Krista (6:36)

All right, we've got some questions here for you. Clark, Natalie says I, like many, have my first child heading off to college this fall. Can I please get your advice on the things I need to do now to set him up for financial success? He has a child account tied to my capital one. He's 18 now and will need to access his own cash. I assume he will need his own standalone checking account and if yes, what would you advise? He is also a card holder on one of my credit cards. We love having him pick up dinner and groceries and he has been extremely responsible with his spending. Do I just leave him on that account and set a set spending limit or should we get him his own card so that he starts to create his own credit history? Any other words of wisdom that you can impart on us or him?

Clark Howard (7:23)

So first of all, you did the preamble of how responsible he is at the college he's going to. The odds are that there will be a credit union available to faculty, staff and students that students don't know about at the campus and that's the best place for a student to open a checking account is at the credit union at the university itself or in the town where the university is. Because credit unions almost always offer free checking accounts where traditional banks are going to charge fee on top of fee. Second thing is that if your child works part time he can get a credit card at 18 because you say he's really responsible with money. He'll start receiving pre approves very heavily from Discover, maybe from some other financial institutions and if he's got part time work going on, he should apply for that college credit card because it will establish a credit identity that'll be really great for him to have moving forward.

Krista (8:36)

Leslie in North Carolina wrote in with this one. I heard Clark and Krista talk about putting your savings into a short term treasury for a better interest rate but almost no detail is ever given. I currently use Goldman Sachs Marcus for savings and the rate keeps dropping. I Use Vanguard for investments. Can you give me a little more instruction on how to set this up with Vanguard? I have reviewed clark.com and haven't found much help with this and that's unfortunate that we do have a pretty good savings account list. But we'll check into the treasury thing.

Clark Howard (9:07)

Well, treasury, you know, having a deep dive on buying Treasuries that becomes a more sophisticated thing for people to do. So there's a couple ways to do this. The easy button is you said you're at Vanguard. Vanguard has a series of treasury funds. They have a Treasury money market fund, a short term, long term, blah blah blah. So you have the ability to buy access to U.S. treasuries at a very low cost. Or you can set up what's known as a Treasury Direct account. If you go to treasurydirect.gov that's where people go to buy savings bonds. But you also can set up an account there to buy Treasuries. And it's some work. So you'll have to do some reading on the Treasury Direct website to see how to buy individual Treasuries. The advantage of that is if you buy a Treasury from Treasury Direct, they and you hold it to maturity, the interest rate that they've guaranteed you is what you're going to get. If you buy a fund from Vanguard or some other financial institution, your case Vanguard would be the one that makes sense. The lowest cost, you're already doing business there. The interest rate you receive will change every day because you're in a fund that is constantly having to replenish the treasury holdings and people buy and sell the fund and all the rest. But that's the easiest way and will usually outperform, at least these days what you're earning on a bank savings account or potentially a bank cd, even often from the online financial institutions.

Krista (10:55)

And this one's from Denise in Georgia. Over the last year I've been teaching my 15 year old godson about fiscal responsibility. I've taught him about saving a percentage of everything he makes, opening a teen investment account where I will match whatever he puts in. And I've even this is quite a godparent, isn't it? No.

Clark Howard (11:14)

Wow.

Krista (11:14)

Just wait. And I've even incentivized his academics. If he graduates with a scholarship then I will buy him a car. Yes, Clark, it will be a new to him car and he is on track to do just that. Yesterday he surprised me. He wants a work permit so he can get a job after school. Then he asked me to help him Get a credit card. My immediate response was no. He then asked for a debit card. Again, I said no. I finally asked why. And he wants somewhere to put his paycheck where he would be the only person to have access to his account. Since he's a minor, the only account he has is controlled by his parent. So beyond addressing the implications that he is worried about other people accessing his funds, I thought, what would Clark do? How can I help him set up an account at the age of 15 or 16 to that doesn't require him to have a legal guardian co sign for him? What options does he have on being able to have his check direct deposited and then accessing it when needed? Is there a card out there that will allow him to deposit his paycheck but will not offer him credit and entice him into debt? Okay, godmother, that's impressive.

