← HerMoney with Jean Chatzky
HerMoney with Jean Chatzky
Ep 527: How To Not Know: Making Peace With Financial Uncertainty
00:59:57
Why chasing certainty is making your finances worse.
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- [00:01]
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- [00:33]
Simone Stolzoff
Zootopia 2 has come home to Disney.
- [00:36]
Jean Chatzky
Let's go get ready for a new case.
- [00:38]
Lacey Garcia
We're gonna crack this case and prove we're victorious.
- [00:40]
Jean Chatzky
Partners of all time.
- [00:41]
Simone Stolzoff
New friends.
- [00:42]
Jean Chatzky
You are Gary the Snake and your last name Desnake Dream Team Hidden New Habitats Zootopia has a secret reptile population.
- [00:53]
Simone Stolzoff
You can watch the record breaking phenomenon at home. You're clearly working.
- [00:58]
Jean Chatzky
Zootopia 2 now available on Disney. Rated PG.
- [01:06]
Simone Stolzoff
There's a middle path, you know, from an investing perspective, if you spend all of your time researching without actually placing any investments, you're going to want to waste a lot of time. And two, never be able to confront your own assumptions and see whether the market will validate your choices. But if you're incredibly impulsive and you gather no information, that's another way of sort of avoiding uncertainty. And so maybe there's a middle road where you gather some information, but you don't let that completely paralyze you.
- [01:35]
Jean Chatzky
Hey everyone, welcome to Her Money. I'm Jean Chatky. Let's take a look at the economy briefly. Right now, the US economy GDP is expected to grow 2.2% this year, but that number comes with a pretty big asterisk. Tariffs are fluctuating by the week, inflation is still running a little hotter than the Federal Reserve would like. AI is reshaping entire industries seemingly overnight, and mortgage rates aren't expected to dip below about 5.8% for the next few years. No matter how closely you're watching the headlines, certainty is not a word that really seems to apply to this conversation. But what if uncertainty wasn't actually the problem? What if it's actually our desperate search for answers that is making things worse than they really need to be my guest today, Simone Stolzoff is an author and journalist who has spent years exploring the big questions about work, meaning, and identity. He has been on the show before. You guys loved that conversation. We are grateful to him for coming back because he's got a new book and it's called how to Not Know the Value of uncertainty in a world that demands answers. Drawing on psychology, history and deeply personal stories, he makes a great argument that curiosity is a more powerful compass than certainty ever could be. So whether you are someone who watches your investing portfolio obsessively or worries about whether AI is going to upend your career or your retirement, or you're just trying to make sense of this crazy world that we're all living in right now, this conversation is for you. Simone, welcome back.
- [03:42]
Simone Stolzoff
Thanks so much for having me.
- [03:43]
Jean Chatzky
Jane, in your book you write that compared to other animals, human beings have two traits that make certainty particular alluring. One of them is that our brains are wired as prediction machines. The other is that we are actually one of the few species that has the ability to plan for the future. And you describe these capacities as a blessing and a curse. Talk to me about this and how we are best off dealing with it in our day to day life.
- [04:25]
Simone Stolzoff
Yeah, thanks for the question. I mean, if you think back biologically to our ancestors, if there was a rustling in the bushes and they didn't know the source of that noise, it could have potentially been lethal. Uncertainty was a matter of life or death. And so our brains are wired to feel safe and secure when we have certainty and feel incredibly uncomfortable and anxious when we don't. It's the reason why we like mute music that's based on repeating patterns where it's easy to predict what's to come. And the same is true for our lives today. We like to feel like we know what's hiding around the corner. It's why it's so alluring when someone on the TV says this is exactly when the market is going to crash or this is who's going to win the game or the election. The problem is so often we search for certainty where it doesn't exist. And if we are too fixed to one particular vision of the future, it can be really easily to be sent off the rails if something were to not go your way. And so this ability to plan, predict the future is a blessing because it allows us to, for example, create a flu vaccine for the next season's flu season or to be able to build an intercontinental railroad that connects people. But it's also a curse in that we can sometimes stay fixed to a level of certainty that is a fallacy. And particularly with anything that hasn't happened yet, certainty is often a fallacy.
- [05:56]
Jean Chatzky
And I feel, at least in the world of investing, which we talk about every day on this show, it is the thing that prevents people from getting started if you are waiting for certainty, if you're waiting for perfect answers, it's almost impossible to get yourself to accept the fact that some things in this world just don't have them. So how do you think we start to work against these forces that are so deeply biological?
- [06:35]
Simone Stolzoff
I think you hit the nail on the head. You know, I think the biggest cost of our desire for certainty is paralysis. It's the idea that unless we're 100% sure, we should not take a leap or make an investment or marry that person. And I think in general, it's more adaptive to be able to make commitments in spite of our doubt, not when we have an absence of doubt. So when it comes to investing, for example, there is inherent risk. In investing, any type of exposure to a market means that your portfolio could go up or could go down. And yet if you never enter the arena, if you're never willing to face the uncertainty, you'll never be able to discuss the possibilities that sit on the other side of your discomfort. So one example that's pretty common, you're stuck in a relationship that you know isn't quite right for you, or maybe in a job that you know isn't quite right for you. But your comfort with the status quo trumps your curiosity for what is to come if you're able to leave that job or leave that relationship. So in a high level sense, certainty narrows our mind. It makes us only see a limited number of possible futures. Whereas if we're able to maintain that mindset of not knowing, maintain a level of uncertainty, we can discover more opportunities than we ever could have predicted existed.
