The Average American Needs HOW MUCH to Feel Comfortable in 2026?

Summary

Money Guy Show | Episode Summary

Podcast: Money Guy Show
Hosts: Brian Preston and Bo Hanson
Episode: The Average American Needs HOW MUCH to Feel Comfortable in 2026?
Date: December 31, 2025

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Episode Overview

This episode tackles a provocative new study from the Economic Policy Institute (EPI) on how much income the average American needs to feel comfortable in 2026. Brian and Bo dissect the headline-grabbing numbers—which suggest astronomical income thresholds for comfort—challenge the study’s assumptions, and provide practical advice for defining and achieving “comfort” in your own financial life. The episode shifts into a listener Q&A, touching on net worth, Roth IRAs, kids’ savings, and more, with the lively, candid style that Money Guy fans expect.

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Main Discussion: EPI’s Report on “Comfortable” Income in 2026

Headline Findings from the EPI Study

• Single Adult: $106,745/year needed to be comfortable ([02:20])
• Two Adults, No Kids: $138,000+
• Two Adults, One Child: $194,000
• Two Adults, Three Kids: $278,000
• Single in California: $163,000
• Family of Five in California: $480,000

“If you are a single individual with no dependents, in order for you to live comfortably on average in America, the income required to do that is $107,000.”
– Bo Hanson ([02:20])

Hosts’ Reactions to the Numbers

• Both Bo and Brian call the study’s income levels "asinine," "bonkers," and "out there."
• They point out that, by these measures, most Americans would not be “comfortable,” which defies reality.
• The study gives some geographic variation (e.g., $87,000 in low cost-of-living states), but even these seem high.
• California’s estimates are especially “outrageous.”

"Who has. What percentage of people is making $500,000? Not even in California."
– Brian Preston ([05:32])

"If this is what it takes...then that must mean that the vast majority of Americans are not living comfortably because the vast majority of Americans fall below these income thresholds. And I just refuse to believe that."
– Bo Hanson ([03:04])

Why Are the Numbers So High? Breaking Down the Study’s Assumptions

• The EPI’s definition of “comfortable” appears to be exceptionally generous:
  • Transportation Costs: Over $1,000/month for a single adult.
  • Discretionary Spending: About $2,600/month per person.
• Hosts view these amounts as unrealistic for most Americans and potentially discouraging for listeners.
• Study fails to acknowledge how most people actually budget and live.

"Discretionary spending for a single adult would need to be somewhere around $2,600 a month...For a lot of Americans, that would be a big fun money budget."
– Bo Hanson ([07:36])

“To say that that's what you need to be comfortable, that's a bridge too far.”
– Brian Preston ([07:44])

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Key Insights & Practical Advice

1. Comfort Is Personal & Within Reach

• Median U.S. household income is about $84,000, far below the study’s threshold.
• Personal finance is personal—everyone should define their own version of "comfortable."

2. Focus on What You Can Control

• Live Within Your Means: Adjust spending based on your actual situation ([08:55])
• Use Smart Rules: Car buying (23/8/20 rule) and home buying (3/5/25 rule) to prevent big-money mistakes ([09:40])
• Pull Your Levers: You can
  • Increase income (career, side hustles)
  • Decrease expenses ([10:37])

"Those are really your two options and you have a lot of control over those options. Sometimes it may take a while...but they're there for you and that is something you can control."
– Brian Preston ([10:49])

3. Enjoy Life Creatively

• Make memories with low-cost or free experiences.
• Life has financial seasons; comfort doesn’t require constant high spending.
• Embrace “bedazzling your basic life.”

“...I think that there's a lot of opportunity to make memories with your community, with your family that aren't super expensive...You don't have to do [Disney] to enjoy your life, or dare I say, to live comfortably.”
– Bo Hanson ([13:06])

4. Use the Financial Order of Operations

• The FOo (Financial Order of Operations) helps reduce anxiety and defines your next financial step, especially when "comfortable" feels out of reach ([14:27]).
• Fully funded emergency fund is a foundation of comfort.

"...If I finished step four and I had that in place, that would allow me to feel more comfortable in other areas of my life."
– Bo Hanson ([14:44])

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Listener Q&A: Timestamps & Highlights

[16:13] – Retirement Number & Age

• Q: “Is there an age or a net worth level where I must know my number?”
• A: No specific age. Early on, focus on saving 25% of gross income—being directionally correct.
• Consider knowing your specific retirement number when you’re 5–7 years from retirement.

"Early on in the journey? Don’t focus on the finish line, focus on the pacing. Focus on 25%. 25%. 25%."
– Bo Hanson ([16:38])

[21:45] – Net Worth Statements: 529 Accounts

• Q: Should kids’ 529s be included in the net worth statement?
• A: Treat 529s as prepaid future expenses; list them in the footnotes, not in your main net worth.

“…they’re an expense that you’re likely going to pay…they’re more of an income statement item than a balance sheet item.”
– Bo Hanson ([23:26])

[27:56] – Pay Off Mortgage or Invest?

• Q: With $23,000 left on a low-interest mortgage, pay it off or invest?
• A: If you’re on Step 8 of the FOo, you get to choose: pay it off if it brings peace, or invest if it’ll make a difference in your wealth-building. Make sure it’s not a major portion of your assets ([28:24]).

[30:21] – Roth IRA: Contribution Deadlines

• Q: Can you make a Roth IRA contribution after year-end?
• A: You can fund for the prior year until the tax filing deadline in April (for 2025, you have until April 2026) unless you missed 2024 entirely ([30:35]).

[32:28] – Finding a Financially Compatible Partner

• Q: How do you find a partner who shares "mutant" (financial) values?
• A: Shared goals matter more than both being financial nerds; being aligned in values and communication is key ([32:28]).

"What matters in our relationship…is that we have the same goals..."
– Bo Hanson ([33:24])

Fun: Mutants Mingle, Met Worth—listeners suggest names for a financial dating app!

[38:52] – Roth IRA for Kids’ Earned Income

• Q: Can an 11-year-old with earned income open a Roth IRA?
• A: Yes, if you file a tax return with their income. Alternatively, consider a custodial account until they get “official” income forms ([38:52]).

[45:24] – Employer HSA vs. Emergency Fund

• Q: If employer contributes to HSA but emergency fund isn’t full, what should you do?
• A: Let HSA funds stay in cash as part of your emergency reserves until your emergency fund is fully built; then invest ([45:24]).

[49:05] – Saving for Kids: 529s vs. Other Support

• Q: Should you prioritize 529s or providing tools for wealth (cars, test prep)?
• A: 5,29s are step 8 in FOo—prioritize emergency fund, retirement, and then 529s. Instilling financial skills trumps just gifting money ([49:05]).

"Money is not a goal. It's a tool that allows us to achieve our goals..."
– Bo Hanson ([52:47])

[54:14] – Not Messing Up: Roth IRAs & Investing

• Q: Fear of making mistakes opening/spousal Roth IRAs with only 401(k)s
• A: Investing need not be intimidating—use a Target Retirement Index Fund if unsure. As long as you meet income thresholds, Roths are direct and simple.

