← So Money with Farnoosh Torabi
So Money with Farnoosh Torabi
1821: Ask Farnoosh: How to Make More Money ASAP, Switching 529 Plans and More
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Farnoosh Torabi
When you're a forward thinker, the only thing you're afraid of is business as usual. Workday is the AI platform that transforms.
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The way you manage your people and.
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Farnoosh Torabi
Money today so you can transform tomorrow. Workday moving business forever forward.
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E Trade Sponsor
Support for this podcast and the following message is brought to you by E Trade from Morgan Stanley. With E Trade you can dive into the market with easy to use tools, $0 commissions and a wide range of investments. And now there's even more to love. Get access to industry leading research and insights from Morgan Stanley to help guide your decisions. Open an account and get up to $1,000 or more with a qualifying deposit. Get started today@etrade.com terms and other fees apply. Investing involves risks. Morgan Stanley Smith Barney LLC Member SIPIC E Trade is a business of Morgan Stanley.
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Farnoosh Torabi
So Money Episode 1801 Ask Farnoosh. You're listening to so Money with award winning money guru Farnoosh torabi. Each day, 30 minute dose of financial inspiration from the world's top business minds, authors, influencers and from Farnoosh herself. Looking for ways to save on gas or double your double coupons. Sorry, you're in the wrong place. Seeking profound ways to live a richer, happier life. Welcome to so money. Welcome to so Money everybody. I'm Farnoosh Tarabi. It's Ask Farnoosh Friday, our Q and A sesh where we dive into your real life money. Questions on everything from career decisions to saving money for a big expense college and what to do when life feels uncertain, which is every day. Coming up, Elizabeth in the audience has a question about working at a worker co op, a worker cooperative. It pays less, but it might offer more meaning. What should she ask before making the leap? Lots of you are concerned about how the volatile stock market might be impacting our 529 college savings plans, even for those of us with kids who aren't even in middle school yet. Maybe we have another 10 years till college, but we're not so confident in the direction of the stock market. So how should we be rethinking our college savings plan? And a teacher in Canada writes in talking about feeling stuck, low savings, mounting debt and no obvious way out. What can she do this summer to regain some momentum? I've got answers. First, let's take a look at what's going on in the economy and why it matters for all of us. Like last week, I want to pull some headlines from the news. Firstly, McDonald's reported a drop in foot traffic in its latest earnings report. So okay, here we Go. Fast food is becoming a luxury. That's a red flag. And then you combine that story with this week's GDP data, which showed that the economy contracted by 1.6% in the first quarter and we had a jump in jobless claims. You've got a trifecta of economic slowdown signals. But are we in a recession yet? Well, not officially, but the cracks are showing. So if you're feeling cautious about big purchases, transitioning to a new job, investment moves, you're not alone. And we're covering it all every day on so money. And another story that really resonated with me this week at least was in the New York Times, a thoughtful piece on how to talk to your kids during economic uncertainty. And the takeaway really from the that story was you can't hide what's happening, so don't pretend like everything's fine and help them understand it in an age appropriate way. We've done a lot of interviews over the years on sew money about talking to kids about money. Just this week we had an episode, I'll get into that in a moment about kids and wealth. But this article in the New York Times actually reminded me a lot about growing up in Worcester, Massachusetts in the 80s and 90s. And my father worked in tech. He was constantly worried about about layoffs. This was an era of constant merging and acquiring in the tech industry. And so his title, his job was always, it seemed, at least on the chopping block with all that consolidation. Words like packages was common dinner table discussion. And I didn't really know what was going on, but I could tell that they were nervous, my parents, and they fought a lot about money, as you may have read about, in a healthy state of panic. So I kind of wish they had been a little bit more direct with me because what, what I always felt walking away from those dinner table conversations was that there was no resolve. And my parents were just kind of like hoping for the best, even though looking back, you know, they obviously were being conservative and they were re budgeting and they were, you know, just trying to hang on. And as a young kid, it was nerve wracking because I didn't feel like I could control any of it. And I think it would have helped just to hear my parents talk about how they were planning around it. The story also reminded me of something that comedian and author Zarna Garg shared with me this week during a live interview that we taped here in Montclair. It hasn't aired yet on so Money, but I sat down with Zarna Garg at Loopwell to talk about her new memoir, this American Woman. During the pandemic, Zarna talked about when her husband lost his finance job. They sat their kids down, all three of them, and explained what was happening. No sugarcoating. And she believes that while it may not have been every family's choice to do that, it was important for her to let her kids know that, you know, this was the reality. And we may not be able to do all the things. We're not going to go on this vacation. We're not going to be able to, you know, participate in some of these activities that we normally do and here's why. But we have a plan. We're going to get through it. She said it did help her kids feel more grounded and more resilient