- [08:00]
Jean Chatzky
I would imagine that part of maintaining that open mind is acknowledging that there are risks in not acting as well. Right. Just to go back to the investing example, if you don't put your money to work, then you're facing inflation risk, you're facing risk from taxes that is going to reduce the purchasing power of your dollar. So you're going to lose money anyway simply by doing nothing or lose time.
- [08:34]
Simone Stolzoff
There was this psychologist that I spoke with who said that when we're particularly intolerant of uncertainty, there are two main behaviors he sees. One is people become obsessive information gatherers. They to read every single review before they buy a water bottle on Amazon. They want to read the menu and know exactly what they're going to order before they step into a restaurant for dinner. Or they become extremely impulsive where they just sort of take the first option that's presented to them. And I think there's a Middle path. From an investing perspective, if you spend all of your time researching without actually placing any investments, you're going to one, waste a lot of time and two, never be able to confront your own assumptions and see whether the market will validate your choice. But if you're incredibly impulsive and you gather no information, that's another way of sort of avoiding uncertainty. And so maybe there's a middle road where you gather some information, but you don't let that completely paralyze you.
- [09:30]
Jean Chatzky
How do you know when you have enough information? Whether we're researching buying a car or making an investment, or taking a supplement, there is so much information on the web on, there's just, there's volumes. You could spend weeks on any one of those conversations. So how do you figure out where and when you hit that point of diminishing marginal returns?
- [10:04]
Simone Stolzoff
I think there are a few frameworks that have been helpful for me personally. One is often attributed to Jeff Bezos and it actually goes further upstream. And he asks us to consider what type of choice we are making. And he distinguishes between one way door decisions and two way door decisions. One way door decisions are the choices that are harder to reverse. So questions like who should I marry or should I buy this house? And they should require a really thoughtful analytical framework. Two way door decisions are the ones that are easier to reverse. Should I order the pizza or the pasta? Should I buy this stock? Invest a little bit money here or there. And the problem is we often take our frameworks for one way door decisions and apply them to these smaller decisions that are of lower consequence. And so especially when it is a two way door decision, often we can make choices faster than we assume. And by making a choice that is the fastest way to learn. I see this with jobs all the time. I do a little bit of consulting with people's careers and we often sort of white knuckle grip these decisions about should I take job A or should I take job baby? And for one, what makes a decision like that hard is often that one option is not better than the other. Overall, one option is better for some reasons, the other option is better for other reasons. And it's the trade offs that make the decision difficult. And so rather than assuming the next job you take, for example, will be the last job you have for the rest of your life, understanding your ability to course correct, to adapt as you go, should give you some confidence to be able to make that decision quicker. The sort of internal heuristic that I use is that when I am say asking everyone I know whether I should take job A or job B and my Uber driver and my yoga teacher. If it feels like I'm no longer gathering new information and it just feels like I'm trying to get validation in some of my prior assumptions, I've probably gone too far. Bezos also says you should make decisions when you are sort of 75% ready, because if you wait till you're 100%, it's often too late.
- [12:15]
Jean Chatzky
I also love a framework that was developed by Susie Welsh. I don't know if you've ever used her 10-10-10 framework, but she asks herself, what is the impact of this in 10 days, 10 months, 10 years?
- [12:32]
Simone Stolzoff
Yeah, it's often called the happiness test.
- [12:34]
Jean Chatzky
We're going to take a quick pause. Don't go anywhere. Back in a sec Lately I've been thinking more about what I actually reach for in my closet. The pieces I wear on repeat heat versus the ones that just hang there. Spring always makes me want to simplify. And that's exactly why I've been loving Quince. The quality feels genuinely elevated, the fits are flattering and nothing is overpriced. My producer Emily just stopped me the other day to ask about my cotton cashmere rib tank in heather oatmeal. It's this beautiful warm neutral that's just distinctive enough for people to notice. Refresh your every day with luxury you'll actually use head to quince.comhermoney for free shipping on your order and 365 day returns. That's quince.comhermoney for Free Shipping and 365 day returns. Quince.comhermoney I'm glad that you brought up jobs because the last book that brought you to this show was a book called the Good Enough Job. How did you get from there?
