2021 EP0116 Planning Matters Radio - YOUR MONEY

We want you to plan for success. Welcome to Planning Matters Radio.

And welcome into the program. This is Rich on Planning. Planning Matters Radio. I am Peter Rishon, founder and CEO of Rishon Planning. And on this program we're going to be talking about your money, your intentions with your money, your planning with your money, your desire, your hopes and dreams with your money, and how to plan effectively in this crazy financial world in order to work the plan and achieve your goals. And today we're just going to be talking with a few folks about their money and their financial situation and see what kind of challenges everyday people are facing and how we can maybe strategize and plan to better handle our money. With me for this first part of the program is Jennalee Carter, and she works in the office at Rishon Planning. So Jennalee, you hear a lot of conversations about money and financial planning and retirement planning.

Yeah, all day Peter. Yeah, yeah you do. And you, I think, are pretty astute. You've got a good handle on your own finances. You seem to be the one in the household that's kind of... you've got the responsibility and the burden of handling the finances for your household. Correct, and that seems to be the case for most households these days.

One person wants to handle it and one person doesn't want to know anything about it. Yeah, absolutely. I would say that that is a big theme in families, in the family dynamic between spouses, in households. There's always the yin and yang, right? It's not just money.

It's it's kind of... there's balance in everything and we tend to somehow end up with people who are not the same as us in many ways. So in your household you're the one that's tracking every penny, pinching every every penny you can, stretching every dollar, and paying attention to where it goes. Correct.

Yep, yep. I remember one time my mom wrote a check for my son for his birthday and I sort of lost the check and misplaced it. He didn't have a bank account at the time and she had written his name on it so he couldn't go and deposit it. About three months later she showed up and she said, hey, by the way, you have not cashed that check that I wrote for Braxton's birthday yet.

And by this point, you know, I had sort of forgotten about it. It was still tucked inside of his birthday card but she paid attention to her money that much to know that that check had not come out of her account yet. And you sort of strike me as the type that's paying attention to your money like that.

Yeah, that's actually a pet peeve, I guess you'd say, of mine. I do not like to write checks for that very reason. People tend to hold on them and not cash them. And then of course you forget about it and if you're not paying attention to every time someone cashes a check or money comes in and out of your bank account, you might miss it and you might miss budget for that week or that month or even two or three months down the road when somebody decides, oh, I found this check, let me go cash it.

