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Money Guy Show
The #1 Financial Fear Plaguing Gen X & Gen Z (& How to Beat It)
00:49:25
Ask Money Guy | November 25th, 2025
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- [00:01]
Brian Preston
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- [00:30]
Bo Reby
Disney wants to know, are you ready?
- [00:33]
Brian Preston
Yes.
- [00:34]
Bo Reby
For Marvel Studios, the New Avengers, now streaming on Disney.
- [00:39]
Brian Preston
Let's do this.
- [00:40]
Bo Reby
One of the best Marvel movies of all time is now streaming on Disney.
- [00:44]
Brian Preston
Hey, you weren't listening to me.
- [00:46]
Bo Reby
I said Thunderbolts, the New Avengers is now streaming on Disney.
- [00:50]
Brian Preston
Meet the New Avengers. That's cool, man.
- [00:54]
Bo Reby
Marvel Studios Thunderbolts, the New Avengers, rated PG 13. Now streaming on. You guessed it, Disney.
- [01:06]
Brian Preston
The number one fear that's plaguing both Gen X and Gen Z.
- [01:11]
Bo Reby
And Brent, I am so excited to talk about this because whenever I hear that there is somebody who is afraid of something or has some fear circled around a financial topic, I love that we get to speak into that and we can hopefully assuage some of those fears and make them feel better about them.
- [01:30]
Brian Preston
What I like, bo, is that we, we know, we don't beat around the bush when we tell you a headline or like common fears. We're like, let's go ahead and give the people what they want. That big fear is feeling completely underprepared for their financial futures. Now, BO people immediately go, wait a minute, you have two generations. And we even skipped one. It was in between those millennials. In between. But I am the Gen Xers. You're not, you're not Gen Z. But Gen Z is more of the children of Gen X. So if you look at this, gen X is 45 to 60 years of age. I'm not 60, by the way. I'm dead in the middle of this thing. Gen Z is 13 to 28. So like I said, it's the children of Gen X. We have some commonality here.
- [02:13]
Bo Reby
And, and why are both of these two categories of people fearful? Like, why are, why do they have some anxiety as it relates to finances? Well, when you think about Gen Xers, they are rapidly approaching that phase where they're going to be entering into retirement. They're going to be thinking about, what does this next phase look like. And I think a lot of folks are recognizing, oh, I'm not where I need to be. And then when you think about Gen Z is these are folks that are just starting out in the world. They're just now beginning in their careers, and they're recognizing that man, finding a job might be difficult. Housing is expensive, living expenses are expensive. Things are not perhaps as easy as I thought they would have been. And it's interesting when you look actually look at the statistics. 54% of teenagers right now, these are like young folks not out of the house, not fully adults yet say they feel underprepared for their financial future.
- [03:06]
Brian Preston
I at least feel like we're doing our part by sharing good financial education. But I understand the uncertainty because student loan burden. Yeah, I mean it seems like every legislation coming out of Washington has some different impact on student loans. Plus colleges haven't done them any favor on how expensive the cost of education is. If you look at cost of living on housing and other things, it is a unique time to be Gen Z and getting out on your own.
- [03:32]
Bo Reby
And I think one of the things that we've done poorly and I don't mean we as in the money guy show, I mean we as in a society, in a whole, we don't do a great job training our young people early on how to make wise financial decisions. I mean a lot of times we will entrust 18 year olds to make a huge decision that has hundreds of thousands of dollars of implications that they are going to carry for the rest of their lives when maybe perhaps they're not quite at the point or have not been educated to the point where they should be able to make those decisions. So there's just a general lack of financial information and education with this populace that I think honestly we could do a lot better of a job on.
- [04:09]
Brian Preston
Well then let's, let's, we just talked about Gen Z, let's talk about Gen X. So we can bring the commonality here, 52% of Gen Xers feel that they're financially not prepared for retirement.
- [04:20]
Bo Reby
That's one out of two folks in your generation.
- [04:22]
Brian Preston
And I kind of get it because realize you know we were the big science project for the future is because in the past everybody had pensions, Social Security was well funded. We are the first generation that's this big experiment with 401ks and instead of being defined benefits, you know we're, we're kind of, now we're on this defined. We're going to give you this certain amount of money every year and you good luck. Make sure you do it right.
- [04:48]
Bo Reby
Well and a lot of Gen Xers had to learn this stuff early on. A lot of 401ks became popularized during the Gen X upbringing. A lot of Roth IRAs came into, came into being during that generation's career. And if you look at the actual numbers, this is according to Investopedia, the average Gen X household has only saved about $40,000 for retirement. Remember, these are the folks that should be at least seeing the destination line. They're not. Maybe the landing gear is not quite down yet, but they're getting to that point. And they've only got $40,000 saved for retirement. And 40%, 4 out of 10 Gen Xers say I have absolutely nothing saved. I've done none of the work thus far to prepare me for the next phase and season of life.
- [05:29]
Brian Preston
Well, look, you know me, I'm an optimist. I don't like just bogging down and all this negativity. Let's talk about how both generations can kind of bring this together. What's the. What's something that can hopefully unite and give you some daylight in this whole process? And I think it's how to prepare financially.
- [05:45]
Bo Reby
Yep. I think the very first thing that you can do, whether you are at the very beginning of your career or maybe you are in the twilight years of your career, educate yourself. Are you doing things like watching the Money Guy show, subscribing to the channel, reading the newsletter, reading articles, educating yourself on how you can make the best financial decisions possible. Because the better educated you are, the better you're going to be able to navigate the decisions you're going to have to make over the coming years.
- [06:12]
Brian Preston
Well, and even that lends itself right into the next thing. Know the resources we try. Every time there's new tax legislation or new policies that we think are going to impact your wallet or your purses, we try to be on the front lines to load you up. So you know how to navigate this as well. Because then I want you to be as proactive as possible. I mean, this is. It made me sad on that previous slide to hear that my generation that the typical resources are around $40,000 saved and then 40% of them actually have absolutely nothing saved. Where were the Mr. Morrows? Meaning where were the people? If you remember, that's where I got motivated in my, you know, high school years where I had an economics teacher just in a off brand. It wasn't even part of the curriculum saying if we just save $100 a month, I could be a millionaire. And that's what lit the spark. I want that for everyone. I don't care if you're millennials, Gen Z, Gen X boomers. We want everybody to succeed. And that's why you have to have a plan.
