As a young professional, you probably have more questions about money than digits in your account balance. When should I pay off debt? How much should I be saving? Can I still have fun with my money? Adam and financial wellness advocate Bobbi Rebell share their financial hacks for these topics and more.
Order Bobbi's book, Launching Financial Grownups, here.
You can find more episodes of Common Cents on the Prairie™ on Apple Podcasts, Spotify, YouTube, Google Podcasts, Amazon Music, and on our website.
Watch every episode on YouTube, and subscribe to First National Bank's channel!
Follow First National Bank on Facebook
Follow First National Bank on Instagram
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Follow First National Bank on Twitter
As a young professional, you probably have more questions about money than digits in your account balance. When should I pay off debt? How much should I be saving? Can I still have fun with my money? Adam and financial wellness advocate Bobbi Rebell share their financial hacks for these topics and more.
Order Bobbi's book, Launching Financial Grownups, here.
You can find more episodes of Common Cents on the Prairie™ on Apple Podcasts, Spotify, YouTube, Google Podcasts, Amazon Music, and on our website.
Watch every episode on YouTube, and subscribe to First National Bank's channel!
Follow First National Bank on Facebook
Follow First National Bank on Instagram
Follow First National Bank on TikTok
Follow First National Bank on Twitter
- Becoming a financial grownup.(upbeat music) Welcome to "Common Cents on the Prairie," a podcast dedicated to helping you demystify the sometimes complex topic of money. I'm Adam Cox, head of Wealth Management for The First National Bank in Sioux Falls. We're a community bank based out of South Dakota. In this podcast we share expert insights from around the country and stories from our local community to arm you with the tools you need to make better financial decisions. Because the truth is, the more we talk about this stuff, the better off we're all going to be. We're recording this episode on the last day of March, which means graduation season is just around the corner. And while it's certainly been more than a minute since I graduated, I thought it'd be kind of fun to do an episode aimed at those who are just getting started in their careers. Over the years, I've had many opportunities to talk with young professionals about money, and how they can get started off on the right foot. And their questions are usually the same. What should I focus on first? Should I focus on paying off my student loans, or investing for retirement? How do I start investing? How much should I be saving? Do I need insurance, and what about a rainy day fund? We're going to tackle those topics and many more in today's episode. However, if you're like me and you're no longer a young professional, I hope you'll pass this along to someone in your life who is. And to help me tackle this topic, I've brought back my friend Bobbi Rebell. Bobbi is a Certified Financial Planner, founder of Financial Wellness Strategies, and author of "Launching Financial Grownups: Live Your Richest Life By Helping Your (Almost) Adult Kids Become Everyday Money Smart." She's a financial wellness advocate, the host of "Wellness For Financial Grownups" podcast, and the founder of GrownupGear.com. Bobbi was previously a global business news anchor and personal finance columnist at Reuters, and has held various journalist positions at top news outlets including CNBC, CNN, and PBS. Here's my conversation with Bobbi Rebell. Bobbi Rebell, welcome back to the show. Thanks so much for joining me today.- Thank you for having me back. Always a pleasure and still very much a fan.- Oh, well the feeling is mutual. So the last time that we got together to chat, we talked about your book"Launching Financial Grownups" and really that book was again fantastic and I highly encourage anyone to pick it up and read it, especially if you are a parent and figuring out how to navigate this parenting stuff when it comes to money. But here today I thought we'd do something a little bit differently. I thought we'd take an extension on that topic and let's talk to the young financial grownups themselves. As I'm sure you, like me, get lots of questions from young folks who are just starting off to saying,"What do I do, when do I do it, how do I do it?" All those sorts of things. So I thought let's talk about those things today. Is that fair?- Absolutely, there's so many directions we can go in and I know we're limited in some time, but I'm excited to get started.- Before we get started too far, tell us about your first job coming out of school and what that looked like.- Okay, so you said the keyword. So coming out of school, first of all, I do want to do a little, I'm going to hijack a little bit here and say tangent. I believe very strongly that kids, young adults should have jobs while in school. And in fact, my 15 year old who's turning 16, is looking for his first summer job now. I'm working really hard at him on not being a helicopter parent. He put in his application, not, I don't want to say behind my back for this one place he really wants to work, but he, I told him you should put that in. I thought I told him to show it to me first, he didn't. It wasn't disastrous, but it wasn't perfect, but I'm just going to let it go. I actually asked my friend,"Should I walk into the store and tell?" And she said, "No."- No, no.- Let him figure it out, it wasn't terrible. I think he just wrote like on his, on, you know, what is your desired salary? And I think he just wrote,"I'd like some extra spending money."- Good for him.- Which is kind of adorable for a 15 year old if only that was all we ever wanted, right, Adam?- Yes, that's right.- So first of all, first jobs. I had many jobs in school. I think the very first one where I got a paycheck while I was still in school was at a bakery. And I still remember they made me pay $10 for this yellow polyester uniform. They took it out of my paycheck, which I don't know, I mean, I guess it's legal. It was I, but they charged me for it. I thought that was terrible, they paid me minimum wage, probably four or $5 an hour at the time. I wish I had kept that paste stub, but it was a big life lesson. My first sort of grownup job, which is I think what you were asking me out of school where they paid me money that in theory an adult could live on, emphasizing in theory, was as a production assistant. I was a production assistant. The technical name that they call it is a news associate at CNBC. And so my job was to run around, there were computers, but we still printed out scripts. And so I was printing scripts and ordering graphics, and helping to run the shows in the studio. And I would work on, it was called, they didn't have individual show names at the time, so it was basically called the "Money Wheel."- Okay.- And so I worked on the,
I believe it was like the 6:00 AM,