Well, now your budget's gone for that. Right, right. You hadn't accounted for it that month. You had accounted for it several months back and then it went missing or didn't get cash and all of a sudden it's upsetting. I get that a lot and, you know, I think that that is one of the reasons why while online banking and this digital world with plastic instead of paper to make transactions, it's very convenient but at the same time we've lost a little bit of that accounting. You know, people used to balance their checkbooks every month and understand where their money was and how much they were spending and pulling cash out of your wallet seems to be a little bit more painful than swiping a card. You tend to think about it a little bit more. Yeah, I think you're absolutely correct. And, you know, it's also important though for more than just one person in the household to understand your budget. You say that with a tinge of frustration in your voice. Well, for two-fold there, you have the situation to where, you know, you have probably one person that is carefree and doesn't matter what they spend or where they spend it and they're really not paying attention and so they're not really concerned about it and then you have the the other person on the other hand who's watching it daily go in and out and they might panic just slightly every time their spouse runs that card not knowing what is even in the bank account but then on the other hand you know what happens when one of you unfortunately passes away. Yep. That's another big reason so, you know, unfortunately if something were to happen to me my husband's gonna be lost for a short period of time because even though I discussed this topic with him he does not care to sit down and find out what bills are where and where they need to go. His theory is when it gets cut off I'll know I need to pay it. Yeah, yeah, I have seen this in my career literally countless times I can't remember the number of times where an individual's come in whose spouse has recently passed away and that spouse was the one who handled the finances in the household and sometimes they come in with their children and their children are like, you know, mom doesn't know what to do and she doesn't know where the accounts are and she doesn't know how to pay the bills so this is the paperwork I've been able to gather up where do we go from here and there was no strategic plan there was no conversation ahead of time and it can be overwhelming a you're already in a situation that emotionally you're probably overwhelmed and and then B there is not a concrete guide that most people have now there are guys that exist and I have helped people put together this guide for their individual situation but what to do financially when a spouse passes away a step by step comprehensive guide and I have been planning for some Valentine's Day events in looking at protecting your spouse to the greatest extent possible and looking at protecting your family and your loved ones ultimate act of love and caring and compassion would be to provide them some amount of protection part of that is laying things out letting them know where things are but you got to be receptive to that too on the other side you got to be willing to to have those conversations and so we don't want to leave our spouse lost there are a number of things I think in in our modern society where the accounts are passwords online but where the bills are where the bank accounts and retirement accounts and investment accounts are all of those things need to be discussed along with having obviously those legal documents in place so I'm correct Peter and also another aspect of that is nowadays it seems as though I guess I want to say younger generation I am still in part of that but a lot of people keep their bank accounts separate nowadays they don't have a household checking account or you know a household saving account and so this person pays you know three of the bills and this person pays for the bills but that also leads to the same thing you know if that person who was paying for those bills goes away you don't have that account in your name yeah right you don't even have access to that so a lot of that you know in your legal documents make sure that you include that somewhere in there that that person has access you know a payment upon death on your bank account yeah you know then another topic going on there of course is life insurance Peter yeah well you mentioned it the payable on death the P OD or T OD that is essentially a beneficiary designation on your bank account so making sure that somebody can show up and transfer that money the person that you intend can can get a hold and get access to that money and then your beneficiary designations on your life insurance on your retirement and investment accounts and those legal documents in place and and having the appropriate amount of life insurance and we see it a lot younger folks in particular they have children at home they've got a mortgage they've got an income they need to replace and they don't have the appropriate amount of life insurance or any life insurance at all and during the on the the oncoming of kovat there was a rush of people who went out to secure life insurance and it was actually pretty difficult at that time to get that processing because of everything that was going on life insurance and your legal documents are two things that you can't do the day after you need to have had them done you've got to be proactive and and plan ahead with them so we are here to help and assist but more importantly today we're here to talk about some of the common concerns that you have with money and and how you can talk those through and work those through so generally in your household what are some of your concerns I know you've had some recent frustrations but on an ongoing basis what are what are some of the thoughts that you have when you're when you're talking about money when you're thinking about money well Peter I actually am a little bit of a panicker and a worrier and I like to plan ahead so where my husband says I'm morbid I think as it as in being prepared so making sure that if something does happen to him I'm at least able to cover our basics of basic needs we even have a separate bank account that a car payment comes out of because if something happens to him and that goes away and I have to give that car back that's okay that was not in my mandatory basic needs budget we have vehicles that are paid for for that just certain things like that I have life insurance on my my child I had the day he was I could get it after he was born and that's very important in some near and dear to me because I have friends that have lost their children have had to make payments on their burials because they did not think you know something could ever happen to my child and so therefore they didn't get any life insurance yeah