- [07:10]
Bo Reby
Yeah. I think one of the key things you can do is no matter where you are, have you written down your plan of action? Maybe you're someone that's struggling with debt either at the beginning of your career or later on. Have you actually put pen to paper to figure out how am I going to pay this off? How am I going to systematically and strategically. Strategically, by making small decisions, begin to knock this out. If you're someone at the very beginning of your career and you're looking for a job, have you put pen to paper saying, oh, I'm going to fill out this many job applications, I'm going to go get this certification or I'm going to make sure that I do XYZ so that you can stand out. Do you actually have a plan of how you're going to end up in the place you want to be based on the small decisions you're making today to move you towards that goal?
- [07:53]
Brian Preston
Yeah. And then the kind of the two closing things we have here is make the most of your time. And this is a loaded statement because we all know when we're talking about the three ingredients to wealth building, whether it's the discipline, whether it's that margin of living on less than you make that creates the money, leads to the third ingredient, which is time. And you have to kind of know, are you ahead of the curve, behind the curve, or right where you're supposed to be? So then you can triage and figure out, hey, how do I take the time that I have and be the most effective and efficient with implementation? We're going to hopefully help you with that. If you go to moneyguy.com resources, we'll load you up with all kinds of free stuff. And then the last thing is be kind to yourself. You're not in this alone. There's a whole community of people out there that are struggling with these things. And I think if you can just not get caught up in the negativity of these things and you figure out, how do you do that? Glass half full way out, you're going to be okay. Yeah.
- [08:45]
Bo Reby
I think it's really interesting if you are a Gen Z or time is on your side, opportunity's on your side. But even if you're a Gen Xer, even let's, let's suppose for a moment you're a Gen Xer who's about to be 52 years old. I don't know how that came. I just came to me. Do you realize that even just starting right now from scratch, if you can just save $1,000 a month and you can do that even starting at age 52, that could add another $300,000 to your portfolio by the time you get to 65. So even though you may feel like you're behind, you may feel like you have to make up for lost time, you, you still can do it. The best time in the world to have figured all this stuff out was yesterday. Which means the second best time to begin figuring it out, taking strides towards your great big beautiful tomorrow is today. I don't think that Gen X and Gen Z need to be scared about their financial future. I think they need to take hold of their financial future. Because if you do not own your financial future, your financial future will own you well.
- [09:46]
Brian Preston
And think about this. If you're somebody like me who never plans on retiring or at least deferring it beyond normal retirement age, adding just three to five years on top of that, you could turn that $300,000 into $600,000 and then a lot of you are going to say 52. That's. I know our audience, our audience is much younger than 52 years of age. Every one of you has a wealth multiplier that's significantly higher than a 52 year old Gen X or has. So once again, go back to moneyguy.com resources, see what your wealth multipliers and then get energized, get motivated and know you can do this. You just have to put the effort in. Exactly what Beau was saying. Choose your small decision today that's gonna have huge impacts for your great big beautiful tomorrow.
- [10:29]
Bo Reby
So we love that we get to share this information. We love that we get to do this. We love we get to do things that can help remove some of the fear. And one of the ways that we do that is we love answering your questions. We love speaking to the things that you care about. That's why Every Tuesday at 10am Our goal is to load you up. So with that creative director Ribe, I'm going to throw it over to you.
- [10:52]
Ruby
Yeah, I've got some questions queued up. The first one is from Paul T. It says good morning. We are on steps three and four of the foo, but the health insurance deductible for our HSA eligible plan has increased. Is that part of ground rule number three or should we return to step one? And I think this is a timely question. So what do you think?
- [11:16]
Brian Preston
Great question. Especially new enrollments and you know, and everybody's kind of working through their benefits at year end. Without a doubt this Is why. And now look, when we talk about the financial order of operations, we really, I mean I just did one of my walking tangents that I talked about the origin story of this and Bo, I want to give you complete credit. When we were walking through and trying to brainstorm the nine steps, it was BO that kind of really fine tuned step one. And I thought it was a great thing because every system, what are we trying to do? We're trying to figure out how do we keep you protected from the desperate decisions becoming an emergency or something comes up. So that's why we came up with highest deductible, not all of your deductibles, but it is one of those where I would encourage you pen and paper or spreadsheet, whatever you need to do, try to go look at your homeowners, look at your automobile, look at all the different deductibles and then whatever the highest deductible is, that does need to be step number one because that's where we're trying to protect you from some catastrophic thing side, you know, derailing your whole life right there.
- [12:21]
Bo Reby
Yeah, it's one of the. I don't know Paul, for sure because you said, hey, we're in steps three and four. And I'm like, ah, you're not really supposed to be in steps three and four. You're supposed to kind of like knock out step three and then you go to step four. But let me give you the benefit of the doubt and assume that you are in step four. One thing that people don't realize is that once you have that fully funded emergency fund, that three to six months of living expenses and liquid cash that encapsulates step number one. It's not like you have to have these two distinct buckets. I don't have to have my deductibles covered in one savings account and then my emergency reserve and another those can be. Combined. So what I hope has happened is that you are in step four and you do have a fully funded emergency reserve and you now that the deductible on your health insurance is increased because your HSA plan, no big deal, you're still covered, no need to go back to step one. But if you do have that high interest debt, if you do have credit card debt, store debt, consumer debt, whatever it is, and you are sitting in step three, I would highly encourage you, if it is high interest debt, to begin vanquishing that make the hard decisions today to be able to knock that out so that it is no longer on your balance sheet because it is very hard to, to get ahead if you are paying exorbitant interest rates on debt every single month. So I would encourage you knock out step three before you even try to begin navigating step four.