the 9:00 AM, and the noon. So I would come in really early, but different shifts changed to be clear. But basically you'd have a show, you'd have like two to three hours building up to the show that you'd work on the show, then the show would air, and then you'd start all over again. So it's kind of like-- Yeah.- a little hamster wheel of TV production. But I did work with people, I worked with Joe Kernan, I worked with Neil Cavuto,- Wow.- and some other, I worked with Maria Bartiromo, but not at CNBC. I worked with her when I was an intern at CNN. She came to CNBC as I went to CNN to produce over there. But I met a lot of great people, Stuart Varney, met a lot of great people early in my career through that. And I remember saying to, and I'll tell you, I'm going to tell you guys my salary. My salary coming out of college was $20,000. And I remember to my son's point about just a little extra spending money, I remember telling one of the senior producers who was clearly very burnt out and quit soon after,"I would do this job for free. I can't believe they are paying me to do this." And I look back and I think, "Oh my goodness, I was so naive, but I loved it." I don't think I've ever been more joyful in a job, because I had worked as an unpaid intern, which is not so much legal these days. There's all kind of parameters that happened. But at the time, these are the nineties, you could have people work for you for free. And so I had had unpaid internships at CNN, and at NBC, and PBS where I had never been paid before. So I was used to basically working for no pay. So this was just completely over the top. The fact that they were paying me to show up at three in the morning and Xerox scripts.- Yeah.- I mean, it was heaven. True heaven.- Yeah.- What was your first job?- My first job, my first real, real job. So, I did a lot of different things growing up. I was a janitor at a school over the summers, did a lot of painting, taught tennis lessons, tried retail, was terrible at retail. And then my first real job was at a large bank where I settled high net worth estates. So my specialty was when someone passed away, I would parachute in. I had a legal and finance background, try to make sense of everything and keep the peace, button everything up and send it on its way, and then get out of there.- Wow.- It was a fascinating job.- That's a big, it's a very important job though.- Yeah.- At a time when people feel very vulnerable and there can be a lot of family uncertainty, not always tension, but just, this isn't something that people often have experience with. So I think it's important to have the right temperament along with knowledge to have that kind of job. That's a big response responsibility. I'm very proud of you, Adam.- Oh, well thank you so much,- A much bigger deal than getting Neil Cavuto's graphics correct, which I once messed up and to this day, clearly never forgot that I messed it up. I messed up his graphics.- Obviously. Yeah.- He yelled at me, then he forgave me and he's great. But yeah, you never forget those early career mess-ups.- No you don't, no you don't. Well, speaking of early career, the reality is a lot of people who I speak to today who are coming out of school, as again I'm sure you do as well, they're starting off their career with some big questions about paying off debt for instance. I think the average I heard, I read the other day, the average student loan debt right now is something like 38,000. And if you don't have a plan for that, to get rid of that as soon as possible, that can stick with you for a long time, and can limit some of your life choices. When I came out of school, I definitely brought up that average. I've shared before I had something like $220,000 in student loan debt. And so for me and for everyone, I think it's really, really important to have a good strategy to get rid of that debt. And so one of the things I want to start talking about is the different type of strategies and what you recommend. Basically what most people say, there's two primary strategies. There's the avalanche method, and then there's a snowball method. The avalanche method being you list all of your debts and you rank them by interest rate. So you pay minimum payments on all your debts except for the one with the highest interest rate. And you pay as much on that as possible until you get rid of that one. Once you get over that one, you go to the next one, with the next highest interest rate, and so on. The snowball method is one popularized by Dave Ramsey, where you again rank all of your debts, but this time by size, smallest to largest, you put minimum payments on everything except for the smallest one, where you put as much money as possible on that one. And then you keep going until you've paid off all your debt. So Bobbi, is there one of those two that you are often recommending, or is there a third Bobbi Rebell repayment plan that I'm not aware of? Like how do you approach that conversation with young professionals?- That was an excellent explanation. Look, the math will point to paying off the highest rate first, the avalanche method. Psychology would point to the snowball method. So I think people have to look and say, "Who am I? Which way resonates with me that's going to work?" And however you get there, you know, all roads will lead to being debt free if you pick, you know, the right road for you. So I think it's important that people really take a moment to think about what's best for them, but also to course correct. It doesn't have to be one way and then I'm stuck on that road. If it's not working for you, change paths. The biggest thing I think is to have a plan and to, in whatever way works for you, whether it's an app or writing it down just on a piece of paper, and this goes, you can flip it when you're saving, it's the same idea. Seeing the actual numbers makes it real, but also makes it a lot less intimidating. I know when I felt like, "Oh, I feel like I charged a lot this month." but I haven't been looking. And you know, if you don't actually go to look at, well what is my credit card going to be?'Cause I wasn't doing a great job of tracking along the way. When you look at it, it's a lot less scary. Even if it's a bigger number, it's usually a smaller number I think, than I envisioned. So it's really important to actually understand the numbers, and if you have an end date, whether you visualize this on, you know, a cork board or whether again you do it in an app, if you see the date, when you will reach your target, you're going to feel a lot more motivated. So even things as simple as having a calendar and having on, you know, each day you're going to, each week, let's say you're going to cross off this much more debt is down, so you feel like you're making progress. That's important. Those little steps. I also believe in accountability to someone who maybe has a financial stake in your success, but also maybe has an emotional stake in your success. This goes to the multi-generational approach that I'm always advocating. You know, tell someone who loves you, maybe privately,"This is what I'm working towards, can you be the nudge, check in with me. Make sure I don't go off track." And to be open about it in a way that's comfortable with you. It doesn't mean you have to tell everyone in the world, but tell someone that cares enough to be accountable. And also I think it's important to, it's almost like when you're losing weight and you tell your friends when you're out at dinner,"I'm not ordering dessert, please don't push me to have the cake, because I'm really trying to prioritize my health, right?"