3 Categories of Savers

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Not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota, and Utah. Today's version of MoneyWise Live is prerecorded, so our phone lines are not open. Have you ever thought, if I made just a little more money, I could probably save more too? You might be surprised to learn that how much you save really doesn't have much to do with your salary. Hi, I'm Rob West. That's one of the key findings from some recent studies on people's saving habits and why some folks are successful at it and others, well, not so much. We'll talk about that.

Then we have some great calls lined up, but please don't call in today because we're prerecorded. This is MoneyWise Live, where biblical truth shapes our financial decisions. So studies by the Employee Benefit Research Institute and JP Morgan first defined three different types or levels of savers. What they called low savers managed to put away about two to three percent of their salary. The next category, middle savers, banked five to six percent of their income.

And finally, high savers were consistently saving about nine percent of their salary. You'll notice that middle savers put away about three percent more than low savers, and high savers, well, three percent more than middle savers. Now, it might seem logical, but it's a misconception that low income people save less on a percentage basis than those earning more money. But the research showed clearly that people often with identical incomes saved at different rates and not necessarily more than folks earning less.

Simply put, there is no link between income and saving. This helps explain what financial author Ron Blue describes as a consumptive lifestyle. The more you earn, the more you spend. Instead of banking all or at least part of a raise, you tend to just increase your lifestyle and your spending. It also may explain why savings rates tended to go up during the recent COVID shutdowns.

As people saw their income threatened, they were galvanized to cut back on spending and save more. Of course, the Bible says we should be doing that all the time because we never know what the future may bring. In Proverbs 6, we find, Go to the ant, O sluggard, consider her ways and be wise. Without having any chief, officer, or ruler, she prepares her bread in summer and gathers her food and harvest.

Today, we might define sluggard as a lazy bones. And the message there is that saving isn't difficult, you just can't be lazy about it. It's easy to let your spending creep up as you earn more money.

It takes discipline to prevent that. So try this. Pledge to bank any type of future increase you receive, whether it's a raise, a tax refund, or even a gift card. Go ahead and use the gift card on budgeted purchases but move an equivalent amount into savings. And in the meantime, how do you move from being a low saver to a middle saver or middle to high saver? Well, the research showed that you can get the most bang for your buck by concentrating on three key areas. First, higher savers tended to focus their saving efforts on housing. That includes a mortgage, a rent, taxes, utilities, and home furnishing. The second saving priority was food, both eating out and groceries. And finally, transportation, which includes vehicle purchases, fuel, and maintenance. Being consistently on the lookout for ways to cut costs in those categories could move you into the next higher bracket of savers. That three percent increase will have a huge impact over time. The research showed that retirement account balances of middle savers were twice as large as those of low savers.

Now here's something else that the research turned up. Actually, let me pose this as a question. What would you rather do? Save $150 a month, $35 a week, or $5 a day? Well, the researchers found that four times as many people chose to save $5 a day rather than $150 a month, even though it's the same amount. And that was consistent across the various income ranges.

The bottom line? Psychologically, it seems easier to give up something that costs $5 a day. Keep that in mind when you're looking for ways to cut spending. It's helpful to write down every penny you spend for at least a month.

Three would be better. As you do that, look for small repeat purchases that you can live without. You'll probably find that saving $5 a day is pretty easy. Just don't tell yourself that you're actually saving $150 a month. And if you need help with this, why not take advantage of our trained volunteer coaches? We've just graduated a whole new class of folks who are ready and eager to help you get on a budget, and they're all experienced in ways to save money. Just go to MoneyWiseLive.org and click Connect with a Coach.

The service is free, except the cost of a small workbook you'll need to get started. Well, that wraps up our topic today. Three categories of savers. We hope it helps you move up to the higher category. You're listening to an encore presentation of MoneyWise Live. Today's broadcast is prerecorded, so please keep that in mind. We're going to pause now for a brief break, but then we'll be back with more MoneyWise Live. Hey, if you hear a phone number mentioned today, please ignore that number and don't call us, because today's broadcast is a reprise edition. But we think the upcoming information will help you and make you a wise steward of what God's given you, so please stay tuned. Welcome back to MoneyWise Live. I'm Rob West.