- [13:44]
Ruby
That's great. Paul T. Thank you for your question. Let's move on to Zach G's question. It says my dad is working with one of the bigger non fee only financial advisory firms. They have extremely high fees on investment products. How do I convince him to work with a fee only fiduciary? And you have an opportunity to define some terms here with fee only and fiduciary. What do you have to say to Zach?
- [14:12]
Bo Reby
Well, you know what, how about this, Brian? Why don't you answer the. Because that's a great thing. Let's do some quick vocabulary. What does fee only mean and what are the different like types of business models? And then I've got some thoughts on how Jack, how Zach might be able to do some conversational strategy with his dad on how to get him there.
- [14:33]
Brian Preston
Yeah, I mean, look, it all comes down to what is somebody selling you and where are their conflicts of interest. I like to think the fee only fiduciary model is the cleanest because it's just, it's transparent. It tells you, hey, look, now full disclosure, everybody has a conflict of interest. I'll explain a little bit further in a second. But at least with fee only, they have to disclose how they're being paid and they're only getting paid by you, the client. Whereas a lot of times when they're not fee only, it's commissions, it's back end, you know, fees that are coming in, that it's just not transparent. And it's not uncommon like with product sales where people say actually you don't pay us anything because the company's going to pay. Well, we all know that that's just an imputed part of the cost that you, the company can only pay that because of what you've paid. That's just a workaround to not disclose to you what they're paying for it. The other thing you have to worry about is where is the motivation for the decision making. And if you're getting your financial planning from. And he says a larger one, look, there's lots of larger players. There are insurance companies that it's amazing how all roads seem to end to an insurance product at the end of the day when you're an insurance company. Big brokerage houses, there's big brokerage houses where they're going to have their own thing. And you just have to ask yourself, are they giving you the best advice for you or are they giving you the best advice for what the law allows them to do? And I've made this a point because there's, there's different standards. The, the fee only. Fiduciary. The reason that word fiduciary is so strong is that they are legally required to put your interest ahead of their business model, whereas suitability and other standards, which are still legal. These are completely legal. It's just that they don't have the, the same legal standard to where your interest doesn't have to trump the business because it's more of are you suitable? Is this a vice? Is this advice reasonable and suitable? It's no different. I made this analogy before because we just came through the Halloween season is that, you know, you can eat candy and it's suitable for human consumption, but it's not actually your best thing that's going to provide nourishment, make you the best version of yourself. But legally it's okay if, you know, if you had somebody who was just coming in every day and just giving you, you know, we'll give you Reese's for breakfast, we'll give you some Snickers for lunch because it satisfies you. It all sounds delicious, it all sounds great. But you're going to notice you get sicker and sicker. You're not the best version of yourself. Whereas you have a dietician who's actually trying to feed you what you want. It's not always great, but you at least know that you're getting stronger, you're getting better. That's the way I look at it. Now look, Fee only has different flavors too. Is that because you have hourly, you have subscription, you have even assets under management, which is the way we work. And I don't mind sharing. We are unapologetic because I like long term relationships. I don't like. I'll come from a public accounting background where hour, you know, that works on an hourly basis or even subscriptions. The structure there is going to be like, how do we get you done? And it's fast. And then there's even as a person who pays like hourly, you're probably not gonna go ask every question because you're like, well, gosh, they're gonna send me a bill for 0.2 hours. That's annoying to me. I don't want, I want somebody who's gonna answer whatever questions so that I can feel like it's you know, whatever it is, it's unlimited. And that's why I like ongoing, because I also know relatives. It's kind of embarrassing when I give advice to a family friend or a relative and then they come to me four years in the future and say, hey, this is what you recommended to me four years later. I mean, four years ago. And I'm like, oh gosh, we changed all that, you know, because the market, the economy changed. Just that that's our thing. I'd rather have an ongoing relationship. And also, I think we're doing things differently because we're doing true financial planning. It's not just investment management. I think that that's a whole nother discussion.
- [18:32]
Bo Reby
I your question, Zach, the way you kind of tell it, hey, how do I convince my dad to move to Fiona? And I think you always have to be really careful when you use the word convince. Because I am more about in a conversation. I want someone to have some self discovery. So I would approach it with the Socratic method and start asking your dad some questions. You said that you noted with his current advisor, with the current firm he works with, there's a lot of like really high fees on the investment products. Well, what I would do is that's. Hey, dad, let's look at some of the funds you hold. Hey, okay, I'll this blank blank of America blank fund. Right. Let's go see what the internal operating expenses of this fund are. Okay, I see that. Man, that's like 0.75, 0.85. Well, what are they investing in? Well, they're investing a lot of the names you see every day in the S&P 500. Okay, well, dad, you realize for the same exposure that you're getting this very high cost fund, you could go buy AN S&P 500 index mutual fund or ETF. And the internal operating expenses are like 0.015%. And I would just kind of go down the list of his funds and say, dad, you're paying this. You get the same thing for this. You get the same thing for this. So that's a real easy way to solve the like investment, investment product part. But then I would take my line of questioning a step further. And this is a little bit of like trade secret, industry secret cheat code. For those of you out there trying to figure out if you're in a solid advisory, advisory relationship, I would ask your dad this. Hey, dad, every year at tax time, does your advisor like ask for a copy of your tax return? Does your advisor like review and look over your tax return, you have, you have conversations around that. And a lot of folks say, no, no, no, no. They tell me, that's my cpa, that's my tax account. No, no, dad, I'm not talking about preparation. Obviously your accountant, your cpa, they're going to do the tax preparation. But is your financial advisor talking with you about that and coordinating with your accountant? Oh, no, no, no. He says that's not what he does. Oh, okay. What, dad, have you had your financial advisor, has he requested copies of your estate documents? Has he read through them to understand what happens if something happens to you and where the assets go and how the plan is supposed to flow? No, no, no, no. That's up to my attorney. Oh, no. Yeah, Dad, I know the attorney is one that writes the documents, but has your advisor talk to you about that? And are you on the same page? And you will begin to uncover very quickly if you were working with a true fiduciary financial advisor, looking at your entire financial picture or if you just happen to be working with an asset manager with a money runner, which, not that there's anything inherently wrong with that, but you want to know that going into. Because they are not the same. So think if you can start asking your dad some of those questions, it will bring to light some of the holes that may exist. And, and then it will provide the opportunity to say, hey, dad, have you thought about looking at a fee only financial planning firm? Have you thought about talking with a fee only financial advisor? Because that's the kind of stuff that they do and that's the kind of work that they can help you with.
