← HerMoney with Jean Chatzky
HerMoney with Jean Chatzky
Ep 479: Katie Gatti Tassin is Retiring Early: Here’s How She’s Doing It, And You Can Too
00:42:28
A look at how today’s young professionals are rejecting outdated financial advice.
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Transcript38 lines
- [00:01]
A
When Novo Nordisk, Invenso Zempic, I want to own that company. Same goes for the emerging markets because we don't know what's going to happen over the next 30 to 40 years and which countries and which economies are going to really take off. So I do want to own US Equities. I want to invest in US Companies because I believe that US Companies will continue to do well. But I don't want to only own US Companies.
- [00:27]
B
Hey everyone, thanks so much for joining us today on HerMoney. I'm Jean Chatky and if you have haven't been watching the show Hacks, well, you should be. I love it. There is this recent episode where Jean Smart, who plays the new host of Late Night, she's in a meeting with the network's data guys and they are urging her to make jokes more appealing to middle class women because, and I quote, women be shopping. Well, yeah, we do be shopping. And you know, I always say buy the latte if you want to buy the latte. But we're also quietly discovering new ways to build wealth. And no women are doing it quite like Gen Z. These women are not just budgeting, they're investing. They're negotiating for higher salaries. They are talking about it and they're redefining what success looks like to them so that their financially stable future isn't some far off dream. It's part of a very strategic plan. One of the voices leading this new wave is Katie Gatty Tassen, better known as Money With Katie. Seven years ago she was working a job that left her feeling trapped and unfulfilled. Fast forward to today. She has become one of social media's most trusted personal finance educators. Her content has struck a chord with millions of followers and now she is channeling it all into her debut book. It's called Rich Girl Nation Taking Charge of Our Financial Futures and it is a real step by step roadmap for women to grow their wealth while tackling six uniquely female financial obstacles. With we are going to take a very quick break here. Back in a sec. One of the smartest apps to have on your phone in 2025, it's upside. It's an app that gives users the power to earn real money that you can spend however you want on everyday purchases. Whether filling up the tank, shopping for groceries, or grabbing dinner, Upside makes it simple. Just open the app, claim a nearby offer, pay as usual with a card, and snap a photo of the receipt. The cash back adds up fast. Users are earning hundreds of dollars a year and Here is the best part. It stacks with your credit card reward. So it's kind of like double dipping on savings, which of course we love. Download the free upside app and use the promo code hermoney to get an extra 25 cents back for every gallon on your first tank of gas. That's an extra 25 cents for every gallon on your first tank of gas using promo code Hermoney. The human body is pretty amazing. It can heal, rebuild, and adapt in ways that even science is still catching up to. Trust me on this. I ran the marathon last year. But let's get real. As we age, those natural processes, they slowed down. That's where Ancient Nutrition's multi Collagen Advanced Lean comes in. This is not just any collagen supplement. It's powered by clinically studied ingredients that are shown to support fat loss, build lean muscle, reduce joint discomfort, and bonus, improve the look and growth of skin, hair and nails. And right now in Ancient Nutrition is offering 25% off your first order when you go to ancientnutrition.comhermoney that's ancientnutrition.comhermoney for 25% off your first order. Ancientnutrition.comhermoney we are back with Katie Gatti Tassen, author of the new book Rich Girl Nation. Katie, welcome and congrats.
- [04:40]
A
Jean, thank you so much for having me. That was such a beautiful introduction and I just want to echo the recommendation.
- [04:46]
B
To watch Hacks Love Hacks love Hannah Einbender as much as I love Jean Smart. Yes. So much fun. I'm ready for a new season. We binged the last one. Tell all of us a little bit about your career journey, starting with this job that made you feel trapped by modern adulthood, as you put it.
- [05:10]
A
Yeah, well, you know, the CR crazy thing about that job is that I actually really liked it. I did like the job. I liked the people I worked with. I liked my company. I was making decent money, especially for somebody who had just graduated from college with a communications degree. But it was the sense of being on that treadmill that gave me a very unsettled feeling that every two weeks, right, I'm here. The best hours of my day, during the best days of my week, during the best years of my life. And I really felt like I just had nothing to show for it. Every two weeks, when that new paycheck came in, it was like, okay, cool, it's about time because I'm running out. And so there was one particular day that I was walking into work that I think it really hit me that if I don't get serious and proactive about my financial strategy here, I'm going to be doing this for the next 40 years. And that expanse of time that once felt very exciting and thrilling and full of potential to me just started to seem a little bit endless. And so that was really the inspiration for beginning to learn about personal finance and try to take it a little bit more seriously. To your point, though, about the women be spending.