- [13:47]
Simone Stolzoff
Hear yeah, so the argument of the Good Enough Job was about the value of diversifying your identity and your sources of meaning beyond just what you do for work. It's very in line with, I'm sure, some of the financial advice that you give, which is a diversified portfolio, is a good approach to any sort of uncertain future. And I wrote it. In going on these book talks and speaking at various universities and companies, I often got the question of how should I think about the future of my career when so much feels uncertain given AI and layoffs and changing industries. And at first what I wanted to do is throw up my hands and say I'm not sure. I was a poetry major for God's sakes. But in actuality I do think that the most important career skill, especially in this rapidly changing economy, is uncertainty tolerance, is your ability to walk into an unknown situation, to trust in your future self, ability to reinvent yourself or to adapt. And that sort of mindset that is more important than any five year or ten year plan for exactly where your career will go. And so my goal of the book is really to help people get more comfortable with the unknown. When we look at uncertainty, we often perceive it as a threat or a source of fear, and understandably so. Uncertainty by design is uncomfortable, but uncertainty also represents sort of the birthplace of possibility. If we are unwilling to approach uncertainty, we will never discover the opportunities that lie on the other side. And so in some ways, my attempt in writing this book is to help people find a little hope and find a little agency in spite of all of the high level uncertainty that's swirling around us.
- [15:37]
Jean Chatzky
It is high. It's higher than its. I mean, if you're feeling like there's more uncertainty now, you make the point in the book that really you are not imagining this. You cite the statistic from the Economic Policy Uncertainty Index that the five highest points of uncertainty since researchers began collecting data in the 80s, the 1980s, they've all occurred in the last five years. Why is that?
- [16:12]
Simone Stolzoff
It's because the world is just changing rapidly. It's partly due to geopolitical instability with the rise of some authoritarian regimes around the world. You see this in the health realm with rise of pandemics like Covid. You see this in policy decisions like tariffs. You see it with wars overseas. The World Health Organization calls it a poly crisis, where there are these layered different crises in different realms of society. And as individuals, we're facing them all at the same time. But it isn't just that the world has become more uncertain. It's also that our tolerance for uncertainty is in decline. There's this really interesting study that I quote from this researcher named Nicholas Carleton at the University of Virginia. And he's found that the rise of uncertainty intolerance is correlated with the rise of Internet and mobile phones in particular. And in some ways this makes sense. We have created this expectation that answers should be readily available. I think about maybe 10, 15 years ago, I might have been okay not knowing the name of a given actor. And now I feel an almost involuntary need to reach for my phone. I think phones do two things. One is they bring all of the uncertainties of the world into our pockets. So now we can track the real time updates of a crisis overseas or the real time location of our as they move through the world and access to more information has not necessarily made us any wiser. It often just fuels our anxiety. And the second thing that phones do is they rob us of the practice of sitting with what we don't know. We don't have much exposure to uncertainty because every answer we try to Google it, every elevator ride we swipe to see if we've gotten new emails, we don't have this capacity that comes from being willing to stay with that which we don't know, rather than assume that every answer is just one I don't know. ChatGPT question away.
- [18:16]
Jean Chatzky
How do you break yourself of that? I know that younger people especially are bricking their phones, they're taking breaks. Digital detoxes are evidently really, really good for our brains. What's your preferred method of putting a little more distance between yourself and your phone?
- [18:42]
Simone Stolzoff
Yeah, I think it was Viktor Frankl who said that freedom comes in the space between stimulus and response. And I think about that a lot when it comes to phones and particularly seeking answers, because there are certain questions that are sort of acute where you can find out what year Jimmy Carter was born or who was that actor in that movie. But there are other questions in our lives that don't have answers that are readily available. And often I see particularly young people wanting certainty about what my career will look like in 10 years or who I should marry. And so what I try to remind myself of is that uncertainty tolerance is like a muscle. It's a skill that's built with time and through exposure. And by consciously not always outsourcing my attention or outsourcing my thinking to these devices or to these LLMs, I am building that capacity in myself. I saw this great metaphor the other day that has stuck with me from the Atlantic. And they were talking about using AI to solve hard problems. And the writer said it's like taking a helicopter to the end of a hike. You might get there faster, but you lose out on all the reasons why the hike is worth doing. And so I think part of what we're seeing in these trends of friction maxing or people trying to find that tension in their life is from the acknowledgment that friction creates heat. That through the struggle and the toil, that's where things become meaningful. And I'm not anti AI or anti technology or anti our phones. But for example, if we want to feel closer to our neighbors, we have to be willing to strike up a conversation with a stranger. We have to be willing to forego the certainty of assuming that you know everything about someone based on who they voted for. Assuming you know exactly how the conversation will go in favor of the curiosity that comes from being open to new experience.
- [20:51]
Jean Chatzky
We're going to take a quick pause. When we come back, we are going to go back to the part that I think hits closest to home for a lot of us money, retirement, and why the fear of not knowing might be costing you more than the uncertainty itself. Don't go anywhere. Back in a sec. Summer's almost here and I don't know about you, but I want to be thinking about where I'm going on vacation, not lying awake wondering if I can actually afford it. That's the difference between having a financial plan and just hoping for the best. And Monarch is what makes that possible. Monarch is the personal finance app that tracks everything accounts, investments, saving goals and spending. Get your first year of Monarch for half off just $50 with promo code Hermoney. What I love is that Monarch doesn't just show you what you've already spent. It helps you plan ahead. My producer Hailey uses it every single day. And once you have that kind of clarity on your finances, you really can't go back. Use code hermoney@monarch.com to get your first year half off at that's 50% off your first year at monarch.com with code hermoney. We are back with Simone Stolzoff, author of the new book how to Not Know. All right, let's get to the money. I want to bring in something from a conversation that I recently had with Hannah Horvath, who writes the Brain on Money, and she's been doing a lot of really fascinating work in the area of economic anxiety and the psychology of economic anxiety. She described this pattern that she calls financial nihilism and says it's particularly pronounced in younger generations. A third of Gen Z believes they'll never own a home. Only about a third have any investments whatsoever. A growing number is essentially saying the system is rigged, the world might be falling apart anyway, so why bother saving for a future that might not exist? They're, as a result, opting out of retirement accounts, skipping investing, disengaging from financial planning. And your book is fundamentally about what we do when the future feels unknowable. So what do you say to somebody who is responding to uncertainty with resignation?
