193: Wealth Advice

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This episode is all about financial health. Joy says she’s allergic to budgets, so how do we get over the fear and discomfort of talking about money? Lenet Rivas is here to show us the way! Lenet is a Certified Financial Planner working as a wealth advisor at a small family firm in Atlanta, GA.

Instagram Handle: @lenetrivas

Notes from this episode:

1. Acknowledge where you are and what you have. Create your baseline. Gather all documents/statements you can find and identify what type of account it is, what is its intended use, and how much you have in it. Same with anything you owe. How much do you owe? What is the interest rate? What is the required payment schedule.
2. Establish your monthly budget. What is coming in and what is going out on a monthly basis? No additional thought here, just simply spelling it out. For miscellaneous expenses, try to get an average across a few months. This is fundamental to all of the other steps. Oftentimes, mindless spending can naturally happen out of lack of awareness.
3. Debt Management- Rule of thumb is to at least try to pay off debt that is costing you more than 7% to carry and aim to pay off your credit card bill at the beginning of every month (tends to carry the highest interest rate of most consumer debt). This is a big one to factor in as student loan repayments kick back in after a three year pause.
4. Establish an emergency fund- Most money markets are paying in the 4%+ range so a good place to have these funds but remember, not chasing returns for these funds. Savings accounts offered by banks are the most common place to keep these funds but you can also put them in a brokerage account. Easier to access the money markets and may keep the funds out of sight.
   1. Good: 1-3 months of expenses saved
   2. Better: 3-6 months of expenses saved
   3. Best: 6+ months, not to exceed a year
5. Employer sponsored retirement plan (401k, 403):
   1. Good: Contribute up to the employer match (if there is one), if not, at least 3%- pre tax or roth
   2. Better: Combined contribution of 15% with employer match included
   3. Best: Max out at $22,500 for 2023. (Percentage will vary based on income)

                                                              i.      If you are self employed, please work with a CPA to identify which retirement account works best for your business set up

5. Reminder here is that these funds cannot be accessed without a penalty + tax considerations until you are 59 ½. There are few exceptions but would steer clear of taking out loans or planning to withdraw before retirement.

5a. Didn’t mention on the podcast but an extra bonus in this space is opening up an IRA (Individual Retirement Account). You can save an additional $6,000 every year. These can be opened at Vanguard, Fidelity or Charles Schwab. Treated much like an employer plan except you are in control of the investments. There are income limits to get a deduction so make a note to check those.

6. Lastly, opening up a brokerage account for additional investment opportunities above and beyond retirement needs:
   1. Good/better/best: saving anything here is already a great start.
   2. Advantages to this type of account- you get free and clear access at any point and get some opportunities to grow your funds in the stock market.
   3. Unless you are a well versed trader, sticking with ETF’s and Mutual Funds will do the trick

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