Matt Bell's Blog, page 16

Profitable Ideas: TikTok and the Gen Z Money Brain, Thinking of Future You, and More

Weekly list of curated personal finance articles from around the web.

How TikTok is wiring Gen Z’s money brain (Wall Street Journal). “You see a 19-year-old trader on TikTok who only has to work two hours a day, and I was like, ‘How do I do that?’”

How the US became hooked on sports betting—and the cost it’s having on our lives (CNN). How the essence of sports is changing is one of the biggest cultural shifts of our day.

Why has your car insurance gone up? (And what you can do about it) (Kiplinger). You’re probably aware of some of these steps, but have you taken them?

Writing a will is ‘not just a question about finances’ (CNBC). Is this one of those items you plan to get to some day, one day? Far better to get it done sooner than later.

Does it matter where your clothes come from? (Relevant Magazine). An example where choosing the lower-cost item may not be the good-stewardship option.

Should I prioritize insurance costs when choosing cars for my teenagers? (Clark Howard). Different makes and models of cars that cost the same to buy can have very different costs to insure. 

5 things you can do today that your future self will thank you for (Becoming Minimalist). If we spent more time thinking of our future self we would probably do many things, including money things, differently.

Did your child earn money last year? You can open a Roth IRA for them. (Flow Financial Planning). One of the smartest money moves you can make for your kids.

To weigh in on any of the above, just leave a comment below. And if you haven’t done so already, sign up for a free subscription to this blog.

A Mom’s Final Advice on Money

Anyone who has lost someone they love will tell you that holidays bring back some of their strongest memories of those people. That’s certainly true for me. So, with Mother’s Day coming up this weekend, I’ve been thinking about my mom who passed away in December of 2003.

This year brought back a memory of a conversation we had about money just a couple of months before she died. Lying on a couch, weakened from the effects of cancer, she wanted to talk about the money she and my dad planned to leave to my brother and me in their will.

Even though my parents were both teachers, they had rarely given us any overt lessons about saving, investing, or avoiding credit card debt, so the topic caught me off guard. What would she say? Was she worried that I might mismanage it, as I had an inheritance I received from an uncle 15 years earlier? Would she implore me to save most of it? To invest it conservatively?

No. She surprised me with the encouragement to make sure to use a portion to buy something just for fun.

It’s possible that my mom was feeling some regret over not spending more on herself. Both of my parents were always very conservative in their use of money. But she also knew that the financial crash and burn I went through had made me very cautious in my use of money. Maybe she thought I had swung too far to the frugal side and wanted to remind me that it’s okay to spend some money just for fun. Of all the final financial advice one could give, making sure we use some money just for fun isn’t bad.

It took me a few years to follow my mom’s advice, but I finally did buy something just for fun—a nice digital camera. I get a lot of pleasure from pictures. They help me relive great vacations my wife and I took early in our marriage, marvel at how much our kids have changed, and think back on special times with friends. It has proven especially helpful when taking pictures at our kids’ sports events.

As an added bonus, when I use that camera to capture a memory, it very often brings back fond memories of my mom.

What great financial advice, either by word or example, did you get from your mom?

Profitable Ideas: How Debt Can Define Your Future, Re-Shop to Save, and More

Weekly list of curated personal finance articles from around the web.

How I think about debt (Collaborative Fund). “Debt defines your future, and when your future is defined, hope begins to die.”

Defining success beyond material excess (Simple Money). Owning more often complicates life more than it enriches life.

The new math of driving your car till the wheels fall off (Wall Street Journal). Your car has 200,000 miles? It’s just getting broken in!

How athletes and entertainers like Shohei Ohtani get financially duped by those they trust (LA Times). “They are naive about or inattentive to their finances; they make risky investments; they overspend on family, friends and expensive toys.”

How do you choose a college? (The College Financial Lady). It’s a decision that can become very emotional, and when emotions get involved, tread carefully. 

5 things you should re-shop to save money (Clark Howard). How to give yourself the chance to make a better decision.

Is identity theft protection worth it? (Kiplinger). Your first line of defense is a credit freeze.

Our skewed view of wealth (Eternal Perspective Ministries). As always, challenging thoughts from Randy Alcorn.