- [21:23]
Brian Preston
Well, I have even some of these big companies you'll say, start talking about Roth conversions, education, planning, and they say, hey, I can only give you advice on assets that I'm managing. That, that's a red flag. Because we all know that the holistic side of your financial life is not limited by the boundaries of what accounts your financial aid planner has. It's just like property and casualty insurance, other things you want somebody who's actually trying to help you navigate because as you get seven figures and beyond and beyond, you're the CEO of a seven figure enterprise that you need to get good feedback so you can be the CEO and make great decisions. That doesn't stop at the boundaries of just what is in that account. It just doesn't. Yeah. And by the way, we have a go to moneyguy.com resources. We, we have questions you should ask your financial adviser.
- [22:11]
Bo Reby
Go to money Gu Resources Download that deliver or go to moneyguy.com become a client and give us a crack at it. We would even love to potentially have a conversation with your dad about what fee only financial planning could look like for him.
- [22:25]
Ruby
No, I honestly do both. Go grab the resource and then go to become a client so you can schedule a call and ask all the questions.
- [22:30]
Bo Reby
I love that.
- [22:30]
Ruby
For abound wealth.
- [22:31]
Bo Reby
I love it.
- [22:33]
Ruby
All right, Zach, thanks for the question.
- [22:35]
Bo Reby
You mentioned Halloween, Ruby. Did your. Did your kids dress up for Halloween? Did y' all do Halloween thing? Who. What were your kids?
- [22:41]
Ruby
We were super Mario themed.
- [22:42]
Bo Reby
All of you?
- [22:43]
Ruby
Oh, who of us?
- [22:44]
Brian Preston
Who was. Who was still some of our costumes from the basement.
- [22:47]
Ruby
I did. You know I did. Because I asked you. I didn't just steal it.
- [22:50]
Bo Reby
We were Mario.
- [22:52]
Brian Preston
You know, you remember that we used to dress up.
- [22:55]
Bo Reby
We did a little TikTok. We did a TikTok thing when we did that. Do you remember?
- [22:59]
Ruby
I mean, we did a whole reaction with you guys dressed up as Mario and luigi. That was pre2021 because of your Mario costume. So my husband was Mario, I was Princess Peach, my son was Yoshi, and our baby was Luigi.
- [23:12]
Brian Preston
That's fantastic.
- [23:13]
Ruby
It was very cute.
- [23:14]
Bo Reby
What about Preston household? Bunch of. How are the Halloween costumes?
- [23:17]
Brian Preston
My youngest had two costumes. She was Wednesday to go to. To go to school because that got her dress code pass.
- [23:24]
Bo Reby
Okay.
- [23:25]
Brian Preston
And then she was a bumblebee for the actual walking around the neighborhood.
- [23:29]
Ruby
Two costumes.
- [23:30]
Bo Reby
That's so good.
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Brian Preston
Yeah, that's. That's a move. She really liked the bumblebee. It was actually comfortable because sometimes with Halloween costumes, you know, there's how cool they look versus how functional they are to walk around the neighborhood.
- [23:41]
Ruby
I. Yeah, I am not a very serious Halloween costume person.
- [23:45]
Bo Reby
We had a. I had a Hermione. I don't know her last name. And I had a Jenny Weasley.
- [23:53]
Ruby
Harry Potter somehow.
- [23:55]
Bo Reby
Yeah.
- [23:56]
Ruby
Very cute.
- [23:56]
Brian Preston
I see a universal trip in your future.
- [23:59]
Bo Reby
We'll see. We'll see. Remember that time.
- [24:01]
Ruby
Your girls will love the pool.
- [24:02]
Bo Reby
They'll love the pool. They'll love the resort pool. Oh, man.
- [24:07]
Brian Preston
They like some Dollywood though, right?
- [24:09]
Bo Reby
Love Dollywood. My kids love. That is actually one of our family's favorite, like, little, like getaway things to do, I think because it's so much more digest like Disney's big. Like there's just a lot to go there. And my kids were younger then, but Dolly would get some of the. Not monkey bread. What's it called?
- [24:26]
Ruby
Cinnamon roll stuff. Yeah.
- [24:28]
Bo Reby
Chef's Kiss. Chef's kiss.
- [24:30]
Brian Preston
I haven't been to Dollywood in probably three to four years.
- [24:33]
Ruby
Really.
- [24:35]
Bo Reby
But I did find myself the other.
- [24:37]
Brian Preston
Night I watched a 35 minute video because I guess on November 1st they, they start doing all the Christmas lights.
- [24:45]
Bo Reby
Yeah.
- [24:46]
Brian Preston
And I just, my wife thought it was crazy, but I was just in and now, I mean, I was just mesmerized by walking this guy who's walking around doing all the things at Disney at Dollywood. And I was like, what?
- [24:57]
Bo Reby
Why haven't we gone back?
- [24:58]
Brian Preston
Well, and the cinnamon bread looks really good.
- [25:01]
Ruby
That's really the main reason.
- [25:03]
Brian Preston
You know, if I can't get my family to do we ought to do the content team. Just out of love. You've been saying it over there. You've been saying that's just right down the street. It's only three hours away.
- [25:10]
Bo Reby
Say less down the street.
- [25:12]
Ruby
Love it. As a fellow financial mutant, I want to have a good handle on my finances. I also know the messy middle can get messy.
- [25:22]
Bo Reby
Amen to that.
- [25:24]
Ruby
So for me, after having another baby, some unexpected expenses, and being a full time working mom, I'm excited to use Monarch to help refresh my financial picture and set some goals with my husband for the new year.