- [23:34]
Simone Stolzoff
I get the impulse. I understand where that comes from. I am a young father myself, and thinking about my ability to own a home feels very daunting. Or my wife Is a teacher, I'm a writer. Even things about retirement or planning for the future feel hard to consider. But there's one insight that has stuck with me, which is that when we are certain about some facets of our life, it makes it easier to hold uncertainty in others. And so how I frame it is we have to find our certainty anchors, the things in our life that will remain constant amidst all the changing winds. And having an investment account, having money for savings, having retirement money set aside, these things can become the anchors that help you weather the changing winds around you. And so I understand the impulse to say, I might as well gamble because I'm not sure whether my 401k or Social Security will exist by the time that I'm older. But I actually think the opposite impulse is more adaptive, which is to say, how can I think about my future self today and put some money aside, have three to six months of liquid savings in case things go wrong, have money however much I can in an investment account that can compound over time. And by finding these anchors, I think it's easier to weather the uncertainty in the future. I think the impulse to think, oh, I can't control what the future holds. I might as well opt out of all of these financial tools makes sense emotionally. But I think one of the canonical findings from the financial world is we don't want to be making emotion based decisions. We want to hopefully make rules based decisions and be making choices about investment from our most sort of high level rational selves.
- [25:28]
Jean Chatzky
I think that what you're saying is that it pays often in the investing world, but also perhaps in the other aspects of your life to focus on controlling those things that you can control while letting go of the others, which I was actually taught by a Wharton professor many, many years ago, is how you build resilience, that if you can get yourself to really understand those levers that you can move and do the best you can in working on those while realizing that there are just some that are never gonna be in your control. You're gonna be a happier, more optimistic person who on the whole feels a little bit more in control of their life.
- [26:21]
Simone Stolzoff
Very much so, yeah. You might have heard it framed as the Serenity prayer. You know, God, grant me the serenity to understand the difference between what I can and can't control and the wisdom to know which category I'm in right now. I do think, especially with some of these big macro uncertainties in our life, like climate change, it's easy to take the path of resignation, to throw your hands up and say, I'm just going to let my worry and my anxiety get the better of me. But one of the central teachings from psychology is that action can absorb anxiety. It's actually through the doing that we begin to see more clearly and our anxiety begins to shrink. And ironically, that's also the thing that can best help climate change, which is trying to find that little string in the large tapestry that you can pull on that you can be part of a solution. I think the same is true with the AI conversation and so many other others. We need to find a sense of agency to re empower ourselves to feel like we can weather any storm ahead of us. So rather than bury our heads in the sand and say, I just really hope AI doesn't come from my job actually playing around with some of these tools and trying to get proximate with the ways in which you might be able to leverage some of these new technologies in your favor. That is a way that we kind of grab a little bit of agency and control back from the universe and shrink that big balloon of worry that might be controlling your life.
- [27:52]
Jean Chatzky
Have you noticed differences as you've explored this between men and women?
- [28:00]
Simone Stolzoff
Yeah, I mean, when you think about financial nihilism, one of the most disturbing trends that I'm seeing is just the rise of gambling. And you see these prediction markets or sports gambling, and I think they're predominantly young men who are falling into these traps. One is the just opportunity cost of all the time that you might be spending gambling or wasting your money on coin flip chances. The other is the actual financial cost of playing these prediction markets or these games that are not very much in your control. I think that becoming a parent has really changed the way that I think about the future. And now it's not just sort of a self absorbed idea of how can I maximize the numbers in my savings account. It's really thinking about what money affords me, which is the ability to provide a level of stability and security for my loved ones. I don't know what world my one year old son is going to inherit, or what college is going to look like, or what his job prospects are going to be. But I know that if I can make responsible decisions today, if I can consistently put some money away, that will compound over time and give us more optionality in the future rather than betting the farm on the result of some game.
- [29:27]
Jean Chatzky
When you think about the steps, the roadmap that you're laying out for people to live in this world, that seems to me at Least based on that study that we talked about before, accelerating in its degree of uncertainty. That the fact that the last five years has been such a hotbed of uncertainty doesn't seem to bode well for the next five years or the next 10 years. What are the three to five things that you want people to start doing on a regular basis to just get a little more comfortable with all of this?