So glad to have you along with us today. In just a moment, we're going to begin taking your calls and questions on anything financial, applying the truth of God's Word to what's going on in your financial life. Here's how you can be a part of today's broadcast. Just call 800-525-7000.

That's 800-525-7000. You can also email us here at questions at moneywise.org. We try to take one or two of those questions each day. You can also jump into our MoneyWise community. It's inside the MoneyWise app, and you can post your questions.

I'm in there periodically. Our MoneyWise coaches are in there answering and responding to your questions. You can also share something that might be an encouragement to the rest of the MoneyWise community. Again, it's in the MoneyWise app. Just download it in your app store today when you search for MoneyWise Biblical Finance.

We started today talking about three categories of savers, based on some new research that was just out from JP Morgan and the Employee Benefit Research Institute. That always brings up the question, why are we saving? To what end? If we recognize that we're managers of God's money, it all belongs to Him, and therefore we're stewards. Money is a tool to accomplish His purposes. By the way, money or the things that money can buy has the propensity, has the ability to compete for our devotion to the Lord.

We need to be careful. We have to ask the question, how much is enough? I think that's really key to any conversation about saving.

What is our finish line? I think for each of us, we need to start on our knees and say, Lord, what would you have me to do? I think we need to start with our giving, because that's going to break the grip of money. Then we need to think about provision for our family and the lifestyle that God's called us to. We want to live simply, so we can, in fact, live generously. I think we need to establish a cap, a lifestyle cap and an income cap that says, you know what? Beyond this, we have enough.

I can't define that for you. I think you have to do that prayerfully. But both for income as well as your balance sheet, I think really challenging yourself through prayer and if you're married as husband and wife, deciding what is our financial finish line for both of those, income and net worth or balance sheet. That's a critical step to say, you know what?

Beyond this, Lord, we're going to give it all away. Our friends at the National Christian Foundation can help you with that, both in terms of giving, but also defining what that number is. I think also having a certified kingdom advisor is critical to that, because this would be somebody who understands God's word and can walk alongside you as you not only make wise investment and planning decisions, but as you think about things like capping your lifestyle and moving to greater and greater levels of generosity. And if you want to connect with a certified kingdom advisor in your area, you can do that on our website, MoneyWiseLive.org. Just click find a CKA. All right, let's dive into your calls again.

Let's start in Pennsylvania. Marie, you're going to be our first caller today. How can I help you?

Hi, thank you so much for taking my call. So I have a question regarding rent versus starting a mortgage, but let me give you a little bit of background first. In 2014, my husband had the opportunity to take his dream job and became the executive director of a Christian camp and retreat facility. We took the job knowing that it paid significantly less than his corporate job that he was leaving, but we agreed to it because they offered onsite housing, a residency for us, and we would not have those expenses.

Due to the pandemic and a lack of campers and retreat groups, the board last year made the tough decision to eliminate his position. So we spent all of last year looking for a new house and moving to a new town, those kinds of things. We started renting in this new area at a cost of a thousand dollars a month. But when I talked to friends who were homeowners in the area, it seems like mortgage rates in our area, they're paying between like $500 and $850 a month. So because we didn't have the income that we were used to, we didn't have a lot saved up, we didn't have utility payments, so we didn't really build up our credit. So I think on paper, we look kind of worse than we are when we can afford a thousand dollars in rent each month. And I'm just wondering what our options might be in regards to loans, or do we keep renting and build those things up?

Yes. Well, it's a great question, Marie, and I'm sorry to hear about the way that things worked out. I know being able to downsize your lifestyle to do something that you really are passionate about, especially when you're doing that in service to the Lord.