To weigh in on any of the above, just leave a comment below. And if you haven’t done so already, sign up for a free subscription to this blog.

The Best Way to Teach Kids How to Make Good Spending Decisions

Personal finance may be the most important topic typically not taught in school. And where it is being taught, there are mixed results. The main problem seems to be a lack of practicality—lectures and simulations will only get you so far.

As I thought about the general ineffectiveness of teaching kids about money in a classroom setting, I was reminded of something I read in Mary Hunt’s book, Raising Financially Confident Kids, which I highly recommend (Mary also runs the Debt-Proof Living web site and writes the Everyday Cheapskate blog).

In the book, she tells the story of “Uncle Harvey.” Harvey lived far away and was a bit older. While they hardly ever saw him, when Mary and her husband, Harold, were raising their two boys, the legend of Uncle Harvey loomed large.

Managing real money in the real world

They had heard that at the start of each year, Harvey would sit down with his family and hand out a year’s worth of money to each of his and his wife’s four boys. The money was for clothing, snacks, entertainment, haircuts—everything but food and shelter. It was up to them to make it last. If they ran out of money before they ran out of year, too bad. And, the Hunts heard, each of Harvey’s kids grew up to be very good money managers.

It prompted Mary and Harold to give it a try with their boys. In her book, she explains how they rolled the plan out with their kids, some of the early fits and starts, and how it all turned out. It made me want to try it with our kids who were then 9, 11, and 14.

A living laboratory

At that point, we had long given them an allowance and had been pleased with the habits they had built around generosity, saving, and spending. But now it was time to take it up a notch, and Mary’s book gave us just the idea we needed.

We decided to give our kids most of what we typically spend on them for clothing each year, one month at a time. They kept the money in an envelope. Each month, we added $25 to each envelope, and they recorded the inflow and expenditures on the outside of the envelope. Very quickly, it proved to be a powerful teaching tool.

I will never forget taking our then 11-year-old son and 9-year-old daughter to Old Navy. Our daughter was in search of some jeans. Our son said he didn’t really need anything (he cares about his clothing—almost the polar opposite of his older brother—so I confess that I wondered whether he could really go to a clothing store and not buy anything).

After trying on several pair of jeans, our daughter decided on one pair that was being offered on a nice discount. Then we headed over to the deep discount rack where she found two tops for about $2 each.

At that point, our son said he wanted to buy something after all. I reminded him that he said he didn’t need anything. But he insisted that he could use a new sweatshirt. Then he picked one out that was 30% off, but still seemed kind of expensive to me and looked a lot like one he already owned.

Still, I backed off, wanting him to make his own decisions. I figured, if he later regretted the purchase, that’s part of what this is all about.

It’s different this time

I can’t fully put into words the fascination and joy I experienced as I watched each one navigate this process. They were clearly thinking and making decisions about purchases in a way that was new to them.

Of course, they had made purchases before, but there was something very different about this experience. This time they were much more in charge. Seeing them hand over cash and take responsibility for their clothing budget is very different than us buying the clothing with a credit card and managing a “kids clothing” budget on their behalf.

I may be just a little too into this whole financial teaching thing, but honestly, watching them approach the cashier holding the clothing they planned to buy in one hand and clutching their envelope with cash in the other actually brought tears to my eyes.

I’m convinced that having kids use real money in real situations is the absolute best way to teach them about money. It’s filled with potential to teach them in very practical ways what it means to make trade-offs, patiently save to buy a special article of clothing, manage a budget, figure out how to stretch their money, and so much more.

I highly recommend using this process with your own kids. And, of course, I highly recommend that you pick up a copy of my book, Trusted: Preparing Your Kids for a Lifetime of God-Glorifying Money Management.

Profitable Ideas: When a Want Becomes a Need, Buffett’s Secret to Success, and More

Weekly list of curated personal finance articles from around the web.

How to distinguish between wants and needs (Becoming Minimalist). The lines are not as clear as you might think.

Understanding the 4 key 529 plan fees and expenses (Saving For College). You’re not restricted to your state’s plan (although you should probably use it if your state offers a state income tax deduction or credit for contributions), so it’s worth comparing plans.

Answers to tough financial questions (Howard Dayton via FaithFi). One of the most respected teachers of biblical money management weighs in on a variety of topics.