- Yeah.- Even last night I was out at dinner with friends and I'm just going to say this, and I'm hoping, well, it's okay if she listens to it. And there were a few girls and she looked at the wine list, and I said, "Keep it nice." You know, wink wink like, and she picked out what I felt was an exorbitant bottle of wine. And she said, "Well that's kind of the cheapest that they have, so what are we going to do?" And I just said, "Uh-uh." I said, "Uh-uh," and I looked at my other friend out, and she's like, "Yeah, uh-uh." And we were like, "No, it's just us having dinner. It's not, you know, we're not wine connoisseurs." And I took that menu- Yeah.- from her lovingly and we joked about it, I took it all in good humor. And I said, "Let's look at the wines by the glass."'Cause we're not big drinkers. Like we're going to have one glass of wine each. How much could a glass of wine? And so we each ordered one individual glass, and it was one third the price total, the three of us total was one third the price of the bottle of wine. And I say this to say, include other people in the fact that you're watching your money in a good way. It doesn't have to be a constant conversation, but if you're out, if someone chooses a restaurant, let's say that's super expensive, just be like privately, you know, however you feel comfortable, get them on board and be like,"Look, I'm paying down this debt, can we go somewhere else?" Or, "If you need to go to that restaurant, I'm going to meet up with you guys later." Or, "We'll go for a walk in the park," or whatever it is. You've got to, because I feel the biggest downfall is sometimes our pride, and trying to keep up with the Joneses as they say. In fact, that's actually a good movie to watch, called "The Joneses." And it's a pre influencer movie, do you know that movie? It's with Demi Moore.- I do. Yeah.- And David Duchovny, so it's basically, you meet this family, they're moving into a neighborhood. It looks on the surface like parents, and two sort of teenage early adult kids. It becomes clear very soon that they're all, they're not a real family, they're all actors hired by a marketing company. This is pre-social media and their job is to infiltrate the neighborhood and sort of be the envy of the neighborhood. Make friends and have the cool new stuff, and make your neighbors want what you have. And they get the neighbors to do things like, you know what the father is a very good golfer who they chose for that reason. He joins the golf club and suddenly everyone's upgrading their golf clubs to the brand that he has. Very much like the influencers.- Yeah.- So the important thing, back to our discussion about how to pay down debt is to get other people on board. Don't be embarrassed, especially if it's student debt. I mean that is, I don't want to say it's great, it's not good to have student debt, but it is debt that allows you to have the career that you want, hopefully. This is, you know, I dunno if it's altruistic debt, it's good debt in that sense. I mean it was done with a purpose. It's not like you just went out and spent money for no reason. There's nothing to be ashamed of if you have student debt, in fact, you should be proud that you went after your goals in that sense and you did what you had to do, and you're going to pay it off. Let your friends know,"I'm battling student debt, I'm going to choose a different restaurant." You know, and just own it. And they're generally going to be really happy with that. I mean my friends were very happy with the, and we had great wine by the way.- Yeah.- The wines were great. We wrote down the name of the wine, it was awesome.- Yeah.- But they're going to appreciate that you step in, because they're all probably feeling that cringe too, 'cause they're all watching their money. Whether we're paying down debt or saving for a goal. We are all wanting to be responsible. Anyone listening to this for sure wants to be proactive and make financial grownup decisions with their money.- Everyone deals with this stuff. There are very few people in our lives who are not dealing with the debt, or trying to save, or whatever it is. So this is fairly universal at this point. So I love not suffering in silence, and feel not having to feel that shame as well. I think that's great advice.- Yeah.- So one of the other maybe controversial things, as much as things can be controversial on personal finance, but one of the hot button topics I've observed over the years is what to do about investing, which will be our next topic, but what to do about investing while you're paying off debt. Some people say stop it completely until your debt's gone. Some people say, you know,"You got to keep going." What say you about investing while you're still in debt?- I'm going to go back to the fact that it is a personal choice, but I do think that you should look very thoughtfully at your timeline to pay down that debt and your realistic timeline. Because what can happen is, number one, you get out of the habit, but also you sometimes miss opportunities. So I am always going to be, and this is so I'm not giving advice to people, I'm sharing my opinion.- Yep.- I want to be clear about that as a CFP.- Yep.- I do think you should always be to some degree dollar cost averaging. You may find balance for example, and there's some new laws that actually support this, with Secure 2.0, that you may be paying down your student debt, but you can still be putting money into your 401K, right? So do something, whatever it may be. And you may want to be paying down your debt, but you also might be wanting to save up for a long-term goal like a house. You don't want to burn out. And I think that as long as you are responsible and understand the number, the payment that's due, the percentage, understand how much you're paying in debt, right? Because that's changing a lot these days, depending on what kind of debt you have. Are you locked in? If you're locked in to a very low interest rate on student loan debt and you're paying it off in regular intervals and therefore you can see exactly your end date, and you have extra money to invest, it may make sense to invest, especially, let's say you were locked into some kind of debt at 3%, which is more common with a mortgage, let's say. And you can get 4% on a CD. I'm not going to say don't pay down the debt, but you should also be aware of the math and find some kind of balance there, because there's a guaranteed, you know, better option than putting all of your money in debt. And it's the same idea where some people, maybe if they already have let's say 50% equity in their home, do they necessarily want to have a fully paid off mortgage? And in some cases that might make them house poor as they say and not have saved enough in investing. Maybe it's not better to pay off your mortgage in full. Maybe it's better to be investing what could be the extra payments. And again, Dave Ramsey would probably hate that, because Dave Ramsey would probably say,"Make those extra payments, be completely debt free on your home." And if that helps you sleep better at night, that is what you should do by the way.