And Christian ministry is a wonderful thing, and yet, obviously, the Lord had other plans last year. And so he's redirected you, and you guys are somewhat starting over, and it's in a difficult environment, not only with the continuation of the pandemic, although things are looking up, but just the real estate market that we find ourselves in. So the key is, is to make a smart decision.

I don't think buying a home is out of the question, even in the midst of the housing market that we're in right now. But we've got to put all the pieces together and make sure that it makes sense. Because even though I prefer you to be a homeowner, and rent prices are high right now, in the same way that home prices are. So you know, I don't want you to rent any longer than you have to, but I also don't want to get you into a situation where you're buying a home you can't afford, or you don't have the right down payment, or you're not settled, and you're trying to buy it, you know, top dollar, and then if a year or two later you were trying to get out of that, because the Lord, you know, has other things in mind, and you know, you're still kind of working through that, then you could, you know, be upside down, depending upon how much you go into this home with. So let's try to put all those pieces and parts together. The first question I guess would be, do you really have a good sense, apart from something unforeseen, that this is in fact where you would stay for the foreseeable future?

I do think that it is. We are definitely looking for some stability, and that long term right now, it was a blessing to be able to follow his passion and to do what we loved, but right now I think we're focused on really settling and maintaining that foundation somewhere, and we like where we're at. Okay, good. What about savings that you could use for a down payment? So we are looking at about $13,000 to $15,000 available. We'd like to keep the price of our home under $150,000 and we'd like to do about a 10% down.

Okay, all right. And would that eat up all of your savings or would you have a little bit left over once you put that $15,000 down? If we went $15,000, that would eat up most of it.

We'd like to stay under that. Okay, and in your current situation with the rent that you're paying, the expenses you have based on your current income, do you have any margin or are you living kind of right up to the edge each month? With the thousands a month in rent, we are pretty much at our max.

Okay, all right. Well, you know, ideally what I would like for you to do is to go into this home with 20% down, so you'd essentially have to double what you have. I'd also love for you to have at least a month's worth of expenses saved up beyond that and then have some margin so that you could continue adding to that until you get to a goal of three to six months expenses.

With no margin right now in your situation, given that you're spending a thousand a month, obviously that's going to be hard to do to save additionally. So, you know, it's not ideal because, you know, we've got a housing market that nationwide is probably about five and a half percent overvalued based on the latest data. We're not in a bubble situation, I don't believe, like we were in 08 and 09 because, you know, we don't have the same lax lending standards that we had back then. We don't have, you know, speculative construction of homes. In fact, we have not enough inventory in this country and we've got significant demand with the millennials, incredibly low interest rates, and all of that has really driven this housing market to higher levels.

I don't think the growth rates are sustainable, but I think we're going to see a cooling off as opposed to a bubble bursting. The reason we'd like to go in with 20% down is it's going to miss the PMI, which is going to be an added cost that does you no good. And secondly, if we were to see a downturn in the housing market, it gives you a good bit of cushion so that you'd never be in a situation to where you're upside down.

Could you go in with 10% down? I'd at least want you to have a couple of months worth of emergency savings. So I think the starting point is to say, what can we do to dial back our expenses as much as possible right now so we could build up that minimum 15,000 or 10% down and still have a couple of months worth of emergency savings to fall back on.

The benefit here is that you would actually, if you can accomplish this and get approved for a loan program that would do this, you can actually save some money each month. Just make sure you add in the true cost of ownership though because you're going to need to start putting some things away for maintenance. You need to factor in any added costs that you're not currently picking up that might be built into your rent, like picking up the trash and any other utilities.

You've got to maintain the yard. That's probably covered for you. So you've just got to really take your time to understand what all those additional costs would be and make sure you will in fact be saving money. You're also going to want to get a real accurate estimate of what are the taxes and insurance, not to mention the utilities, just to see if there might be some increases over what you're paying now when you buy this home. So I'd want you to do a good bit of that due diligence and figure out if you can dial back your spending or increase income to get that emergency savings up. I certainly wouldn't want you to go any less than 10% down and again my preference is for you to wait and get to 20% if you can figure out a path to do that. In terms of getting qualified, I think the key is being able to demonstrate income. I realize it's not income that you've had a long time but being able to demonstrate that you have a good reliable income and if the ratios work and your credit score is there you should be able to get a loan. The key would be to get at least three offers.