"If you can answer two questions, how much can I save? When do I need the money? You've answered everything you need to know when it comes to investing."
– Bo Hanson ([54:14])

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Notable Quotes & Memorable Moments

"Those numbers become discouraging. So what we said in true Money Guy fashion is, let's dive in."
– Bo Hanson ([05:41])

"Personal finance is exactly that, it is personal. And so you have to define for you and your life, what does comfortable mean?"
– Bo Hanson ([08:03])

"Very often. Nope."
– Rapid-fire affirmation/disagreement during practical advice on living within means ([09:27])

"Mutants Mingle... That's the winner. We're launching."
– Bo Hanson on the idea of a finance-nerd dating app ([37:46])

"Money is not a goal. It's a tool that allows us to achieve our goals..."
– Bo Hanson ([52:47])

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Key Takeaways

• Don’t let sky-high “expert” income estimates define your sense of financial comfort.
• Focus on living within your means, making smart big purchases, and pulling the levers of income and expenses you control.
• Build your comfort and financial future step-by-step—with an emergency fund and the FOo.
• Enjoy life and make memories, even on a budget.
• The Money Guy community is active, supportive, and maybe even playing matchmaker for financial “mutants”!

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Resources Mentioned

• Money Guy FOo (Financial Order of Operations): moneyguy.com/resources
• Net Worth Statement Template: moneyguy.com/resources
• Roth IRA & Backdoor Roth guides: moneyguy.com
• Making a Millionaire Series: YouTube channel, every other Monday

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This summary captures the central debate, practical wisdom, and the community feel of this Money Guy Show episode. Whether you’re concerned about your own comfort threshold, worried about being “behind,” or puzzling out next financial steps, Brian and Bo deliver reassurance, clarity, and motivation to keep building your best financial life.

Transcript

[Bo Hanson]

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[Brian Preston]

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[Bo Hanson]

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[Brian Preston]

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[Bo Hanson]

Reeves. I am so excited to talk about this because I thought that the numbers that we got, the information that was put out by the Economic Policy Institute was absolutely asinine. It blew my mind. We've had a lot of folks over these past couple years talking about inflation, inflation, inflation, inflation, inflation. We've heard this. The costs of the things that we buy on a daily basis are getting more expensive and more expensive and more expensive. And so I think a lot of people are feeling that sort of strain. They're feeling that it's tightening up. But when it comes to, okay, what is actually required, what does it take to actually feel comfortable? What does it take to be able to make ends meet? Some of the numbers that we found in our research, I just thought, in my opinion, absolutely bonkers.

[Brian Preston]

Yeah. This is a specific study based on data from the Economic Policy Institute. And obviously, like Beau said, this is on everybody's mind. Like, we are interested to see what they came up with, but the conclusion that they came to. So here's the first number is that a single adult needs an income of $106,745 per year.

[Bo Hanson]

So say it again. If you are a single individual with no dependents, in order for you to live comfortably on average in America, the income required to do that is $107,000.

[Brian Preston]

But wait, the numbers get bigger. So if you add two adults, like a couple in a household with no kids, the number goes up to above $138,000. And then if you add a kid to the mix, we are at $194,000. Of income to live comfortably and three kids, they say $278,000. So we are almost to $300,000 for a typical American family to, quote, unquote, live comfortably according to this study. What do you think?

[Bo Hanson]

We're going to talk about this in a moment, but we know what the average income or the median income for most Americans are. So what this is suggesting is that, is that if this is what it takes for one adult to live comfortably or this, this is what it takes for a household with a child or two children or three children live comfortably, then that must mean that the vast majority of Americans are not living comfortably because the vast majority of Americans fall below these income thresholds. And I just refuse to believe that. Now I'm, I'm not minimizing the fact that yes, inflation is a real thing and yes, the cost of the things that we use on a daily basis have gotten more and more expensive. But the idea that in order for you to be comfortable, in order for you to live the life that you want to live, in order for you to have a beautiful today and a great big beautiful tomorrow, you have to hit these income numbers, I think is just out there. I think it's totally wonky. Now, when they did the study, they did acknowledge there was some variance by geography. I know that all the time, like if you live in one of the higher cost of living areas part of the country, obviously what's needed from an income standpoint would likely be higher. But what they found is that for a single individual, again single individual, no dependents, the average income needed was about $107,000. But when you look at lower cost of living areas, the average income needed was as low as about $87,000. So that's what, $20,000 less notably in like states like Mississippi and of course, oh, no, I'm not doing it, I'm not doing, I'm a bulldog. You ain't going to do that on air. Not a chance.

[Brian Preston]

Caleb responded, not a chance. But then there are, oh, there, yes, of course, everyone's going to say, like what about big cities in California? And yes, cost of living there is much higher. We get that. But the numbers here, they get outrageous. Just to be really frank, in my opinion, in California, a single adult to live comfortably needs as high as $163,000 of income. And then if you add up, if you add in the kids, like a three child household, according to the study, allegedly needs $480,000 into California to live comfortably.

[Bo Hanson]

So if you are a family of five in the state of California, you need half a million dollars in order to leave, to live comfortably. And what, what I think is so frustrating is that I think that this could be very discouraging.

[Brian Preston]

Yes. I think that's why I'm getting a little heated about it. Like these. Who has. What percentage of people is making $500,000? Not even in California.

[Bo Hanson]

We did a. We did a. A show a number of years ago, and it was, hey, what do you think? You know, what percentage of population makes x X dollars? And if I remember the numbers right, the average American thinks that one in four people make half a million dollars a year, $500,000 a year. And in reality, it is like a fraction of 1%. Like, it is so, so, so much lower than that. And so I think that these numbers become discouraging. So what we said in true money guy fashion is let's dive in. Let's actually see why they come up with these. Yeah. Like, how are they quantifying what are they calling comfortable? And when we actually dug into the numbers, I think it got interesting. And I think what the Economic Policy Institute defines as comfortable is different than what I would define as comfortable.

[Brian Preston]

Same. For instance, there is some hope hidden in this data. The estimated costs were high. Like, for example, transportation costs alone for a single adult were over $1,000 a month. So you can see how that automatically just inflates all of these numbers. It's assuming you're spending a lot on, like, car payments and gas. Gas and like, public transport. That's a lot. Especially, like, in perpetuity, like, for a significant amount of time.

[Bo Hanson]

And there might be a season where you might spend $1,000 a month. But in order to be comfortable, you have to spend a thousand thousand dollars every single month on car payments, every single month on gas, every single month on utilities. That just seemed high. But I didn't think that was even the. The most remarkable number. There was another little nugget that they put in there. And again, this is what they are defining as living comfortably. They said that the discretionary spending for a single adult would need to be somewhere around $2,600 a month. $2,600 a month. And discretionary spending.

[Brian Preston]

Whatever you want.

[Bo Hanson]

Fun money. And I think that for a lot of Americans, that would be a big fun money budget.

[Brian Preston]

Yes, that. And listen, if you have that, if that's your goal, awesome. That would be great. But to say that that's what you need to be comfortable, that's a bridge too far. It's A bridge, giant discretionary spending income for a single individual, like just for one person, just on whatever they want, in my opinion.

[Bo Hanson]

And so what I would encourage you guys to recognize is that maybe you're not at one of these incomes. It doesn't mean that you're behind. Remember, the median household income is about $84,000. So what this is saying is on the median, there are very few households in America that are actually living comfortably. And I just don't think that that's the case. But we know that personal finance is exactly that. It is personal. And so you have to define for you and your life, what does comfortable mean? So what are some of the things that you can do? How can you take this information and what can you do when you think about creating a comfortable lifestyle for yourself? Well, I think that you have to focus on the things that you can control, what stays inside of your onus of control. And the very first of those is, is just simply living within your means.

[Brian Preston]

Yep.

[Bo Hanson]

If you don't have a large income, if you don't have a lot of discretionary cash flow, maybe spending $1,000 a month on transportation would not be inside your means. Maybe having a $2,600 a month slush fund or fun money, Fun is not inside your means. And you have to figure out what that means for you.