- [30:13]
Simone Stolzoff
I think it's important to distinguish between what I call sort of acute uncertainty and the more ambient uncertainty we feel in the world. So let's start with the former category. Acute uncertainty is uncertainty that will be resolved. So, for example, you get a biopsy and one day you'll get the results of that medical test, but you don't know exactly how it's going to turn out. Or maybe you are a senior in high school and you're very anxious about where you might go to college. The first step in the decision tree is to ask yourself, can you control the outcome? So, for example, if you're a senior in college and you haven't submitted your applications yet, you can do your darndest to submit a great application or to get good grades or to sort of put your best foot forward. If you can't control the outcome, can you prepare for multiple potential scenarios? So I think a lot of the dissonance when it comes to facing uncertainty comes from having all of your eggs in one basket being too attached to one particular future. And one of the benefits of developing more tolerance of uncertainty is it literally allows you to see more options ahead of you. So maybe you prepare for what happens if you do get into your first choice, but also find silver linings if you don't get into your first choice or apply to some backup schools in case the worst case scenario happens. And so, so preparing for multiple different outcomes. Then once you've done what you can to control the outcome planned for multiple contingencies, it comes down to regulating your nervous system, allowing yourself to accept that which you can't control. And there are things that can help, like yoga and meditation or looking for silver linings, but really, at the end of the day, it comes from what you said earlier, you know, separating what you do have actionable steps to control and what you don't. When it comes to that more ambient uncertainty, you know, the things that are sort of in the world that you might have in your realm of that which you can control. Finding your anchors, I think is a great place to start choosing curiosity over fear. I think one of the hard problems with uncertainty is Our natural tendency to catastrophize or think about all of the things that could go wrong, but trying to also frame the possibility and ask yourself, what if things go right? The last point is just being able to trust your future self to be able to handle some of your future problems. I learned that line from a friend of mine named Emily, whose mom was given a terminal diagnosis when she was young, and Emily was sort of riding this rollercoaster of anticipatory grief and fear. And one day, a family friend named Bill, who's an oncology doctor, came to visit and said, emily, how are you doing? And Emily said, honestly, I'm not doing very well. I have no idea what I'll do if my mom passes. And Bill says, first of all, the version of yourself that will handle that tragic event, if or when it occurs, will be born into existence in that moment, and that version of you will have more context, more information, and be better equipped to deal with it than the version of you today. You have to trust in your future self to be able to handle your future problems. It's another way of saying you must cultivate a sense of faith. And I think faith is not necessarily just, you know, a religious context. I think it's a really pragmatic skill in the face of an unknown future. Emily's really glad that she didn't spend too much time worrying because her mom ended up recovering and she didn't sort of rush out to meet her suffering. But even if she hadn't done so, I think it's really important to think, oh, my future self has skills and capacity to course correct, to change, to adapt. And that can give me faith to take action in spite of the uncertainty that I face.
- [34:18]
Jean Chatzky
I think that's such great advice. And I've also found that if you need data to convince yourself that your future self will step up and will be able to step up, you can look at tough things that have happened in the past and remind yourself that you actually were able to cope, that maybe it was tough, but you got through it, and here's how you did it. And, and enough of that sort of data can sometimes, I think, tamp down the negative thoughts and radios that sometimes play in our heads.
- [35:01]
Simone Stolzoff
I couldn't have said it better myself. You know, that's what it means to cultivate faith. It's to build the case for why you should keep going as opposed to stopping.
- [35:11]
Jean Chatzky
I love this conversation. Thank you so much for coming back here and for talking us through the book. If folks want more information where would you like me to send them?
- [35:24]
Simone Stolzoff
Yeah, you can go to howtonotknow.com that's where all the information and my social media is as well and I hope you dig it. I feel very lucky that it feels like it's a book that's meeting its moment similar to the Good Enough Job, which came out during the middle of the pandemic and now feels like we're in this uncertain world. And hopefully this book can provide some tips to help. Help.
- [35:46]
Jean Chatzky
No doubt. Thanks so much. We'll be back. As someone who loves to cook, I've always been particular about where my protein comes from. I seek out the good stuff, the butcher counter, the farmer's market because I believe quality ingredients make all the difference. But honestly, with all my travel lately, that takes time that I don't always have. That's where Omaha Steaks has been a genuine revelation for me. Me, my husband asked me to make him the steak Diane that his mother used to make him. I did. It was delish and you could taste that. It's a real quality standard that shows up on the plate. What I love most is that I always have something exceptional to work with, whether it's a quick weeknight dinner or a weekend dinner party. Get flavorful high quality proteins delivered by visiting omahasteaks.com/35 off when you use promo code hermoney at checkout. That's omahastakes.com code hermoney terms apply. See site for details. Hey everyone, it's time for our mailbag and today we are talking about something I hear more and more. And honestly, it makes complete sense given everything that's been happening in the world world lately. The question I keep getting is what do you do with your money when your life is in the middle of a major shift? Some of you are staring down the possibility of divorce. Nothing has been filed yet. Everything is still shared and you're not even sure you're making the final call. But something in your gut is telling you it's time to start paying attention to the financial picture and you don't know where to begin. Some of you are watching your workplace get smaller. Layoffs have already happened once. The rumors are swirling again and you're sitting there and just wondering, do I keep contributing to my 401k? What happens to my health insurance? What do I actually do right now while I still have a paycheck coming in? And some of you have recently come into an inheritance money that you were not expecting, arriving at a moment that's already Emotionally complicated. And you want some so badly to do the right thing with it that you've done nothing at all. Because the fear of making the wrong move is completely paralyzing. These are all very different situations, but they share something important. They are moments where the financial ground shifts and the decisions that you make or don't make in those early weeks and months can have a real and lasting impact. That's why we're calling today's mailbag Money in Motion. To help us navigate all of it, I am joined once again by Lacey Garcia, founder and CEO of Willow. For those of you who are newer to the show, Willow is a personalized advisor matching platform that connects women and their families with vetted fiduciary financial advisors, professionals who are legally required to act in your best interest and who are specifically trained to work with the financial realities of women's lives. Lacey, so good to see you and so good to have you back.