I'd go to bankrate.com to look for those. So I think at the end of the day, Marie, if you can wait and really work on that spending plan and get this shored up so you have more savings, I would prefer that but if you want to move ahead just make sure you really count the cost and don't just assume you're going to be able to save money when you may not be able to. We appreciate your call or to come on MoneyWise Live. Welcome back to the program. I'm Rob West. So glad you're along with us today. Today's program is pre-recorded so I would encourage you not to call in but I will tell you we have some wonderful calls all lined up in advance that I know you will enjoy.

In fact, let's go to one of them now. Reginald is in Chicago, Illinois. Reginald, I understand you had an accident. Is that right? Yes, well not me. In particular, it was my mom. Thank you for taking my call.

Sure. And, you know, I was awarded a settlement on her behalf because of her injury and I was told by the attorney and I've asked him several times, do I have to pay taxes on this money? And repeatedly they have said no, it's tax-free money.

And I guess I still have that question mark in my mind. They said it's tax-free. Yeah, well typically that is the case. I mean it'd be worth checking with your tax preparer. It's a little different because you're getting the award based on an event that took place related to your mom. But generally here's the way this works.

It's exactly as it's been described to you. Money that you receive as a part of an insurance claim or settlement is typically not taxed. The IRS only levies taxes on income, meaning more wealth than you had prior. So because the idea of a settlement is to make you whole, you generally only receive enough payment to recoup losses. So any kind of medical claim you make to insurance, whether it's a part of a settlement you make after an accident or you claim for a medical appointment, won't be taxed. Where you could have taxes involved is when it involves a lawsuit.

It gets more complicated. You might receive different forms of compensation. So for example, if you're awarded punitive damages or lost wages or pain and suffering, you would generally have to pay tax on those and you'd likely receive a 1099 form to use when filing your taxes. So I think that's where you just need to perhaps check with a tax preparer to understand exactly what you've received, how it was paid out and treated.

But again, typically if it's a settlement based on damages or in this case an injury trying to make you whole for the accident, then those are generally not taxable. So I'd look a little bit further into it just to make sure in your specific situation that holds true, but I would say that's probably going to be the outcome. And I hope your mom's okay. We appreciate you checking in with us today. God bless you, sir. Let's head to Shreveport, Louisiana. Edward, what's on your mind today?

Yes, sir. I got a preliminary question and then I wanted to tell you something else. If I sold part of this annuity, my mom left me, she passed away about five years ago. If I wanted to sell part of it, I'd take care of some issues like an automobile, dental work, blah, blah, a lump sum or whatever. It wouldn't be much, maybe 25, 40,000, something like that. Would I pay tax on that?

Well, it just depends, unfortunately. So if there's any tax deferred portion in there, you know, a lot of times, well, you will pay taxes on that. I think what's different here is that, you know, there's generally going to be a stepped up basis involved when you're receiving this as an inheritance. So this came to you as a beneficiary. And so we're going to have to, your tax preparer or CPA will have to pay taxes on that. And so we're going to have to, you know, tax preparer or CPA will have to look at what came to you, what has it done since then, and then what portion of that may be taxable to you along the way. So I'd get a bit more information just based on the moving parts here you're describing.

Just a few seconds left. Did you have something else you wanted to share? My seat was set up to where the taxes are paid. I get a $1,700 a month and taxes already paid.

I don't have to pay any taxes on it. Okay, good. Well then it sounds like you're all set.

You've already looked into it. So listen, I know you had a part two, so why don't you stay on the line. We'll talk off the air.