- Right, yeah.- But if you were sleeping well and you've paid off, let's say you've got 50% equity in your home, a nice chunk, okay, you're solid. It may make sense to pay the right amount on your mortgage, but be investing more because that compound interest and the time, just the magic of time to smooth out the bumps. We've had a very bumpy ride recently in the stock market. So you do need time if you're going to be investing in the stock market, you want to make sure you don't bypass the time.- What I always tell people when they ask me about these things, kind of two things to look at. Number one is your interest rate. If you've got high credit card debt that's paying, you know, that's charging you 18, 19, 20% on interest, there's no investment that you can invest in that's going to overcome that.- Okay.- And so that might be an area where you need to go a little bit more scorched earth and get that out of your life. Or the other option is just the amount of time, if it's going to be a really short amount of time before you can get out of debt, say less than a year, and you really hate having the debt in your life, okay, get rid of it one year, nine months, whatever. That's not going to kill you from a compounding standpoint. But, you and I both know, and this is a good segue into the investing side of things,$10,000 invested when you're 25 turns into something very, very different at retirement than 10,000 invested when you're 55. And so the power of compounding is very real. And so getting those dollars invested when you're young is really, really important. However, a lot of young people will come to me and I'm sure come to you and say,"Bobbi, how do I even get started? There are umpteen mutual funds that I can choose from. There are individual stocks, there are alternative investments, there's real estate. I'm hearing all these things on social media. This seems really, really complicated." And they're right, it is. It can be really, really complicated to get started with investing, but it doesn't quite have to be, does it, so.- Yeah.- How do you think about getting started and how complicated should people make it?- I think that what has happened is we've evolved into a world where we no longer have to pay for the transaction, but we also have to remember that that doesn't mean investing is, or should be, completely independent. Just because you can push a button that says, "Buy," doesn't mean you have the knowledge and information, context, perspective, and experience to choose those. Which is why it's really important to find a way to educate yourself. Now at a certain point you may be able to a afford a financial advisor who might take a percentage. It's really important that people be paid. If anyone tells you they're giving all of their services to you for free, realize that they need to be receiving compensation some other way, and they should disclose that to you.- Yep.- And if you're okay with that, that's okay. But you also have a wonderful situation where you can get tools. Right now, whether it's podcasts like this, there's many other podcasts out there as well. I have one, we can certainly put together a list, or you can reach out to Adam. I'm sure he can recommend a bunch of podcasts. There is great reading material. You may have to pay a small subscription fee, but I think it's really good to get behind the paywall of some of these higher end publications and open secret. If you start looking at them, they'll come after you with some nice introductory rates. Here's the bigger secret though, Adam, and I've done this myself. They'll hit you with like, so they'll start you out at like $4 a month, then they want to go to $49 a month. Cancel, they'll come back with a $4 a month, trust me.- Yes.- Okay, but educate yourself. You know, look, I went and became a Certified Financial Planner, because I wanted to know the information and it was really important to me. You don't have to all become CFPs, but you could also go and just read up on different topics. I'm sure you have a lot of material for your people to educate themselves. And that's really the most important thing is understand what you're doing. Take the time to educate yourself, and take the time to investigate and find the right people that you can put together a team as your net worth grows, and as your needs evolve. Finding the people that can be, at the very least a sounding board, but certainly a guide, and give you the right direction to make the right decisions.- Yeah, well I think that's awesome. And this stuff can be overwhelming to everyone. I came out of school and I had a master's in finance. And I still remember where I was, and that feeling of overwhelm when I signed up for my first 401K through work, and then you get this list of investment options. And I'm like, "I don't know what the heck to do with like. Okay, where do I even start?" And I had a background in it and I was interested in it for a long period of time and it still hit me. Thankfully for as much as the world has gotten more complex from an investing standpoint, there have become a lot more simple options as well. So for instance-- Yes.- a lot of retirement accounts now have very low cost, you know, index funds. They also have target date funds that are low cost as well. And those are great, I mean I'm sure-- Yes.- you've seen these as well that they're okay, they cost almost next to nothing. All you have to do is make two decisions."When am I going to retire and how much can I save?" And then you kind of set it and forget it, and they take care of the allocation changes over time. So investing can be complex, but it doesn't need to be complex.- I agree, and I think the most important thing is that you make decisions, whatever they may be. Because as long as you're investing in something that makes sense, that's diversified, and suits your goals, you're probably going to be in a good place.- So next, let's talk a little bit about the importance of habits. I know we're talking-- Yeah.- Personal finance here, what do habits have to do with anything? I'm not going to talk about my 5:00 AM morning ritual and how it's transformed my life or anything like that'cause it hasn't.- But now you have to tell us
what is your 5:00 AM ritual?- I mean I just, I'm getting old and I can't sleep anymore.
