, Howard.

A couple of things come to mind. Number one is, you know, in each of these questions, the husband has been at the center of this. This can obviously go both ways.

And we want to make that point very clear. We could easily exchange the wife in each of these situations. Secondly, you know, I think we need to build in some flexibility in the budget for each person to be who God created them to be. Assuming there's margin, you know, perhaps we build in hobbies that each of them enjoys or some discretionary spending within reason for each of them to feel like they have a way to express who they are through the family finances. Does that help?

It really does. And I think it really to build on that, Rob, it helps for the family to have a vision, a vision for what they want to accomplish financially. And when they get together and discuss how do we fulfill that vision, you know, make it part of the budget, one that he or she can spend on whatever they want.

But the core budget should be able to move them along toward reaching their vision. Yeah, boy, that's so helpful. There are so many questions I want to get to today. Perhaps we only have time for just one more. And this is one that comes up so often and troubles many faithful spouses. Here's the question, Howard, my husband doesn't know Jesus Christ as his Savior and doesn't want us to give. I'm afraid to disobey the Lord. Should I insist that we tithe, give 10% so that we don't miss God's blessing?

What do you say? Well, if your husband doesn't want you to give, don't force him, rather cooperate with him. 2 Corinthians 8-12 tells us if the willingness is there, speaking of giving, the gift is acceptable according to what one has, not according to what one doesn't have. In other words, if you desire to give, God knows that. He's pleased with you, even if your husband won't allow you to give. So here's a suggestion. Ask your husband if you could give a portion of what you saved from the part of the budget that you manage.

That way you still have the opportunity to personally give, even if it's not based on the total income of the family, but on the portion of the budget that you yourself control. That's a very practical way to continue to give in that circumstance. Well, Howard, thank you for your wisdom today, my friend. We're going to have to have you back real soon to continue to unpack these. God bless you. Thank you very much, Rob.

All right. Howard Dayton, founder of Compass Finances God's Way. Your questions are next, 800-525-7000. Stay with us.

Much more MoneyWise Live when we return. So glad to have you along with us today on MoneyWise Live, taking your calls and questions on anything financial. Here's the number, 800-525-7000. We have some lines open.

We'd love to chat with you, 800-525-7000. Always great to be joined by our good friend and former host of this radio program, Howard Dayton, founder of Compass Finances God's Way. Howard has really thought through this whole idea of money and marriage. In fact, that's the reason he wrote the book, Money and Marriage God's Way. I'd love for you to check that out.

It is a wonderful resource. It's an area we can all use assistance in. There's a reason that 70% of married couples have conflict related to money, and it's an area we need to lean into.

Think about it. You know, we all come to the marriage relationship with obviously different personalities, but that includes money personalities. How was money handled growing up as a child? What was modeled for you? Was there excess? Were you living on a very tight budget?

And how has God wired you? You know, usually you're either a spender or a saver, and you know, putting those two together in an area that's as charged as the money topic is just can create some real conflict. Our good friend Shanti Feldhahn, the researcher and author, really did a significant study on this and found, in fact, that one of the primary reasons 70% of couples find so much conflict in this area is there's a misalignment of values related to how the money is handled.

You know, why are we spending money the way we are? What's most important to each of us and together as a couple and as a family, and how is money able to support that? Well, until we have those conversations and get on the same page, we will struggle in this area.

So my prayer is that you will do something about it. Pick up a copy of Money and Marriage God's Way. If you're an engaged couple, spend a significant amount of time talking about this whole area and finding some common ground, determining what lifestyle you're going to live and your views on debt and giving and work all of that out.

Perhaps even find a mentor financial couple that can journey with you for the first year. You know, these things are so critical, but it pays huge dividends, and I hope today was an encouragement to you. We'll have Howard back real soon to talk much more. All right, let's take some phone calls today.

We do have some lines open. We'd love to hear from you. Whatever's on your mind today, saving or giving.

Perhaps it's establishing a spending plan or maybe you've got some debt you're looking to pay off. Whatever it is, we'd love to hear from you. 800-525-7000. We're going to begin today in Wisconsin. Teresa, thank you for your call.

How can I help you? Hello. I was just making a comment, and I first have to say I have been listening since the days of Larry Burkett and Steve Moore.

Way, way, way, way back. Anyway, my comment was I was listening to some advice about looking at bankrate.com for interest rates. And so I went there and I thought, wait a minute, my credit union is paying more than any of these banks are. They're paying 2%. So I'm just throwing that out there. Don't forget to recommend the credit unions because their interest rates are phenomenal, considering.