Clark Howard (12:22)

Yeah, this is pretty fantastic. Denise. I read between the lines that your godson doesn't trust the parent unfortunate, the parent will swipe the money. And I don't know what the dynamic is if you're going to end up in a difficult situation with a parent at some point with the help you're doing. So what I would recommend is that you take your godson to a Fidelity Investments office and open an account with Fidelity. Fidelity allows a teenager to have pretty moderately good control of an investment account with you kind of watching over. And it is a more active event for your 15 year old godson than a normal custodial account. And so I like the Fidelity accounts because it really will get your godson thinking about not just saving money, but the whole concept of investing. Being able to put money in direct deposit from the paycheck, have it tied in with, yes, a Fidelity debit card. This would be a case I'd say is okay to have a debit card and be able to access funds. But the great part about being at Fidelity is your godson can take some of the money from working part time and open a Roth IRA and start having money grow tax free and grow tax free for a lifetime and be spent tax free way down the road doing it at 15. And we have a chart that we did like, gosh, that was decades ago on how much money you end up with. If a teen working saves money starting at age 15 or 16. It's a crazy amount of money because time is your friend was saving money for the future. So if I were thinking about how to kill multiple birds with one stone, I would do the Fidelity Investments youth account.

Krista (14:30)

The teen just has to understand that they can't take money out of the investments that. I mean, they could. I guess in Roth you can take out what you've put in penalty free. But you know, if he's trying to.

Clark Howard (14:39)

Access cash, well, that's why you put some of it, because you only need a dollar to open that Roth and the spending money is accessible through the Fidelity debit card. I think it is my favorite for someone who is really responsible or learning to be responsible as a teen, particularly when they get their first job.

Krista (15:03)

Very lucky to have you as a godmother, Denise.

Clark Howard (15:05)

No kidding. Coming up ahead. All right, we're gonna, we're gonna have a serious talk about living on less than what you make. And you don't have to be as goofy as what I'm about to share with you. But gosh, it gives you a lot of freedom in your life.

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Clark Howard (17:27)

Edu I read an obit recently about guy named Bob Kierland who was one of the founders of a company called Fastenal, which is only known to people in industrial sectors. They make nuts, bowls, all kinds of things for industrial settings, construction, that kind of thing. And Bob ended up incredibly wealthy. But through his entire life, he stayed ultra cheap. As CEO of the company, he made me seem like the biggest spender there ever was. He would stay in really, really cheap hotels, would use coupons through his life. I'll tell you a coupon story later. Would buy his suit second hand. And if you've listened to me or watched me for a long time, you know why I identify with this? Because I'm so proud of the used suits I bought over the years. $1, $2, $5 suits, that kind of thing. I told you a story about when I flew to a funeral and realized I hadn't brought a tie and went to a used clothing store and bought a tie at the used clothing store to wear at the funeral. I mean, and obviously I'm a couponer, but nothing as cheap as he was. So the Wall Street Journal did a profile on all the things he did, you know, at the company headquarters. Used furniture. When he travel for the company as the CEO, he'd share a room with another employee so they could save money if the airfare was too expensive. They drive. This is a guy who the company was so successful, so big, he could have been flying around on a private jet all he wanted. But that was not his deal. Every penny mattered. And you know what he did with the money? Invested in the business and gave a lot of it to employees. I mean the. His spirit was so great. And you got to go back in the wayback machine. A lot of people won't be familiar with this company, but Kmart used to be the largest retailer in the world. They were a deep discounter. And the merchandise was not of the quality of, let's say Walmart. It was below that. But those are the clothes he wore. He wore Kmart clothes and he bought on the blue light special, if you know what that was. So this guy lived his life that way. And then when he died, worth a fortune, he gave money Away in big amounts to charities, to nonprofits, to the employees. This is a guy who. The company is worth $44 billion. This is a guy who always stayed true to his principles. So there are people who. Who is. They make more money, they live large. But think about Warren Buffett, one of the world's wealthiest people. Was he like, fifth wealthiest in the world or whatever? Used to be the wealthiest. He lives in the same basic house he's lived in for 70 years. So you don't have to live a life like this. Of complete. He didn't. He never thought of any of this as deprivation. But I'll tell you a funny story. After he retired, CEO went to see him for advice. And so he went to see him at his home. He was already elderly, and he had coupons on his desk. And the CEO said, what are you doing here? He said, well, before I go to the supermarket every week, I got my coupons together to go grocery shop. It didn't matter that he'd built a company worth $44 billion that he'd built. He was still a couponer. Today would be electronic coupons. But the idea is that being careful with your money through your lifetime builds habits. And being careful at not getting too soft over time and saying, why bother? Why would I spend that time trying to figure out how to save this or that? Because it's much easier to save money, actually, than it is to make it. I want you to think about that idea. What's the cheapest thing you've ever heard me do?