- [06:27]
B
Yes.
- [06:27]
A
This is one of those cultural tropes that I think really prohibits what women who might have that same sense from really taking the reins. I think there are a couple of these tropes, by the way. There's women be spending, or alternately, women be shopping. I think that was the original. That kind of implies women aren't really good at managing money. They can't be trusted to manage money. You've got the gold digger trope. There's really no equivalent for men. This idea that in your romantic relationships you might exhibit some sort of malevolent greed. Right. We don't really see a parallel going the opposite way. And then I think another thing that had really stuck with me from a young age, and I don't really know where I picked this up, but this idea that, like, girls aren't good at math. Well, I'm just not good at math. I had really internalized that. And like I said, I don't think anyone ever told me that explicitly, but it was just. It felt like the water that I was swimming in. And so a lot of those hangups or hurdles were in the beginning, things that I had to actively unlearn to realize what I eventually realized, which is that this stuff isn't rocket science. You actually can learn it quite quickly, and if you are dedicated, you can implement it quite quickly. And when I saw how quickly I was making progress, not yet earning more. Right. And not yet really even spending all that differently, but just by putting a plan in place, I felt like I had to share that information with other people because it seemed like it was going to change the trajectory of my career and life to have a financial safety net. And that was really why I started Money with Katie.
- [08:11]
B
Good for you for getting past all of that so young. It took me a little while longer. Do you think that you're typical of your generation that this urge to not work 9 to 5, not follow the path, get off the treadmill, not retire at 65, take many retirements along the way, do it in a way that feels more personal? Do you think that that is typical.
- [08:44]
A
I do. And I think part of the reason it's typical is because I think a lot of people in my generation feel, and I would say rightly so, that the social contract that worked for their parents and grandparents doesn't quite work the same way anymore. And I'll use my dad as an example. He worked for the same company for his entire career. He was able to retire in his early 50s because they did save diligently. But he also has a very generous pension. Pensions are pretty much an anachronism now. They're basically a thing of the past. And so that tri legged stool that we used to think about when saving for retirement, where you have your Social Security, you have your pension and you have your personal savings, one of those legs has been almost completely kicked out from under you. The other, who knows how that's going to look in 30 years from now. And so I think a lot of people recognize that they might have to think differently and that just kind of following the path that's laid out for them isn't guaranteed.
- [09:52]
B
And you've been very clear that it's not that your generation doesn't want to work. I think that's important. It's that you want options, right? Not everybody can become an influencer or a financial expert. But what are the options that you see some of you, your colleagues, your friends, your listeners pursuing that are giving them the freedom that they want?
- [10:16]
A
I think there are a couple different ways to approach this. So I will say that as far as the friends that I have that are really thriving financially, most of them have made online careers. They are entrepreneurs in some capacity. So they own the means of their own production, they own the intellectual property that they are profiting from, and they are really leveraging the Internet to make money. I think that that is quite common. Not necessarily as influencers per se, but it is a big part of the way that they've built their livings. I think that there was an interesting piece that came out in the Wall Street Journal a couple weeks ago that showed that the career paths that young people are taking now, particularly that kind of Gen Z Young millennial cusper, which is right around where I am, the way that young people are earning a lot of money today is deviating slightly from the way that people used to earn a lot of money. So you still have doctors and lawyers who are earning good salaries, but it's also banking, it's consultants, it's the tech sector. These are places where young people are finding that they can be paid to the most. And I think, I look at that and I go, okay, the top 5% of millennials are actually making a lot more money than the top 5% of baby boomers did when they were our age, the ones that are working in this field and creating online careers. But I am a little bit alarmed by that personally, because I think that it is indicative of a trend that tells us that the careers where people can make the most money are not necessarily the ones where you are adding the most value to soc. I have friends that are consultants that would not be offended by that statement. That would be like, yep, you know, I make slide decks and I get paid a ton of money to do it. So I think that what we see with my generation is a very practical and rational recognition of the economic conditions that they're in and they're really not going to school to follow their passion. Or, you know, there's this joke about the underwater basket weaving that gets trotted out whenever we talk about people taking on too many student loans for jobs that don't pay well. But I think that that is a big misconception about Gen Z and younger, that like, they don't know what's going on. A lot of kids are going to college only to study things that they have a very practical sense will pay off for them because they know that there's really not any other option in many cases.