That's my 5:00 AM ritual, so I just get up and work out.- So what do you get up? Do you get up and meditate or you doing yoga? Everyone wants to know.- No, no, Bobbi, you give me too much credit. I go downstairs and I jump on a Peloton, and I just get after it for a while. So that's my deal every morning.- That's even better, I'm so impressed. Oh my goodness.- Yeah. Well thank you. Well one of the habits that I think is most important for everything in your life, whether it's spiritually, mentally, physically, or financially, is this idea of, you know, paying yourself first. There are only so many things we can do if our health isn't good, or if our mind isn't right, or if our spirituality isn't there. And there's certainly that case with personal finance as well, so the idea of paying yourself first is a pretty simple one. It's this idea that when you get paid you carve off a certain percentage or dollar figure that you have decided that that is the bottom I want to save. And then you live on the rest. It's much more difficult in practice if we all have their best intentions, especially start a new month, we say,"I'm going to save this month." And then you go, you live life, you've had 84 lattes by the end of the month, and there's nothing left to invest. So the idea of paying yourself first is you carve that off, it doesn't hit your checking account, you pretend like it doesn't exist and you live on that. So that's been transformative for me. Bobbi, is that something that's helped you as well?- I think it's important to know what bills are coming ahead of time, so that you can figure out what you can pay yourself, so that's part of the problem. Where this fails is if people say, "Okay, I'm going to pay myself 10% of my salary immediately off the top." But then they don't budget properly or they don't look ahead at what is coming down the road in terms of expenses. And so they end up dipping into that. So I think it works very well, but you have to be proactive and like with everything, just knowing what the numbers are is 90% of the battle. It's the same thing as we said with debt. If you actually look at the numbers, and it can be hard to, there have been phases in my life when I'm like,"I just feel like I don't want to look." We've done, I'm going to tell everyone, that's what happens when you do like renovations at home. That was my weak spot, I was like,"I just don't want to know." Because you don't have visibility,'cause these contractors, you know, they say one number. And then I know you get told it's 30% more, but when it really hits you it's really hard, and they're kind of like,"Well we could just leave this part unfinished." And you're like, "No, I know I can't do that." Like, "Oh, we noticed you have the opportunity to do this while we're here, it'll cost, you know,$1 now and $500 later, so what do you want to do?" So you know there's times when expenses creep up, and there's nothing you can do, but for the most part you know where your spending is going. So if you've planned correctly and you put that in a different account, then that should work well.- The other habit that has been really helpful for me, and I'm interested to get your take on how you use this one as well, is that I try to automate as much as humanly possible when it comes to finances. All of us are busy, life happens, and we get decision fatigue and-- Yeah.- Sometimes we forget to go back and look at things. So the nice thing about automating your financial life is you generally have to make the decision just one time, and then it takes care of itself. Two ways I've used this one, Bobbi. One was when Diane and I were just getting started off and we had limited resources, and lots of priorities, and lots of things, you know, trying to get at our money. And so what we had to do is we had to set separate savings goals and so we had separate accounts for those, so every time we got paid we sliced off part of that paycheck to go into , whether it was the vacation fund, or the down payment fund, or the debt repayment. And that was really helpful for us and we just set it once and then it took care of itself to met the goal. The other thing which is really great for young savers, especially those who have access to a retirement plan through work, is a lot of retirement plans now have automatic contribution features as part of the retirement plan. So if you are are young and just starting off and say,"I can only save 5%." Okay, you're starting, that's great, but you're reasonably sure that you're going to get raises every year, and so proactively you can say, every January or whenever your annual raise, I'm going to increase my savings by 1% or 2%. And those, for me, those have been really, really transformational. Are there things in your life that you automate, that you feel pretty strongly about?- Yes, I, well first of all, retirement. I mean I did that, we talked about my job at CNBC, I did that and I think that's served me very well. Still have that money. I mean I guess obviously I still have the money,'cause it's in a retirement account and I'm not retired. But the time has definitely been on my side. And the fact that it was automated when I felt young and poor, even though I always tell young people when I speak to them, that as much as they feel that they're not earning that much money, they also have to recognize that they usually don't have any dependents. And so they in fact have more financial freedom in a way than they ever will in life, because everything is their choice. And once you have a partner, or a children, or even a pet, there are some expenses that you don't get a say in to some degree. So when you're young and you feel that pinch guys, just remember it's all you, you can choose not to have a latte. You can't always choose not to, yeah, I don't know, get your kid braces, whatever it may be. The other thing, but I'm going to give everyone a warning. Okay, definitely all that you said about retirement funds and all the things, I automate every bill that I can, because the number one thing that will hurt your credit score is being late with a bill. That said, it is very important to watch those bills and to make sure that nothing goes awry, because there's ACH involved, which can be dicey sometimes. Sometimes you might be paying them by other outside payment systems. Really understand, and'cause and I say this, and I don't know if you can tell in my voice, we did have some fraud in our checking account.