[Brian Preston]

It's important to note that, that not being in your means is very, very normal. Like that is the vast majority of Americans are not able to spend $1,000 a month on a car payment.

[Bo Hanson]

Yep.

[Brian Preston]

Very often.

[Bo Hanson]

Nope.

[Brian Preston]

And so, yeah, like, living within your means isn't always super popular, but it's, it's powerful, powerful stuff. If you just make those decisions when you make those big purchases. Like a car can make all the difference.

[Bo Hanson]

Well, and that's why we have rules that you can use if you buy a car we want you to follow. 23, 8, 20% down. Don't finance for any more than 36 months. And don't let your car, your transportation cost, your car payment be more than 8% of your income. You can do the same thing for houses. We have our 3, 5, 25 rule. Because a lot of times it's not the latte decision. It's not the $5 a day that cause people to live outside their means. It's these big decisions. It's the automobiles, it's the homes. So make sure you understand for you. Where do your means in and what does it mean to live inside of those?

[Brian Preston]

Yeah, you can check out moneyguy.com resources. If you want more information on those car buying and home buying rules.

[Bo Hanson]

Another thing that you ought to think about as well is that when it comes to personal finance and Ruby, we talk about this all the time. When it comes to making financial decisions and trying to like impact your financial life, there are really only two levers that you ever get to pull.

[Brian Preston]

Oh yeah, I thought you were going.

[Bo Hanson]

To say, do you know what those lovers are?

[Brian Preston]

I do. And it's. I think, I think that sometimes people, I don't like this answer, but it's so simple. It's actually great news. In my opinion. You can pull the lever of you can make more income.

[Bo Hanson]

That's it.

[Brian Preston]

You can rise up in your career, you can side hustle, you can use your meat, like use your opportunities and resources to get more income or you always have the option to lower your expenses. You can see where you can cut, how you can get creative, how you can adjust. And so those are really your two options and you have a lot of control over those options. Sometimes it may take a while to figure that out. I understand it may take some time to pull those levers fully, but they're there for you and that is something that you can control. So definitely evaluate your levers before getting discouraged about, you know, where you are or your financial journey.

[Bo Hanson]

You know, there's a wonderful couple that we recently sat down with on Making a Millionaire. If you've not had a chance, make sure you subscribe to the channel right now because every other Monday we release a brand new Making a Millionaire episode where Brian and I get to sit down from a real financial mutant just like you and do a deep dive into their personal finances. And what I think is really interesting is recently we sat down with a young couple and man, they were not doing stuff wrong. They weren't overspending, they didn't have crazy housing, they didn't have crazy automobile, but they had literally cut their expenses down so low, they had cut it down to the bone. The conversation we finally had to have with them is, hey, you have exhausted the lever of expenses. You have to figure out how do you control that income level, how do you go out, figure out a side hustle? Maybe one of the individuals, maybe you need to go back to work. You have a highly sought after skill set. Maybe there's some way you could figure out how to monetize that. It was a great conversation for them because no matter Whether you have 10 or $10 million, those are the two lovers that you have to operate with. So recognizing that and recognizing again what's inside your control can be unbelievably valuable.

[Brian Preston]

Because sometimes just a little bit can go a long way. And that brings us to our third point. Be sure you're bedazzling your basic life, as Brian would say, since he's not here today. We will definitely say his phrase because it's so true. Take advant of the low cost experiences, especially if you're in a season where your expenses can't go too much lower or your income hasn't gone up to what you want just yet. I think that there's a lot of opportunity to make memories with your community, with your family that aren't super expensive. We've talked all the time. You've said how when you went to Disney World, it was like this big milestone. Your kids love the pool almost more than the park. And it's just kind of one of those reality checks where like, it's wonderful to go to Disney and if you get to do that and can plan for that, amazing. But you don't have to do that to enjoy your life, or dare I say, to live comfortably. Which is what this is all about, right? I think the reason I took such issue with this is because I think the study kind of erases the seasonality of your life. Like there might be a time where you do have that discretionary income. There's going to be a time where you do not. And it doesn't have to be. Neither one of those has to be forever or is promised to be forever. And so I think that there's a lot of freedom when you see, like, okay, maybe I do have to buckle down for a year or two to pay off this debt, to build up this emergency fund to invest, even though I'm in the messy middle. But then there's going to be another season where, oh, we do have a little more income as a household. Somebody went back to work, I got a raise, we got a bonus. Like, I think that's why I didn't like this study. So that's my opinion. I am excited to hear what you guys think about these numbers and we hope that we were able to dig into why they were reported the way that they are and really take it back to what you can control about your own personal financial situation and your own levers that you can pull income and expenses. So.

[Bo Hanson]

And one of the things I love is a lot of, a lot of Americans are arriving at this conclusion. Hey, I don't, I don't feel comfortable. I don't know If I'm doing the things that I'm supposed to be doing, I don't know if I'm doing them the ways that I'm supposed to be doing. That's one of the very reasons why we came up with a financial order of operations. We wanted you to have a guide to help you know exactly what you ought to be doing with your next dollar. Hey, maybe one of the reasons that I don't feel comfortable right now is I never actually got my fully funded emergency fund. My fully funded emergency reserve. Man, I bet if I finished step four and I had that in place, that would allow me to feel more comfortable in other areas of my life. Or maybe I don't know if I'm saving enough. Okay, well, financial order of operations, I get to 25%. Okay. Now I can spend freely. I don't have to worry. Am I doing the things that I should be doing. So if you want your free copy, you can go to moneyguide.com resources and check that out. As we go into a new year, this is a great time to reevaluate. Hey, where am I? What is my highest deductible? Do I have it covered? How much are my monthly living expenses? Do I have a fully funded? Am I maxing out my employer benefits? Am I putting money to in my Roth ira? Am I doing the hsa? Now, we've already done an episode of this. A lot of the numbers are changing in 2026. So if you were. Just because you were set to max out in 2025 does not mean that you're automatically set to max out in 2026. So let the financial order of operations be your guide so that you can start living both a comfortable today as well as a great big beautiful tomorrow.

[Brian Preston]

Well, on that note, this is a live stream day, so we're going to be answering a lot of your questions. If you have a personal finance question, drop it in the chat below and we are going to answer them.

[Bo Hanson]

Awesome.

[Brian Preston]

So we're going to kick it off with Silas's question. He says, is there an age or a net worth level where I must know my number? He's referring to his retirement number. I'm 30 and everything seems speculative. This far out from retirement, I feel like I should just save a bunch. And that's all he says. But I'm feeling like maybe he's feeling he's flying blind a little bit. What would you say to Silas?