Yes. Well, Teresa, it's a great point, and I'm glad you brought it up. You know, typically credit unions have higher interest rates on deposits and lower fees than brick and mortar banks. They tend to put an emphasis on customer service. They may also be willing to work with folks who have a lower credit score.

You know, the downside is there are requirements for many of them to be able to join, so it's not as widely available to everyone, and they typically have fewer locations. It's also not, you know, typically a lot of these high-yield savings accounts offered by the online banks are available nationwide. The credit unions obviously typically are more regional in nature or have some requirements that would make them not accessible to everyone, but that doesn't mean you shouldn't do your homework as you've done, and if there is a credit union in your area that you qualify for and they're paying higher rates with lower fees, then absolutely take full advantage of it. And, you know, one of the things I'll mention is that federally insured credit unions are equally as safe as FDIC insured banks. Those credit unions use what's called National Credit Union Share Insurance Fund, which is backed by the full faith and credit of the United States government in the same way as FDIC insurance.

So you bring up a great point, and I would fully concur with checking your credit union at the same time you look at bankrate.com and, you know, consider some of the online banks in your search for low fees, accessibility, good customer service, and high interest. So, Teresa, a great point that you've made today. Thank you for listening, and thank you for calling. On to Spokane, Washington, 800-525 is the number to call. Ralph, thank you for your call today, sir.

How can we help you? Yes, I am getting ready to retire, and I'm working for a company. Well, I work for a Chinese service, and they have something called public tires, Public Employees Retirement Fund, and I'm trying to decide. I got in my retirement thing, it says that I can buy up my monthly payment, and so I'm trying to understand, is it worth buying up to increase my monthly payment or not? I mean, is it a good investment? Because, basically, they would pay a higher rate all the way till I passed away.

Yes, yeah. Well, it's certainly worth looking into. I think it's really just a function of the funds that you have available now and, you know, the present value of that future income stream and whether, you know, what they're going to return to you in terms of a higher monthly payout makes sense in terms of the rate of return you're going to get for the money you're going to have to commit to buying that up.

So, I think this warrants, Ralph, a visit with a financial planner to look not only at whether or not this makes sense from a financial standpoint, running the calculations, but also comparing that to what your expected lifestyle and budget will look like in retirement, what assets you have that when added to your social security, whether or not that will meet your need, and the amount of liquid capital you need to hang on to in the near term. So, as they put all of that together, I think they'll be able to give you some good advice. Look for a CKA there in Spokane at our website, MoneyWiseLive.org.

Just click Find a CKA. We appreciate your call. More to come on MoneyWise Live.

Stay with us. So glad to have you along with us today on MoneyWise Live, taking your calls and questions on anything financial, applying the truth of God's Word to your financial decisions and choices. We have some lines open. We'd love to hear from you. Here's the number, 800-525-7000.

That's 800-525-7000. This is a great time for me to remind you as we head toward the end of June during these summer months that MoneyWise Media and this radio broadcast is listener supported. We can't do what we do without your generous support. If you consider yourself a part of the MoneyWise family, you count on this broadcast to give you godly insight that's practical and encouraging as you handle God's money. If you're availing yourself of the MoneyWise app or the great content on our website or our coaches, whatever it might be, we'd just ask that you perfectly consider supporting the ministry. You can do that quickly and safely online at MoneyWiseLive.org. Just click the donate button. That's MoneyWiseLive.org.

Click donate. We'll thank you in advance. Again, we've got a few lines open. 800-525-7000. We're going to head next to Georgia. And Angie, we appreciate your call today. How can I help you?

Hi there. My father passed away in February. And so my mother had this annuity that was in both of their names.

And we checked on it today. And she has an amount of money that she needs to do something with. I'll just say $300,000. And I have two siblings that this will be split evenly when she passes among all three of us. She can leave it with the company it's currently with at a 1% rate.

Or she can take a lunch time and pay taxes on just the gain that it's had. So he advised us to speak to a financial planner because he said there are other better options than leaving it with them at a 1% rate. So I wanted to get your advice. What are some good options for us? Well, I appreciate the call.

I'm so sorry to hear about your dad's passing. But I'm delighted to hear that your mom is, you know, wanting to think through and be a careful steward of these funds that are significant. And you all are walking alongside her in that. Let me just ask Angie, does she need an income drawn off of this to supplement other income sources? Or is this money that, barring the unexpected, is truly beyond what she needs? At this current time she does not need this money for income.