and also more like a part of the family. More on that conversation. Next week, I'm going to air that powerful interview with Zarna. You'll hear about her reinvention, her family, and of course you're going to laugh because she's hilarious. We're going to get to the mailbag very quickly. But in case you miss any of our episodes this week, I alluded to my conversation with Rachel Rogers on raising money conscious kids. That was on Monday. Rachel has a new book out called Future Millionaire A Young Person Step by Step Guide to Making Wealth Inevitable. We talk about how to teach our children that wealth is within their reach, no matter their starting point. And then on Wednesday, if you're not sure about how to start a will, whether the will you have is viable. Good. We've got Estate Planning 101 with Heather Zach. This was actually a recording from a special workshop that I led for my so Many Members Club in April. And now you get to hear it. Just a reminder, if you're interested in joining the so Money Members Club, enrollment is ongoing. You can go to somoneymembers.com we do monthly workshops on hot financial topics. We have office hours once a week and we have a very engaged community of people who care about their finances. They care about their financial well being. They're very supportive. We're going to be covering so much the rest of this year, from college savings to navigating money in the sandwich generation, mastering the world of credit card points, managing your debt, negotiating a raise, how to how to buy insurance. Come be a part of the community. If you're looking for a way to invest in your financial life as we head into tricky times, go to somoneymembers.com to learn more about enrollment. And if you have any questions, just reach out Farnooshomoney podcast.com All right, let's go to the mailbag and answer your questions. First up, Elizabeth writes in a longtime Listener. She says she's casually looking for a new job because of some changes at her current workplace. She's interviewed at a new company that's a consulting firm set up as a worker cooperative. The salary is much lower than her current role, but the work, she says, seems interesting. So she wants to know what questions should she ask about how worker co ops run. She currently works at a private company, and so she wants to understand more and better about what she's getting herself into potentially. And also any thoughts that I may have on making a lower salary. It seems like an interesting company, she says, and it has some extra benefits over my current workplace, but I. I don't want to make a mistake. All right, Elizabeth, thank you for bringing this to our attention. We've never covered co ops before. I had to look this one up. I mean, I know what co ops in general are. It's the idea that everybody rolls up their sleeves and participates. So, like, if there's a school that's a co op, the parents volunteer more than, say, your typical public school. I lived in Brooklyn. There was the Park Slope co op, food co op that was run by the community. A lot of people who lived in the area worked there, volunteered there. A worker co op model is owned and governed by the employees. It's intended to be democratic. Everyone typically gets one vote, and there's shared accountability. I don't know how common this is, but here are some questions I would be curious to find answers to. One is how are major decisions made? For example, if there is a tough quarter, a tough year, and there's going to be cutbacks, rollbacks, how does the organization decide on things like layoffs and who gets laid off? Is it majority vote? Is it consensus? How long will we have before we get answers to big decisions? How is profit shared or reinvested? Are you going to get a bonus every year that aligns with the profits that everybody contributed to? Are salaries capped or tiered? So what, if any flexibility exists around pay bumps? I would also want to know about the governance structure. Is there a board? Are there committees? And again, what happens during downturns, layoffs, pay cuts, severance? And then I would want to know what is the average length of time that people stay at the company? Why do they potentially leave? If you can get a hold of people who have worked There I would ask them some questions too and maybe you can find people on LinkedIn and just straight up DM them. Now with regards to that lower salary, a smaller paycheck, you know, money isn't everything. And I'll be the first to say that sometimes making less at a job that's going to give you more in the sense of balance and autonomy and maybe even benefits is sometimes worth, worth so much more. A smaller paycheck is manageable, but you have to make sure that there are maybe some other benefits that are offsetting the lower pay. Are there things like profit sharing? Is there a flexible schedule so you don't have to do the commute, Equity in the business, or sometimes people just interested in a company that has more values, alignment, right, that we feel happier, better going to work and contributing to this company. But let's also be practical. What do you need to earn to meet your financial responsibilities and your goals? Not just today, but in the long run? And if this new job can't get you close, no matter how kumbaya it is, then it may not be sustainable, even if it is fulfilling. So that's the sort of calculus, right? Like if I'm giving up on some pay, what am I getting on the other side of it? But also the bigger question is, is this going to be feasible given that I have some real hard costs? And maybe the question then becomes, well, what can I trade off in my financial life to make this job worth it? You have to really love the job, right? It sounds like to be able to make all these concessions. But remember that co ops, although they are not traditional, you can still negotiate. You can ask about a raised timeline, you can ask for more when they're offering you their initial offer. And you know, jobs aren't forever, as we know. If this opportunity is exciting to you right now and the trade offs are manageable, it may be in your mind, you're like, this is not a forever