[Bo Hanson]

Silas, you're 100% right. And this is gonna be a hot take, cold water, whatever you wanna call it, but I think so many young people, they love personal finance and they love the details and they love the spreadsheets and they love the Monte Carlo and they love all of those parts and pieces. But when you are 30 years old and let me just speak from my experience, my 30 year old self and what my preferences were, what my thoughts were, my future looked like is very different than what my 35 year old self was. And just having a five year spread, a five year change, there were so many variables that were diff. That were different. That same thing is true exponentially. So when it comes to thinking about a 30 year old who's looking at retiring at 60, 65, 70, that's why we tell folks early on in your journey, you don't have to know your number. You don't have to, it's okay to play horseshoes. You just want to be directionally right. That's why we tell you that the sooner you the, the earlier you can start saving 25% of your gross income, the earlier you will be able to give yourself options to figure out, okay, what is my number? Where do I need to be so early on in the journey? Don't focus on the finish line, focus on the pacing. Focus on 25%. 25%, 25%. We have a great deliverable. If you go to moneyguide.com resources called what can 25% do for you? Nope, called how much should you save? Once you go see this, it will tell you, okay, am I saving what I should be saving? Well, if you're doing that and you're moving directionally in the right place, you don't have to have all the answers. So. But your question, Silas, was is there a specific age or a specific net worth where I do need to know my number? Yes, but it's not a specific age and it's not a, it's not a specific net worth. It is at that point where you are seriously considering financial independence. You want to know that before you put in that resignation, before you, you know, decide to tell your boss what he can do with a job, whatever that thing is for you, you want to make sure that you know your number, that you've stressed out, stress tested your plan and you factored in all the variables. I know how often I'm going to change automobiles. I know in this crazy healthcare marketplace that we work. I know how I'm going to have health insurance. I know how much I want to spend on travel. I know what I'm going to count for later in Life. I know if I've got to cover the cost of college or weddings or any gifting, I know if I want to reload whatever those things are. In your situation, you have not only defined your number, but you've also stress tested that number to make sure that the future that you hope for, the future that you're dreaming about, is actually realistic and is actually attainable. So for us, a lot of folks begin to have those conversations when they're five, seven, eight years out from actually making that decision. So long as you've been directionally doing the thing you're supposed to be doing. Saving 25%. Saving 25%. Saving 25%. But if you are someone and you like to have a goal and you like to have an idea of the destination, that's why we did the know your number course. You can go to learn.moneyguy.com and Brian and I, we used to call this because we'd sit down with prospects who were thinking about hiring us. Okay, well, what do you want your money to do? Like, what's. What's the goal? Right. And. And we'd pull out our calculators and our pins because we're nerds and we just do some, like, quick back of the napkin math. What we were doing is on the fly. We were doing the know your number course to give them a loose idea of what the destination looks like and then helping them paint a path of how to get from where they are today to that destination. That know your number is supposed to be a directional indicator of am I moving in the right direction? And so, Silas, for you, you'll be able to define, okay, when do I need that? When do I need to know that? But if you don't know it and. And you don't care about it today, that's totally okay. Try to get to 25% and the rest will take care of itself.

[Brian Preston]

Yeah, Silas, I'm in a similar boat. Like, I'm in that age range. I use the know your number tool and it at least helped me see, like, okay, I know I want more than this, or, like, if I'm saving this much, how much am I going to have? It still gives you, like, a ballpark. I. I recognize that number may change or, like, I don't know exactly when I will need to be financially independent, and that's fine, but it still gives me a benchmark to shoot for and kind of confirmation that, like, okay, if I'm saving this 25% of. Or if I'm saving this x Amount I should have enough to do something, you know, be dangerous, retire in some way. Um, and that is really helpful. So go to moneyguy.com if you have not checked out the know your number course if you're interested in doing that.

[Bo Hanson]

You know, I told myself that I was going to answer the question really quickly. Uh, I was like, oh, I'm going to, I'm going to show them how fast I can do this.

[Brian Preston]

Why?

[Bo Hanson]

I didn't. Just because, you know, like speed ramp. I don't know. It's like, it's like developing a skill set that maybe is not natural, but I didn't do it fast. That's all right.

[Brian Preston]

That's all right. It was a good answer at the.

[Bo Hanson]

End of the year.

[Brian Preston]

I appreciate it.

[Bo Hanson]

Hey, by the way, I think.

[Brian Preston]

Oh, go ahead.

[Bo Hanson]

It's end of the year. You know what that means.

[Brian Preston]

Network statement.

[Bo Hanson]

Time worth day is almost.

[Brian Preston]

Have you done yours yet? Oh, no, you're the 31st. I never cheat.

[Bo Hanson]

I never ever cheat. This. It's so silly. I purposely, for the past, I don't know, month, like, I haven't even logged in to look at my accounts because I don't even want to have an idea. I don't even want to. I like to be surprised. But here, in two days, I will go in and start. You know, it takes a while to put it all together, but start putting together all the numbers. And it's so exciting. If you're someone who's never done your net worth before, you've never tracked it, you've never looked at it, this is an amazing time to start right at the end of the one year, beginning of the next year, because it lets you know where you are. Because how can you know if you are on track, ahead of the curve, behind the curve, maybe even know the curve is if you don't know where you're starting at today. And a net worth statement can bring that to light. So if you want a free template, we have [e-mail] resources. Or if you want to use the exact same tool that I use that Brian uses that rabies, you can go to learn.moneyguy.com and check out our tool that we built ourselves and has a dashboard with all kinds of fun, interesting information. This is a wonderful time to start doing that.

[Brian Preston]

Absolutely. I have a question about net worth statements up next from Katrine Kraft. I believe it is. It says, hi, money guy team, longtime listener, first time caller. That's always fun. Nice to hear from you. My husband and I Filled out the net worth tool for the first time yesterday, which is very exciting. Do we include the kids? 529s anywhere? So let's talk about some of these, like, extra investments and accounts around. How do you put those on the net worth statement? Or do you at all?

[Bo Hanson]

Yeah, so what, what is a net worth statement? It is simply a listing of all the things that you own, own beside all the money that you owe. And then you net those two and you come up with what your net worth is. Uh, and so when we think about things that we own, we're thinking about, you know, assets. We're thinking about cash, checking account, savings accounts, Investment Accounts, Roth IRAs, 401ks, Primary Residence, Business interest, real estate, those types of things. Liabilities. We think about all the money that we owe. Five 29s, while they do seem like they're an asset, because they are an investment account. We consider 529s to sort of be like a prepaid future expense. It's this future expense that I'm going to incur and I'm kind of, you know, it's like a glorified sinking fund. I'm going to have this thing that's going to happen in the future, so I'm going to fund this sinking fund today to be able to satisfy that, because of that. Because those dollars aren't actually part of our true financial independence journey. They're more of a income statement item than a balance sheet item. For all you accountants out there, we like to consider 529s on the footnotes. They're not actually your assets. They're an expense that you're likely going to pay. You're going to help your kid pay at some point in the future. So if you use our net worth tool, you'll notice there's a footnotes page. Well, on the footnotes is where we want you to list that kind of stuff. We want you to list all of your insurance policies, your life insurance, your disability insurance, maybe your property and casualty stuff, if that's important to you. We want you to list the important people, your accountants, your attorneys, your insurance agents, your financial advisors, and we also want you to list all of the other outside assets. This could be 529 accounts, custodial accounts, utmas, ugmas, other types of assets that aren't necessarily the net worth statement, but you still want to have an accounting for it, you still want to keep track of. So for us, me and Brian and Aribi does the same. 529 are a footnote item, not an actual net worth sheet item.

[Brian Preston]

That was a great answer, Katrine Craft. Thank you for the question. I was thinking, I think I'm gonna make today a Tumblr day.

[Bo Hanson]

Whoa. I'm gonna do it nowhere.

[Brian Preston]

So, Silas and Katrine Craft, if you would like a money guy tumblr, just email winner moneyguy.com and we will send one to you. Beau is modeling this tumbler for me today. It can also be a koozie if you would like to put a can in and keep your beverage cold as well.

[Bo Hanson]

Did you see what else I'm modeling today?

[Brian Preston]

He's modeling his new Christmas present.

[Bo Hanson]

It's my favorite. It was my favorite Christmas present this year.

[Brian Preston]

Yeah. For our listeners, it's a mug with the pictures adorable faces of his children.

[Bo Hanson]

All three. All three of my folks on there.

[Brian Preston]

Very good messy middle Christmas present. It was a win right there. She mama job, Hanson household.