- [39:14]
Lacey Garcia
Jean, thank you so much. It's wonderful to see you. Wonderful to be here.
- [39:18]
Jean Chatzky
Before we get into the specific questions, when someone comes to Willow in the midst of one of these big life shifts, what's the first thing you tell?
- [39:27]
Lacey Garcia
Tell them. Well, Jean, actually I started Willow based off of my personal experience of having multiple real life transitions happening where the emotions were high, where the stress was high, and feeling like I didn't know what to do, right? All these things that others might be feeling at the time as they're facing some of these life transitions. So what we say, and I believe in this and have experienced this, it's like the first thing is just to take a breath, right? To take a moment to get organized, to really understand what you have and get a clear picture as much as you possibly can. And I think sometimes that's really hard with these transitions and the emotions around it and the stress and the responsibility. So that's why also, you know, leading on trusted professionals, support professionals, you know, a fiduciary kind of financial advisor, financial planner. Maybe it's a coach, maybe it's your cpa. But I think, you know, sometimes it's hard to separate those emotions and get a real clear picture just by ourselves. So that's one of the reasons we believe so much at Willow is leaning on those trusted advisors during these moments, a hundred percent.
- [40:36]
Jean Chatzky
I may have told you this story before, but when I was going through my divorce, the best advice I got was, get yourself a good financial advisor, which I already had, by the way, a good accountant and a good therapist. And I needed all three, plus all my girlfriends.
- [40:52]
Lacey Garcia
A hundred percent. 100%.
- [40:55]
Jean Chatzky
Let's dig in here. Our first question comes from an anonymous listener who writes, jean, I need some help thinking through a situation that feels really overwhelming. And I know I'm not the only one going through this. I am planning ahead for a separation. Nothing's been filed yet, but I want to get ahead of things financially before the process starts. My husband and I have shared assets, accounts, property, things we've built together over the years. And I honestly don't know how to start thinking about how to divide any of it fairly. How do you even begin to figure out who gets what? And I've heard you talk about this on the podcast before. You said that a lot of women fight to keep the house in a divorce, even when that's not actually the best financial move. Is that true? Because my instinct is to wanna stay in the home, especially for stability. But I wanna make sure I'm thinking about this clearly and not letting my emotions make the decision for me. Lacy, really, this is several questions rolled into one. So let's parse it out and take it one at a time. Let's start with the first. When someone comes to you at this stage, before anything is filed, how do you help them start thinking about dividing shared assets?
- [42:19]
Lacey Garcia
Yeah. So first of all, feeling overwhelmed, totally normal. There's a lot here. So one of the things to do is to kind of try to separate the emotions from the practical. Getting organized and kind of creating an inventory, because just that simple question, which is a simple question, but it's such a complicated process and answer to get to what is actually, you know, an equitable distribution. Right. Because that could mean 50, 50, but that often varies, you know, depending upon the state, the length of the marriage, the financial contributions you've made, our financial needs. So the first thing you want to do really is to start by completing a complete inventory, like writing everything down. So you say that you hold everything jointly. So write all that down. Like create a spreadsheet, your bank and investment accounts, retirement, mortgage and other debts, real estate, valuable personal property, everything, you know, insurance, just write it all down. And then thinking, because one of the ways that things will be determined on what is the actual fair market value on things. So, for instance, your home. Right. Or, you know, maybe a car. Certain things might need to be valued by third party professionals. Also think a little bit about what might be marital versus separate. Like you mentioned, that everything's held jointly. But are there things that you brought into the marriage that are separate? Because sometimes those are treated Differently are often treated differently. They were commingled. Knowing what's on the table is really the best way to start by getting empowered. And Jean, I'm sure you've got lots of thoughts and advice to add on top of that.
