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How Much Should You Have Saved In Your Emergency Fund (By Financial Situation!) – Money Q&A

In this episode of the Personal Finance Podcast, we’re going to talk about how much money should you have saved in your emergency fund by financial situation?

In this episode of the Personal Finance Podcast, we’re going to talk about how much money should you have saved in your emergency fund by financial situation?

 

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Transcript:

 

On this episode of the Personal Finance Podcast, how much money should you have saved in your emergency fund by financial situation?

What's up everybody, and welcome to the Personal Finance Podcast. I'm your host Andrew, founder of Master money.co. And today on the Personal Finance podcast we're gonna talk about how much emergency fund should you have. Saved by financial situation and we're gonna have some other questions as well on this money q and a.

If you guys have any questions, make sure to hit us up on social at Master Money Co. And follow us on Spotify, apple Podcast or whatever podcast player you love listening to this podcast on. And if you wanna help out the show, leave a five. Star rating and review. Cannot. Thank you guys enough for leaving those five star ratings and reviews on Apple Podcasts, Spotify, or your favorite podcast player.

And if you wanna watch this, you can watch this on the Androgen Cola YouTube channel. Now, today we are gonna be talking about how much emergency fund you should have by financial situation. What I'm gonna do on that question is I'm gonna go through each and every single financial situation. And tell you how you should build out or how you should think about your emergency fund, your wealth protection plan.

Then we're gonna go through, can you open a Roth I r a if your spouse does not work, and I will go through exactly how you actually can do that and the step-by-step process for that. And why would you choose index funds with fees when there are index funds out there with no fees? We'll talk through that question, and there's another question about the order to invest.

So this is an action packed episode. Really excited for some of the information in this episodes. Without further ado, let's get into it. Alright, so the first question is, how much emergency fund should you have by financial situation? Now, if you don't know what an emergency fund is, it is a fund that you put together in cash to protect your wealth.

It's there to protect yourself against life. If your car breaks down, guess what? You have the money there in your emergency fund to take care of it. Stress free. If your house has an issue, you have the money just there. Stress free to take care of it. If you lose your job, you have the money just there to take care of your living expenses until you find another job.

If your job offers you a better job across the country, you have the money just there to be able to afford the move. Your emergency fund is there to protect you against life, and it is a very powerful step in the stairway to wealth that you need to accomplish in order to have. The money just there.

There's power in having the money there. And your emergency fund does exactly that. It reduces your stress, it reduces your anxiety, it allows you to have protection over your wealth. So nothing can interrupt your investment plan. 'cause the last thing we wanna do is interrupt our investment plan unnecessarily.

'cause that means we are interrupting compound interest unnecessarily. So it's really important to make sure that you have that emergency fund in place. So, A lot of gurus out there will tell you, Hey, well you need three to six months of emergency fund. Well, we have a little bit more of a detailed plan for you when we talk about this in the Stairway to Wealth and here out on the Personal Finance Podcast.

And if you don't know what the Stairway to Wealth is, it is our step-by-step guide on what to do with your money. If you wanna check that out, you can go to master money.co/resources. The Stairway to Wealth is the pillar of a lot of things that we talk about here on this podcast. And so the size of your emergency fund is really gonna depend on your financial situation, where you are in life.

And it's also gonna depend on the type of job that you have, because what I want you to think about here is if you're in an industry where it is very difficult to find another job, now a lot of people think that their industry, it's gonna be easy to find another job because they underestimate how long it's actually gonna take them to find that job.

Instead, what you want to do is overestimate how long it's gonna take you to find a new job. But if you are in an industry that you know you can find a job really, really quickly, So for example, if you are someone who works in software development or coding, those jobs are usually high demand. But if you are someone who works for a nonprofit and it's a very specific niche that you are working in, those jobs are in less demand currently.

So there's a lot of things that I want you to think about when it comes to your job description now. When it comes to that, if you have a job where you can find a job really quickly, you can maybe, maybe get away with three months. I almost never tell anybody to have three months of an emergency fund. I just think it's too risky.

Cash is security. Having that cash available to you is gonna be really, really important. But if you have a job where it's gonna take you much longer than six months, Of living expenses is what you want to have in your emergency fund, if not more. I like to have way more than that a lot of other people do too, because cash is security.