The one question you need to cultivate wisdom (Fast Company). “Anticipated regret is a form of wisdom.”

Why do people make “bad” financial decisions? (Of Dollars and Data). Replacing judgement with empathy.

Reclaim your time: conquer the 4 major time wasters (LifeHack). Time is our most valuable asset. And yet, so much of it slips away.

The secret to Warren Buffett’s success (Tony Hixon). It was an honor to have this post on Tony’s blog.

Why Clark says you should ‘ignore’ Paze as trendy new payment option (Clark Howard). If you haven’t heard of Paze yet, you probably will soon.

To weigh in on any of the above, just leave a comment below. And if you haven’t done so already, sign up for a free subscription to this blog.

How Much Should I Spend on a House?

Of all the spending decisions you make, housing is the most important one. It’s probably your biggest expense, so it’s essential to get it right. Doing so is one of the most important keys to being able to live generously, save and invest adequately, and live with financial margin and peace of mind.

How Much of a Down Payment Should I Make?

It used to be normal for people to make a down payment of at least 20 percent. That became anything but normal during the run-up to the housing bubble, and look where that got us.

Putting 20 percent down demonstrates the discipline to save. Plus, it prevents you from having to pay private mortgage insurance.

How Much Can I Afford to Pay Each Month?

Lenders typically tell people they can afford to devote 28 percent of their monthly gross income to the combination of their mortgage, property taxes, and homeowner’s insurance.  When you include other debts, such as credit card balances, student loans, and vehicle loans, they want all of those monthly payments plus housing to total no more than 36 to 40 percent of your monthly gross income, depending on the lender.

I’ve come to a different conclusion. The ideal is to spend no more than 25 percent of your monthly gross income on housing—preferably no more than 20 percent—and have no other debt. And here’s the kicker: It’s best to be able to afford a home on one income.

What? That’s impossible, right? I mean, look at today’s interest rates.

Well, the common approach to money in our culture is to save too little, carry too much debt, live with too much financial stress, and fight about money too often with the people we love. Do what’s uncommon and you’ll be able to enjoy uncommon financial success and peace of mind.

Basing housing costs on one income is especially important for young two-income couples that want to have kids one day and also want the freedom to have one person step out of the paid workforce while raising those kids. But it’s important for others as well.  Buying a house that requires two incomes is risky. What happens if one person loses their job?

What If I’m Spending Too Much on Housing?

Please don’t shoot the messenger, but if you’re spending much more on housing than what I just recommended, your finances are probably going to be a challenge. It’s going to seem impossible to give generously or to find the money to save or invest. In that case, prayerfully consider something radical, like moving to a more affordable house.

I know. It sounds crazy, completely unrealistic. Selling a house can be tough. The whole process of moving is time consuming and disruptive. But I’ve met people who have done exactly that. They were living in houses they realized they could not afford and they moved.

One couple put their house up for sale at a time when other homes in their community were sitting on the market for over a year, and yet theirs sold within 30 days and for nearly the full asking price. The other, after selling their home, decided to live in the basement apartment in the home of some friends. They stayed there for three years as they saved up enough money for a healthy down payment on a house they could truly afford.

Both couples took really tough, counter-cultural action, and they got to a better place financially, emotionally, relationally, and spiritually.

For most people, housing is the expense category that can make you or break you. Getting it right is essential if you want to experience uncommon financial success.

What are your thoughts on my housing recommendations? Take a minute and figure out what percentage of your monthly gross income you’re spending on housing (mortgage, taxes, and insurance). If you’re spending more than 25 percent, how are you making that work? Is it working?

Profitable Ideas: A Financial Finish Line, Christians and Sports Betting, and More

Weekly list of curated personal finance articles from around the web.

The prosperity paradox (Becoming Minimalist). Where’s your financial finish line?

Americans think they need almost $1.5 million to retire. Experts say to focus on another number instead (CNBC). Fortunately, it’s a number you have a lot more control over.

Insurers are spying on your home from the sky (Wall Street Journal). Think your insurer doesn’t know about that new trampoline? Think again.

Welcome to pricing hell (The Atlantic). With online shopping, prices can—and often do—change instantly.