[Bo Hanson]

You know, you know what else I got for my. What else I got for Christmas?

[Brian Preston]

What?

[Bo Hanson]

Oh, I didn't. Never thought you'd ask. Probably two weeks ago, Jenna said ask. Actually, Jenna said, hey, we need to switch cars tomorrow. And I. And you can't ask me any questions. And I'm like, I'm like, oh, yeah, that. Okay, sure. Well, I drive a truck. And so I was like, okay, well, a few things are happening, right? She's going to do something. Maybe she's going to get it clean. I don't know. She's going to do something to it. And I was like, oh, well, no, maybe she just bought something and she doesn't want me to know what she bought and she needs to have the truck to be able to, like, haul it. But then my mind started, like, spinning and I was like, oh, my goodness, what if, what if? In my wife's genius, she was like, you know what? I'm tired of this minivan. I'm not doing anymore. I'm not going to have it. And she took my truck and she would have gone and traded it in and got her new car and told me, hey, the minivan's yours now. She didn't do that, but for a moment I thought that that was going to be my present, but it was not. She got, she got my, my truck completely detailed and cleaned and it is.

[Brian Preston]

That is a great pristine.

[Bo Hanson]

It was awesome. Yeah, super awesome.

[Brian Preston]

That's really cool. Very good job. All right, I've got another question queued up for you. It's from NWW in nursing 6068, I believe that's A complicated username, but the question is, I have $23,000 left on my mortgage with a low interest rate of 2.375%. Should I pay it off? Should I pay it off? I'm in step eight of the foo and and have $35,000 cash on hand, no other debt, or should I invest the cash I have? It's a little unfair that I'm asking this when Brian is not here. Well, so maybe we can speak a little bit for him, because this sounds like a question that Brian himself had.

[Bo Hanson]

I mean, Brian was in this exact spot, though. He had a low balance mortgage, it was at a low interest rate, and he had cash available to pay it off. Now, here's what you said NW that I thought was great. Hey, I'm in step eight and this is a little bit of a hot take. Not a hot take. This is something people forget. When you're in step eight, you get to do what you want to do. You get to choose, right? Like if you want to pay off your low interest debt, by all means do it.

[Brian Preston]

It's really fine if you want to.

[Bo Hanson]

Go buy a nicer car or you want to go on a trip, or you want to pick up some new hobby. In step eight, you get to define what you do, your dollars. So is it okay? Just should you do it? You totally can if you want to. It depends on what your goals are. What I'd love to know about your overall financial situation is how far along in the wealth building journey are you? If you got a couple million bucks, say, saved and invested working for you, then likely $23,000 of capital going to extinguish that mortgage is going to be immaterial to your financial life. If, however, you've been a debt crusader and you've got $50,000 of investment saved up, and you have this because you've been prioritizing paying off the mortgage and you got $23,000 left on it, I'm going to argue that $23,000, depending on your age, could potentially work harder for you than if you go satisfy and extinguish that debt. So I'd want to know a little bit more about your situation. But my leaning is this is fairly immaterial for you. And if it's fairly immaterial for you and it's, you know, like Forrest Gump said, this is just one less thing, there's no problem with you paying it off. Even though there's probably an arbitrage, you could invest that in cash and make more at Some point, you just don't want to have any more. You don't want to deal with a mortgage statement. You don't do the mortgage company. And that's okay. Step eight, you get to choose. You get to create your own adventure.

[Brian Preston]

I like that. Create your own adventure. Well, NWW in nursing 6068, you get a money guy Tumblr, since we answered your question and if you would like one, just email [e-mail] and we'll send that out to you. Next question is from Madison Blanchard. It says my husband didn't contribute to a Roth IRA in 2024. Okay. Is it too late to move the money now before the end of the year?

[Bo Hanson]

You think she meant 2024 or you think she meant 2025?

[Brian Preston]

You know, I think she meant 2025. Madison, if you're still watching and in the chat, let us know because those are two different things.

[Bo Hanson]

Yeah, this will be, this would be a quick one. If he did not put money in a Roth in 2024, unfortunately, it is too late. You have missed the window to be able to fund a Roth IRA contribution for 2024. If, however, you meant to type in 2025. One of the beautiful things about Roth IRAs or IRAs in general is they're kind of like little time machines. You can get into the next year and say, oh, I didn't find, I didn't put my money in there. You have up until the tax filing deadline, up until April to be able to fund your Roth for the prior year. So even though you didn't fund it by 1231, you could still go put money in your husband's Roth or he could go put money in his Roth in January, February, March of next year. No harm, no foul. There are a number of accounts that will lie to do this. You can do this for HSAs, you can do this for Solo 401ks, you can do it for SEP IRAs, you can do it for profit sharing. If you're an employer and you have an employer sponsored plan. So it is not too late to fund for 2025. It is too late to fund for 2024.

[Brian Preston]

Good answer. Honestly, when I was scanning, I was thinking she meant 2025.

[Bo Hanson]

I would.

[Brian Preston]

Those are two very different.

[Bo Hanson]

I would assume so. You answers really behind in that. 24.

[Brian Preston]

Yeah. 24. Too late. 25. Yes. Do it now. That's the answer. All right, I'm going to ask you a ridiculous question. Oh, but somebody asked it and I kind of want to know what your response is going to be Brandon Leonard. 377 says Good morning, MoneyGuy team. I'm 26, single, and at around 340k net worth, which sounds like he's doing amazing. So shout out to you. Finding a partner who shares mutant values is proving to be difficult. Have you considered making a spot for single mutants to meet? How does he find love beautiful? How do mutants find other mutants? Or do you have to?

[Bo Hanson]

What do you think, Matt? I'm gonna need you to work on. Let's start snowballing names of our dating app. I don't know what it's gonna be, but I need you to come up with a really good one. We'll have that ready for you in Q2. Here's what's really interesting. I think a lot of financial mutants, depending on your level of mutation, find it hard to find other people that are the same as them. I will use my wife and I as an example. I'm a big time financial mutant. I like live and breathe this stuff. I do this for a living. I talk to you guys about it all the time. I just love talking about it. People all the time say, man, how'd you and Brian come with the idea to do the podcast? I was like, honestly, the podcast is nothing more than you guys seeing conversations me and Brian were having. Any. Either way, even the. Even the cameras weren't on. This is the stuff that we talk about. These are the kind of things that. That we go through. And so trying to find someone who has that same level of desire and attention and affinity for personal finance might be difficult. And, you know, my wife, she's not watching right now because I know her and the kids are in a movie right now. But if she were watching, she would not be offended me saying this. She's not exactly a financial mutant. I mean, she understands how to make wise financial decisions. She. She understands the basics about live on less than you make and save and invest for the future. But if I was like, hey, babe, talk about how to execute a backdoor Roth. And she'll say what? She could tell you what a Roth is. But she's. She's not going to know the intricate nuances. And that's okay. Because what matters in our relationship, Brandon, is that we have the same goals. Meaning that, hey, we know we want to be able to do this for our kids and create this kind of life and have this sort of freedom and use our money to accomplish these sorts of things. So long as you can be on the same page about the goals, you don't necessarily have to be the exact same type of mutant. Now what happens though is when you do meet that person and when you first start interacting, there's a little bit of friction. Right. We, we did. You know what, our search function on the website is so good. Now if you go to moneyguy.com and you search, don't do this now. Stay in the live stream. But after the live stream, go search love, marriage and finances. It was an episode that we did it right before I got married. We're basically walk through me as a financial mutant, all the things that I was going to just absolutely convince my non financial mutant wife of. And it's hilarious going through how we're going to spend money and what's the budget look like and all this kind of stuff. And then I tracked every single dollar for an entire year meticulously. And we did a revamp to see how close I was. And boy was the first year of marriage for us in education. And it was way more of an education for me than it was for her. So I would tell you, where do you meet, you know, other financial mutants? Well, our Reddit thread is really good, you know what I mean? Pretty popular. Well, if you don't follow us on socials, you can go follow any of our socials. That is where other financial mutants hang out.

