Ask HTM - The Wrong Fidelity Account, Geographic Arbitrage, & Financially Preparing for a Baby #760
Dec 11, 2023
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Topics include financial preparation for having a baby, moving from California to Arizona, investing in a 529 college savings plan, and encouraging a new job holder to invest. The hosts also discuss the generosity of others in giving away baby items, leaving investments in equities, and investing in a Roth IRA for a working teenager. They touch on the flavor of spring water in beer and express gratitude for a beer donation.
Encourage teenagers to open a Roth IRA to instill the habit of investing in retirement.
Teach teenagers about financial responsibility and the power of compound interest to empower them in their financial future.
Consider both financial and lifestyle factors when deciding whether to sell a house and move to a new location.
Deep dives
Encouraging Teenagers to Start Investing in Retirement
Parents of working teens can instill the habit of investing in retirement by encouraging them to open a Roth IRA. Even a small contribution of $5 or $10 a week can make a difference. By starting early, teenagers can develop a mindset of regular investing and understand the importance of saving for the future. While the grocery store job may not offer a 401(k) or a match, the Roth IRA provides a tax advantage and flexibility. This way, teenagers can get accustomed to having a portion of their paycheck automatically dedicated to retirement savings.
Promoting Investing as a Standard Practice
To help teenagers view investing as a standard practice, parents can emphasize the benefits of long-term financial security and independence. They can explain how setting aside a percentage of their earnings for retirement will compound over time and provide a solid financial foundation. By introducing the concept early and making it a routine, teenagers will develop good financial habits that can last a lifetime.
Empowering Teenagers to Take Control of Their Financial Future
As teenagers enter the workforce and start earning income, it's an opportune time to teach them about financial responsibility and the importance of investing. Parents can empower them to take control of their financial future by educating them on the basics of investing, such as the power of compound interest and the different investment options available. By giving teenagers the knowledge and tools to make informed financial decisions, they can develop the confidence to navigate their financial journey throughout their lives.
Considering a Move: Financial and Lifestyle Factors
The podcast episode explores the decision of whether to sell a house in Huntington Beach and move to Prescott, Arizona. The host emphasizes the importance of considering both financial and lifestyle factors when making such a decision. While the potential for monetary gain through the sale of the house is a significant factor, it's crucial to also consider the community, amenities, and personal preferences that come with a new location. The retiree play of moving to the Sun Belt for a lower cost of living is mentioned, but it is highlighted that the decision should not be based solely on financial considerations.
Filing Jointly and Tax Benefits
The listener inquires about the possibility of filing jointly and the tax implications when selling the house. The podcast advises that filing jointly can be advantageous for maximizing the tax exclusion on the gain from the house sale. By choosing to file jointly, they can exclude up to $500,000 from the taxable gain, offering significant savings. The importance of consulting a tax professional is stressed to ensure the best outcome. Additionally, the episode covers the role of a home as a valuable asset and the potential for downsizing to a more affordable location as a strategy to retire earlier.
Let’s dive into the week with some fresh listener questions we have lined up for you! And don't just stand on the sidelines- if you have a question you’d like us to answer, toss your voice memo our way. It only takes about 90 seconds to record and you can find a step by step guide over at HowToMoney.com/ask . Regardless of how random or bizarre you might think it is, we want to hear it!
1 - We’re planning to have a baby! How do we financially prepare and what other advice do you have for us?
2 - Should I sell my home in California and move to Arizona?
3 - How aggressively should I invest within my new daughter’s 529 college savings plan?
4 - My son starts at his first job this weekend – how can I encourage him to invest a portion of his paycheck?
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During this episode we enjoyed an Austell La Vista Mexican Lager by Frog Rock Brewery- a big thanks to Joe for sending this one our way! And please help us to spread the word by letting friends and family know about How to Money! Hit the share button, subscribe if you’re not already a regular listener, and give us a quick review in Apple Podcasts or wherever you get your podcasts. Help us to change the conversation around personal finance and get more people doing smart things with their money!