- [25:35]
Bo Reby
I love that you can feel organized and confident in your finances with Monarch. It's an all in one personal finance tool that brings your entire financial life together in one clean interface, either on your laptop or on your phone. And right now, just for our listeners, Monarch is offering 50% off your first year with code moneyguy@monarch.com I really like.
- [25:57]
Ruby
That I can easily collaborate with my husband using Monarch. So we're using it to map out things like saving for a car, investing for retirement, and just getting realigned on where our money is actually going every month.
- [26:07]
Bo Reby
Here's the deal. Even when you're making good money, you don't want to get complacent. A tool like Monarch can help you stay informed so nothing gets lost in the chaos of the day to day. And you can even give access to your financial advice advisor at no extra cost. We have used Monarch with clients and it's been awesome to have such great information ready to roll whenever we have our meetings.
- [26:27]
Ruby
Don't let financial opportunity slip through the cracks. Use code moneyguy@monarch.com in your browser for half off your first year. That's 50 off your first year at monarch.com with code moneyguy.
- [26:41]
Brian Preston
Hey Bo. Imagine we're waiting to catch a flight. You're walking back with your Pre flight, coffee in hand. And since we all know I'm the nervous traveler, I'm already in line at the gate.
- [26:50]
Bo Reby
All right, that sound accurate? Keep going.
- [26:52]
Brian Preston
Then all of a sudden you get a work call. You need to access one of our crucial systems from your phone. So what do you do? Imagine you yell across the airport to me and you say, hey Brian, what's the password? And then to make it worse, what if I yelled the actual password back to you?
- [27:07]
Bo Reby
Okay, no, no, that's insane. As our chief compliance officer, I am entirely opposed to this analogy.
- [27:13]
Brian Preston
I completely agree with you. But my point is that public WI fi, just like in this example, is basically like shouting your password across. The term ExpressVPN is that whisper you need to keep you safe.
- [27:26]
Bo Reby
Alright, that makes sense. Every time you connect to an unencrypted network, your online data is not secure.
- [27:33]
Brian Preston
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- [27:49]
Bo Reby
Cybersecurity and protecting your information is super important to us. Secure your online data today by visiting expressvpn.com moneyguy that's E X P R E-S-S vpn.com moneyguy to find out how you can get up to four extra months free. Expressvpn.com moneyguy all right.
- [28:11]
Ruby
Want to do some more personal finance?
- [28:12]
Brian Preston
Yes, ma'. Am.
- [28:13]
Ruby
We've got a question from MrTrib12. It says I drive a car that is not 23, 8. Sadly maybe that was before he found the Money Cash app, I don't know. And I am looking to downgrade to a car that is around 6 to 9k. My current vehicle is worth about 17k but I owe 19k. Without the cash, how can I make the switch?
- [28:38]
Bo Reby
All right, I'll make sure I get all my numbers right. The car is worth 17, but we owe 19. I need to go buy a car that is six to $9,000. All right, I've got a thought but I hate, I hate my thoughts. I want to hear yours so I have time to come up with a better one.
- [28:58]
Brian Preston
Well, I mean look, there is a delicate balance here because fortunately with interest rates being dropped here recently, that car loan potentially could qualify as not high interest debt on on some of even in the used car market. I think that I've seen stuff. I wonder if the part of 6%.
- [29:17]
Bo Reby
But I wonder if the part of 23. 8 that's really getting him is the 8%. I bet that this car loan that he has out is taking a big chunk of his income. And that's what the.
- [29:27]
Brian Preston
That's a cash flow issue. And that's why probably a reset does make sense. It's just what I don't love is that negative equity component. I would almost rather level. I mean, if he could look out, you're in a crappy situation, bad situation. So I think you need to wear that a little bit. And the fact that we got to do. We got to have a few months of pain to get you out of this is that I would love to get rid of, just completely eat. Eat up that negative equity before I made any transaction. Like, really. I mean, you just go full stop on all your expenses, see if you can clean out that. That $2,000. And then now when you go and buy whatever the reasonable used car is that you can get for less than $10,000, you then respect the 238 at that point because, you know, and just promise yourself you'll never make that mistake again.
- [30:19]
Bo Reby
Yeah. I wrote down what I want you to do, and then what you could do and what I want you to do is attack what Brian said. I want you to, like, tighten the belt, batten down the hatches, do everything you can to knock down that car payment so that you are not underwater.
- [30:32]
Brian Preston
That's like, well, it's got this.
- [30:34]
Bo Reby
23.
- [30:34]
Brian Preston
8 is 20%.
- [30:35]
Bo Reby
Yeah.
- [30:36]
Brian Preston
And if you got negative equity, that's not 20.
- [30:38]
Bo Reby
That's right. So I want you to, like, cancel the subscriptions. I want you to really watch the grocery budget. I'm not going to tell you eat cereal every meal because it's super unhealthy, but it is a way to save some money. I want you to figure out the things that you can do in a short term to really right that ship. Because basically, what you got to do, you got to do two things. You got to pay down the negative equity of two grand, but then you do need to come up with 20% for that 6,000, $9,000 car that you're going to get into so that you can actually do.
- [31:04]
Brian Preston
So we got a $4,000 delta. I mean, change. That's got to happen.
- [31:07]
Bo Reby
So that's what I'll. That's what I want you to do. Like, that's the thing that I want you to do. But I don't know how dire your circumstance is. I don't know how desperate you are in this moment because Brian alluded to this. There is this thing where you could trade in that car, roll the negative equity into a car and now instead of having a $17,000, a $19,000 loan on a $17,000 car, you're going to have an $11,000 loan on a $9,000 car. You're still negative equity. But hopefully what you've done is if you reset your payments to get them back into the threshold to where they're sustainable. But that's like the. I don't want you to do that one. I want you to do the first one and make the hard decisions that are going to set you up better than just exacerbating and rolling on this bad.
- [31:53]
Brian Preston
I think he's got a $4,000 hole he's got to fill. So $2,000 in negative equity. It's 20% you got to put down. I think you look at four grand and you treat this like, you know all the caper movies that we saw growing up where you know, there's not dance offs and things like that. So you have to go drive. Well, I don't know if you want to. There's just some type of side hustle.
