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Speaker 1: Hi, I'm Stacey and
I'm back for another episode of

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Better Financial Health in 15
minutes or less, and what I want

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to talk about today is 1% how
to nudge your finances along by

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making sort of small moves that
just move you in the right

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direction.

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Oftentimes, we think that we
need to get everything perfect.

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We need the home run.

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We should have bought NVIDIA
three years ago.

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We should have bought Apple in
2004.

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And we're looking for the
perfect house at the perfect

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price or the perfect job.

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What we really need to be
thinking about, and what we have

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discovered in working with
hundreds upon hundreds of

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retirees, is that these
millionaire next doors have

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built their wealth not by
swinging for the fences, but by

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doing the little things along
the way.

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Or, to use a baseball term,
they've hit a lot of singles,

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they haven't hit a lot of home
runs, but just over time, that's

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compounded, and compound
interest is a powerful, powerful

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tool, and so what I wanna do is
talk about how that can work

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for you, whether you're in your
20s and 30s and you're just

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starting out, or if you're
already retired, how you can use

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the power of 1% to really help
you.

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So, for our younger listeners,
the thing I would encourage you

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to do is, if you have a 401k or
a 403b available to you,

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increase your savings rate by 1%
.

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So if you make $60,000 a year,
that is an extra $600 a year,

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$50 a month and over time that
could lead to that $600 in a

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year could lead to 50 or $60,000
by the time you hit retirement.

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So it's not a big change coming
out of your pocket.

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It's certainly not going to
break you.

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But that little change can have
a big impact.

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What if you don't have a 401k?

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Or you're like, okay, I've
already saved.

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You know I'm already at 15% in
my 401k.

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Well then, consider maybe
canceling one subscription

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service and taking that savings
say $10 a month and putting that

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into a Roth IRA.

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So that's $120 a year.

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That also is going to build
over time and build you a

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tax-free bucket.

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So these are some small things
that you can do that will really

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have outside benefits for you
down the road.

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The other thing that you can do
is if you've got a savings

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account at the bank or you're
carrying more than $5,000 in

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your checking account, I'd
really encourage you to look at

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either a high yield savings or a
money market account not at the

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bank, because a money market
account at a bank is not really

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a money market fund but a money
market account at a large

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brokerage firm such as Fidelity
or Vanguard or Charles Schwab.

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Those are going to earn you
over four percent% and over time

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that's sort of free money that
you picked up and earned on

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money that was just sitting
there waiting for a rainy day

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anyway.

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And so if you've got, if you
look at that and you say, okay,

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I was earning nothing on that
money, on that $10,000, but now

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I'm earning $400 a year, well,
that can go a long way toward

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offsetting the cost of a
vacation or even making one of

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your car payments for you.

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So those are some little
changes you can make there that

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can have outsized benefits to
you longer term.

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What if you're already retired?

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You can also apply the 1% rule.

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That's, for example, if you're
pulling out $60,000 out of your

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portfolio a year to live on, if
you reduce that by 1%, that's

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$600.

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That's going to stay in there
and grow over time and

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potentially make it easier for
you down the road when a big

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expense comes up, because that's
there.

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The other thing that you can do
is to be a little tax smarter.

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If you're making charitable
contributions and you're 70 and

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a half or older and you have
money in a pre-tax IRA, you can

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pull that money out from the IRA
.

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The check has to be made
payable to the charity, but that

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money comes out of your IRA.

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You never pay tax on that money
.

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It goes directly to the charity
and they get full benefit from

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it.

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They don't pay tax on that
money because they're a

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charitable organization.

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That's called a qualified
charitable distribution.

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So that's something that you
can do.

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You're still making the same
charitable contributions, but

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instead of pulling it out.

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Still making the same
charitable contributions but

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instead of pulling it out and,
since the standard deduction is

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so high, not getting any tax
benefits for your giving.

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If you do do it through your IRA
, you can't do it if your

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money's in a 401k.

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It has to be an IRA to be able
to do this.

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That's another way you can do
it.

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The savings account thing and
interest earnings also applies

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to you if you're retired.

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So that's also something that
you can do, because what we're

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really trying to do is to just
focus on that small changes that

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we can do better.

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It's the same way that we get
in better shape we start going

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to a class and we just show up
every day and then all of a

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sudden they're close, but a
little bit better.

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So those are some small things
that you can do that will

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enhance your overall financial
wellness over time.

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You don't have to hit a home
run, just make one small step.

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So I challenge you what is
going to be the 1% thing you try

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to do this week or this month
to enhance your financial

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wellness?

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Thanks for tuning in.

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This has been another episode
of Better Financial Health in 15

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minutes or less.