[Brian Preston]

See, but we wouldn't do this, to be really frank with you, we would not do this in order to have people meet in a romantic way. But if there was a community that was just for mutants, would somebody like this use it?

[Bo Hanson]

That's what I'm saying. That's kind of where I'm going with this.

[Brian Preston]

So I'm not curious to know. Actually, please tell us in the chat.

[Bo Hanson]

I'm not suggesting that you begin propositioning in the Reddit thread. What I am saying though is that that is where like financial mutants hang out. That's, that's what financial means do. They like to hang out on the Facebook page. They like to interact with folks. So I think that's where they hang out. What matters more is when you're searching for this person, does this person value the same stuff that you value?

[Brian Preston]

Yeah.

[Bo Hanson]

Does this person care about, hey, one day, you know, hey, I really want to travel one day. I don't ever want to leave my house. It's going to be some stuff.

[Brian Preston]

Yeah. And more difficult beyond finance.

[Bo Hanson]

That's right.

[Brian Preston]

I think that that's the thing, like, are you aligned, generally speaking in life? And like, do you respect each other enough? Like, are you looking for someone to just go along with you no matter what? That's going to be difficult. Or like, is your partner. Same thing. Like, is your partner wanting nothing to do with money and just wants to spend all the time and doesn't want to listen to you? Like that's a whole. That's a bigger problem.

[Bo Hanson]

That's right.

[Brian Preston]

Right.

[Bo Hanson]

That's exactly. And Brandon, let me just go ahead and give you a heads up. At 26 with a $340,000 net worth, you're crushing it. You're absolutely crushing it. Objectively. Take away all the love stuff, you're in a fantastic spot. I don't think that in order for you to be happy, you have to find another 26 year old that also has a $340,000 net worth and is doing the exact same stuff that you're doing.

[Brian Preston]

Also, you're giving yourselves more options.

[Bo Hanson]

That's right.

[Brian Preston]

Like now. So if you did get married and like you do decide you want to do something like with the kids later, you're setting yourself.

[Bo Hanson]

That's right.

[Brian Preston]

Really well.

[Bo Hanson]

To be able to do that really well.

[Brian Preston]

So I think that's great. Some names for our dating app. Okay, come up. We've got Met Worth.

[Bo Hanson]

Oh, that's good. You get. Because it's not net, Matt. It's. That's good.

[Brian Preston]

Mutual Mutants.

[Bo Hanson]

That sounds like an insurance company.

[Brian Preston]

Mutants Mingle.

[Bo Hanson]

That's the winner.

[Brian Preston]

Bo's like done and done.

[Bo Hanson]

We're launching. Hey, let's. Can you go buy that URL real quick? Let's make sure we get that logged down.

[Brian Preston]

Oh, man. Somebody said, oh, where is it? They had a tagline.

[Bo Hanson]

Mutants Mangle.

[Brian Preston]

They said dating app, tagline. Your love can grow 88 times over.

[Bo Hanson]

Hey, look at that.

[Brian Preston]

That was a little cringe. I had to read it. Anyway, anyway, Mutants Mingle. Fun question. Thanks for playing along in the chat there with us.

[Bo Hanson]

That's so good.

[Brian Preston]

Mutant Mangle. All right. Oh, Tumblr. If Brandon wants a Tumblr, we'd love to send you one. Just email winner moneyguy.com since we answered your question. All right, next question is from chaos medicine. My 11 year old is making between 50 to $100 a week working for the neighbor. He hears you guys in the car, which love that. I love it. And he wants to do a Roth ira. Would it really be as simple as filing a tax return and starting with fidelity? He's 11 years old. Yeah. I mean, I think he has earned income. What else do they need to know?

[Bo Hanson]

Yeah. So to answer Your question? Chaos. Yes. It is as simple. If you file a tax return, you claim the income that he's receiving, then, yeah, you can contribute up to 100 of his compensation or the IRA max, whichever is lower. So if he makes, you know, 100 bucks a week, 52 weeks in a year. Can't do the math in my head, but if he makes like five grand, then he could put five grand into a Roth ira, which is great, up to the earned income. I tell parents this a lot, though, because I. You have to answer the question, is it worth it? And I don't mean, like, is it worth it? Like, like, obviously saving in a Roth and compounding interest, you know, from age 11 till 65 is obviously worth it from like a mathematical standpoint. But what you really care about with your son is that you want the behavior there. So I tell a lot of my clients, hey, I know that you want to do this. How about instead of doing this one, have you taught them the basics of finance? They have a bank account. They understand how, like, saving works. Like, hey, I want to take my money and put it in there. They got that. Okay, great. Well, next, once you get past that, you can absolutely do the Roth ira. You can absolutely set that up. But a real easy thing you could do is you could set up a custodial account and you could say, hey, let's have a custodial account. You put, you make 100 bucks a week, you put 50 bucks in, your dad's going to match it. 50. And what you can do is you can start the behavior of doing that without having to have it inside the Roth structure again. I love the raw structure. Don't mishear me that I'm saying don't do the raw structure. But there are some, there is more nuance to it and there are some steps required to make that happen. There are other lower step ways to get them involved. So what I, what I tell a lot of, again, these are like friends or clients, is, hey, why don't we do the utmacustolo account until your kid gets their first actual tax form, until you get an actual W2, an actual 1099. So that way you're not, like, having to think about consolidating the, like, income from the neighbor for raking leaves or whatever. You have an actual tax form that's going to substantiate filing the tax return. It's just something to think about. But, yes, if you want to claim the income on a tax return, file the tax return, boom, your son is off to the races.

[Brian Preston]

Yeah. I love that he's listening, and I love that he wants to do that. So keep up the great work. Parenting work. That's awesome. And hopefully that gives you some options that can get. Keep him excited and hopefully set him up well for the future.

[Bo Hanson]

You know, I've got my. Got my 10 year old doing this. Did I tell you about this? Have I told you?

[Brian Preston]

I don't think you have. What is it?

[Bo Hanson]

My 10 year old. Barrett.

[Brian Preston]

There she is.

[Bo Hanson]

I told her. I told her. I was like, hey, babe, you got a. You're 10. It's almost car time right now. It's not really almost car time, because 16 is car time. But it's.

[Brian Preston]

I don't like that.

[Bo Hanson]

And I was like, hey, here's. Here's what. Here's what mom and I are probably gonna do. We're probably gonna do a third. A third? A third with you. You save up a chunk of money, that'll be a third of your car. Mom and dad will throw in a third, and then mom and dad will loan you the other third. Because I want you to have a payment. I want you to understand what it's like to have to make a payment. And we'll, you know, we'll be the bank. So. Third or third or third? And I was like, so you need to start making some money. She came with this great idea for a trash can valet service. So what she does is that for. This is so great. And I'm gonna brag a little bit because I can.

[Brian Preston]

And she came up with this idea?