gig. And that's okay. Give yourself permission to be like, I'm going to do this for a year and then see where things go. It could be worth trying. But don't sacrifice your financial wellness for mission driven work. Because maybe not everybody will tell you this, but I mean, I'm very practical, right? You have to pay your bills, you have obligations. And as much as we would like to just do mission driven work, sometimes we have to be practical. If you have a side hustle that can supplement this income, well then there's a solution. But don't feel bad that you're going to make a decision based on the hard facts of your financial life. I've taken jobs in the past to pay the bills, and I'm so glad I did because those things are important. But good luck, Elizabeth, and let us know how it goes. I've I appreciate you giving us a heads up about these worker cooperatives. I'd be curious to know how many companies in the US actually operate like this. It's not what you say, it's how you say it. And when you show up in a Range Rover Sport, you don't have to say much at all. This is the vehicle for those who lead with quiet confidence, where power, poise and performance speak louder than words. The Range Rover Sport combines a dynamic sporting personality with refined elegance and agility, delivering an instinctive drive that feels as purposeful as it looks. Its distinctly British design doesn't shout for attention, but it gets it. And when the road changes the terrain Response to system with seven drive modes adapts like a seasoned traveler Inside luxury is not an add on, it's a standard. 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Support for this podcast and the following message is brought to you by E Trade from Morgan Stanley. With E Trade, you can dive into the market with easy to use tools, $0 commissions and a wide range of investments. And now there's even more to love. Get access to industry leading research and insights from Morgan Stanley to help guide your decisions. Open an account and get up to $1,000 or more with a qualifying deposit. Get started today@etrade.com terms and other fees apply. Investing involves risks. Morgan Stanley Smith Barney, LLC Member SIPIC E Trade is a business of Morgan Stanley.
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Farnoosh Torabi
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This is an opportunity for everyone in the club to come and hang out with me, bring their questions and this time a lot of people were curious about college savings plans. The 529 Many are worried that the market is going to be too volatile over the next 10 years and they want to protect their savings. Rightfully so. Because I have a good sense, I can almost predict that while maybe we will enter a recession, maybe there will be a slowdown in the economy, the market's going to be volatile, the cost of college is not going to go down, it's going to only go up. And this is a common concern, especially in uncertain markets. The good news I'll start with that is that most 529 plans allow you to invest in age based portfolios. So 529 plans are state administered plans. You don't have to live in that state in order to participate in a state's 529 plan, but many often do participate in their state's plan, as many plans come with a state tax break. But that aside, when you're investing in a 529 plan, typically they're designed, they give you an age based portfolio and then they give you a few choices. Do you want to be aggressive, do you want to be moderately aggressive, or do you want to be conservative? And that's essentially going to inform which investment track you're going to go on. If you're using one of these age based portfolios, your plan may already be adjusting for risk gradually. So an age based plan would say, okay, if you're going to go to college in 2030, 2040, we're going to create a portfolio that's going to reduce its risk the closer we get to that target date where you're going to want to pull the money out for college. So in that case I wouldn't be too concerned know that the risk is more or less being adjusted for the fact that maybe right now, 10 years out you can take on more risk, but closer to that college date it's going to turn more conservative. But if you're, let's say in an aggressive age based Portfolio right now, now. And you're thinking, I think I want to switch to moderate or conservative. That's a personal choice. You can make those adjustments. I think every 529 plan gives you one or two times a year where you can make an adjustment to how you're investing and you can call them and ask for that adjustment. You might be able to do it online through your website. If you're managing your 529 plan manually again, you could shift to a more conservative allocation, which means more bonds, less stock. You can also split the strategy and keep the 529 going. But consider adding to a high yield savings account or a CD for more stability. If you've got 10 years to go, you don't need to overcorrect here. That's still a long horizon. Stocks may dip, but they'll also recover. And a little protection is fine, but too much could limit your growth. For all of us, saving for college, if we are at the beginning of this, we don't have a whole lot to worry about in my opinion. If we're in the middle of it, kids are like, you know, eight, ten years out, then, okay, revisit the plan. Do you feel comfortable? Do you want to go from aggressive to maybe moderate? If you're really close to college and you're in an aggressive 5 to 9 age based portfolio, then in that case you might want to move it to something more conservative because you're hearing a lot about potential recession potential, more volatility in the market. And if that's not okay with you and you want to make sure you're conserving every dollar as you get very close to college, then you might want to switch the allocation to something a little bit more conservative. If you're working with a financial planner, this is a perfect question for your financial planner. It's also a good question as all these 529 plans have customer service. They have people who are qualified to answer your questions and so take