- [32:15]
Bo Reby
You're about to say uber self defraud.
- [32:17]
Brian Preston
Yeah, well, I know a vehicle's not going to fix that because you're just to going go. You're going to depreciate yourself and into a pickle. But there's got to be a way, take extra hours. You got to figure out some way to get past that $4,000 hole because it just. I do not love the idea of negative equity because it just it pushes that defers facing the music of what got you in this situation.
- [32:40]
Bo Reby
That's right.
- [32:41]
Ruby
No, that was great answer. And Mr. Trib12, we're really glad you're here and I hope that that helps you think through a difficult financial situation. But hopefully you can move past that wisely and continue on with the food and you'll be better for it. All right, Walker P has a question. It says with two under two, when should we move our kids savings from a 529. From 529 plans to custodial Roth IRAs. Why would you want to do that too? What's the.
- [33:13]
Brian Preston
There's kind of these are comparison. Realize these are two distinctly different vehicles. Yeah.
- [33:21]
Bo Reby
This is not an age based thing. The age of your kids has nothing to do with the answer to this question.
- [33:27]
Brian Preston
It's the why. I mean because it's because 529s. The why on 529s is education funding. They, they originally were started for college funding that is been expanded many times over to where now it can be for K through 12 education, it can be for trade schools, it can be for, of course for college. It can even be for education supplies and other things. And 529 is just to give everybody the kind of why everybody loves these things is some states, depending upon what. If you do a state specific plan and it's your state and they offer some tax benefits in some states, do your research on that. So it can even be incentivized to fund a 529. But if you use it for qualified education expenses, part of that list I just went through, all the growth is tax free. So it sets up an incredible thing. Since you have your kids, you know, if you use college, which was the initial thing, close to 20 years of compounding growth and having a senior in college myself, I've seen the power of these accounts. I mean I was just saving small little things. 100 up bucks here, 200 bucks here. And it turned into, you know, thousands of dollars that paid for my daughter's College. Now Roth IRAs and now this new component of custodial Roth. The why on these is tax free growth for retirement. But they have a huge asterisk next to them is that you have to, you're required to have earned income that can be from wages, that can be self employment income. You can't open these accounts just because, you know, so that's why a transfer doesn't make any sense.
- [35:04]
Bo Reby
Yeah, let me speak to that for a second because I've actually had this conversation two times in the past two weeks with two clients, oddly enough, both of them pilots. It wasn't until I thought right now, both of these clients are pilots. Both of them have young kids. One is like 12 years old, the other's like 14. And they've been listening to the show and they love the stuff we talk about. Like, guys, I want to do the custodial. Ross, I'm ready to do it. I'm ready to do it. My kids have been helping. They've been doing odd jobs around the house. I've been paying them for chores. I'm, you know, building this building out in the back and my kids been helping out that I'm going to pay them for that. I really want to do the custodial Roth. And what I told him was like, hey, I love that. I think that's great. I Think that's amazing. But you have to be able to show earned income. And so in order to do that you have to file a tax return, you have to claim that income and it has to be something that you do. One of the things that I really encourage parents to think about, and I know this is a hot take because in like the financial world, people want to be as like specific and esoteric as possible.
- [35:56]
Brian Preston
Well, they're hiring babies as models.
- [35:57]
Bo Reby
Ye overcomplicate it. And this is what I told both these clients said, hey look, in the next couple years your kid's going to go get a job where they get a W2 or a 1099. There's going to be some natural tax reporting that's going to be required anyways. You're only a year, two, three years away from that right now. Don't overcomplicate it. Forcing the tax return, trying to create the income. There's nothing wrong with doing a custodial account because you're still going to be able to do the same sort of thing. If you want to be able to do some sort of parental match, you can do that into a custodial account. You want your kid to be able to put money in, you can do that in a custodial account. Keep it simple. There's no need to complicate it until it actually makes sense to introduce in that complication. So as you have these two under two, college is a great thing to begin saving for. It's a great thing to just start putting the money and you don't have to think a lot about it. You can kind of set it, forget it. Pick a target retirement index, age based or aggressive age based type plan. Have your contributions go in and then you can focus on other stuff. And then as your kids get older, then you can introduce in the custodial, the, the utmore the custodial account. And then as they start working then you can graduate to Ross. So it's like this natural progression. You don't have to have all these accounts all established and all funded two years into their lives.
- [37:11]
Brian Preston
It's almost like there's an order of operations to finances work.
- [37:15]
Bo Reby
We should do a kid's order of operation like a coup. Oh, and that's kind of clever because.
- [37:20]
Brian Preston
It'S like that's not how you spell kids.
- [37:23]
Bo Reby
Like.
- [37:23]
Brian Preston
Well, I guess.
- [37:26]
Bo Reby
Well, yeah, yeah. But I was, it was, it was like, you know, like, you know, the literary.
- [37:31]
Brian Preston
Okay.
- [37:31]
Bo Reby
Like K O, O. Right. Like kids or.
- [37:34]
Ruby
I'm tracking. Yeah.
- [37:35]
Bo Reby
If you were gonna say the word koo.
- [37:37]
Brian Preston
How would you say let's ideate on that?
- [37:39]
Bo Reby
And you see, you know what, it's clever because that's the sound a baby makes, right? So it's kind of like there's, there's.
- [37:44]
Ruby
A. I'm in branding, children's order of operations.
- [37:48]
Bo Reby
So I'm getting a thumbs up from a producer. He said it's a great idea. Did you see that?
- [37:54]
Brian Preston
Saw another one. Do a thumbs down. I think we would just, you know, if this was the, the Roman Coliseum. That idea is not making it up.
- [38:04]
Ruby
That, that was pretty painful. Fun though.
- [38:08]
Bo Reby
Agree to disagree.
- [38:09]
Ruby
Walker. Thank you for your question. Glad you're here.
- [38:12]
Brian Preston
Two year olds probably not doing a custodial rock.
- [38:15]
Bo Reby
Two under two. That's, that's, that's a, that's a middle. That is messy, awesome and amazing and incredible messy though.