We've got to head into a break. We appreciate your call today. It's great to have you with us on MoneyWise Live today, but unfortunately, today we're not live. We're prerecorded and therefore won't be taking your calls. However, we've lined up some calls in advance that we think you'll find helpful. So stay tuned and enjoy the rest of the program. Welcome back to MoneyWise Live.

So glad you're along with us today. We've got a range of questions coming up dealing with pensions college and how to take care of needs out of an inheritance. But just before the break, we were talking with Edward in Shreveport, Louisiana. Edward's mom passed away unfortunately several years ago, left him with an annuity. Edward was trying to decide does he pull the money out and take care of some immediate needs, medically for some dental work and transportation for a car, or does he leave that there and take that money out systematically over the rest of his life, which would be a significant monthly income stream plus a bit of an inheritance he could pass on depending upon how long he lives. And Edward, what I was saying was during the break, you know, you think about this as a real blessing from the Lord in terms of this provision that the Lord has allowed you to come into that could be there to help you really offset to real needs that you have for the rest of your life, even provide a bit of an inheritance. And what if you really kind of tightened the strings, if you will, on that to monthly spending and funded some of these more immediate needs to the extent you have the ability to do so out of current cash flow and not pull this out?

Tell me your thoughts. Well, like we were talking during the break, it's been my gut feeling the whole time, but between JG Wentworth and Peachtree, they've been courting me. And I'm resistant because I know my mother would, if she was standing right here, she'd say, son, like I told you, since you were a little boy, you got to learn to budget yourself. And so that's probably what I'm going to do.

And it's just the dental costs are so crazy. I'm just going to figure it out from here. That will enable me to be such, quit being such a spendthrift and tied to my church and pray about it. But I appreciate it all yourself. Well, absolutely, Edward, I want you to stay on the line. We're going to get your information.

I want to give you a six month pro subscription to our MoneyWise app, which could actually help you start to track your spending, use the envelope system and really have control over what's coming in and going out to make sure you don't go over budget in any one of these categories, whether it's eating out or, you know, the discretionary or even some of the fixed expenses that you have. So stay on the line. But I'm encouraged to hear that you're following what you believe your mom would have had you to do and clearly wanting to honor the Lord in your giving. I'm delighted to hear you say that.

And just in managing God's money. Well, I mean, that's what we all need to be doing. And I appreciate you sharing that with us. And I know our listeners have been encouraged by that. So stay on the line. We'll get you a pro subscription to the MoneyWise app.

And I think that'll help you as well. Let's head to Missouri. Gary, you're next on the program. Go ahead, sir. Thanks for taking my call.

I have a question. I've got a company paid pension and when they decide to retire, I have some options on taking a lump sum or a monthly payout. And I was wondering what you thought about that.

Yeah, you know, there's a couple of sides of this. I mean, the first is just the calculation, the internal rate of return that would be based on the the present value of that future income stream on the monthly payout to determine what that actually is. And then comparing that amount to what they are willing to give you as a lump sum just to figure out from a math equation standpoint, which is, you know, better financially, which is going to allow you to come out ahead. And if you, you know, don't want to do that yourself, you could certainly seek out a certified kingdom advisor that would help you kind of do that analysis just to look at what are they offering you for the rest of your life and would that pass on to a spouse or heirs if you died in a certain period of time and then versus, you know, what they're willing to give you as a lump sum check.

So that's the kind of math side of it. Then the non-financial side is just the the peace of mind. You know, are you more comfortable knowing that you've got this check for life and does that really match up with what your shortfall is on a monthly basis so at least you know your expenses are covered to maintain your lifestyle or is this money that would kind of be extra over and above other income sources covering your lifestyle and therefore it's not as much of a concern because for some folks they don't like taking on even a minimal amount of risk based on investing that lump sum on a conservative basis. And, you know, if we were to get into a recession and a portion of the portfolio was down a good bit for, you know, a couple of years, would you be able to weather that?