- [12:53]
B
I think you definitely have a point, although I am listening to you. I graduated from the University of Pennsylvania in 1986 surrounded by folks who were there exactly for the reasons that you describe. Right. I'm on the cusp of the Xers and the Boomers. I'm sort of that 1964 year where everything shifted and I came out an English major thinking, oh my God, what am I going to do with this degree that really didn't set me up to. To pay a ton of money and found my way, as you have, through being entrepreneurial with communication skills in a not so non traditional way. But I do think it's. I do think it's more common than it used to be, in part because of the pressures that, that you described. Let's talk about the book. Chapter one of the book is entitled the Hot Girl Hamster Wheel. It sure is. It sure is. You describe it as this endless rotation of expenses. Nails, hair, skincare, all in the name of staying presentable. Did you, did you succumb to this? And what did your hot girl detox look like?
- [14:18]
A
I sure did. So the hot girl hamster wheel is what I came to call the rotating and recurring litany of expenses that are required. So the interesting thing about everything that you just listed right, the hair, the nails, the Botox, these are not one and done purchases. These are, once you get on that hamster wheel, you actually have to keep re upping pretty regularly in order to keep up appearances. And what I noticed about some of these expenses was that they actually, if you don't re up, they actually leave you kind of worse off than you were before. If you get your hair colored and then you let it grow out, it looks worse than when it was just your normal color. If you get gel nails or acrylic nails and then you don't get them properly fixed and redone, your nails are more brittle and they don't look as nice after the fact. So I started to recognize some of these forces as a little bit coercive financially. And the reason that I became so hyper focused on them was because when I started really taking personal finance seriously, I sat down as one does, and I did the personal finance audit of my life. I said, where is all my money going? And I was warned by a lot of the personal finance influencers and educators that I was following at the time that there are a few categories that are usually tough for people, Housing, vehicle, et cetera. But all of that for me was very reasonable. I was living pretty beneath my means or within my means on those big ticket items. But the beauty and personal care category for me was something like 10% of my take home pay. And I couldn't find really much talking about it online. The people that I was reading weren't really addressing it. I was like, what do I do about this? Is this normal? Is this like a regular? Like, should I be spending this much? And so I'm looking to, you know, my social surroundings, the women that I work with professionally, the women I'm spending time with on the weekends, and they all have highlighted hair and gel, manicures and spray tans and they're waxing and, you know, they're doing all these things. So I'm like, okay, well, it seems like this is a pretty normal thing to spend money on. Like, it's probably fine. But the more that I learned and dug deeper and realized just how much and this figure is from 2017. So I'm sure it has increased because the filler and Botox explosion happened post 2020 when everyone got really sick of looking at their faces on zoom screens. But the average woman in 2017 spent around $300 per month on her appearance now over a 40 year career. Gene, I know that you understand how compounding works. I did the math and I realized that that's about a million dollars in opportunity cost. Had that money been invested instead, if you're just getting average market returns. So that really led me to think about this as an area where we've grown very comfortable talking about the beauty standards, negative impacts on women's mental health and our emotional health psychologically, how they impact us, but that we are not yet as fluent in discussing how they impact us economically and financially. And a million dollars is not a cost at the margin for most people. That's a retirement supporting amount of money for many. So I think it's something that's worth talking about directly.
- [17:48]
B
I think so too. And I think there are definitely ways, and we learned this during COVID where you can get away with a lot less. I mean, I don't know what sort of a detox process you went through, but during COVID I started coloring my own hair and have not stopped. I gave up the manicures and really have not gone back. In part because for me, it's not as much of an economic decision. I can afford this stuff. I just don't want to put in the time. Like, nothing bothers me as much as having to sit with my head in the sink for 45 minutes at. And like I could be doing other things that are more. That are definitely more important. How'd you deal?