- [43:53]
Jean Chatzky
Well, that's exactly where I would start. And it's also where any lawyer is going to tell you to start. The very first step in the process for both people is going to be to create this inventory that you're bound by so that everybody has this honest assessment of what is what, what it's worth, where it is, et cetera. You'll also have to chart your income, as will your soon to be ex, so that you can see the flows of money and who's contributing what or has been contributing what to the relationship. And if there's going to be child support or if there's going to be alimony or other forms of spousal support, those decisions are going to be based on the numbers that you put on the page. I want to turn to your question though, about the house, because I think it's important to understand why I say that it's often a mistake. It's a mistake if you can't afford to keep it and to continue to build a life that will get you to retirement on a separate track. Historically, the house was one big asset and the retirement accounts were the other big asset. And sometimes couples would swap one for the other. And the thing that you have to realize is that the house is as much of a liability as it is an asset. It costs money to maintain a house, it costs money to live in a house. Whereas retirement accounts or a pension, that's just cash investments that generally keep growing. And so when you look at the split down the road, the person housing bubble notwithstanding, who took the pension is often on a better trajectory. When you make the decision about whether or not you want to stay in the house. I think the thing to do is think about your life, think about your kids, think about how you want them to have stability and what that means. Does it mean being in the actual house or does it just mean being in the same school district? There are a lot of different ways that you can play this and then get really, really honest about the question. On a single salary, with whatever support that I'm going to have coming in, can I afford to sustain this long term term? Because if the answer is no, if you can't afford to do this until your kids are out of high school, then I think that it's a mistake. What do you think?
- [46:49]
Lacey Garcia
Totally agree. I mean, there's a reason why we hear the saying house rich cash or even life poor. Right. And I also think I would add to that I've worked with so many women and seen so many women and also had so many friends and myself gone through this that, you know, oftentimes it feels like this is stability. Right. But one of the things about the divorce is, you know, it's an ending, but it's also a new beginning. Right. So I've often seen, more often than not, I actually, I can't think of a single scenario where a woman who ended up selling the house regretted it. In fact, it was really hard to get to that decision. It took time, it was emotional. And then afterwards it tends to be more financially freeing. Right. And maybe you're renting and if you have children, clearly that adds of a lot layer of complexity here. But oftentimes you can even figure out a better setup for them as well. So I would say that I agree with you, Jean. And I think it's also, you know, it doesn't have to be a black or white. This is a bad thing. It's actually opening the door to more financial freedom and to like, new opportunities in that next chapter in what can be a very positive way.
- [47:58]
Jean Chatzky
Very, very well said. Let's go to one from Leslie. Leslie, she writes, I've hit the half million dollar mark in my retirement savings, which honestly feels surreal to say out loud. Congratulations, Leslie. That's awesome. But now that I'm no longer with my company, I'm starting to wonder, do I actually need a financial advisor at this point? I know I want to keep growing this and I have a long term retirement goal in mind. But without a paycheck coming in right now, it almost feels like a little silly to be paying someone to manage money I'm not actively adding to. Is that the wrong way to think about it? And in the meantime, should I leave my 401k where it is, roll it into an IRA, or do something else entirely? I just don't want to make a move that sets me back when I've worked so hard to get here. I also have broader questions about navigating this gap. Health insurance benefits, I'm losing income that's suddenly uncertain. What should I be prioritizing? Right? What decisions can wait until I land somewhere new? Lacey, let's start with the 401k question. I know a lot of women in this situation feel kind of frozen. What are the general considerations when it comes to leaving it where it is versus rolling over.
- [49:20]
Lacey Garcia
So looking at the 401k, leaving it where it is can often be the best answer. Right? Simple, low effort keeps the institutional protections and it's really good. If it's a good plan, it's low cost, lost funds. You know, some of the negatives might be though that you can't consolidate or easily access more flexible investment options. So second, thinking about rolling it into an rira, more investment choices, potentially easier consolidation, Roth conversion planning sort of opens it up to some of these other things. It's also important I will say, you know, before you get to your next job and then have the option of potentially rolling it into a new employer plan. This is something where I would say if you're not working within a advisor currently, but maybe do a one time session with a fiduciary certified financial planner who can actually take a look at your unique needs and help you to think through. Because they help us focus on the long term. Right. And I think right now there are so many talented and exceptional people who are out of work, highly skilled workers. So actually working with someone can help you to not make some quick decisions in the short term that feel like the right thing. But you know you're gonna find a new job, right? These things are gonna work out. But it can feel hard to navigate that in between.
- [50:38]
Jean Chatzky
Yeah, I actually agree. I think if you feel like you need a set of eyes on your financial picture, but you don't wanna pay a ton of money for it, then a one and done consult now with a fiduciary can be a very good way to go. And then once you are earning again, if you like that person, then you can go back to them and you can start mapping out a plan for the future. You mentioned a couple of other things on your list. And I think in terms of priorities, I would put health insurance at the very, very top. When we lose our ability to contribute to a 401, we'll make up that ground down the road. If we've got any money that we want to shelter from taxes, we make an IRA contribution that year. That's possible, but health insurance and specifically going without health insurance can wreak havoc with your financial situation. It can literally bankrupt you. So talk to your former employer about cobra, about continuing your past health insurance benefits and what the cost for that would be. Don't be surprised when the cost turns out to be a lot because when you leave a job, they stop subsidizing your plan. Go shop the Affordable Care act, marketplace, healthcare.gov and see what you can find there and shop the Private Market I am hearing from more and more people these days because the subsidies on Affordable Care act plans have taken a huge step back from where they were. I've heard from a lot of people who are finding a much better deal in the private market. So make sure that you cover the lay of the land. And the private market can mean shopping from various online sites, but also mean calling a health insurance broker to see what is available for you. We're going to take a very quick break. Don't go anywhere. We've got a question from a listener who's come into a surprise inheritance and has no idea what to do with with it. You know that feeling when you've tried everything? The diets, the early morning workouts, telling yourself this time will be different and the scale still won't budge. Or worse, you lose the weight and then watch it slowly creep back. It is so frustrating and honestly, it's not a willpower problem for a lot of people. It's biology. Which is why I want to tell you about weight loss biology.
