Podcast Summary: How to Money Episode: Ask HTM - Deciding How Much ‘Fun $’, Prepping for Long Term Care, & Doubling Down on Employer Retirement Accounts #967
Release Date: April 7, 2025
Host: Joel and Matt from iHeartPodcasts

In this episode of How to Money, hosts Joel and Matt tackle several listener questions centered around budgeting for fun expenses, planning for long-term care, and optimizing retirement account contributions. The duo provides practical advice, shares personal experiences, and includes insightful quotes to guide listeners in making informed financial decisions.

1. Balancing Finances for Newlyweds: Allocating ‘Fun Money’

Listener: Cheyenne from Memphis, Tennessee
Timestamp: [07:58] - [18:28]

Cheyenne and her new spouse are navigating the integration of their finances, specifically how much to allocate to individual versus joint spending accounts. They currently deposit most of their income into a joint account while maintaining small individual allocations.

Key Insights:

• Combining Finances: Joel emphasizes the benefits of a joint account, including shared goals, transparency, and trust. He states, “You get the shared goals, you get the easy tracking… it can really start living a rich life.” ([11:05])
• Individual Allocations: Matt discusses maintaining personal autonomy by allowing individual spending, highlighting the importance of each partner having discretionary funds for personal expenses without micromanaging each other’s expenditures.
• Custom Solutions: The hosts suggest that each couple should determine what works best for their relationship dynamics, whether it’s a fixed amount, percentage-based allocations, or separate credit cards for discretionary spending.

Notable Quote:

"You still don't know who you are when you're like, you were, like, 16 when you got married." – Matt ([09:15])

2. Prepping for Long-Term Care: Protecting Parental Assets

Listener: Nate from Oklahoma City
Timestamp: [32:11] - [42:14]

Nate seeks advice on how his parents can protect their assets from being drained by long-term care expenses, such as nursing home costs.

Key Insights:

• Long-Term Care Insurance Challenges: Joel and Matt discuss the rising costs and premiums of long-term care insurance, noting that many people drop their policies before utilizing them due to affordability. Joel mentions, “Long term care insurance premium inflation has been worse than eggs.” ([34:03])
• Alternative Strategies: They explore alternatives like Medicaid planning, reverse mortgages, and consulting with elder law attorneys to strategize asset protection without jeopardizing family inheritances.
• Importance of Planning: Emphasizing proactive planning, the hosts advise having open conversations with family members to alleviate future financial stress and ensure quality care for elders.

Notable Quote:

"If you're looking to or if your parents are thinking, well, Medicaid, I've got Medicaid. I don't need long term care insurance, or I don't need to like pay attention to not spending down my retirement assets... it's just not that simple or easy." – Joel ([35:30])

3. Optimizing Retirement Accounts: Employer Plans vs. Individual IRAs

Listener: Miranda from Logan, Utah
Timestamp: [24:04] - [31:42]

Miranda is evaluating whether to maximize contributions to her employer-sponsored retirement plans or to invest independently through an IRA, given her new job offers substantial matching contributions.

Key Insights:

• Maximizing Employer Match: Joel and Matt strongly advocate taking full advantage of employer matches, describing it as “a 14.2% raise” due to the generous employer contributions. Matt praises, “Hey, by the way, this is your salary, but you also got a 14.2% raise just like right out of the gate.” ([25:37])
• Diversifying Retirement Accounts: They recommend diversifying investments by contributing to a Roth IRA after maximizing employer plans to enhance flexibility and tax advantages.
• Choosing the Right Provider: The hosts suggest opting for reputable, low-cost brokerages like Fidelity over others like TIAA, which may have higher fees and less favorable terms.

Notable Quote:

"She is in a pretty fantastic matching situation here. Just, I mean, the fact that you get a match that's that generous here with your new job... that's off the charts." – Matt ([25:37])

4. Investing in Index Funds: Understanding Performance Variations

Listener: Dan
Timestamp: [51:24] - [57:08]

Dan questions why different S&P 500 index funds show varying performances despite tracking the same index.

Key Insights:

• Expense Ratios and Fees: Joel explains that differences in fund performance often stem from varying expense ratios and additional fees charged by fund managers, which can erode returns over time. He advises, “The biggest one is how much they cost to own.” ([51:30])
• Fund Composition: Matt adds that some funds may exclude certain micro-cap stocks to minimize costs, slightly altering their performance compared to others that fully replicate the index.
• Focus on Low-Cost Funds: The hosts emphasize prioritizing low-cost, well-diversified funds from major providers like Vanguard, Fidelity, and Schwab to ensure close tracking of the desired index without unnecessary fees.

Notable Quote:

“As long as the fund itself offers enough diversification to satisfy you, don't worry about which S and P500 fund or which total stock market fund has done better.” – Joel ([53:10])

5. Managing Hobby Funds vs. Emergency Funds

Listener: Matthew
Timestamp: [45:45] - [50:38]

Matthew inquires about keeping his hobby fund separate from his emergency fund, especially since unexpected bills often arise when he engages in his hobby of buying and flipping items.

Key Insights:

• Separate Funds for Clarity: Joel suggests that having a separate hobby fund can help prioritize discretionary spending without jeopardizing essential savings. “A little side hustle action” from fund flips can support hobby expenses without tapping into emergency reserves. ([46:07])
• Budgeting for Predictable Expenses: Matt recommends identifying and planning for recurring or foreseeable expenses to reduce the frequency of tapping into the emergency fund. He states, “If some of those unexpected bills could be planned for, then being able to rearrange like that is the solution.” ([47:36])
• Incentivizing Savings: Keeping hobby funds separate can also motivate individuals to increase their income through side hustles, as excess earnings can directly enhance their discretionary spending capabilities.

Notable Quote:

“It's the little bucket for hobby stuff versus the big bucket for emergencies… keeps it siloed.” – Joel ([46:07])

Conclusion

In this episode, Joel and Matt provide comprehensive advice on integrating finances post-marriage, preparing for potential long-term care needs, optimizing retirement savings, understanding index fund performance discrepancies, and effectively managing hobby-related expenses alongside emergency funds. Their practical tips and relatable anecdotes equip listeners with the knowledge to make informed financial decisions tailored to their unique life circumstances.

Notable Takeaway:
"Once you start enhancing your skills, the sooner you'll be ready." – Matt ([00:52])

Additional Resources:

• For more detailed guidance, listeners can visit howtomoney.com/ask to submit their own questions.
• Explore low-cost investment options at major brokerages like Fidelity, Vanguard, and Schwab.
• Consider consulting with a certified financial planner (CFP) to tailor financial strategies to your personal goals.