- [18:34]
A
Well, I think the detox is going to look different for everybody depending on where you're starting. I lived in Dallas, Texas, which is kind of like the blonder and bigger the hair, the closer to God country. So I was a pretty big spender on this stuff. I was in my early 20s, so I hadn't really dabbled in the more expensive cosmeceuticals and things of that nature. But I was spending around $300 a month. And what I did was I listed out every single personal care or beauty item that I was spending on and I ranked them in order of importance to me. So something that was near the bottom for me. Manicures. Same with eyelash extensions. They were very popular at the time. And both were pretty expensive. Both were very time consuming. Both had to be done very frequently. We're talking every two weeks or so. So it's no small time commitment to your point. And one by one, I just started removing them from my budget and from my schedule. I canceled the appointments and I said, I'm just gonna experiment. I'm just Gonna see how it feels to revert back to my natural self. And I basically got all the way up to my hair, my highlights, and I was like, oh, that's one that I don't feel prepared to break with yet. So we're gonna leave that one for now. But. But I got rid of pretty much everything else and replaced it with at home treatments or fewer and farther between lower expense alternatives. But what I realized and what was really the big takeaway for me is what you noted, that, yes, it certainly made a financial impact at the time when it was a pretty sizable part of my budget. But it was the time that was the thing that I was surprised once I started getting it back. It's like the frog in boiling water. I was like, oh my God. I didn't realize how much time and energy I had been devoting to this.
- [20:25]
B
And I think what's so interesting about the methodology that you just laid out, and it is a methodology, is that you can apply it to any sector of your life, right? You want to look at your food spending, look at your food spending. You want to look at pets? When we take people through our finance fix process, people are shocked at the amount of money that they're spending on their pets. You wanna look at travel, you wanna. Everybody has a different Achilles heel. You gotta figure out what yours is, and then you can go about examining it and changing it. Another obstacle you lay out in the book is that women simply get paid less than men and that two things can be true at once. One, women don't earn less than men because they're bad negotiators. And two, learning how to negotiate in a way that effectively negates gender bias can help women learn more. Let's unpack that.
- [21:24]
A
So in Rich Girl Nation in chapter two, I tell this story of getting my first job and noticing quite early on that my department, while it was predominantly female, that the most powerful and highly paid people at the top of that organization were all men. And so this was around the time that the, what I refer to as the girl boss era was reaching its crescendo culturally. So I read Lean in, right? I'm like, okay, I gotta. I gotta find the advice that's gonna help me escape this stalled out middle manager fate that I can see plain as day happening in this department. I can see all these talented, frustrated women around me that are fighting against this. And I think that in the beginning, I really embraced this wholeheartedly and I thought this is the way, right? And then I think as I learned More. And I became more acquainted with economic research like that of Nobel Prize winning economist Claudia Goldin, who's done a ton of research about the wage gap and has really linked it to caregiving and what she calls the greedy job in a. In a partnership. And, you know, you started learning about how the wage gap actually gets bigger as women enter their 40s and 50s. And like, there isn't much of a wage gap before you have children. And then suddenly it becomes this gaping chasm. I was like, okay, I think there's maybe more to this story here. And so for a while, I think I had actually completely rejected a lot of the advice that maybe scanned as ladder climbing because I felt like it was misleading or I felt like it was thrusting the responsibility back on women and being like, well, you're just not trying hard enough or you're just not negotiating correctly. And I think where I ended up, you know, after really sitting with that and grappling with it, frankly, for years, was that it is not the case that women today do not ascend to levels that men ascend to. And when I'm saying ascend to levels, I'm referring to the fact that something like 95% of top 1% earners are male. And we know that your income is directly correlated to how much wealth you can build and how quickly, but that if you learn how to navigate and prepare for some of these statistically likely pitfalls, you can improve your personal outcomes. And one of the experts that I interviewed for the book, her name is Katherine Valentine, she is a negotiation expert for women that really focuses on scenarios where the research supports that essentially gender bias is likely to play a role. So, for example, if a woman is asking for a masculine coded good, this is money, this is power, this is status. Things that are thought to subconsciously or consciously rightfully belong to men. If a woman is asking for that, she is more likely to be penalized for doing so. The same is true for men who ask for more flexibility or negotiate for something that is gender incongruous for them. So this does go both ways, but for women it means fewer resources. So Catherine gave me a lot of really good advice that I spend a lot of, chapter two unpacking about how women can prepare for, identify, and to the best of their ability, basically circumvent those pitfalls.