advantage of that. Our final question comes from a teacher in Canada who is feeling stuck and unsure about next steps, especially financially. Here's what she writes. Dear Farnoosh, I'm feeling stuck. I'm female, in my mid-30s, teaching at a community college in Canada. I make 85,000 a year, but after deductions, my monthly take home is about $4,000. I have about 7,000 in debt and a student loan that I keep deferring. The education sector here has become unstable. Enrollment and funding have dropped. There have been layoffs, and my department Says things could get worse in the next few years. Job security no longer feels reliable. Now I've been living frugally. I've been cooking at home, I've been limiting my expenses but groceries are expensive and unexpected vet bills have set me back. I'd love to travel during my two months off in the summer, but I can't afford it. I thought I would apply for part time work. Haven't had any luck there. I've tried tutoring online but it's low pay, high stress. I also tried pet sitting through Rover but no one reached out. Overtime isn't available at my job and moving into an admin position it might help but I don't know how to break in and I avoid workplace politics. This is a job many people would envy because of the pension and time off. If I leave, I may never get tenure again. But I feel so stressed because of my debt. Ideally I'd like to find something in the summer to pay it off so I can think more clearly. I just don't know what else to do. All right. Well my friend, thank you so much for sharing this. I think it takes a lot to write this to someone and know that it may be shared with an audience. So appreciate you and I think in doing so a lot of people listening might be feeling seen. You've clearly done a lot of things to stay afloat, so I just want to recognize that and applaud you for that. You're really being proactive and and you've got what it takes to be successful here. I think it's just a matter of not getting beaten down and being persistent. Let's get you to a short term win though, because I think that would be helpful to feel psycholog rewarded. And how I would do this is to focus on that $7,000 in debt, set a concrete motivating goal. Is it possible to pay off half of that this summer? Can you make an extra principal payment? Can you get very deliberate about putting extra money towards this debt? This is something that is a healthy focus. I think you can do it and you're going to give yourself time until the end of the summer. So August, early September, something actionable to work to. Another step is I would lean on your community for income, for extra income. So you've been unsuccessful online you say, but what about in person? Summer opportunities, test scoring, academic camps, admin help at nearby schools or nonprofits. These may actually pay better than online work. It may be less crowded and you get to be with your community and you'll be able to network while you're on these jobs? I've known many teachers who teach at summer camps. They tutor in person over the summer, whether it's SATs or subjects. And it may not be life changing money, but it is helpful and it can help to pay off this debt. And the other bonus as I mentioned is being within the community to network and learn from other people. I'm all for working from home. I'm all for the convenience of working online. But but there is an inherent benefit to getting out of the house and working with other people. You will be inspired in ways that you won't be behind a desk. Then as I say that there are some low hanging freelance jobs online that may not be very exciting but can be low lifts for you. Given that you have a teaching background, could you help other teachers prep their syllabus, their syllabi? Can you edit their resumes? Can you consult on diversity initiatives? What's your niche and who could pay for it? Like we always say on this show, you make money from what you also what you know, what you've learned on your journey to becoming the person with the title that you have as a teacher. Can you consult other teachers and finally be open to leaving? I know that it's hard to give up on the benefits and the tenure. But if you do leave because you have another job that's going to be more financially advantageous, the work is better. There's more of a future for you there. That's not a mistake. It's a pivot. A tenure does not equal peace of mind. If the system is no longer working for you, it's no longer supporting you. So just putting that out there as well, you are capable of reinventing. You are that go getter. And I believe that with the right opportunity, if and when there is a right better opportunity, don't ignore it just because you have tenure. Consider it. Really consider it it. And that is our show, everybody. A kind of short, sweet Friday episode of Ask Farnooche. Stay tuned. Next week we'll be hearing from Zarna Garg live in Montclair, New Jersey, talking about her life and her memoir, this American Woman. Thanks for joining and I hope your weekend is so money. Every idea starts with a problem. Warby Parker's was simple. Glasses are too expensive. So they set out to change that. By designing glasses in house and selling directly to customers, they're able to offer prescription eyewear that's expertly crafted and unexpectedly affordable. Warby Parker glasses are made from premium materials like Impact Resistant, Polycarbonate and custom acetate and they start at just $95, including prescription lenses. Get glasses made from the good stuff. Stop by a Warby Parker store near you. Support for this podcast and the following message is brought to you by E Trade from Morgan Stanley. With E Trade, you can dive into the market with easy to use tools, zero dollar commissions and a wide range of investments. And now there's even more to love. Get access to industry leading research and insights from Morgan Stanley to help guide your decisions. Open an account and get up to $1,000 or more with a qualifying deposit. Get started today@etrade.com terms and other fees apply. Investing Involves Risks Morgan Stanley Smith Barney LLC Member SIPIC etrade is a business of Morgan Stanley.