Is that going to cause you some concern? And if not, then I think that's great and the benefit of taking the lump sum is you have access to the money because if you had a major expense in the retirement season of life, which would probably be medically related or long-term care related, you could actually tap those funds as opposed to the monthly payout, you know, which obviously is not available because you can't touch the principal. So I think you've got to just kind of think through both the financial side, the calculation, as well as the non-financial side, the peace of mind, your willingness to take a little bit of risk, and your desire to be able to access the, you know, the principal if you need it and then put all that together, make it a matter of prayer and see what the Lord would have you to do.

But tell me your thoughts on what I've just shared. Is there any protection if you do take a monthly payout if the company goes bankrupt or anything? Is that protected anyway? Yeah, I mean, that's one of the concerns, you know, with a pension. Obviously, there is the Pension Protection Act, which, you know, protects retirement accounts and, you know, holds companies that are underfunded accountable. And, you know, there is some protection there. But depending upon what the outcome of the company is, it may not be, you know, completely protected.

So you'd want to understand that, you know, before you go into it. So I'd encourage you, Gary, to reach out to a Certified Kingdom Advisor there in Missouri, who could perhaps help you as just a third party, you know, make this decision in light of your overall financial situation by looking at, you know, what else you have in terms of assets, what your income needs are, what's being offered to you, and, you know, help you really work through it and make a decision you can feel good about. You can find someone in your area on our website MoneyWiseLive.org and we appreciate your call today, sir. Let's head to Columbia, Illinois. Bonnie, you're next on the program.

How can we help you? Yes, I'm retired. I have no debt. I live comfortably on my Social Security. I dip into my retirement money occasionally, but, you know, rarely.

But what I'd like to do is take that out of my retirement completely. I would pay the taxes on it, put it into a, well, I would do that because at the end of the year at tax time, I usually get most of that back because of my income. So that way, when I am gone, my daughter, who's my beneficiary, if I wait and she takes it out, she's going to be charged taxes on it herself. And I assume that they will use that as income. So I'm just wondering if I'm able to do that, take it out, put it into a savings with both our names on it. And that way, if I do need it, I can get it quickly. If I'm taking a trip or something like that, or when I'm gone, it will automatically be hers.

Sure. And Bonnie, how much is it that you'd be looking to take out? It's about $61,000. Yeah, the problem is that that's all going to be taxable to you in one year. Or if you took it over two years, you know, two years, let's say you split it in half, which means that, you know, your low income that has allowed you to get refunds each year is probably going to disappear and you will be paying some tax on it. Now, potentially at a lower rate overall than your daughter would be down the road.

But I don't think generating that kind of tax bill right now makes sense. I'd probably just leave it there and take it out as you need it. As long as you've listed her as the beneficiary, then she'll get it. And she'll be able to convert it to an inherited IRA and take it out over a long period of time, or even make it her own and let it grow.

I think that's going to be your best bet, but talk to your CPA just to get a second opinion. We appreciate your call. Stay with us. We'll be right back. This is our final segment of a broadcast we previously recorded. Thanks so much for being with us today, and we hope you'll stick around and enjoy the rest of today's program.

Welcome back to MoneyWise Live. Thanks for being along with us today. We're going to head back to the phones.

Oklahoma City, Oklahoma. Bethany, you're next on the program. How can we help you? Thank you for taking my call.

I have a question for you. I'm graduating from a two-year college, and then I'm going to a four-year college. I have money in my savings account that's burning a hole in my pocket. I'm wanting to just get rid of it, because I don't want to spend it. But I'm trying to figure out whether I should invest, if I should save it for when I go to my four-year, or what I should do. I have about 40,000 saved.

Okay, great. Well, I love the fact that you've got a plan. You've obviously been diligent in saving some money.

So Bethany, you're really setting yourself up and establishing some disciplines that I think will serve you really well throughout the rest of your life. And congratulations on transferring to a four-year college. Tell me what you're going to need to spend to fund this education to get you through to graduation. So, it's about 15,000 a semester is what I need to get through for college. I have a full-time job right now, and I don't have any debt. My car's paid for, and I have about a six-month emergency fund saved up already. And that's in addition to the 40,000?