How to be enough (Vox). Today’s consumerist messages go beyond, “You don’t have enough,” to, “You are not enough.” The ultimate answer is found in 1 John 3:1.

Should I freeze my credit with the other credit bureaus? (Clark Howard). I had no idea there are so many credit bureaus.

Is it okay for Christians to bet on sports? (Relevant Magazine). A pastor and former pro football player weighs in.

The 5 most important areas of life to simplify (and the stats to prove it) (Becoming Minimalist). Ironically, advice about simplifying can get overwhelming. Here’s what to focus on to get the most benefit for your simplification efforts.

To weigh in on any of the above, just leave a comment below. And if you haven’t done so already, sign up for a free subscription to this blog.

Rest for the Weary

“Who of you by worrying can add a single hour to his life?” – Matthew 6:27

In December of 2006, as each week brought news of yet another publisher who had decided to take a pass on a book I had poured a year of my life and left a well-paying corporate job to write, I found myself deeply discouraged and increasingly worried.

Was it a colossal mistake to leave my corporate job? Was it really God’s call on my life that I sensed moving me to write and teach about biblical money management full time, or was it simply something I wanted to do? And, if the book doesn’t get published, will I be able to provide for my wife and two young sons? (Less than two years later, we would welcome our daughter.)

In the midst of one particularly discouraging day, my wife recited the words from Matthew 7:9-11.

You parents—if your children ask for a loaf of bread, do you give them a stone instead? Or if they ask for a fish, do you give them a snake? Of course not! So if you sinful people know how to give good gifts to your children, how much more will your heavenly Father give good gifts to those who ask him.

She reminded me that God calls us his children. He loves us and wants the best for us. His timing may be a bit different than ours, but the plans he has for us are good.

The words felt like such a warm embrace that I couldn’t speak. They were at once so reassuring, and so humbling. In my worry I had doubted God’s promise to provide for us. Even worse, I had doubted his love for me.

At around the same time, I remember reading an article in USA TODAY that reported on a study showing that people who worry a lot may have higher blood pressure and heart rates, less effective immune systems, more stress and depression, and perhaps even shorter life spans. That’s quite a price to pay for wallowing in worry.

Financial concerns are a prime source of anxiety for many people. A recent study found that about two-thirds of adults are anxious about being able to pay their bills and other expenses.

Researchers quoted in the USA TODAY article suggested exercising and listening to classical music to reduce worry. While there is certainly value in such activities, the Bible’s solution is a bit different: “Give all your worries and cares to God, for he cares about you” (1 Peter 5:7, NLT).

Whenever we find ourselves worrying about something, that’s a good time to stop and ask ourselves whether we’ve taken it to God. Have we prayed about it? Have we asked others to pray for us? Have we meditated on the truth of God’s word?

And it’s a good time to remind ourselves of who it is we’re praying to: our heavenly father who is not only willing to take on our concerns, but wants to.

What are you worried about today? Take it to Jesus in prayer. Then read and re-read the promises in God’s Word, such as the following.

“Come to me all who are weary and burdened, and I will give you rest” (Matthew 11:28).

If you’d like more encouraging verses to reflect on and meditate on, click here. That’ll take you to a PDF we put together over at my day job with Sound Mind Investing. During the big market downturn in the first quarter of 2020, we asked people what verses of Scripture they turned to for comfort. Over 500 people responded with over 70 verses. Whether your concerns are about finances or something else, I know you’ll find these verses deeply encouraging.

Profitable Ideas: A Happy Pay Cut, Money Blind Spots, and More

Weekly list of curated personal finance articles from around the web.

They chose to take a pay cut—and say they’re happier (Wall Street Journal). Large numbers of people who took a new job for less pay have seen a boost in life satisfaction.

Are Apple Pay and Google Pay more secure than credit cards? (How-To Geek). They’re not perfect, but they do add a layer of security.

Beware the hidden costs (Mr. Stingy). The financial commitments of owning a home go well beyond the mortgage, taxes, and insurance. See also, The hidden costs of homeownership are skyrocketing (Wall Street Journal).

Here are some big money blind spots you need to avoid, advisors say (CNBC). Check yourself against these potential problem areas.

Yes, money can buy happiness, but not how you think (MoneyNing). Paying to free up time pays big happiness dividends, and it’s not just accessible to the wealthy.