- Oh.- And it's only because I knew that's not one of my authorized transactions. And you have to catch it, I believe within 72 hours if it's an ACH. So it's really important, it's not set it and forget it. It's really important to keep an eye on things, okay. Because you don't necessarily, things can happen. There's a lot going on in terms of cybersecurity these days. And so be aware of what's going on in your accounts. I don't want people to check out, even though they've automated things.- Yep, yep, that's a great point.- That was a little downer, sorry about that.- No, you're fine.- But it's, I feel, But it's important. But it's important. It really is important, and I was very scarred by this. I was relieved that I caught it in time. But there are bad actors out there, and they count on the fact that you sort of know that money's deducted and they will, just like with the emails, they'll name themselves something close to, you know, like I have five family members that could all use Amazon. So I won't necessarily know. I'll think, "Oh, my stepson charged something, okay." Or you know, maybe they'll say PayPal, and so it looks similar to something you may have authorized, so really be on top of that. And I would really urge everyone to check in maybe even once a day.- Yeah.- And just glance over their primary checking account, or whatever it may be.- So maybe the message is automate, but stay vigilant.- Absolutely, yeah.- Yeah, I think it's great.- And also I will say one more thing about the bills- Yeah.- is especially with things like phone bills and cable bills, sometimes the number changes. So they're adding all these fees, be aware of that. If you get a creep up in your bill, don't be afraid to go in, notice what's changed and renegotiate it down. Because sometimes once you've authorized them, people don't notice that they've added different charges, or they've raised the prices. So you may be okay with that, but you should be aware of it.- We all have scars, don't we? We live these things.- yes, we do.- We've learned.- We do. We have learned.- Yeah, hopefully we can pass on some of the lessons we've learned so other people don't have to go through some of the stuff that we did. But speaking of downers, we got to talk about planning for contingencies, right?- Yeah.- None of us is invincible and life happens.- Yeah.- You talked about the braces, people lose jobs, people get sick. There are all sorts of things that can happen. I call them kind of the known unknowns. We know some bad things are going to happen, we just never know when they're going to happen, or how much they're going to hurt when they do happen. So, Bobbi,- Yes.- how have you planned for these unfortunate contingencies as part of your financial life?- Well, I look, we have plenty of life insurance. That's what I'll say. You know, we are big consumers of life insurance. You know, I think that that's really important, and I think it's important to go back and reexamine it whenever you have a change in life's stage. And also it's a balance of what's right for you financially and what's right for your comfort zone. It's interesting, we're still at a life stage where we have a good amount of life insurance. We have three children, and a dog, and each other. And we want to be very insured. But it's interesting because I do hear that, you know, and I learned this a lot when I was studying to be a Certified Financial Planner. I'd be curious to hear what you think. You have to think about what is the purpose of my insurance? Is the purpose of my insurance to leave an inheritance for my children, or is the purpose to cover expenses should I not be able to be there as a provider for my loved ones? And if it is purely to cover the expenses, then at a certain age, and remember insurance can become, especially if you have term and it's maybe it's 20 years, and you have to re-up it, it can become much more expensive. It's very often you get it when you have a child for 20 years, it's kind of a normal term. It can become very expensive. And you have to go through the question I just asked, because if you are in an age where your children are financially independent from you, and would pay their bills without you, you don't really have dependents in the same way. It may be time to have a conversation about what makes sense for you in terms of life insurance. And again, I'm not giving advice, I'm merely giving perspective and opinion, but I do think it's important to understand that, you know, whole life, for example, is really an investment product. And it can be right for people, but you should understand the purpose of it. And what's your goal with that insurance. Term life, so important when you have dependents and young ones, it's like that's the number one bill to pay, always pay that insurance bill, it's just everything.- Even though I'd like to say term only, there are certain circumstances where a whole life policy can be beneficial, especially if you're a really high net worth individual, or you're a business owner and you need to make sure you have some backstops in place for when you do pass away, so that business can stay in the family, for instance. That can be useful there. The thing I like about term, especially when you're young, is it's typically assuming you're healthy, it's typically dirt cheap.- Yes.- But you know, they have an adage or a guide that they usually use. They say get 10 to 12 times your annual income in insurance. And that should cover you if you have someone who's dependent on your income, which ultimately is what you're trying to-- Right.