not a check you ever want to cash or receive but nonetheless important because you certainly don't want to have that horrible experience and then go in debt as a result of it yeah it's very important just um just the hard topics that people don't want to talk about the what-ifs and the you know the wise and and while yes you know the world around us seems to be crumbling in this moment and that may be even more frustration for you to sit and talk with your partner about what's gonna happen in the future and the future is so unclear right now well plenty of time to do that though right right plenty of time you're stuck in the house together 24-7 but it's just you know take the time to sit down with them and maybe talk about it in a way to where you know it's not it's always gonna sound morbid when you talk about one passing away but honestly it's smart it's one of the best things you can do not only for yourself but for your peace of mind and for your children well the way I view it is that my job as a planner is to make the bad things happen on paper and in the planning process so that people can be prepared if they ever do encounter those events in real life and not have it be as devastating or as detrimental or obviously you know when I'm talking about bad things happening Murphy's Law the worst case scenario occurs at just the wrong time it's going to be emotionally hurtful and draining but if you have a plan in place if you have talked those events through beforehand you're ultimately going to be better prepared for them and probably handle them better and make better decisions because you don't want to be making knee-jerk reactions or not know how to handle a situation and not have a plan when the worst case scenario happens so I think you're right you know having those conversations it seems difficult but I think it's more difficult in people's minds than it is in reality and if you have those difficult conversations now you can then go out tomorrow and feel like you've got that handled it should be a burden off of your shoulders rather than something that's weighing on your mind heavily all the time correct you know most of it if you just view it the way I try to view it it's it's paperwork and we all hate paperwork but as soon as you get it done it's done and it's lifted off of your responsibilities now you have that box and it's checked and now we go to the next task in life so that's just the way I view things everyone is not like me so on my husband's end he is more of a free soul and could care less if that box was checked or not yeah same in my household my wife not not the one that ultimately pays attention to the bank accounts or balances the checkbook and so that's my responsibility so I have to be even more cautious and take even further steps because I know that that is not her bailiwick and in her area so I've got to take the steps to make sure that she is as much as possible protected in in those areas you know these are the same concerns that I think every American household has on top of what's going on in Washington and what's going on in the stock market is a red day or a green day how are my accounts doing when's the next time the markets going to crash it's these day-to-day kind of issues that really weigh on people's minds and that is the reason why some of the bigger issues don't get handled and addressed like they should I've read plenty of studies that say the average American could not come up with the cash for a $400 emergency they're going to go into debt for that that the median 401k balance for those ages 45 to 54 is about $40,000 you know those are those are folks that should be on their way to preparing for retirement and that's not nearly enough for most people to retire successfully and and it's because the the small tasks the day-to-day routine tasks are the things on our mind and so we never even get to those larger tasks you got to build your foundation you got to start with the first things first and start with the easy stuff in the small stuff and then you can really formulate your plan long term to get where you want to go and I think that a lot of people feel like it's insurmountable that I've also heard and seen plenty of statistics that people spend more time planning their vacation than they do planning for their retirement and I I believe that that is because planning for a vacation seems like something you can accomplish we can do it it's bite-sized it's easy it's a finite period of time we're gonna have a finite amount of money whereas planning for a retirement seems it's a short goal yeah so it's a lot easier for you to plan for a short goal and and mark it off than it is to think oh I've got a little 20 years down the road and that's just super oh well you know you can't do it yeah you just get really overwhelmed trying to do that but as I watch you and I watch you with your clients and you know you sit down with them and and you make a plan once it's on paper it seems a whole lot easier yeah and you know easier to obtain yeah well the questions for vacation right are where are we staying where are we going how much does it cost to get there and how much do we want to spend while we're there yep and those questions are still gonna be the same though when you retire and if you plan right for retirement now then vacation is just you know that's just something you get to do when you retire well every day is a Saturday in retirement and I know that right now for me I'm either earning money or I'm spending money I'm either at work or I'm not and on Saturdays and on vacations that's when I spend the majority of my money and so a lot of people are planning like Social Security is going to cut it and that's all they're going to need in retirement or like their income is going to substantially drop in retirement and that's just not the reality of the situation retirement can be very long can be very expensive and I tell you another thing that a lot of people are planning under the assumption that they are going to be paying lower taxes in retirement by default by de facto if you are saving your money in a tax-deferred retirement account like a 401k or an IRA and you are not paying taxes on that money today the default assumption the reason you would do that is because you somehow believe that you'll be paying lower taxes into the future and I would carefully examine that line of thinking today because taxes have come down significantly since the 401k really started you know the mid 80s the early 80s somebody making $8,000 was in the 35% tax bracket in order to be in the 35% tax bracket today you've got to make over $600,000 but taxes could absolutely turn around and go back up I believe taxes are on sale now and so Roth IRAs Roth 401ks making conversions to tax-free retirement accounts I think is a big thing again these are kind of the the more long-term questions to ask and when we go through