Okay, all right. Well, you pointed out what is typically seen as the options that she has. As the surviving spouse, you know, typically you would treat the annuity as your own and you'd keep all of the options that the owner had.

In this case they owned it jointly. Annuities obviously can be structured in a wide variety of ways. So options vary on the particular annuity structure that was determined with the provider at the time of sale, the insurance company. So as you said, you know, often you would see someone take a lump sum distribution, which has tax implications you'd have to plan for, and or you could roll it into an individual retirement account, which may be a great option to consider because that would defer the tax options and perhaps give favorable treatment, barring any changes in the tax code, which some are being proposed that would change this, but would potentially, at least under the current tax code, give favorable treatment when it was inherited at her death. So I would encourage you to perhaps visit with a financial planner just to look at any number of options. One percent is quite low, so I think rolling it out either into an IRA or just taking a distribution and have somebody manage it is going to be a better option because you can still stay, or she can, very conservative and yet do better than that one percent a year. There would be probably a growth a growth component to the overall portfolio that would be long term in nature that would allow the returns, you know, to move higher, but then still a very conservative base, perhaps even the majority of the funds, so that it's protected, offers some stability, it's going to smooth out some of the volatility that you might experience if it were 100 percent invested in stocks, which is probably the right approach given that even though she doesn't need it now and arguably this money could you know grow for a couple of decades or more if she has good health, you know, regardless of that she may need it at some point. I mean obviously the unforeseen, you know, could happen and it would most often be medically related in this season of life, you know, if she were to need some some care in home or in a nursing home or assisted living, you know, that can erode assets in a hurry. So I think given what I've heard, it probably is going to result in you either rolling it out or taking the distribution and getting some professional management, but I'd want you to look through all of that and consider that alongside her overall financial picture and I think connecting with an advisor in your area to do that makes a lot of sense.

If you don't have one or she doesn't, you could look for a CKA in your area by going to our website MoneyWiseLive.org, but does that generate any questions in your mind, Angie? Well it just seems like there may be different options out there. I like the potential for the growth and that the protection as well. The IRA may be a good option. Just need to explore what's out there. I'm just uncertain about all the options.

Well that's probably, again, I hate to make a specific recommendation just not knowing the full picture of her finances, but what will likely be the outcome is that the rolling it out to an IRA will make a lot of sense just because it'll defer the tax implications and potentially allow you to miss them all together, barring a change in the tax code, and get that repositioned so it's invested appropriate to, you know, her goals and objectives but perhaps with a goal of exceeding the current return being offered by the annuity company. So I would proceed along those lines, get some professional counsel, but I suspect that'll be the direction that will make the most sense. We appreciate you checking in with us though. All the best. Let's go to Chicago, Illinois. Robert, thank you for your call today, sir. How can I help you?

Hi, thank you for taking my call. Mike, I wanted to ask you, what do you think about investing in tax lien certificates? What is your take on tax lien certificates? Yeah, you know, you can purchase tax liens in the same way actual properties can be bought and sold, you know, and it's not something that I'm particularly, you know, fond of. You know, property liens carry substantial risk, which means, you know, if you're a novice buyer, you have to understand the rules and the potential pitfalls that come from this type of asset. I mean, essentially, it's a claim the government makes on a property when the owner fails to pay the property taxes.

They usually have bidding wars because they're sold at auctions, you know, and then if you had to foreclose, there could even be other liens against the property that prevents you from taking possession. If you get it, there could be unforeseen expenses with repairs or even evicting somebody who's occupying it. So I think, you know, given some of those particular issues inherent with this type of investment, it's something, you know, unless you're a, you know, a professional who's got significant experience in this area, you've got ample capital behind you to go into it, knowing that there could be some pitfalls, but you've got the financial means to overcome that. You know, for the average person, I would just say stay away.

Let's do more kind of vanilla flavored investing with stocks and bonds and real property, but not through the auctions with the tax liens. That's just my take on it. I like to keep things simple. I hope that's helpful to you, Robert. We appreciate your call today. This is MoneyWise Live.

I'm Rob West. So glad you're along with us today. Much more to come. And we do have some lines open.

800-525-7000. Looking forward to chatting with you. We're going to pause for a brief break when we come back.