So I like to approach closer to six, 12 months depending on what the situation is, and have that available. Now, where do you put this emergency fund? Where's the best place for it? A high yield savings count is the number one place I always recommend to have your emergency fund. Do not ever. Invest your emergency fund.

The reason for that is if there's a recession or there is a stock market decline, your emergency fund can get cut in half when you need it. Most, say for example, you were in the 2007, 2008, the Great Recession, and you had an emergency fund there, all of a sudden the stock market gets cut in half and you had that money invested.

Well, now your emergency fund is only three months living expenses. If you only had six months of living expenses, so now you have three months of living expenses, but all of a sudden your job also lays you off. So now you have a job that laid you off and you only have three months of living expenses.

Now you've got yourself in a little bit of a pickle here because you invested the money trying to grow that money faster, and instead your emergency fund gets cut in half. So this is why we wanna keep it safe and secure from money that we need to utilize at. Some point in time high yield savings account is the place to go.

Now, if you really, really have to invest your emergency fund, what you could do is have six months of expenses in a high yield savings account. And if you wanted a year long emergency fund, you could invest the second six months of emergency fund if you wanted to do that in something like a taxable brokerage account that you could liquidate very quickly.

So that's the gist of the emergency fund. How to set it up, how to have it in place, how much should you have by financial situation. So the first situation we're gonna talk about is if you are single with no dependents. Meaning if you are single and you have nobody else who depends on you. Maybe you live with some roommates in your apartment, maybe you have your own place and.

It's just you. And a caveat to this is if you have parents in the area or somebody else who could help back you up, if something happened, then maybe you can get away with three months of emergency expenses. If nobody's, depending on your income, if nobody needs your income to be there and you're just renting with roommates or you're just renting a place on your own, you can probably get away with three months expenses if you wanted to.

I personally would never, ever do that. The reason for that is because six months of expenses is a much longer runway than three months. Three months goes by really, really quickly, and if you're trying to find a job, well first maybe you get laid off, you're trying to get over getting laid off for the first week, and you're trying to figure out, okay, how do I go out and find another job?

Then the next couple of weeks, you're starting to send out your resume and sending out all these different things. Then you're going through the interview process. What if none of these interviews land and you have to go through a second round of interviews? And all of a sudden you've hit three months and you are now out of spending and emergency expenses.

This is why I really don't recommend three months almost to anyone ever. Instead, it's gonna fly by. You need that six month runway. At least finding a job is a lot harder than it used to be, especially with how competitive it is in a lot of different markets. So, Number two, if you are a single income family, this is one of the most dangerous financial situations to be in.

If you are a single income family, all of your hedged money, all of your income is hedged into one individual in that family. So say for example, I. The wife works and the husband does not work. He stays at home with the kids. Well, in this situation, you are relying on one income. If you don't have any additional income streams, if you don't have rental properties or something like that, then you are relying on literally one single income.

This is a very dangerous financial situation to be in. I want you to actually think about it that way because if you don't think about it that way and that income gets cut and you don't have an emergency fund in place, Then you're in some trouble, my friends. So you have to have an emergency fund in place in this situation.

So if you have a stay at home parent, nothing wrong with that. I think that's amazing to stay home with your kids, spend time with them. That's the most valuable thing that you will be able to do with them. You'll never regret that. If you stay home with your kids, spend more time with your kids, then what you have to do is ensure that you have at least six months expenses there.

Honestly, I would have nine months. If there's one income alone, you have to give enough runway for that individual to go out and find another job. Now, if you are a stay at home parent and your kids are young, maybe you can figure out like a side hustle to build out within those two to three hours that your kids nap if they still nap.

I. Or maybe you can do something on nights and weekends that will be able to at least bring in an additional income to hedge against this risk just a little bit so that you can have that additional income because that is not a place you want to be in if you don't have an emergency fund. So while you're building up that emergency fund, maybe you can have a side hustle so that you can kind of build out that emergency fund and have that cash in place.