Jonathan Haidt on adjusting to smartphones and social media (Conversations With Tyler). Haidt describes himself as an atheist, and his research finds that “it’s the secular kids and the liberal kids who got washed out to sea, got really depressed after 2012, and much less effect on the conservative and religious kids because, I think, they’re more rooted.” 

Our entire society is becoming addicted to sports gambling (The New Republic). “Only six years since the Supreme Court opened the floodgates, it’s become abundantly clear that sports gambling is having a ruinous effect on American society.”

What I learned from my no-spend month (Gretchen Rubin). It can reset expectations and habits.

To weigh in on any of the above, just leave a comment below. And if you haven’t done so already, sign up for a free subscription to this blog.

Two Steps For Better Money Management in Marriage

With all the stuff two people bring into a marriage, it’s no wonder that money is a very frequent topic of dispute. They were raised by different sets of parents who did the whole money thing in their unique way. They had different personal financial experiences. They have different temperaments, and they bring into marriage different financial expectations, habits, and hopes for the future.

Here are two steps every couple can take to work as a team in building a financial life that works really well.

Play to your strengths

When you can’t get your spouse to stop spending so much money (or start spending money, or buy better quality stuff, or stop spending so much to buy quality stuff, or…), usually the issue isn’t really about the words coming out of your mouth while you’re arguing about it.

Very often, isn’t really about the spending or the saving or whatever else the issue seems to be about. There’s an issue behind the issue.

It’s that he or she comes from a family where they always did it that way, or it’s because of a desire for more security or more freedom or…

I devoted three chapters of Money and Marriage to helping couples understand all that stuff. Only by understanding what’s behind the issue can you have any hope of really resolving the issue.

And one of the biggest factors behind any issue that comes up in marriage is each others’ temperaments. Chances are good that you and your spouse are wired up differently than each other. That’s what drew you to each other, and it’s what can drive you apart.

There are various temperament classification systems, but they all trace back to this simple four-temperament system: choleric, sanguine, melancholy, and phlegmatic.

Knowing your primary temperament and your secondary temperament, as well as those of your spouse, will help you put each other’s unique strengths (each person has some) to work in your marriage while minimizing each other’s weaknesses (each person has some of these as well).

Become a student – a lifelong student – of how you are wired up and how your spouse is wired up. You’ll be amazed at how helpful it is in your marriage, and not just financially.

Plan to succeed

There may be no less romantic topic on earth than the idea of using a household budget. However, research has shown that couples that use a budget tend to fight about money less often than those that don’t. And the more detailed the budget, the fewer the fights.

A budget gives you objective information about your finances. If you’re truly using a budget – you have a plan, you’re tracking your use of money, and you’re managing to the numbers in the plan – you don’t have to debate whether too much was spent on clothing or concerts last month. You can just look at the budget and see how much was actually spent.

Use my Budget Quick Start Guide and Recommended Cash Flow Guidelines (found at the same link) to put together a plan. And keep these tips in mind:

Give each other some freedom. Each spouse should have some money they can spend how they want to. Jude and I have separate clothing budgets. As long as we stick to the agreed upon amounts, we have some freedom in how we spend that money. Other couples have separate budgeted amounts for “fun money.” It’s for lunches with friends or hobbies.

Divide the tasks. Both of you should be involved in choosing what goals to pursue and both are responsible for doing their part to keep spending within the boundaries set by the budget. However, one will typically take more naturally to the “work” of budgeting – data entry and such. If one of you has a melancholy primary or secondary temperament, that’s the person who’s probably best suited for the job.

Review regularly. At the end of each month, go over the budget to see how your actual spending compared with your goals. Then decide what changes may be needed in the month ahead.

There’s only one way you can do life exactly how you want to. Stay single. Choosing to get married is choosing to make room for another person – that wonderful, amazing, very different person you call your spouse.

Learning to put each other’s strengths to work and developing a plan for your use of money will help you stay on the same financial page.

What else have you found helpful in making the whole money thing work in your relationship?

Who else would benefit from this article?  Why not forward a link to my site? And if you haven’t done so already, you can subscribe to this blog by clicking here.  Twice a week, you’ll receive ideas and encouragement for using money well.