- Trying to help. I made a mistake when I was young and just getting started off on my first job. I, you know, was not making a huge salary. And I did have some insurance through work as well. So I thought I was really sophisticated. I did 10 to 12 times my salary. But in think about it, to say, "Well Adam, you're probably not going to make this salary forever, and the math won't work if you keep making more money."- Right.- And so I got it when I was young, very healthy and it was very inexpensive. But then I left a job and that insurance went away. And so then all of a sudden I had a shortfall. So I had to go back to the market after time had passed, and a little more weathering came on me personally and it was much more expensive. And so that was for me as a lesson. So when you're young and it is so cheap, maybe think forward a little bit and project forward as like, you know, yes, 10 to 12 times today. But maybe when I'm 30 or 35, 40 when someone could really use this income replacement, what do I think I'll be making then? And if it's not that much more money, I'd say go ahead and and buy more cheap insurance.- Yes, no one ever regretted having too much insurance, I don't think, but the other thing you mentioned, it's interesting that you got it through work, because work will often give you insurance for free, or for a very nominal amount. It's important to know that you can say yes to that and then also buy your own insurance separately. That will be portable because what you don't want to have is insurance that you pay for and then you sort of leave the job and it doesn't come with you. Obviously to some degree the free insurance, or you know, that is what it is. But make sure that you have your own that's portable.- Yep, the other contingency I think we should talk about is like a rainy day fund. And you know, again, when you're younger, maybe the bumps in the road aren't as expensive as when you're a little bit further along, and you've got the kids and the braces. And I've learned recently, those are not cheap, or the car goes out or you know, something happens. It's a good practice for anyone I think to have money set aside. And this is not money that's in an investment account. This is not money that you get cute with. It's money that's in a bank account, or a money market account. It's not doing much necessarily.- Yeah.- But it's there to protect you for when those oopses do happen. And a lot of people say with three to six months is a good range. Is that typical advice that you've given, Bobbi?- I think it's important to figure out what's right for your family. A dual income may not need as much. And remember as you said, you're going to put this just in a savings account, when savings accounts are paying okay these days, if you're in the right one. So it's not necessarily the worst decision, but you also want to really make sure you have access to that money. So you want to have, you know, I think of it in tranches. So you might want to have money that's literally in a savings account that's one to two months and then maybe, you know, the two to four months might be in a money market, and the four to six months might be in three months CDs or something. Or you might also have a home equity line of credit that you can tap into as another buffer, so that you don't necessarily have to have six. I mean that's a huge amount of money, first of all to save. And I think people get intimidated. So at one point I read an article that said just get three weeks, so at least you got your bills paid so you can look up and that's what you have there. And maybe you have, it's not that you only have three weeks, but three weeks literally right there in cash. And then the rest might be a home equity line of credit, it might be CDs, it might be, you know, whatever it is. Some other thing that's not literally only in a savings account. It has to do with your comfort. It also has to do with your liabilities, and what's going to happen. You know, I think another thing you can do if something happens and you don't have the money is think through, "What is my plan B?"Am I in a rental, can I get a roommate, right? Am I in a rental, can I break my lease? What does that cost? And move in with a friend or a relative." You know, think through beyond money. What happens if X, Y, Z happens, especially in this world with layoffs and all the chaos that we're in. Really go through a drill,"If I got laid off today, I know I should have three to six months, but I've got two months, what am I doing?" And play it out and talk to your friends and be like, "Okay, we all have our own apartments now, but if I get laid off and I can't pay, I'm crashing on your couch for a month." Or whatever it is. Well it sounds ridiculous, but like kind of, you know, back to the wine example, they might feel relieved, like, "Okay and if it happens to me, I'm going to crash on your couch."- Yeah.- Or whatever it may be. You know, not everyone has a parent they can move back in with, or wants to maybe go to a different city to live with their parents. You know, your financial support doesn't have to be only about tangible money. It can also be your network of friends, and people that care about you. And having that support system and figuring out in advance what solutions can I find if I don't have the money. We try to talk to ideals like we should have three to six months. Okay, but a lot of people don't. We know that.- Yeah.- So what is your game plan, given your reality? Think through that, and you know what it's also going to do, Adam, it's going to motivate you to save the money, so you don't have to go crash on your friend's couch, or whatever it may be.- Yeah, that's right.- And these things do, look, you have to, if you don't have the money saved, but you do own a home, let's say, and you can get a home equity line of credit, you need to do that before you have the crisis.- Yep. So it's an important thing to say,"I've got a month saved up, but I'm going to have a home equity line of credit while I'm saving the six months." You don't ever have to tap that HELOC. Remember it can just be out there, and your CDs can just keep rolling over at the three month mark, that's okay. Another thing you can automate, right?- Yep.