Krista (22:09)

Oh, man, don't put me on the spot.

Clark Howard (22:11)

Like, that's a long list, isn't it?

Krista (22:14)

You walk the walk. People ask me that. Oh, you really spend a lot of money. No. Nope.

Clark Howard (22:19)

How great it is that I. I will park a long distance from where I'm going to be able to park for free.

Krista (22:26)

Yeah.

Clark Howard (22:26)

And then I get all these extra steps in because I, you know, I'm trying to walk seven, eight, nine miles a day every day. And so by not paying for parking anywhere, I'm getting extra steps in against my goal every day. Yeah.

Krista (22:41)

You told me a story the other day, and my friend was in the car and was laughing so hard that you had sold a car. And you got this, you know, this check for the car that you sold, and you asked the guy at the place where you sold it, you know, I want to get to the subway, you know, public transportation, whatever. Subway or bus, you know, what's the best way to get there? And you ended up walking there. Right and the guy was just looking at you like you were crazy because you could have just like hopped in an Uber or whatever to get home.

Clark Howard (23:10)

But you, The Uber was $16. It was a dollar to ride the train. What do you think I was going to do? And I got a 20 minute walk in to go to the train, but I didn't know exactly how to get to the train in that neighborhood.

Krista (23:24)

You literally walk the walk. There's no doubt. But you're also, I mean, definitely one of the most generous people I've ever known. Just like Bob sounds like, I mean.

Clark Howard (23:33)

No, I'm not just like Bob. This is a guy who's, I mean, I have grown soft in some ways, but this guy is not fooling around and he did so much for so many people. And I think that's really neat. But you know, most of us aren't going to be ultra successful in a business or whatever and be able to be a story about how cheap they stayed. But the reality is we're the only country in the world where people, as their income goes up, their spending goes right up with it. Nobody else does that. Everybody else in the world, as their income rises, what they do instead is they increase their savings or their investing money that they build up wealth. Here we're all about consumption and that's not healthy.

Krista (24:28)

As you like to say, don't be all flash, no cash. Be all cash, no flash. Right?

Clark Howard (24:33)

That's right.

Krista (24:34)

All right, here we'll go to some questions here. Dave in Florida says, my wife and I and our 3 year old son are looking to maybe move out of the country for a possibly extended length of time. We own a successful handyman company and we're able to operate from anywhere as long as we have Internet and phone service. Right now we are seriously considering Portugal. We would visit first and get a feel for whether or not it's a good fit for us. There are a number of expat services to help you travel and find a home in a nice area. Are they legit? Any recommendations of a reliable service? We will need a visa, info, banking info, etc. A lot of which we've already looked into. We're probably looking at a digital nomad visa, but we don't know a lot about visas or Portugal. Is it safe? Good health care? I've registered for some webinars and read numerous articles, but I don't like to make moves like this without the sage advice of Clark and Team Clark.

Clark Howard (25:28)