Much more just around the corner. Stay with us. So glad to have you with us today on MoneyWise Live as we explore the scriptures and apply them to your financial decisions. That's what we're all about here. We recognize God owns it all, and therefore we're a steward or a manager of God's resources.

Here's the question. How can we manage God's money faithfully? We all want to hear, well done, good and faithful servant. And I believe that begins with the posture of an open hand, holding what we have loosely, recognizing we have an abundance. And that begins with a recognition that our abundance is not financial in nature.

It begins with God's love for us, most notably shown through the sacrifice of his son on the cross, that we might have eternal life, paying the penalty for our sin and inviting us into a personal relationship with him. If we start and end there, we have all that we need. The question then is about stewardship. You know, after we give our lives to Christ, we want to be good stewards of everything God entrusts to us. Our time and our relationships and his word. And yes, the financial resources that all belong to him. The earth is the Lord's and everything in it.

So how can we be that faithful manager and what principles can we draw from scripture that we can apply to today's financial decisions to move forward with confidence, but in a way that allows us to live with contentment and peace and ultimately generosity? That's what it's all about. Hey, how can we help you today? What's on your mind?

We have probably room for a couple of more questions today. Here's the number 800-525-7000. That's 800-525-7000. Let's head back to the phones today to Indiana. Angela, thank you for your call.

How can I help you? Hi, my question is actually for my daughter who is going into her second year of college and she's wanting to start long-term investing. She puts savings, she puts money into her savings account when she's paid every two weeks. During the summer, she's working maybe about 25 hours.

During the school year, about maybe 10 per week. So she's wanting to get the best interest long-term and so she would like to open an IRA, a Roth IRA, but the bank isn't... she just needs to know what's the best option for her age. Yeah, yeah. So I think the key is deciding what type of account she wants even before the investments in the account because as you mentioned, any money that she has, she wants to start first by establishing the practice of giving. So we want to begin to model systematic generosity and then beyond that, she needs that reserve account. Then I think given kind of her stage in life, she needs to be looking perhaps with your help at what are some of those perhaps near-term or medium-term needs that she'll have for funds. So once she gets through college, you know, is that savings going to be enough to get her started in her first apartment and turn on the utilities and first last and security and is she going to need to buy a car? Some things like that that she may not want to tie money up long-term if she has some needs like that. But once, you know, we've got a plan that she's working toward in terms of some of those things that have been identified, then I think it's a phenomenal idea at her age to start a Roth IRA. Assuming she has earned income and you said she does, you know, then she could start systematically putting an amount into a Roth even if it was just, you know, at a hundred or two hundred dollars a month, it would be below the the cap on what she can put in each year but it starts that habit of saving for the long term. I don't want to take away from money she'll need in the near term but if it's truly money she can allocate to the long term, then that makes a lot of sense. And keep in mind, although I wouldn't want to encourage this, if she needed to, she could always get back the original contributions or up to her total contributions. Not any of the gains but the contributions without any tax implications. As to where to open that account, I'd probably at her age and, you know, with the amount we're talking about, have her start with one of the robo-advisors, you know, Betterment or Schwab Intelligent Portfolios or Wealthfront.

They're very easy to use, they're very low cost and, you know, they automatically rebalance the portfolio with every contribution and there's not any transaction fees. So she'll just pay a very small percentage, probably like 0.2%, one-fifth of one percent a year on what's in there and based on the way she answers the questions that will be posed, they will build a basically an index portfolio that mirrors the market and she'll capture the broad moves of the market. She won't be investing in individual companies but she doesn't want to be with this amount of money. She'd be too highly concentrated. She'd just get the broad moves of the market over time and that will do very well over the next, let's say, 40 years or however long it's going to be in there between now and when she needs it down the road.

But give me your thoughts on what I've just shared with you because I've thrown a lot at you. Well, yes, that is what we were thinking. We just didn't know where to go to do that because, for instance, I have one at our bank but I know the interest rate isn't as high and she has taken a financial course in high school they're required to take. And so she was familiar and she's like, I need the compound interest over time, mom. So she was just wanting to know where to start and the amount, the percentage because she does understand when she finishes college, she's hoping to go on to grad school and, like you said, department, that kind of thing. So she knows to say for that. So she didn't know if there was a percentage to kind of base what her contribution should be.

