Best of Both Worlds podcast: Jean Chatzky on money, investing, and goals

Best of Both World podcast with Laura Vanderkam

Much personal finance content out there focuses on getting out of debt, creating a budget, and frugal hacks that can save a few dollars here and there. There’s nothing wrong with these steps, but a good chunk of Best of Both Worlds listeners have moved beyond them. Let’s say you’ve reached the happy place — by choice and circumstance — where the money going out is less than the money coming in.

Now what?

Sarah and I welcomed Jean Chatzky to the podcast today to talk about this topic. I first learned of Jean’s work many years ago when I watched the Oprah Winfrey Show’s “Debt Diet” series (on the treadmill, naturally). That was seriously great TV. Jean is also a regular contributor to the Today Show, the host of the Her Money podcast, and the author of several great books including Women with Money (note the “with,” not the “and”!)

She talked about benchmarks for money success. First, she recommends saving about 15 percent of your income. If you can do more, awesome, but that’s a good goal. If you’re doing that, you should hit her retirement savings benchmarks: One year’s salary by age 30, three years’ salary by age 40, six years’ salary by 50, and so forth to ten x at retirement.

(Just to put other numbers out there, the FIRE folks — financial independence/retirement early — tend to recommend building up 25 times your annual expenses, so you can pull out 4% a year, with the assumption that you will continue to grow your portfolio by that amount simultaneously, and hence not run out of money. Depending on your income and planned expenses, and whether you’ll be old enough for Social Security, these numbers could be similar, but as Jean noted, most people have a better handle on their income than on their planned retirement expense level.)

Of course, you can’t just put the money in a minimal-interest-bearing savings account if you hope to stay ahead of inflation. And unfortunately, there’s some evidence that women tend to leave a lot more money in not-terribly-productive assets than men do. The good news is that investing has become a lot easier and more accessible over the years. You could honestly put almost everything in a target date fund (i.e. a fund designed to rebalance your portfolio over time to lessen risk as you get closer to retirement age) and be fine. Index funds (which track major indices such as the S&P 500) are a great option, and you don’t need a fancy brokerage to tell you how to buy and hold those. If you do feel you need a financial advisor, Jean recommends going with someone who will look at everything holistically: taxes, real estate, etc. in addition to your portfolio.

Finally we talked about how to talk to kids about money. Jean is a proponent of allowances as a teaching tool, and having older kids work for money. The goal is to teach them its value, and that money — not always, but often — translates into time. You can use it as a tool, but you want to be a good steward of your resources.

Please give the episode a listen, and please share it with a friend!

 

5 thoughts on “Best of Both Worlds podcast: Jean Chatzky on money, investing, and goals

  1. I always love hearing and reading these tips about personal finance-luckily, my parents had us involved at a very early age. Unfortunately, since I am STILL in school (20 months left! Out of 108 total!!), saving has just not happened in my twenties. MD/PhDs are in a weird weird position-we have no debt (!!), but we also have no savings at ages 30-35, and our salaries make such weird jumps at each stage of our training. Hopefully it all works out!

  2. Loved this episode! She was a great guest. I like that she actually provided savings targets instead of dancing around what you should target for a savings goal. Too bad she’s been skewered for that advice! I know it’s not achievable/possible for many or maybe even most, judging by the ridiculously low savings rate of our nation (something like 7% these days – which is an increase from how low it was 5-10 years ago!). But it’s at least good for people to have an idea of what they should be saving.

    I’m glad she touched on how to discuss money with kids. My parents were pretty good about educating us about money but that’s something we want to be extra mindful with when it comes to our son!

  3. I wanted to congratulate you guys on a really wonderful episode! I thought the intro was done really well – you spoke gently, thoughtfully and candidly about FIRE etc and then the main segment was really well done too. Great job Sarah and Laura!

  4. Excellent guest! I imagine referring back to this episode as I work on my finances.

    Regarding the Q&A…I am a believer in ethical spending. While the earth is getting hotter and more polluted, while we have more ways to support fair labor, I think it’s really important for consumers to do their part. Our choices don’t have to be perfect, but I think we need to do what we reasonably can do. It need not be time-consuming or expensive.
    One way to save money is to buy less. Take a moment to consider whether you need that one-more-thing cuts down on unnecessary spending and unnecessary natural resources. Cutting down on food waste is a huge – meal planning makes this happen, and once you plan some meals, just repeat your menus to get in a groove. I joined a Facebook group on “zero waste” as a helpful resource.
    Buy secondhand, give or sell your unwanted items away to others, or swap things with others. Some resources that have helped me are local consignment shops, online consignment shops, local moms groups, and my local Buy Nothing group.
    Some ways to shorten research: find a group or blog that is like-minded, and follow their recommendations. There are also great apps, like Seafood Watch, which I use at the fish counter. In other words, use other people’s research.
    I know I am late to comment, but I hope this helps someone. I think doing a little bit, if that’s what you can do, is significant!

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