[Bo Hanson]

Yeah, she came up. Well, we have some friends who do it. And so she'd like. So, you know, we put our trash out on Thursday nights. Cause it runs on Friday. So one Thursday night, she just went for everybody on our street, and she marked down all the people whose trash cans were out. So she knows that they're Friday morning delivery folks. Right? Well, I helped her put together this. This little pitch where she'd knock on the door and she'd say, hey, can I ask you a quick question? Question number one. Does your trash service run on Friday? And they'd say, yes, because we had already done that, right? And say, hey, question number two. Have you ever forgotten to take it out before it ran? And then if they said. If they say, and I had her, I gave her like this. If they say, no, do this. They say, yeah. And if they say, oh, yeah. But she was. Oh, yeah. My dad has, too. And, boy, does he get frustrated in that. But guess what? I have a Solution for you. I'm starting a trash can valet service where Every Thursday at 7pm I'll take your trash out. And kind of went through and it was awesome.

[Brian Preston]

She.

[Bo Hanson]

She knocked on so many doors and she got so many no's, and she loved it. Like, it was. It was such this. It was like such a wonderful experience to see her have the resilience to go. Not do her pitch, ask, get a no. Not do her pitch, ask, get a no. I am so thankful that she had the experience of getting all those. And we. She did get some yeses. So she's making like, you know, tens of dollars a week, which is great though. Yeah. But she has like 10. Look, she has like five or six clients. Yeah, that and everything. And. And what's great is she now has a responsibility. I don't have to tell her. Like, I don't. And like, this week she was like, hey, dad, because of Christmas or New Year's, like, are the trash day. And I was like, yeah, I got an email. They don't. Everything's bumped back one day, so you got to bump back your service. And it's just been really, really fun to see that kind of take hold. And now to get the bank account opened and get her to deposit the. It's just a super fun thing. And if we can instill those types of behaviors in our kids at 10 years old, 11 years old, I just think that's awesome.

[Brian Preston]

That's amazing because that resourcefulness will go with her everywhere, you know, like, for the rest of her life. I love that so much. Are you. Are you. Are you a customer?

[Bo Hanson]

Of course.

[Brian Preston]

Okay, good thing.

[Bo Hanson]

Of course I am.

[Brian Preston]

Like, you better go sign up right now.

[Bo Hanson]

I do get super annoyed when I forget to like, yeah, there's nothing more than not taking the trash out because we. We go through some trash.

[Brian Preston]

Right, right, right. Oh, that's amazing. All right, let's see. We got another question. It's from David Linsmeyer, 7797. He says, Is this a foo hack? My employer contributes $4,500 to an HSA. Should I invest that even if my wife and I are still building our three month emergency fund? Because in the foo, I will hold up the sheet in honor of Ryan. You can get this for yourself for [e-mail] resources. Step four is emergency reserves. And then you kind of get going with HSA and Roth investments.

[Bo Hanson]

Yeah, but you know what? This one, I'm gonna. I'll see you. But I'm kind of going to Raise. Step two feels like it's step two, employer match.

[Brian Preston]

It is employer related.

[Bo Hanson]

It's unclear to me if it's required that you put money in or they put money in.

[Brian Preston]

It says my employer contributes.

[Bo Hanson]

So if I were sitting here, this is the way I would think about this. And by the way, 4, 500 into your HSA, it's great. I don't know that I've. I don't know that I've heard of that aggressive of a contribution from an employer before. So that's incredible. Everyone in the chat's going to ask who you work for, but here's the way that I might think about it. If I don't have a fully funded emergency fund, I get the $4,500 into the HSA. What I might do is in the interim, I might have it sit in cash and I might think of that as part of my fully funded emergency fund as I'm building up cash. Because a lot of the emergencies that we have when life comes our way are medical emergencies. Well, if you have money inside an hsa, you then have that money to be able to use. So what I would do is I would leave that in cash until I got to the point to where I had a fully funded emergency fund. And then once I get that three months, four months, six months, whatever is for you. Once I get my emergency fund fully funded, then boom, I go invest those dollars. So I let the dollar stay in there. I still get one of the tax advantage. It's not a tax advantage because your employer put it in there. But I still have the money. They're ready and primed for future growth. Once I've completed step four, that's probably the way that I would think about it. If my employer was putting that money in there. 40, $500.

[Brian Preston]

I know. If that's truly just the employer putting it in, that's awesome. Wild.

[Bo Hanson]

Well, do you have to put anything in yourself? Is it a match or they're just.

[Brian Preston]

Yeah, you can let us know in the chat, be interested. Well, David, if you would like a Money Guy Tumblr, just email winner moneyguy.com and just in case I don't know if I gave Chaos Medicine Tumblr for his question. You can email winner money guy.com in case I forgot to say that. Thanks for the questions. I have it on good authority I haven't been as dialed into the chat today, but apparently there were singles in the chat exchanging info.

[Bo Hanson]

No, there was nothing.

[Brian Preston]

Just like look me on LinkedIn, connecting on LinkedIn what if that is so official?

[Bo Hanson]

What if like two or three years. What if two or three years from now we sit down with a Making.

[Brian Preston]

A Millionaire guest and they're like.

[Bo Hanson]

And their story was. It was the money guy show that.

[Brian Preston]

In the money Guy chat.

[Bo Hanson]

Do you realize if Brian ever was able to have a Hallmark movie made after something that happened with the Money guy showed honestly that he would be.

[Brian Preston]

Happy just to imagine the Hallmark story, just to hear your story. It doesn't even have to be a movie.

[Bo Hanson]

That's wild.

[Brian Preston]

He would love that. That's why, no pressure, but fall in love and get married. Okay, thank you. Awesome. Want to do another question?

[Bo Hanson]

Yes, ma'.

[Brian Preston]

Am. We've got one from Aaron Gray, 2660. It says, hey, money guy, first baby coming in February. Okay. We've had several people in the chat say their first baby is coming soon. So. So congrats to everybody and congrats to Aaron. It says, if trying to do step five, how do we balance saving for our kids, intermediate goals, like with 529 versus gifting them the tools to make their own wealth like a car, test prep, etc. So I think they're talking about like, we have some money to save for our kids. We say five 29s a lot. We talk about those. What about saving for a car? What about saving for bigger expenses? Test prep is interesting. I've never heard that before.

[Bo Hanson]

Yeah, if you're one, we hold the food up for me real quick.

[Brian Preston]

Yes.

[Bo Hanson]

If you're in step five, that's like the Roth and HSA step. That's the step where you are building towards future financial independence and you're saving up tax free dollars. So your question like, okay, where do 5, 29 fall? Nowhere near there. 5 to nines are like a step 8. So like you got to get through step 5, through step 6, into step 7, on to step 8 before you start funding 529s. But then you threw in some other stuff there, like, hey, what about cars, test prep? What about giving them the tools to be able to build their own wealth? And I love the language that you use there. What I hope for all three of my kids is that I am able to instill in them not this idea that mom and I have done well and mom and I have been able to build up, build up to a certain level of wealth. But I want to instill in them, hey, these are the behaviors necessary so that I can build my own wealth and I can stand on my own two feet. I care a lot More about that than, like, all right, let me put money in an account for them and let me fund their 529. Let me do the. I mean, all those are wonderful things, but I want them to have those tools. And so I do think it's one of those things. You're gonna have to know your own financial situation. I have a number of, like, friends that I grew up with, and the deal was, hey, if you want a car, you got to go out and get it. And I have some that the parents said, hey, we'll get your car, and I have some. It was like a joint effort. So, like, you'll have to determine what's available and appropriate for your financial situation, for your family situation. I think those short term goals, like test prep cars. I don't remember what the other one was. I. I think that test prep cars.

[Brian Preston]

That'S all they said.