And these are all great points and questions. Once she's in her working life and she's got a budget and she knows what it's going to take to cover her rent and her utilities and food and insurance and the things that she needs to pay for, the goal will be after her emergency fund is fully funded, which will be three to six months worth of expenses, whatever her monthly expenses are, we'd want that in liquid savings. Then the goal would be to try to get to 10 to 15 percent of her income going into a retirement account, probably starting with a 401k at work if she has that, if not a Roth IRA or both. But right now that doesn't really apply because she's not into her working life yet.

She's still in college. So I think a better approach is to say, let's try to determine how what our goal is for that first last insecurity in the car and some of those other things that we can actually assign a number to. And then let's take the discretionary income she has right now above her expenses, the margin. And let's say between now and graduation, how much does she need to put aside to reach those goals? And then whatever's left could be, you know, go systematically into a retirement account. So it's probably less about a percentage right now in this season of life and more about what is it going to take to reach her goals for the money she needs after college and then what's left over. And that's what she would set up an automatic contribution to into her Roth IRA. And I think Wealthfront Betterment or Schwab Intelligent Portfolios would give her what she's looking for. And just one clarification, you mentioned an interest rate. It's really not an interest rate.

It's more about the growth of the investments in that because she'd have stocks, largely stocks inside that portfolio. Do you follow all that? I do. Thank you. Okay, good. Well, you're welcome. And I appreciate your call today and tell her we're wishing her all the best and hope to talk to you again real soon to Indiana. Scott, thank you for your call, sir. How can I help you?

Hi, good afternoon. I am 66. Facing my second retirement. No debt at all. My house is paid for, everything is paid for. And I've got a hundred and sixty thousand plus sitting in the past brick ceiling account making point zero one. I'm losing money. I need to try to find something to do with it.

Yeah. What is this money for? Is this money you need to try to convert into an income or is it just, you know, extra that is there if you had an emergency?

What is it for? Well, thirty thousand is an emergency fund. The rest is just money over time. Okay.

We've done very well financially past four or five years. And it just might just. Yeah. Yeah.

Yeah. So the question is, beyond the thirty thousand, do you want to take any risk with it? Are you looking to achieve a higher rate of return? I mean, you could immediately take this whole thing and move it into a high yield savings account and go from, you know, what you're making right now to a half of a percent point five percent, maybe even point five five.

And, you know, quadruple your return, even though it's still not going to be a whole lot just by going to Ally or Marcus or Capital One 360. But if you want to take some risk, even on a very conservative basis with the portion beyond the thirty thousand in the emergency fund, then you could begin investing it. The question would be, are you comfortable with a seven to ten year time horizon on that money so that you're not having to, you know, pull money out when the market's down? I like cash. Yeah.

Okay. My risk tolerance is somewhat low, but I want to summarize. I was offered an account that invests in the market that you actually write checks against. I don't know if that's a smart move or not, but I'm losing money where I'm at right now.

Yeah. Well, I would look around, you know, to our earlier caller. I mean, you could perhaps look for a credit union or your area that's offering an attractive interest rate. I mean, you can find one, even two percent.

If you qualify for that particular credit union, you need to look at all the fine print. But I think if you're looking for a banking product, you just need to do your homework at Bankrate.com or look locally to see what you can find. And, you know, that's going to give you at least somewhat better, you know, much better than you're earning now. But with inflation, let's say it's pegged at two percent. You know, even any of those options, you're going to be losing purchasing power over time unless you take a portion of it and move it into risk assets. Even on the conservative end of the spectrum, you could have an advisor build a portfolio for you that has, you know, maybe 30 percent in dividend paying conservative value based stocks that would provide some growth. And even if the market was down for a period of time, you know, a year or two from now, you wouldn't touch that and you'd let it come back. And then the rest you could invest in, you know, bonds and other fixed income type investments with a goal of getting not five or six or eight percent, but maybe, you know, four percent or five. But if you want to stay in banking products that are ultra conservative, I think you just need to look for a better yield.

And that's going to either be a credit union or an online bank. So appreciate your call. It sounds like you guys are doing a lot of things right because you had quite a bit of margin that allowed you to build up this money in the first place during retirement. We appreciate your call. God bless you, sir.

Well, that's going to do it for us today. So thankful that you stopped by MoneyWise Live as a partnership between Moody Radio and MoneyWise Media. I want to say thank you to my team today, Gabby T and Amy Rios and Jim Henry. And thank you for being here as well. We'll come back on Monday and do it all over again. I hope you'll join us. In the meantime, have a great weekend. God bless you.
Whisper: medium.en / 2023-09-26 18:02:20 / 2023-09-26 18:19:13 / 17

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