Yes. Okay, and how many semesters do you have left? I have about five years left because I'm going for my master's.

Okay, and so they're telling me. Yeah, so that's about 30,000 a year, is that right? No, it's 15 a year. It would be 15 times, yes.

Okay, times five. Okay, yeah, so you've got about 75,000, and how much are you, I mean, since your car's paid for and, you know, you have six months in emergency funds, which by the way, again, phenomenal job, how much of your paycheck do you use just for food and gas and your expenses versus what you might be able to use to contribute to this 15,000 a year? Okay, so I am, I make about 2,500 a month after taxes, and I use about 1,600.

Okay, great. All right, so if you've got about 9,000 a year, you know, that obviously, you know, goes a long way toward this 15,000. But, you know, keep in mind, we still have a gap between the 40 you have saved and the 75. So I'd really be looking to make sure you can graduate completely debt-free. I mean, you've really positioned yourself well in terms of not taking on any debt, having a car, a job, you're going on to get your master's, you're obviously going to get a job, you're going to get a job, you're going to get a job, having a car, a job, you're going on to get your master's, you're obviously busy, but you're managing all of this really well. So I'd hate to see you graduate college and take on a lot of debt. Now, if you continue on this track and you're able to cover, you know, let's say 10,000 a year of this and it, you know, just based on your current cash flow and some of the surpluses you have, and, you know, you only are using 5,000 a year, then I think the next option would be for you to take and fund at least partially a Roth IRA, you know, put away a couple of thousand dollars a year. That would really, you know, set you up to where if you could graduate with no debt, including your college education, including your master's, you're ready to start your working career with your master's and you've got some money already started growing for you in a Roth IRA, that would be awesome. But that would be lowest priority for me, apart from you continuing on this track and being able to graduate completely debt-free. If you did find, though, that you have some surplus at the end of each year as you project this out and you wanted to do that, I'd probably look at the Schwab Intelligent Portfolios or Betterment or Wealth Front, one of the robo-advisors where you could set up that Roth IRA, start systematically contributing or once a year at tax time, get that invested in low-cost ETFs, which would be a diversified indexed approach to investing. You'd have a long time horizon. I mean, we're looking, you know, 40-plus years down the road, but this money as you start to put it away now is going to be really be able to grow for you nicely. But again, that's going to be at the bottom of my list of priorities. I want you to stay on this track of living within your means and remaining debt-free with a good emergency fund to fall back on.

Does all that make sense? Yeah, so pretty much what you're saying is I should not, I should just sit on it and get through school and that way if I need to use it, then I can, I have that money there and I don't go, I'm not getting a loan or having to do something like that. And then after I get through debt school, then talk about investing in our Roth RIA. Yeah, the only exception to that, which you just described, which I think is exactly a good summary of what I had shared, the only exception of that would be, I think each year you could look at it and say, how much of the $15,000 was I able to cover through my own cash flow? And depending upon what you're then projecting, it's going to take for you to get through and get that masters. If you wanted to take an extra couple hundred or a couple of thousand dollars and go ahead and make that annual contribution to the Roth IRA, then do it.

But if you don't have a real high confidence that, that that's going to continue or that you'll be able to get through college without borrowing, then I would skip it and wait and reevaluate again the next year. Does that make sense? Okay. Yes, sir.

But I have one question on that. So on the Roth RIA, do you have to, do you have to put contributions in it every year? So like if I started it this year and then if I didn't have the money next year, is that a problem?

Not at all. No, you, you just make the contributions for the taxable year at your discretion. So you could put in zero or you could go up to the max of $6,000 and you can fund the current year up until when you file when you file that year's tax return. So for instance, you know, when you file your 2021 tax return in April of 2022, you could still make your 2021 contribution, but just because you start it doesn't mean you need to stick with it.