- [24:49]
B
It's fascinating research. We've spoken with Katherine on this show before, and I think what she does is not only really important, but really useful because you can take that information and actually apply it to, in Your next job negotiation or in your planning for your career. You get really candid about your wedding in the book. And I'm going to actually tell people that if they want to read that part, that part is beautiful. But I want to fast forward to being married because one of the questions that we get asked a lot on this show is what's the best way to manage money in a relationship? I think that you've basically decided that you do it like my husband and I do it. But how did you come to your definition of best?
- [25:40]
A
To me, I think it's important to walk the line between morale boosting and kind of good for the team that you are as a couple and your relationship, but also realistic about the risks. So I think about kind of the three different options. One is the traditional model. We combine everything, right? Everything is jointly held. There is no singular accounts. You have what I call the roommate model, which is more popular today than I'm sure it used to be, for obvious reasons, which is basically we split everything 50, 50, or proportionally, but all of our money is kept separate. This is common. I talk to people a lot. This is probably actually the. The situation that I hear from people the most about. Like, this is what is the most popular for people my age. And I think that if that is what people want to do, that is obviously fine. But I always warn people the separation in that case is a little bit of an illusion, that once you get married and you sign on the dotted line of that. That marriage contract, all income is joint income. Assets that you are purchasing or investing in with joint income are joint assets. So you can, like, keep everything separate according to the name on the account. But, like, if that relationship does not last, that separation is not really real. And I think that that's important to be aware of if that's why you're keeping everything separate. The final model is what I call the yours, mine and ours. And that's what we do. It sounds like that's what you do. So in this model, you're basically working toward joint goals jointly, but then you still have some accounts that are held in your name only. So in our case, both my husband and I had done quite a bit of saving and investing prior to getting married. We didn't then retroactively combine all that money or open new accounts and put all that money into it. I still have my brokerage accounts. Obviously my retirement accounts are individual by nature, as are his. So we have that money. That is separate property, both legally and literally. But once we got married, we really wanted to get on the same page about finances and approach our goals like a team. So we do have a joint checking account that all of our income flows into that pays all of our bills, and all of our credit cards are hooked up to it. So we think about it like our money, and then we invest in a joint brokerage account with the money that we decide to save. So that works really well for us. One slight tweak that some people like to make on that is they'll have their incomes going into individual accounts, and then they'll fund the joint account. That's just a step that I personally felt was unnecessary for us because we did the legwork first to get on the same page about finances. And I think that the importance of that cannot be overstated. There was a great interview we did on our show with a guy named Bill Nelson who basically said, if you're keeping your finances separate because you have a strategic reason for doing so and you're on the same page, that's very different than keeping them separate because you want to avoid having the conversation. And I think that that's the critical piece of this.
- [29:04]
B
Was it easy for the two of you to talk about money, or did you find that there were some points of contention?
- [29:11]
A
My guess is that it was easier for us than most because we were both into the fire community independently of one another. And so I think we had similar views on how we wanted to approach our finances. But there was one instance when we first got married, before we opened the joint account, that I think was kind of the. I don't want to say the straw that broke the camel's back, but the. The proof point that told us that keeping things separate was not going to work for us. We had gone out to get milkshakes, and this was when we were splitting everything 50, 50. And he buys our milkshakes. And we get home and I get a Venmo request for the milkshake, and I was like, we're married. This is crazy. Like, why are we doing this? So it's not. It's not as though we haven't had arguments or, you know, differences of opinion. But I do think that for us, sitting down and getting serious about it and kind of hashing that out early on has saved us a lot of argumentation and back and forth.
