Today's thoughts are brought to you by........ Stefanie O’Connell
brokeGIRL rich wanted to know- What do you recommend the first goal be for someone freshly out of debt?
If you haven’t already fully funded an emergency fund, a savings account with 6-9 months worth of living expenses, that’s step one. Now that you’re out of debt, you need a buffer to ensure you don’t fall back into debt should an unexpected emergency expense arise.
Budgetlovingmilitarywife asked-How big of a nest egg will someone need today to retire at age 65 years? and 30 years from today?
There are so many different answers to this question depending on who you ask. Some experts recommend having banked 8 times your annual pre-retirement pay, others recommend having as much as 12 times your yearly earnings saved. Still others recommend an alternate approach of saving 33 times what you expect to spend in your first year of retirement. The more frugal your retirement lifestyle, the less you need to save up to start enjoying it.
The question gets even more complicated with the quickly evolving retirement landscape. With rising healthcare costs, disappearance of pensions and the long term viability of social security in question, those who are still 30 years from retirement should plan on setting aside as much as possible as they will likely be relying on more of their own savings come retirement.
Mrs. Frugalwoods said- I'd ask how they've been most/least successful in their savings and frugality efforts. And, what they wish they hadn't spent time and energy on.
While I’ll do quick checks for coupons and discounts, I don’t spend hours pouring over circulars. For me, looking for bigger savings provides a far better return on investment. For example, I’m happy to set aside the time to score a free airline flight, but putting in that same effort just to save $10 on groceries, not exactly the same reward.
Debt debs wondered- Best financial decision / practice that they have done themselves? Worst financial decision / habit that they have done or that they've heard of (maybe they don't have anything that bad)?
I started investing when I was 24. It was 2009. It wound up being an amazing decision because not only did I get in young, I got in while the market was still reeling from the financial crisis. My investments have surged over the last 5 years and I’ve just sat idly by enjoying the climb.
One of the things that really drives me crazy is when young people with high incomes and minimal financial obligations spend everything they earn without setting anything aside. It’s such wasted opportunity. I have one friend who bought a jeep for 40k and sold it a year later for 20k. That same friend, who has a six-figure income by the way, liquidated his ROTH IRA because he “needed the cash”. I just shake my head.
Jessica Harlow- How much family finances info should you share with your kids, and when should you start?
I don’t have children but I’m a fan of open financial discussions. I know a lot of parents introduce financial planning to their children with a save, spend, share method. I think that’s a great way to get kids thinking about financial goals and short-term vs. long-term pay offs.
Sunday-How can financial independence be attained when income or earnings are not stable?
Now this I know all about :) Having had variable earnings my entire life I have to stay extremely grounded in my expenses and what I call my “make or break number”. That’s the absolute minimum amount of money I need to earn each month to cover my basic expenses and make at least some contribution to my savings and retirement accounts. If I make more than that, I have the flexibility to either add in some discretionary spending or more savings or hopefully, both.
In terms of budgeting, I like to use the previous month’s income to set the following month’s budget. That way I’m not counting on money that may or may not come in. I only commit to spending what I’ve already committed to earning.
This is the first interview in a 6 part series! Please come back next Monday for part two!
The Penny For Your Thoughts asks heroes, mentors, experts, and all around awesome people to share their knowledge, helpful tips, secrets, and more. Every other month we'll feature a new subject and interview based on your questions. Have someone you want to see featured, or questions you think we should ask? Email Me
If you have a suggestion for the interview topic for May then please share your thoughts at Ask Marty Anything