You make that decision each year, whether you want to put it in monthly or one time. Okay. And then do you have someone who could advise me in that and like help me with that?

Or is that something that I need to do on my own? Yeah, sure. So a couple of thoughts there. One would be visit with our friends at soundmindinvesting.org and just begin reading some of those great articles. But I think in terms of where you'd want to get some investment counsel, I would use some of the robo advisors.

They're really easy to work with. So Betterment or the Schwab Intelligent Portfolios, it's real simple to do in terms of setting up the account. You'll answer a series of questions about your age and risk tolerance and what you're saving for. And they'll build the portfolio for you using an algorithm that's going to be really well diversified, very low cost, and it's real simple.

So if you start reading soundmindinvesting.org and you use one of those robo advisors, again, if you decide each year you want to put something in and that will vary year to year, then I don't think you'll have any trouble with that. Hey, we appreciate your call today. I do want to do one thing for you. Stay on the line. We're going to get your information. I want to give you a six month pro subscription to the MoneyWise app, which may be a great tool in just helping you to track your spending so you can set up your budget using the envelope system.

Download your transactions and just make sure you stay on budget every month so you can really prioritize that surplus and get that going toward your schooling. And we appreciate your call today, Bethany. God bless you. Let's head to Oklahoma.

Julius, you're next on the program. How can we help you? Hey, how are you doing? Good.

All right. I had a question about about what what were your thoughts on investing in? Well, first off, what are your thoughts on the recent rise of affordable cryptocurrency or, you know, that just everyday people can get a hold of?

What are your thoughts what are your thoughts on that? And also, would you think it would be wise to speculate on some affordable cryptocurrency, not like obviously throwing in thousands and thousands of dollars on something that could fall through? But, you know, if you had some extra money, putting some into, you know, some of these more attainable cryptocurrencies that are bringing about returns for people?

Yeah, I'm not a big fan, Julius, for a couple of reasons. I think the cryptocurrencies are here to stay. They're kind of a sign of the times and very consistent, I think, with where we're headed in our global digital economy. And I think the technology behind them is here to stay, but not as an investment, perhaps as a means of exchange. And we'll see, you know, just kind of what role they play in our monetary system and economy moving forward, given that they're unregulated, no central bank, you know, they do have a number of issues just in terms of cybersecurity and a whole host of other issues, but as an investment, I'd stay away. Number one, as a rule of thumb, I tend to say, let's only invest in things that we can explain.

And number two, there's just way too much volatility, I realize they've been up, you know, in terms of their returns in a very short period of time. But as a manager of God's money, because it all belongs to him, I think the best way to describe a biblical approach to investing is through the words steady plotting. And investing in cryptocurrencies is anything but steady plotting. So I just would stay away from the speculative category altogether.

And that's clearly where this would go. So even though it's not as exciting to kind of take a more tried and true long term approach, I think that's the biblical model. Again, as we manage God's money, you know, all of our money should be used against God given goals and objectives and priorities.

And so we need to pray and say, Lord, what would you have me to do, starting with our giving and then our provision and saving for the future and paying down debt. And I just don't think speculation with high flying extremely volatile investments has a place in in a steward's portfolio. That's just kind of my perspective on it. So I appreciate you checking in with us. And I realize it can be quite tempting, especially when you're reading all the press about what's going on. But I'd watch it from afar.

And I certainly wouldn't get into it as an investment. We appreciate you checking in with us today, sir. Well, that's going to do it for us today. So glad you were along with us today as we apply God's truth to what's going on in your financial life. Let me say thank you to my team today, producing Deb Solomon, engineering Amy Rios, on research today, Jim Henry. Our call screener today was Aaron Houlian. Let me remind you that MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. We're also listener supported. So if you'd prayerfully consider a gift, just go to moneywiselive.org and click the donate button. This is where God's word intersects with your financial life. Come back and join us next time, will you? God bless you.