Now a dual income family could have a smaller emergency fund. Why? There's two incomes coming in, and so if one person loses their job, you just need to make up enough money for that one person until they find the next job. So having your emergency fund in place, you can do a number of different things.

You can have three months of expenses for both of your incomes. Or you can have six months of expenses for one person's income. Now the risk to this is what if you both get laid off at the same time? So you gotta make sure that you are protecting yourself for all of these different situations. I see the emergency fund more so as a layoff.

Protection. Whereas the cash buffer, which we talked about in the stairway to wealth, is more so for those quick financial situations that come up. Your car breaks down, your house has an issue, but if your house has a major issue, you still have the emergency fund in place to cover the rest. That's kind of how we think about the cash buffer and the emergency fund.

Now, you can have a fully funded emergency fund and no cash buffer, no problem there. That is a lot of cash to have on hand, but at the same time, I like to have the dual protection just to protect my wealth even more. Now, if you're self-employed, This is the situation where we are going to stretch this emergency fund out way more because you need a longer runway.

'cause if stuff doesn't go right, guess what? We gotta have that runway available to take care of our expenses. In addition, a lot of self-employed people know this, that when you are self-employed, you are going to have a lot of times where income. Is not the same every month. In fact, that's how it always is if you're self-employed.

I've been self-employed for a long time now, and income is never the same. So when you do this, this is something where you're gonna have to have a longer runway of emergency fund. I like for sure, over six months, I like to have at least a year's cash if you're self-employed, maybe even up to 18 months if you want to.

But having that available, In a runway is gonna be really, really important. Now, you could keep this in your business account. If your business account is doing really well, you have a lot of cash coming in, you can maybe just have a bunch of money in your cash checking account there at your business account.

If you don't want to pay the taxes on that money, you could definitely do that and have that runway available there so you don't have to pay taxes on those dollars and pay yourself a massive amount just to get that emergency fund set up. No issues there. In fact, the tax bill will be way higher than what any interest that you would make in a high yield savings count.

So I would. Honestly recommend doing it that way. That's how we do it with our businesses, is we just have a longer cash runway inside that checking or that savings count with whatever you use at your business, and that'll just allow you to have a longer runway. And then this is just gonna give you a better situation for your business, for you, so that you have that runway to solve the problem.

Whatever the problem is, that's going to stop your revenue. You have that cash runway to solve that problem. Now, the last situation I wanna talk about is retirees. Retirees, you need to have. At least one year of cash on hand. But I recommend having more so 18 months to two years of cash on hand. Why do we want to have this cash on hand?

If we're gonna have social security, if we're gonna have money coming in from our portfolio, maybe we got a pension, why should we have so much cash on hand? The reason for that is because once you have this cash on hand, if for example, the market takes a dip, And if the market takes a dip, maybe you don't wanna draw down on your portfolio when it has a 50% reduction because we're gonna have to adjust how much we're withdrawing if we have a major recessionary event.

So if that happens, you can live on the cash for maybe a year or 18 months and allow that portfolio to correct. That's one instance that you can use it. The second instance is maybe, for example, you have a bunch of medical issues or something major really comes up. Having that cash runway is just gonna protect you against life.

Life is gonna happen for the next 30, 40, 50 years, however long it is that you're retired. And you gotta have that protection available in that situation. And if you're worried about this, maybe you're already retired or you're getting close to retirement age, maybe you pick up a side hustle while you are in retirement age.

Now that will be taxable income. But maybe you pick up that side hustle and take that income and just put it towards your wealth protection plan. Just save that money aside so that you have it available to you and you don't have to worry as much in retirement. That's just gonna be a really powerful thing.

Thing for you. It's gonna reduce your stress, reduce your anxiety significantly, and in addition, I would pay off my house mortgage, whatever you're utilizing at that point in time, just so you have peace of mind by that point in time. So these are the situations that we're talking about. Obviously, if you're a dual income family or a single income family with kids, Everything's above six months no matter what.

You need to make sure you're protecting your family and not putting them in a bad situation. So if you have dependents or kids, always, always, always more than six months so that you can have that available at least six months in, or if not more. Now, what about the situation if cash erodes away? Well, cash is going to erode away based on inflation, and that's the price that you pay for having your money.