Well, Dave, this is really cool. And Portugal's in with Americans Americans have been moving there in big numbers. But don't overthink this. So you know about the digital visa. We talked about the digital visa on the podcast a couple of years ago. They make it pretty easy for someone like you to be able to get the digital visa. Not that hard to get. You just have to demonstrate that you're earning money from the business you're doing. And not a lot. It's a pretty low level. In Portugal. Some other EU countries, the equivalent of the. The digital nomad visa requires a higher demonstration of monthly income. But if you go there, you can go there first on a tourist visa for three months. Try to get a feel if that's where you want to be during that time. You can apply for the digital visa, extend your stay. One of the things you have to do is you have to buy an EU health coverage plan. They're not crazy expensive. But you have to demonstrate that you're not going to stick the taxpayers of Portugal or any other EU country with a lot of medical bills. And you'll know after a while if this is just a place that you enjoy spending part of your year, or if you really want to build roots in Portugal or somewhere else in Europe. That's the point at which you might need a local expert on the ground to help you. But don't spend any significant amount of money up front on this, because first you got to test this, do a test drive, see if it works for you. A lot of people will think they want to live in Spain or Portugal or live, you know, somewhere in Asia or whatever. And you get there and you realize, I really enjoy hanging out here, but not living here. And you'll learn from others. I mean, you look on Reddit, there's so many people who have already made this journey to live somewhere in the EU and to specific countries, and they'll drill it down for you. What are the pluses, minuses, where things you have to do, but you don't need one of those expensive consulting services yet. You may not need them at all even down the road. And I hope you enjoy Portugal. You live right now in Florida. Just want you to know Portugal in the winter gets pretty cold. There's this perception that Portugal is going to be really warm like Florida. Uh, so you gotta be prepared. Gotta have that winter coat.

Krista (28:16)

All right. And Isaac in Texas says I'm 24 years old and can save roughly $1,000 a month.

Clark Howard (28:22)

Fantastic.

Krista (28:23)

Currently, I'm maxing out my Roth IRA and putting the rest in a money market account towards a Down payment for a house. This year I was 2 or 3,000 short of my itemized deductions, exceeding the standard deduction. Okay, should I open and max out an HSA to get the triple tax benefit before putting savings in my Roth IRA or toward a house down payment? I'm in the 12% tax bracket right now, but my income should significantly increase in the next few years to put me in the 22 or 24% tax bracket.

Clark Howard (28:52)

Okay, 24 years old. This is so fantastic. I can't even tell you. You're using the advantage of being at an extremely low tax rate to put in money after tax in the Roth. The house thing you were asking about, if you were to sacrifice anything, it would be the money towards buying a house so you could fund fully the HSA and fully fund the Roth ira. Don't sweat very much worrying about being able to itemize deductions versus a standard deduction. You're good. You're great like you are right now. And the HSA is such a valuable tool over the years. Obviously you have an HSA eligible health care plan where you work or on your own, making you eligible to get the triple tax benefit of the hsa, which is actually superior to my beloved Roth ira. And the way you are so intentional about saving money, you'll still be getting money aside for the house. But I love the idea of you fully funding the HSA and the Roth and then whatever's left over put towards the house. And you by doing this at 24, you're going to be so well set for your life financially, it's hard to even picture how well you're going to do financially.

Krista (30:23)

And April in California has a very simple question for you, Clark. Is it okay to use my debit card for Amazon purchases?

Clark Howard (30:31)

In the past I would have said no problem, but the number.

Krista (30:36)

Would you?

Clark Howard (30:37)

Huh?

Krista (30:38)

You would have.

Clark Howard (30:39)

Well, if somebody doesn't like using credit cards and they want to use a piece of trash, fake visa or fake MasterCard, there it is. Why is it a piece of trash, fake visa or fake MasterCard, you don't have the same rights. And if, if you're owed a refund for something you return to Amazon or whatever, or the goods are not as represented from a third party Amazon seller with a debit card, you don't have a right to dispute the charge. When Amazon had a foolproof, rock solid return and refund policy. Even though I don't like debit cards, you would have been okay using one at Amazon today because most of the merchandise on Amazon is not actually made or sold by Amazon and the return policies have become really fuzzy depending on who you actually bought the goods from. Using a debit card on Amazon is a risky thing where before you really didn't have to worry about the risk. So using a debit card on Amazon is something that because the, the culture at Amazon has changed so much on returns and refunds that it makes me really uncomfortable using it on Amazon as it's been for any other place you buy things that you're getting in the future or you're buying online. I really want you using a credit card, not a debit card at Amazon. Amazon does not have the special relationship with its customers that it used to have. And you got to know that about Amazon. You got to see who you're buying from and what the return policy is from, who you're buying from, because the old Amazon is history. And I want to thank you so much for joining us on today's podcast. I hope that you've learned something today that is helpful to you. And my daughter used to say, dad, why do you do this? You should just say be cheap. Bye bye. But there's more to it than that. There's more to learning ways to save more and spend less and avoid getting ripped off and can't wait to see you next time.

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