the planning process with individuals we don't jump right there we talk about first things first what are your day-to-day financial challenges and questions and concerns and once we get the plan put together for short-term and long-term goals we try to give people a snapshot of where they are today we talk about their hopes and dreams and what they envision retirement to be about and and we put those in writing because a dream written down that becomes a goal so we have their goals written down and then we try to map out a timeline of executable action items for them so that they can easily understand what they need to do in order to make those goals a reality and then we're available for even short-term issues that come up those day-to-day issues and you know like your family two different people in a household sometimes we play moderator you know sometimes we're the doctor Phil if you will of the financial world where we are balancing a couple different personalities and and different different descriptions of what we dream for and hope for and and envision retirement to be about or even what we think the next week should be about oh right Peter because I know in my household if I bring in a third-party professional nine times I tend my husband's gonna listen to them way more than he will just talking to me no it's true so you know if you if you can manage to get your significant other to sit down with someone else to bring an outside view in it usually does really help and I've just seen that over and over in our office as well well again that's what we are here for and if you would like to have those conversations if you would like a optimized retirement plan in your hands simple easy to understand language steps action items that you can execute on that you can read and understand what you need to do give us a call feel free we'd love to hear from you we'd love to talk it over with you on the phone or through a virtual meeting or in person and eventually if it merits we'd love to put that plan together for you there's no cost no obligation for that we get all the way up to that step where you've got the plan in your hands before we even have a conversation about what our compensation is or what our costs are and we are very cost conscious another quality I know you are very cost conscious you care what you pay for things I do I understand that people are like that I am like that and so before we cross the bridge threshold where anyone is obligated to pay anything for planning they've got a plan a tangible document in their hands and they understand how we would help them execute that plan what we would do on an ongoing basis to deserve any compensation and we are very upfront about what that compensation consists of what it would be so if you would like that kind of conversation and again it's just that to get started a conversation about your money about your finances give us a call Rashaan planning this rich on planning that's what it looks like nine one nine three zero zero five eight eight six nine one nine three zero zero five eight eight six nine one nine three zero zero five eight eight six you can go online rich on planning calm against my last name Rashaan but it looks like rich on planning calm and right there on the website you can also request a copy of my book understanding your investment options it's not exciting it's not a page turner but it's important information that I think if anybody does want to have a better grasp a better handle and understanding of how to put your money to work for you it's a great read it's a an important book for you to have so I'll make that available to you for free go online rich on planning calm or give us call nine one nine three zero zero five eight eight six and generally Carter thank you for opening up a little bit about your your money your finances and what that looks like in your household you're welcome Peter it was a nice to be on with you well that was a great conversation certainly appreciate generally sharing and I got another one of our team members here with me now this is a younger man Landon Holland is one of our team members on our production side he handles actually producing these radio shows for us so Landon welcome in hello Peter hey how you doing good what about yourself doing well doing well Landon give just a little background you you are in school how old are you what what grade are you in 17 years old 11th grade at Fuquay Verina High School all right all right and you're earning some money now you got a job getting paid what what are you doing with that money saving up not really trying to just blow all through it okay good good you got anything on your mind that you're hoping to to buy anytime in the future plan on getting a better computer okay the laptop I have now is really slow like you'll try and do something then five seconds later it finally starts to work five seconds that's that's a long time for for computers today I guess it is yeah yeah all right so you've you've actually you've thought about what you're saving up to purchase and it sounds like kind of intentional with what that purchase is going to be don't don't want just any run-of-the-mill laptop or device or video game system you're looking at like a real desktop computer a buildable PC because it'll be better on the less expensive side okay and you can get the specs that you want yes fantastic fantastic man that's awesome a that you're saving be that you you're you're saving with purpose and intention and I think that's what everybody should do but a lot of people don't like a lot of people the money comes in the money goes out they don't know where it went all of a sudden it's not there right they've they've eaten out they've bought a few things they've got a couple new gadgets as we as we get a little bit more affluent they've got a new boat in the driveway a new car in the garage nice house lots of things inside of it but where did the money go right and so I think we need to have that perspective as you're beginning to earn money and building up that that account saving should be a priority and I want to let you know now saving and paying yourself first should be the first thing that you do with your money right what by the time you see it the government's already seen it all right so you you you you work you put in your hours you're in a certain amount and that's what you expect in your paycheck but by the time you actually receive your paycheck it's already passed through the IRS's hands and you only get what they decide is left over for you so you pay the IRS first of what you have left you should absolutely decide intentionally to pay yourself first okay and Dave Ramsey I'm a Dave Ramsey smart investor pro he's he's a big-time radio show host and financial guru and he talks about financial discipline and control and living debt-free he suggests he's pretty adamant about it fifteen percent