Emergency fund. Hopefully you have it in a high yield savings account to protect yourself against cash. Inflation has reduced over the course of the last month, for example. At the time recording this. So inflation has been going down over the last couple of months, which is a good sign for some people.

We don't want it to go down way too rapidly 'cause that causes other issues. But it is steadily coming down to a point where we are looking at a better situation if we can actually get it down enough. So this is one where, Looking at that, hopefully you have it in that high yield savings account so you can protect your wealth against all these other things.

So that is how you set it up. Keep it in a high yield savings account. You could also do a CD ladder on the Master Money Newsletter. We are gonna be coming out with the best places to actually keep your emergency fund, including specifics on which banks, things like that. So make sure you're subscribed to the Master Money Newsletter if you are not subscribed to the Master Money Newsletter.

You get smarter with your money in five minutes every single week, this is the best place to actually interact with me as well. So if you respond to me via email, I'm gonna answer you. So when you join the Master Money Newsletter, I ask you a question immediately I say, Hey, what do you wanna hear more content about?

So you can actually give me content suggestions. I read all of those emails. When you gimme those content suggestions, I don't always respond. 'cause sometimes there's no response. Invoked, but I will always read those emails. I read every single one, and I actually keep them all in a folder. And I look at those when we're looking to create new content.

So if you want to have a say in what content we create on this podcast, the Master Money newsletter is the place to be. You can respond directly to that initial email and you'll see, I'll ask you the question in the initial email. What kind of content do you want to see? And in that newsletter we're trying to make it funny and entertaining and a lot of other things.

And we also have a book club in the Master Money newsletter. So when you are in that Master Money newsletter, there is a book club inside where it's called the High Performance Book Club, and I show you what book I'm reading every single week. And so we try to breed a book a week. So if you're looking for the best book recommendations, which that's one of the biggest questions I get.

Master Money Newsletter is a place to go and you can see exactly what I'm reading and read along every single week. So, We're gonna be talking about the best places for your emergency fund. Make sure you check out the Master Money newsletter as we go through this. Now let's jump into the next one. The second question is, can you open a Roth I r a if your spouse does not work?

Now, I love this question 'cause a lot of people don't know about this specific Roth I r a, and I love talking about this because it creates a ton more wealth for families if they actually learn how to use this the correct way. So there is something out there called a spousal Roth, I r a, and if you prefer the i R A, maybe you're a high earner and you wanna get those.

Tax deductions upfront. Then you can use a spousal i r a. But the spousal Roth I r a is actually a Roth i r a, where a working spouse can contribute to a non-working spouse's Roth i r a. So there are a bunch of key things to consider when it comes to this, but this can be a great way to double up your contributions to a Roth I R A.

Why do I love the Roth I R a? Most people know this, but it's because you contribute money. That has already been taxed money. That's just in your paycheck. So you get your paycheck, that money has already been taxed. So you take that money and you just stick it in a Roth i r a, and then you invest those dollars.

And when you invest those dollars inside of the Roth, i r a, remember the Roth I r a is the account. You still have to invest the money once your money goes into the Roth. I r a, most people miss that mistake when they're new investors. So once you have that Roth i r a and you put the money into the Roth i r a, then you invest it in something like an index.

Fund an E T F A stock, whatever you wanna invest in, then over time that money is going to grow. The growth of your money is completely tax free. Now this is incredibly powerful because the tax free growth there is gonna be the majority if you have a long time horizon that you're investing. So if you're investing for 30 plus years, you could have close to a million dollars in tax-free money if you would max out that Roth I r a every year.

This is why it's so powerful to have a Roth ira. You're gonna see how powerful it is in a second, 'cause I'm gonna do a little math for you. We're gonna have a little fun with the math problems here, and so when we go into that Roth I r a, that's how we do that. Then you pull the money out tax free. You don't have to pay taxes on that money, whereas is as your 4 0 1 k.

When you pull that out in retirement, the i r s is gonna say, Hey, This money is income. It needs to get taxed. I need to tax you on this money, so you're gonna have to worry about taxes in something like a 4 0 1 K. Whereas if you're in a Roth I r A, you don't have to worry about that, which is absolutely beautiful.