- So think through because, I feel like people get very exhausted hearing us in well-meaning tone saying three to six months, three to six months. That is not realistic for the vast majority of people. And I don't want them to feel despondent-- Sure.- about it, I want them to come up with game plans.- Speaking of exhaustion, all this future planning and finances can be a little bit exhausting. And you, especially if you're in your twenties and your thirties, there's more to life. I haven't always-- Yes.- taken my own advice, but let's end on a high note.- Okay.- Part of being a young professional is you have to carve out time and resources to have fun, and to live your life.- Yeah.- And to do things that you value, so Bobbi, so what are some of the things that you and your family have valued that you have made room for? You talked about renovation,- Yes.- obviously that was something you made room for in your finances, what are those things that you've made room for?- It took a while.- Yeah, all right.- Yeah, only 15 years to renovate a bathroom, Adam, but we got there.- You got it, yes.- We still have two more to do, but we're working on it. Clearly not the highest priority.- Yep.- I look back, it's so funny. So we all have these phones that, I don't know if you have this setting, I didn't do it on purpose, but somehow my phone is set up that when I wake up in the morning it pushes me sort of a memory slideshow. And it'll say on this date, five years ago, right? And it gets me every time. Oh my god.- Yeah.- And I look back and I, you know, life is going by and I didn't feel like we were doing that much, we did so much. And you see these pictures of your children growing up, and the vacations you went on, and the parties you went to, and the dinners you had, and all the different things that you do. So, you know, make sure to fill your Instagram, whatever you want to phrase it as. You know, make sure you're doing stuff that is engaging, and delightful, and you enjoy. And it doesn't mean you can't be aware of the cost. Of course.- Yep.- But do them. You know. I remember one of our best ski vacations was at a time when we were so tight with money, we had nothing but we somehow scrounged up airline points, and we stayed, you know, way off the mountain skiing, and we had the, you know, the back of the plane seats that we barely got on and it just, everything was bare bones, literally. You know, we took whatever public transportation. And none of that, by the way is bad at all. And we had a great time and we made it work. Whatever you're on, you know, it's like I said to somebody the other day,"Don't wait to go to Disney to, if Disney's your thing." I know it's a lot of people's not thing, but if it's your thing, you know, go when your kid's the right age, there's different price points for everything. Find a way to make it work. I mean, we've driven to Florida, you know. Do what works for you, but don't not do.- I agree, I think the answer is you can and should do both. You can't just-- You can and should do both. Yeah, and you know, don't.- Yeah.- Look at your own pictures. Don't look too much at other people's pictures with envy, Back to the Joneses again.- Yeah.- Do your own thing. There's always a story behind the pictures. Things are never as perfect as you think. And just, it's easy to sit here and say this, so forgive me. But you know, you do want to just live your own life and not be looking and feeling like you're behind other people. We all fall victim to that. To this day, I have days when I'm like,"Oh, I feel like someone has everything's perfect." And I'm not feeling so good about things. But you're doing fine, you're doing fine.- Yeah.- And you're doing your thing and enjoy your life, and don't worry about what everyone else is doing'cause they're probably looking at you thinking you're doing so great.- That's right, let's leave it there. Bobbi, you're awesome. Thank you so much for doing this. I always enjoy chatting with you about this stuff.- Thank you for having me back. I always enjoy hearing your stories and now, I'm just going to say, so I feel a little lame here, because I don't get up at 5:00 AM and hop on a Peloton.- Yeah.- So there we go. There we go, right?- Yeah. Yeah. Live your life, Bobbi, not mine, right?- I know, but I just, now I'm going to go to sleep being like,
"I need to get up at 5:00 AM and get on a Peloton." Which I don't even own a Peloton, so now I got to save up for a Peloton. My next big splurge.- Yeah, there you go.- I don't know, my birthday's in January, Adam. You know what I want.- I guess I'll start saving, yeah. So before I let you go, Bobbi. People want to learn more about you. Obviously you've got an incredible book, lots of resources. You've got a podcast. Where can people find out more about you?- Thank you so much, yes. My book is "Launching Financial Grownups." My podcast is "Wellness For Financial Grownups," which we recently rebranded because I launched a consulting and education company, called Financial Wellness Strategies. We work with companies to help facilitate conversations between generations about money. And we also work with companies to help educate their employees about different financial wellness topics through webinars, and in-person speaking engagements and events. So financialwellnessstrategies.com if anyone wants to learn more about that.- Perfect, we'll drop those links in the show notes. Thank you so much, Bobbi, I appreciate it.- Thanks for having me.- [Adam] I hope you found this helpful. If you did, please subscribe and share with your family or friends. If you have a topic you want us to cover in future episodes, send us a note through our website. And if you're at the point where you want an expert opinion on your finances, reach out and we'd be happy to start a conversation. And remember, any comments, insights, or strategies discussed on this podcast are intended to be general in nature, and therefore may not be suitable for you and your situation, whatever that may be. Before acting on anything we discuss, please consult with your attorney, CPA, and/or your financial advisor.