- [30:12]
B
We are going to take a very quick break here, Katie. When we come back, I want to dig into investing. You've got a super specific investment portfolio breakdown that skews pretty heavily toward global markets. I want to talk about why that right now and get into the details for our listeners. Back in a sec. Here is something I've learned. Making good financial choices does not mean having to give up the things you love like delicious home cooked meals. Think you have to spend big bucks or big hours in the kitchen to make that happen? Think again. With every plate you get flavorful, satisfying dinners like crispy Buffalo Ranch chicken or cheesy Mexican street Corn hash and they are ready in 30 minutes or less. Every plate is one of my go tos for busy weeks when I don't want to overspend or fall into the what's for dinner spiral. What are you waiting for? Dig into these flavor packed meals your household will love. New customers can enjoy this special offer of only $1.99ameal. Go to everyplate.com podcast and use the code HERMONEY199 to get started. This is applied as a discount on your first box. Limited time only. If retirement's on your radar or even if it still feels far off in the distance, you need to know where your money's going today because here's the truth. You cannot plan for the future if you don't have a clear picture of the present. Enter Monarch Money. It's the personal finance platform that's more than just a budgeting app. It's a full command center for managing money with confidence. With all of your accounts, checking, credit, investment, retirement, HSAs, even crypto connected in one place, users get a clear real time picture of their financial lives. Monarch is the tool real people use and actually like, including my producer Haley. Get control of your overall finances with Monarch Money. Use code hermoney@monimalmoney.com in your browser for half off your first year. That's 50% off your first year at monarchmoney.com with code hermoney. We are back with Katie Gatti Tassen, author of the new book Rich Girl Nation. You should all look for that. All right, investing if somebody handed you $100 today and said make this grow, what's your game plan?
- [32:57]
A
So my game plan is twofold. Number one, I'm gonna make sure that I'm investing in a tax advantaged account because I don't want to take the tax haircut or I want to avoid taxation as much as I possibly can. That tax drag. And the second part is that I'm going to be diversified. I love J.L. collins. He has become a friend of mine. I love his vtsax and chill simple path to wealth formula of Keep it As simple as possible. But for me and my timeline, my outlook, I don't personally and have actually never felt personally all that comfortable investing only in US equities. So for me, I'm going to take that hundred dollars and I'm going to spread it out. I'm going to buy large cap US equities, but I'm also going to buy small cap value. I'm going to buy the polar opposite right of that large cap growth. I'm also going to invest in developed markets because I want to own when Novo Nordisk and Venso Zempic, I want to own that company. Same goes for the emerging markets because we don't know what's going to happen over the next 30 to 40 years and which countries and which economies are going to really take off. So I do want to own US equities, I want to invest in US Companies because I believe that US companies will continue to do well. But I don't want to only own US companies.
- [34:18]
B
Is there a proportion that you can sort of outline for us? How much goes global, how much goes US how much goes to bonds?
- [34:29]
A
Well, I think that depends a whole lot on your age, your risk tolerance and the timeline that you need this money in. For me personally, as someone who's 30 years old, who is investing pretty aggressively, who doesn't foresee needing this money for a long time, I typically will probably do something in the ballpark of maybe 10% fixed income, so like 10% bonds and then dividing the remaining 90% up amongst those different asset classes that I just described. So for me at this point, especially with, I don't really do a lot of rebalancing personally for me at this point, I probably have actually close to like 50 to 60% in the US like total stock market and then probably around, let's see, 20ish percent in small cap, mid cap, you know, those different market capitalizations that you're not really getting a ton of exposure to in something like a total stock market fund that's cap weighted and then the remaining, what, 10 to 20% in developed markets. But yeah, it definitely changes over time from what I maybe would have allocated years ago when I set it up to like how it has grown and changed now. But what's interesting and what I've really been, I don't know, maybe pleased to see this year or vindicated to see this year is that up until, I don't know, the other day, really when the stock market turned positive for the year, my international exposure was performing much better. Than my US exposure and kind of buoying the portfolio. I wasn't down as much as I probably would have been. So in years past, where the developed markets and the emerging markets had maybe kind of kept a lid on my growth, it also provided a bit more of a floor. So it has helped with volatility.
- [36:25]
B
I want to let you off the hook when it comes to the rebalancing. I do rebalance, but. But I had an. I interviewed Jack Bogle a number of years ago, and I asked him, oh, yeah, no, I mean, amazing. But I asked him how often you should rebalance? And he said, once or twice a year. And then I said, okay, how often do you rebalance? And he said, ugh, I haven't rebalanced in a decade.