- [38:22]
Ruby
Don't blink though.
- [38:23]
Bo Reby
Don't blink. It goes quick.
- [38:26]
Ruby
All right, days along. Your interesting one from Matt Y. Up next. It says on which step would you spend some of your saved money on emergency preparedness or disaster preparedness? And then he qualifies. I am not talking about doomsday prepping, but would a hurricane fl, fire, blackout or earthquake preparedness kit fall into step one, step four or step eight? Personally, we happen to live on the west coast where earthquakes and wildfires are not rare. And this sort of future preparedness is something we need to think about. It's interesting, right? I want to know what you're going to say because we talk about the unknown. Unknown. But there's some nuances. So what do you think?
- [39:10]
Brian Preston
Hey, I'd be curious in your, like, I don't know where you keep your stuff. Do you have, do you have any preparation stuff in like a closet somewhere in your house?
- [39:19]
Ruby
My, I mean, we don't have any earthquakes and wildfire.
- [39:23]
Bo Reby
My mother in law, who I love dearly, Lauren, if you're listening, she is very good about gifting us like, here's a meal kit. Here's a fire starter kit. Here's a, like, you know, here's all this. And I'm like, Lauren, we live in the middle of the burbs, but that's all right. So you don't have like a water.
- [39:42]
Brian Preston
Filter, you know those water filter sticks. You don't have a fire starter kit? No. But you don't have emergency blankets.
- [39:47]
Bo Reby
We are, we are picking up, we are picking up. My wife and I are picking up hiking now. And so I am going to get one of the straws, you know, one of like the Water conversion straws. I know that's not emergency preparedness, but it's cool thing that is in the same vein because here's, here's my thought to how I'd answer your question, Matt. What step of the food. Where does this fall into? What's beautiful about personal finance is that money is nothing more than a tool that allows us to achieve our goals. And the people that get to decide what our goals are are us. And so for you, as you think about all the financial goals you have, one of the goals it sounds like is, hey, I want to make sure that I'm prepared for an emergency. If there were a wildfire, if there were an earthquake, one of my goals is to satisfy that. Now you have to decide how far up my priority list does that goal fall. And if it's like, hey, man, I'm losing sleep at night, I am really anxious about this, I'm really nervous about this, then, yeah, that may be one of like the step one, step four, early on, risk management things that you need to have in place. But if this is like a nice to have, not like a have to have, I would love to see that come into play later on in the financial order operation. Somewhere around like step seven, step eight, so that you're not. And again, I don't know how much you're planning on spending because if you're spending a couple hundred bucks, it's different. But if you're going to put like a whole home generator, that's like an expensive endeavor.
- [41:12]
Brian Preston
Now. I mean, look, now we're getting to the point is that I think that everybody.
- [41:16]
Bo Reby
I mean, there's nothing wrong his head at me.
- [41:18]
Brian Preston
There's nothing wrong with the family. I mean, because it's. I don't understand why this is the. It's not even a financial order of operations question to say you should have in your house. I think it's just good planning that if you were without power and other things for three days, your family's gonna be okay. You should think about. And that's not even that expensive to prepare. And by the way, think about it now while you live and don't have the emergency, because you can. And by the way, you can go on Amazon. This is probably a few hundred bucks solves this problem. Now, look, it doesn't mean it's gonna be the life of luxury. It's not like a Looney Tunes where, you know, the world, you know, has trouble and all of a sudden you got generators firing up and, you know, and all the food's preparing itself. You know, it doesn't work that way.
- [42:04]
Ruby
I did realize I need more flashlights or something when I got a power.
- [42:07]
Brian Preston
This stuff doesn't have to be expensive.
- [42:08]
Ruby
Like, oh, I can't see anything.
- [42:10]
Bo Reby
But flashlights versus a whole home generator are a different magic.
- [42:15]
Brian Preston
I looked into home whole home generators and what's funny is parts of the country matter too. Because I have a buddy down in Atlanta, his house is bigger than mine, he was able to put a whole home generator for half the cost. Because I live in a part of the country where everybody just thinks you open a door and money falls out, so they double charge for everything. So I don't have a generator on my house. I mean, because it's also. Now I found out I'm on the 911 power grid. So for the tower, it's, it's out back on the hill.
- [42:43]
Bo Reby
That means you're like locked in a little bit better.
- [42:45]
Brian Preston
Well, it means we can lose power, but we have underground utilities and we're on the Grid for the 911 system for the county. So it's just we don't have a lot of money.
- [42:53]
Bo Reby
Yeah. So look, if there's some major cataclysmic event, I'm just going to drive to your house. It sounds like you're covered. You got food and power. I'm golden.
- [43:01]
Brian Preston
But it is, I think this is an important part of just good financial management. But I don't want you to create anxiety for yourself. I think it's one of those things, hey, write down, be reasonable. Don't get into where now you are going into. And if you want to be a prepper, that's fine. But it doesn't have to be part of a financial order of operation. I think that this is a solution that can be found itself with a reasonable amount of money that even comes in before step one.
- [43:30]
Bo Reby
And look, if you got, if you have like a ton of like crippling credit card debt, though, I don't know that I get super excited about you spending a ton of your resources on emergency preparedness and not knocking out that high interest credit card debt.
- [43:42]
Brian Preston
Right. I mean this, this shouldn't be super expensive.
- [43:46]
Bo Reby
I think again, that depends on the scope. Right. Because like, yeah, having some extra food is one thing, but you know, I.
- [43:51]
Brian Preston
Mean, having a bunker. We used to do. We used to do.
- [43:53]
Ruby
I did Google one of these like earthquake preparedness kits. Some not as schooled in this. And they were only, they were like a couple hundred bucks. They weren't crazy. I will Say, I'm telling you, based.
- [44:03]
Brian Preston
On my cursory research, years ago we used to have like some Amazon affiliate links where we'd put our favorite things. This would be like, based upon this question, we could put up these water filters and other things. I mean they are pretty amazing, I think. I mean, I would encourage everybody to go buy something so you could at least provide water for your household if something bad. And it's not that expensive. There's technology that's pretty amazing and even turn swimming pools into water sources.