It doesn't reduce your social security benefits. A lot of cool things there that on the back and a lot of people don't talk about. So here's the first thing, the contribution limits. Here's the rules. The contribution limit for the Roth I R A is $6,500. If you are below the age of 50, if you're above the age of 50, it is $7,000.

So if you're above the age of 50, you can put $7,500 into the Roth I r. A beautiful thing that you can do there. If you're above the age of 50 now, income limits. The Roth I r a has these things called income limits, meaning that if you make above a certain amount of income, you cannot not contribute to Roth I r a.

But wait, we can do a backdoor Roth I r a. So the way a backdoor Roth I r A works is you open a I r A and then you transfer that money I. To the Roth I r a. That's how the high earns can get their money into a Roth I r A. We have an entire episode about the backdoor Roth I r a. If you wanna check that out, we will link it up in the show notes below.

But the income limits at the time recording this are $218,000 If you are married, finally jointly at the time recording this. So a backdoor Roth I r a would be your best bet. You could still get your money in there. Just do it backdoor at this point in time Now. For the spousal I r A election. Here's how this works.

So you can contribute to a spousal I r A on behalf of a spouse who does not have earned income. To do so, you must have enough earned income to cover both contributions. So say for example, you're under the age of 50 and you wanna max out both Roth IRAs, you just have to make more than $13,000 per year.

Most people listening to this podcast make more than $13,000 a year. Who are in the working class outta college, all that kind of stuff. So if you are that person, you can do that. And if you make $13,000 or more, and if you're over the age of 50, then it's $15,000. So you just gotta make that amount or more in order to contribute to it.

And then once you reach age 59 and a half, you can start withdrawing on that money. Completely penalty free. You can always take out your contributions, but you can also withdraw on the gains once you reach age 59 and a half. There's a lot of other ways to get money out of retirement accounts. We're gonna save that for another episode, not this episode, because that is gonna get deep into the weeds if you wanna do that.

But there are other ways to get money out of retirement accounts. Now, the backdoor, like I said, is the best option for those high earners, so definitely, definitely consider that when you go through that process. Now, here's the cool thing. I wanted to show you how powerful this is, because if you only have one Roth i r a, say for example, you max it out over the course of 35 years, but you only have one Roth i r a, and you get a 10% rate of return, which historically the s and p 500 has gotten more than that, but we are just gonna say a 10% rate of return.

And sure, you can adjust down for inflation, do all those different things. You do whatever you want to do. But we're using a 10% rate of return. For this calculation. So if we calculate this at a 10% rate of return over the course of 35 years inside of your Roth ira, you're gonna have $2.67 million. So this is something where, wow, that's really, really powerful for somebody to be able to do, and a lot of that money's gonna be tax free.

In fact, the majority of that is gonna be tax free. But let's say you opened two Roth IRAs, so say you have one for you and one for your spouse. Well, if you did that, if you opened a second Roth I r a for your spouse, All of a sudden, your retirement went from $2.67 million to $5.34 million. This is the power of having two Roth IRAs and contributing an additional $6,500 per year if you got that 10% rate of return.

That is why it is so incredibly amazing to. Max out as much money as you possibly can into these Roth IRAs. Now to contribute to a spousal Roth I R a, one caveat is that you have to file your taxes married, filing jointly, and if you don't do that, you can switch it up for the next year so that you can contribute to a spousal Roth ira.

But that is what you have to do. You can talk to your tax professional if you want to be interested in your personal situation. So that is one key. Now another question a lot of people have is, does the money in my spousal i r a belong to me or my partner? So once the money has been contributed to a spousal i r A, it belongs to the owner whose name is on the account.

So say for example, something terrible happens, you have a separation or a divorce. If you in that situation that happens, then the. Spousal I R A goes to the non-working spouse. It does not go to the working spouse, it goes the non-working spouse because the spousal i r A is in their names. So here's the key takeaways, is the spousal i r a is a type of savings account that allows the spouse to contribute to an individual retirement account or an i r A in the name of a non-working spouse, usually to contribute to a Roth I r A.