- [36:52]
A
That does make me feel better.
- [36:54]
B
Even professionals don't often do it the way they say that you're supposed to do it.
- [36:58]
A
Well. Cause sometimes I feel like I should have my personal finance card revoked for that. But I'm like, I just want to be honest. I don't really take the time to do that.
- [37:05]
B
It's okay. I haven't balanced my checkbook since 1986. So there we go. You are planning to have kids in the next few years. And one of the most interesting things that I found think you've done is break down the costs in a practical way that I have never seen before. You say that if you are shooting for five years from now, saving, and this is a quote, $897 per month between now and then, we'll have you covered. Or if you're doing it with a partner, $448 each. That's really specific.
- [37:45]
A
That's a lot of money, isn't it?
- [37:46]
B
It's a ton of money, but it's also. It's highly specific. So how did you get there? Is that the right number for everyone? What goes into it? And what are you doing with that money in the interim? Where are you parking it?
- [38:04]
A
So this is in chapter five. Every mom is a Working Moment. And it was a table that I built because I think that the costs of childcare often kind of catch people off guard. It caught me off guard when I started talking to parents. Talked to a couple in Boston a few years ago who said, oh, yeah, our childcare is $4,000 a month. This was at a time in my life where I was barely just past the point in my career where I was earning more than $4,000 a month. And I was like, how do people do this? For example, even now in Denver, Colorado, my landlord, their childcare for two kids is $5,000 a month. And so I basically looked at the average cost of childcare for I think it was something like 300 metro areas. There's really good data from the MIT Cost of Living calculator about this. So if you are planning to have children, you can get hyper specific about what it is likely to cost adjusted for inflation by the time that you want to do this and save ahead of time. So I typically think that if you're talking about something that's going to be within a few years, you're probably going to be looking at something like a high yield savings account, which is now more reasonable because interest rates are not 0.5% or something like a CD ladder where you can maybe even get higher rates, maybe a money market fund, but that you do want this money to be growing, you also want it to be protected. You also want to limit your downside risk. So I took those averages for, okay, if you want between call it 10 and $15,000 a year ready to go by the time you have kids, you want to take that pressure fully off yourself. And you know this is something that you want, you might as well start saving for it now. And the cool thing about these high yield savings accounts or money market fund is that because you're going to be taking the money out little by little, it's almost akin to a mini retirement, like a mini 4% rule calculation where yeah, you're going to be taking out $1,000 or $2,000 a month, but the remaining 50 or 60,000 is going to stay in that account and continue to earn money for you. So it ends up that you don't need to save as much as, quote, five years worth of daycare upfront because that interest does start to do a little bit of the heavy lifting for you. But I just think that this is a really good way for people to practically and realistically prepare for an expense that you know you're probably going to have and give you more optionality when the time comes so that you aren't faced by default with a really hard decision about whether or not you're going to keep working and pay for daycare. If you're gonna leave your career behind, you wanna be making that sort of decision as a parent, I think, and I would wanna make that sort of decision from a place of strength and optionality and not because I'm backed into.
- [41:11]
B
A corner a hundred percent. Katie, I could talk to you all day. The book is fantastic. I've sent it to my daughter.
- [41:19]
A
Oh, thank you so much.
- [41:20]
B
Absolutely. I think required reading. Thank you so much for being on the show. I hope that you'll come back.
- [41:26]
A
Jean, it was a pleasure. Thank you so much for having me. Thank you for saying that. And thank you for sending your daughter the book. I'm so honored.
- [41:32]
B
Absolutely. If you love this episode, please give us a five star review. On Apple Podcasts, we always value your feedback and if you want to keep the financial conversations going, join me for a deeper dive. HerMoney has two incredible programs, finance Fix, which is designed to give you the ultimate money makeover, and Investing Fix, which is our investing club for women that meets bi weekly on Zoom. With both programs, we are leveling the playing fields for women's financial confidence and power. I would love to see you there. Her Money is produced by Hayley Pascalides. Our music is provided by Video Helper and our show comes to you through Megaphone. Thanks for joining us and we'll talk soon.