- [53:24]
Lacey Garcia
Hers.
- [53:24]
Jean Chatzky
Hers now offers access to an affordable range of FDA approved GLP1 medications. Ready to reach your goals? Visit for hers HerMoney to get personalized affordable care that gets you that's F R h e r s.com hermoney forhers.com hermoney Weight loss by hers is not available in all 50 states. Wegovy is the registered trademark of Novo Nordisk and to get started and learn more, including important safety information, WeGovy clinical study information and restrictions, visit forhers. Com we are back with Lacy Garcia from Willow answering your mailbag questions. This one's from Mary. She writes, I recently came into an unexpected inheritance and I'm feeling this mix of gratitude and pressure to just not mess this up. I'm not starting from zero. I already have some retirement savings in place. But this lump sum feels different. And with everything going on in the markets right now, I'm honestly a little nervous about doing anything with it at all. My instinct is to put it somewhere safe in the short term while I figure out the bigger picture. Maybe a CD or a high yield savings account, but I'm not sure if that's the smart move or if I'm being too conservative. I don't have a financial advisor and I've never had to think about managing a lump sum before for every decision feels like it carries a little extra weight. Where do I start and what should I actually be doing first? Lacy I actually love this Question. Because I think doing nothing is more common than people admit. And sometimes it's the right call and sometimes it's not. When someone comes to you with a lump sum, how do you help them think about what to prioritize?
- [55:22]
Lacey Garcia
You know, you're right in thinking about taking a breath, parking the money in something safe and liquid while you think about it. So that high yield savings account or the 3 to 12 month CD ladder, and you know, what you'll choose there really depends on whether or not you're looking for that emergency fund or shorter cash that you might want more flexibility or access to it. But I also say, Gene, one of the things that you don't want to just do nothing is because there could be tax implications, right? So you want total talk to your CPA or look into whether or not there's any immediate tax reporting things that you need to take care of. So you don't need to do a lot upfront, but it's smart to make sure that you are parking that money in a way that it's earning interest and that you're aware of whether or not there's any tax implications that you need to take care of.
- [56:08]
Jean Chatzky
In the short term, that's perfect. And then when it comes to the long term, and even though this was not the question, I, I think it's really important. And this is where an advisor can help to think about this as an opportunity to think about what your goals are for the Future. This year, five years, 10 years. As I was researching my book, I learned this remarkable statistic that 40% of all inheritances are blown within the first year. And the reason for this is that they're emotionally charged, right? They feel like death money in many cases. And as a result, sometimes people feel like, oh my God, I gotta do something with this. I have to get rid of it as soon as possible. Which is the wrong reaction. And why What Lacey said about parking it until you can get some emotional distance makes tons and tons of sense. But at that point, this is an opportunity that you're not going to get again. So you sit down with an advisor and you think about, what do I need? What do I want? What are my wishes and how can this money help me get closer to all of those things? For people who don't have a financial advisor, Lacy, how does Will Willow help?
- [57:39]
Lacey Garcia
So you come to Willow and we meet you where you are. If you're looking to potentially, you know, start working with a financial advisor, we will have you fill out our questionnaire. And then based upon what you're looking for, what your priorities, your goals are, your preferences. We take into account not just how much money you have and what your financial goals are, but what's your personality type and your preference in communication style. And then we'll match you with a vetted fiduciary financial advisor, give you a few options and set you up with somebody who could potentially really connect with you. Not just, you know, not just from a sort of business relationship, but on a more personal level that will help you, as we uncovered here, to be open and honest because we know that money's super emotional. So having that person who can be that trusted advisor, that sounding board, sort of that coach or a little bit of that therapist is very beneficial. So that's how we really focus on helping you to get connected with that best fit person. For you.
- [58:39]
Jean Chatzky
You're eharmony, but for money, 100%. Thank you, Lacey, so much for being here. It was a valuable conversation. I know that our listeners are going to get a lot out of it.
- [58:51]
Lacey Garcia
Well, Jean, thank you so much.
- [58:53]
Jean Chatzky
For anyone who wants to connect with Financial Advisor through Willow, you can find one@hermoney.com findanadvisor. You'll find the link in the show notes. And as always, thanks for sending in your questions. Please keep them coming. And before we go, if you love today's episode, please take a moment to leave us a five star review on Apple Podcast. Your feedback means the world to me, but it also helps helps other women find the show. And if you haven't yet, be sure to pre order my new book, the Forever Paycheck. It's your guide to building a secure, steady income stream that actually lets you enjoy the retirement you've worked so hard for. Tap the link in the Show Notes to pre order your copy today. Her Money is produced by Hayley Paskalides. Our music is provided by Video Helper. Thanks for listening and we'll talk soon.