[Bo Hanson]

Yeah, yeah. I think that those are more like current expenditures that by all means you want to set your kids up for success. I mean, I. It's so funny. When I was coming, you know, I got a fairly unique background. I didn't know about test prep. Like, no one ever told me that you could like, study for the sat. I don't even took the act right. That wasn't popular where I came from, I guess. But I didn't know that was like something you could like, prep for and do all this stuff. Man, it would have been awesome if I'd have known that. Right. And so if you can like instill in your kids. I found out I was 10 points on the SAT off of like, unlocking tons of scholars. Well, it doesn't matter. I was 10 points off.

[Brian Preston]

But you're. I get it. Like you're saying, like, now there's so much information, like people are so aware of that or depending on where you are economically.

[Bo Hanson]

And so if you have the mech, if you have a mechanism to set your kid up for success, there's absolutely. You should do those. I do not think that those are in conflict with step five. Step five should be something you're already doing. Putting money in the hsa, putting money in the Roth ira, building up those tax free accounts and also figuring out how can I set my kid up with the tools and skills necessary to be able to make great decisions later on in life.

[Brian Preston]

Yeah, I think it is interesting, like with cars, like you just mentioned, not to just repeat, but how you're getting creative with your oldest daughter about potentially doing like a third. A third. A third. So she has experience of like having a car payment has to save up a little bit of money. So, like, there are other, I don't know, there is some creativity that could go into these two and you could do a little of all, if you will. So I don't know, I thought that was an interesting question and good answer from you.

[Bo Hanson]

The other thing I love about this third or third or third thing because I spend a lot of time thinking about this, I'm going to charge 0% interest because I don't need to collect interest on her. But she's gonna have a fixed payment and I'll probably be for three years because I want her to follow, you know, follow the my guy rules.

[Brian Preston]

23 8.

[Bo Hanson]

But I'm gonna, like, I want her to know she doesn't babysit now. She's too young for that. But I imagine one day babysitting a wife, I want her to think, holy cow, if I want my car this month, I gotta go work so that I can pay mom and dad so that I can keep my keys. And I want to like, instill in her that, like, yeah, there's a, there's a necessity for us to work, to be able to do the things that we want to do. Money is not a goal. It's a tool that allows us to achieve our goals. And for most 16 year olds, one of their goals is having a car and being able to keep their keys. And so I'm just really excited about getting to like, navigate that. And what's awesome about having multiple kids is once I screw this up with the first kid, by the time it gets to two or three, I'll know the right way to do it all. At least that's my plan.

[Brian Preston]

As a middle child, I do feel like my older sister got the wrong.

[Bo Hanson]

That's right.

[Brian Preston]

That's really funny. All right, Aaron Gray, 2660. If you would like a money guy tumblr, just email winneroneyguy.com thanks for the question. We appreciate it. All right, next question is from Dr. Bode 07. He says, I'm 36 years old, single income, family of four. I only have 401ks. How do I get past the fear of messing up getting a Roth IRA or a spousal Roth ira? I think he means getting it wrong. Investing is very intimidating to me.

[Bo Hanson]

Well, so, okay, let me answer the second part of the question first. Investing in and of itself doesn't need to be intimidating because the world has made it so, so easy. This is one of the reasons why we love Target Retirement Index. Funds. If you can answer two questions, how much can I save? When do I need the money? You've, you've answered everything you need to know when it comes to investing. So if you're 36 years old, let's say that you want to work for another 30 years. 20, 25 plus 30 is 2055, right? I'm always so nervous about doing that math. That's 2055. Go look up a target retirement index fund. You could do Fidelity Vanguard, Charles Schwab, Fill in the blank. Target retirement index fund 20, 2055. And you just put the money in there, right? Like that's, that's an easy way. You're going to have an allocation right now. It's 30 years out, it's going to be more aggressive and then as it gets closer and closer, it'll get more and more conservative. So don't let that be the hindrance. Like investing is intimidating. Don't let it be intimidating. If you can answer those two questions, then you can invest. Now, when it comes to the Roth and spousal Roth, let me make it easy for you. If your income is under a certain threshold, well, here's your single income household only you work. A lot of people don't recognize that even if your spouse does not work, you can contribute to an IRA not only for yourself, but also for your non working spouse, so long as the total income you make is high enough to max both them out. So you know, if the limits are $7,000 a year for Roth, so long as you make more than 14,000, you could put 7,000 in your Roth and you can put 7,000 in your spouse Roth. It's not any harder than that. So like if you're under the income thresholds to be able to contribute directly to a Roth, and it's like, I don't know, 250,000. The numbers change. It's like somewhere around that for a married couple, if you make under that amount, then you can just put money directly in a Roth. Go open a Roth. Go open a Roth for your spouse and dump the money in. If you make more than that, that is where it gets a little more nuanced. It is where it gets a little more complicated. And you can do what's called the backdoor Roth, where you can open a traditional ira, you can make a non deductible contribution, which means you put money in there and you just don't take a deduction on your tax return. And then you can convert that to Roth and it will be a tax free Conversion. Assuming you don't have any other IRAs, no SEP IRA, no SIMPLE IRA, no traditional IRA, no IRA rollover, so long as you do not have those, then you can do a tax free Roth conversion. If you do have those, well then it gets a little more messy. But you've already said to me, Dr. Bode, that you only have 401ks and assuming that you didn't roll over those old 401ks in an IRA and they're still in the 401, 401k structure, then doing Backdoor Ross is not something incredibly difficult for you. I understand the apprehension. That's why if you go to our website, go to moneyguy.com and just type in Backdoor Roth. Just type that in on our search function. You'll be amazed at the articles, at the videos, at the tutorials, and all the stuff that will come your way that will help walk you through the right and accurate way to do it without running a foul. It does not have to be difficult. Don't let lack of desire to do a smidge of research be the thing to miss out on a great opportunity. I had a call the prospect yesterday. I was considering hiring the firm and I was like, man, here's what I'm so nervous about. If you don't hire us, I just told you that you were prime candidates for doing Backdoor Ross and you haven't done it for this many years. I'm nervous if you don't hire us, you're not going to do it. You might need to hire us just so that we can continue to like prod you forward to go take advantage of this planning opportunity. It sounds like Dr. Bode, you might be in that same exact position.

[Brian Preston]

Yeah, some resources for you. Like both said, go search Backdoor Roth or Roth on our website moneyguy.com we also do have an ebook all about Roth IRAs. If you just wanted to like read up and feel more confident, go to learn.money guy.com and then like both said, if you truly are getting to that complexity point where you feel like you should just explore, maybe talk to somebody, see if you need that extra set of eyes, that extra help you can click on. Become a [e-mail]. so basically go to moneyguy. Com, have all your problems. No, don't. That's not actually true. But there is a lot of amazing resources there that really can point you in the right direction and hopefully make this a little bit less intimidating because there is just such opportunity here that we would hate for you to miss if it's available to you.

[Bo Hanson]

So man, this was a fantastic 2025. We could not do this without you guys. If you guys didn't show up, if you didn't watch the show, if you didn't t in, if you didn't subscribe, we wouldn't be able to do ah, we'd still do it, just not as many people would know about it. And so we're so eternally thankful that you guys allow us to be part of your financial journey. Our commitment to you is if you keep showing up, we will keep delivering information so that you can do money better. I hope you all have a Wonderful close to 2025 and an amazing start to 2026 for Brian, for me, for Reby, for the entire Money Guy Team. Happy New Year MoneyGuy team out. The MoneyGuy show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the securities and Exchange Commission. In accordance and compliance with the securities laws and regulations, Abound Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment or legal advice. All investments involve a degree of risk, including the risk of loss.