of your gross income should go toward your retirement accounts okay now my suggestion for you is Roth IRA all day you know anything about a Roth IRA no sir okay so let me let me kind of explain it this way when you're saving for yourself for retirement picture it as you're putting money in an envelope and you're mailing it to yourself in the future now when you open it in the future there's gonna be more money there because we hope for growth right with retirement accounts if you if you qualify money as a retirement account you get a few benefits all right and you can decide which benefits you want to have but you also have a few limitations technically you can't use the money until fifty nine and a half right that's what the government has deemed an appropriate retirement age I I picture two senators on the golf course and one wanted it at fifty nine the other one wanted at sixty and they say well I'll meet you in the middle fifty nine and a half I don't know why they decided fifty nine but that's that's the age okay so when you are putting money in that envelope you can make a decision do you pay tax on it now and all of the growth that occurs and when you open that envelope all of the money that's inside you get to keep it's a hundred percent yours that's a Roth Roth IRA or Roth 401k or do you get a tax break for that money now do you get to make that money go in that envelope before the IRS sees it and then when you open it in the future they're going to tax everything that's there right now Albert Einstein said the most powerful force on the planet was the power of compounding interest and I I believe that the IRS was paying attention they knew that if they let you make that decision and not pay your taxes on the seed that when you opened up that envelope in the future if there's growth on your money you end up paying them more okay so for you being younger having a lot of time for this money to grow go ahead and pay your taxes now pay your taxes upfront because you're probably in a much lower tax bracket and tax environment than you'll ever be for the rest of your life especially 40 years down down the road here I think taxes will be higher in the future for a number of reasons I fully believe that but if I'm wrong if I'm wrong about that assumption and taxes are the same as they are today and you've planned under the assumption that they'll be higher guess what you've got more money than you thought you were going to have in retirement so it's it's not a bad not a bad deal either way so again I would suggest for you the Roth IRA and for most younger savers and investors all day every day I would suggest maxing out every Roth opportunity that you have and even for those that are kind of on the doorstep of retirement or even already retired we are in a low tax environment right now we understand what taxes are today we can buy the IRS out of our retirement accounts today but if you keep deferring we don't know what changes will happen with tax law into the future and you are subject to those those changes so have you ever heard the saying it's not what you make it's what you keep no no okay well let me let me tell you it's not what you make it's what you keep and taxes are the biggest thing standing between those two okay when you talk about what you make that's your gross pay and then after taxes that's what's called your net pay so it's not what you make it's not that gross it's what you actually get to keep that's your net pay and with your retirement accounts how you're going to base your retirement do you hope to retire one day I hope so all right what one day you don't want to have to work right man of course maybe you'll do something if you want to do it but you don't want to have to do it just to pay your bills of course that's that's the hope you know time time is more valuable than money or else we would just keep working and working and working for more money but that's not that's not really how it works we trade just enough of our time for hopefully enough money so that we can enjoy some of the rest of our time and and one day we reach the point where hopefully we don't have to work anymore that's retirement right but in retirement you've got to think about that retirement account the same way it's not what you have it's what you get to keep and right now there's a lot of people out there with a five hundred thousand dollar retirement account with a million dollar retirement account and they come in they say I've got a million dollars and I say congratulations let me take a look well let's see what you got here and it's all tax deferred and I have to break it to them sorry you don't have a million dollars you've worked hard to build this up you're debt-free except for the debt that you have to the IRS inside of this retirement account and really only 650 to 750 thousand of this is your money so how are we going to live off of that those are the conversations that we have with people how to be efficient how to be effective in planning how to keep more of your money so Landon thanks for joining me thanks for sharing a little bit about about who you are and and your thoughts on money but as we as we go along you know we'll have more of these conversations and hopefully you get a good handle now because if you save from the age of 20 to the age of 30 and then stop you'll be better off than somebody who starts at 30 and saves all the way till age 60 that's how compounding interest works so start early okay okay all right well we appreciate land thank you very much and ladies and gentlemen if you want to have conversations about your money if you'd like to talk things over learn a little bit more get a different perspective understand better how to be efficient leverage your dollars have a plan in your hands that you can understand give us a call we're happy to help you we're happy to have those conversations and put those together I am Peter Roshan founder advisor at Roshan planning it looks like rich on planning you can go online to rich on planning you can request a free copy of my book understanding your investment options or you can give a call and we can set up a time to talk and if it merits if you believe it'll be beneficial a time to really sit down and and get to business of putting a plan together we do not charge for that plan you have that plan in your hands before there is any type of compensation and we have the conversation about exactly what that is and and what it will provide you as far as benefits before you're obligated to any costs or expenses so if you'd like that plan in your hands if you'd like a free book give us call 9 1 9 3 0 0 5 8 8 6 9 1 9 3 0 0 5 8 8 6 or go online rich on planning calm appreciate you tuning in talk to you soon this has been planning matters radio the content of this radio show is provided for informational purposes only and is 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