- [44:32]
Bo Reby
Now there's an idea hadn't thought of.
- [44:34]
Ruby
You're all set.
- [44:35]
Bo Reby
Send me that link.
- [44:38]
Ruby
Oh, that was an interesting one. But Matt, why we get it. Good thing to think about. And we hope that our varying thoughts around the subject helps you think through it. All right, we've got a question from anonymous user.
- [44:52]
Brian Preston
Uh oh, oh, oh.
- [44:54]
Ruby
It's not that juicy question either. I'm like, wow, they really wanted to be anonymous.
- [44:58]
Bo Reby
They wanted to be anonymous or that's their name.
- [45:00]
Ruby
It said. It seems like they wanted to be anonymous from the information that I cause.
- [45:04]
Bo Reby
Imagine how early on in YouTube you would have had to have like picked your thing to get that username.
- [45:09]
Ruby
I think that's came from another platform actually. So do with that what you will. Got says. I was curious what advice you all would give to someone who is working hourly, not salaried, on how to save money.
- [45:26]
Bo Reby
Same rules apply, right? When we say that we want you saving 25% of your gross income. Gross income does not matter how it comes to you. So whether you're paid hourly salary, bonus, commission, whatever that is, as you have inflow coming in, even if it's irregular and sporadic, we want you to be saving 25% of that gross. Now, what happens for a lot of folks is they're not able to save that 25% consistently. So perhaps you're someone who works hourly and for one week you might work 80 hours and the next week you might not work and the next week. So you might have to like smooth your savings so that it makes sense from a cash flow standpoint. But I think if you're hourly, you should think about saving in the way you structure your dollars, the exact same way as someone who does it that's paid salary.
- [46:13]
Brian Preston
Yeah, My thing is just be honest with yourself. Know thyself is because I think sometimes people who work hourly, you could. Some jobs will let you work a gazillion hours and you're like, well, I could do that, you know, because I'm trying to get out of debt. I'm trying to do this. Be realistic with your assumptions on what you're, you're doing because that's what, that's one of the things. Planning is only as good as the data you put into it. So be honest with yourself on what the income coming in. And also if you have an employer that's not giving you the hours that you want, put that into the assumptions as well. I'm just saying make sure that the assumptions are as smooth as possible. Because that's sometimes the harder part is because instead of you knowing what's coming in monthly automatically, it's more on you based upon how often you're working and the planning and you choosing which hours you're working here and there. So you have to be very honest with yourself and responsible with those assumptions.
- [47:06]
Bo Reby
Yeah. And I would budget conservatively. I mean one of the things being responsible with that is don't assume, oh I'm hourly. This is my hourly rate. I'm going to work 120 hours and this is how much I'm going to come in. So I'm going to spend at that level. I would pick some more conservative number to base your budget off of. So that, that way you give yourself a little bit of margin, a little bit of wiggle room in the system.
- [47:28]
Brian Preston
Yeah. And like overtime and things like that. Those, those one offs. Just like I said, be honest with yourself so that you're not making expectations that break the plan.
- [47:37]
Ruby
Yeah, that's really good stuff how it was phrased. I also wasn't sure if it was like a freelance hourly thing and that's even more so because that's more varied income.
- [47:45]
Bo Reby
If that is the case. One of the things I do want you for all my freelancers out there or side gig people. One of the things that like we think about saving. How do I save? How do I save? How do I save? Don't forget there is also a tax bill that's going to be associated with that income. You got to pay ordinary income tax on the money that you earn. But then you also get hit with self employment taxes. So make sure you're fact that that's one of the most heartbreaking things I see. Either someone strikes out on their own or their side gig becomes profitable quickly and they go to their taxes like hey guys, I thought I did what I supposed. I set 20% aside of the money I made on my side gig for taxes and I'm like I don't think you did enough because it comes quick.
- [48:24]
Brian Preston
15.3% is just the self employment. I mean, most of us, when you work for somebody, don't pay it. Notice that because your employer is paying 7.65% of that and then you pay the other 7.65. So 7 doesn't feel that crazy. But when you're out on Your own paying 15 gets less income taxes. You realize, ooh, this whole thing about taxation, it's, it's real.
- [48:46]
Ruby
You know, we are in the most wonderful time of the year when so many financial questions are coming up. Maybe you're getting a year end bonus. Maybe you're spending more because of the Christmas holiday season. Maybe you just know January is coming and you're gonna get more serious or set new goals or just have a reset on your finances. Those are all super common things we hear and experience and that's why we're right here for you. We will be continuing to put out great content throughout the holiday season and year end and the start of the new year. And moneyguy.com resources is there as you start thinking through all of your personal finance questions. Because we know personal finance is personal and that's why we love to take your questions right here on the show every Tuesday at 10am Central. But we understand you may want to go a little deeper or be reminded or have something tangible that you can go work through and customize for your situation. And so that's what moneyguy.com is for. Be sure to check out our resources as we're coming up on the year end.
- [49:42]
Brian Preston
I'm just thankful for every one of you. I don't take for granted that starting in January this will be 20 years of broadcasting for the Money Guy Show. That wouldn't be possible without everyone out there who just keeps supporting us. We are the longest running podcast. It's going to be an overnight sensation anytime now. So I mean, it really does. It means a lot to me that so many of you are so supportive of us and hopefully you can tell the heart of this thing is that we really are trying to be educators so you get to live your best life. And if you're one of those people, maybe you were riding around in middle school and your parents were listening to the Money Guy show, the podcast. And now you're a titan of industry and you're crushing it and you're like, man, those are the guys that inspired me, motivated me, and now here I am. Don't skip out on the abundance cycle. We'll leave the porch light on for you. Love for you to check us out if you go to boundwealth.com or go to moneyguy.com and look at work with us. That's not why this started, but it sure is a way we continue the relationship and we don't take anything for granted. I'm your host, Brian. Mr. Bo Reby and the rest of the content team Money got team out.