The spouse has to have earned income, but with a spousal. I r a, you do not have to have earned income and the working spouse can contribute to both Roth IRAs or IRAs depending on which one you open. And other than how they are funded, the spousal IRAs literally have the same exact rules as the Roth I r a.

So that is the gist of it. Hope you guys do this. If you have situations where you only have one specific income in the family, and if you do this, I'd let me know. I'd love to hear how you're building wealth for you and your family. Uh, I think it's a really exciting thing to do and I'm really, really excited for a lot of you guys to learn about that.

The next question. So I was wondering why some index funds have fees at all? What is the benefit of putting money into an index fund with fees when there are tons of index funds that have no fees? So this is a great question and it is one that I could do an entire episode on, but we'll do a quick breakdown here.

Maybe we'll do a full episode later. If you like what I'm talking about here, let me know on Instagram at Master Money Co or Twitter or TikTok, and we will do a full episode. But I'm gonna give you an example because the most popular Zero. Fee funds are the Fidelity funds. And so they were the first ones to do this.

And so we'll kind of talk about these zero fee funds and the differential between them. So there's a lot of different reasons on why you potentially would want to go with a zero fee fund instead, or why you'd want to go with a fee fund instead of a zero fee fund. And right now, because zero fee funds are new, some of those reasons are.

A track record, so track record comes into play for me. Vanguard, historically has had the longest track record for a lot of different index funds. That's why I like Vanguard funds so much because they have that really, really long track record. And so I can see historically what these bad boys have been doing over the course of a long period of time.

Also, they have larger fund sizes, and obviously with these larger quantities of fund sizes, a lot of times it just brings in a little extra comfort a little. De-risks the portfolio a little bit and allows you to have a couple of extra things. This also gives you additional access and customer service, and it tracks a specific index.

So if an investor wanted to track a specific index, and we'll talk about what I mean by that in here in a second, then there may be no zero fee option available. So what do I mean by specific indexes? Well, if you look at Fidelity says zero fee funds, for example, the catch is that. Fidelity has what they call proprietary index funds.

And so what this is, is, say for example, you wanna buy an s and p 500 index fund. Well, the Fidelity Zero Fund is not actually tracking the s and p, it's tracking its own proprietary index fund. This is one of the reasons why they can offer 0% fees 'cause, because they have to pay a fee if they wanna track the s and p 500 to get that name.

Onto their fund. The s and p 500 is an index, so if they wanna get that name onto their fund, then they have to actually pay a fee to do so. That's part of the percentage of fees that you would pay on something like a Vanguard SS and P 500 Index Fund. Also, if you wanna reduce the fees, for example, then you can look at something like the E T F.

A lot of times the Vanguard Index Funds might have a little bit of higher fees than the ETFs do. In fact, Last time I looked, the s and p 500 Index Fund had a 0.04% fee if you're looking at something like the Admiral Shares. But the E T F had a 0.03% expense ratio, and in some situations, depending on what you're looking at, 0.02% expense ratio on the Vanguard side.

So Fidelity does have these zero fee funds. It's just you don't have as long of a track record because these Fidelity funds have not been long around for longer than 10 years. So your track record is much smaller when it comes to some of these Fidelity funds. So over the long term, this could be a great option and you may say, Hey, the fee differential is something to really, really worry about.

But in reality, It's 0.04% for a longer track record that actually tracks the s and p 500 and is spot on. Now, this is nothing to say. These zero fee funds that have these proprietary indexes are wrong because I still own some of 'em. I own F Z R O X, for example, at Fidelity, which is their. Total stock market zero fee fund.

And so that one is one that I have owned for since they've started it. And so it's not something that I would avoid completely, but for me, I like Vanguard funds the most. And the reason why I like Vanguard Funds the most is because they have that long track record and they have a lot more investors who have been in those funds for a long period of time.

It just reduces the risk a little bit for me. And there's a lot of simulations and models that have been run with Vanguard funds that have not been run as much for things like Fidelity funds. So that is the reason for that. If. Index Fund Pro members. We're actually gonna make a video on this if you're in Index Fund Pro.

Well, we'll talk a little bit more about this. So if you wanna check out Index Fund Pro, you definitely, definitely can. Index Fund Pro is our investing for beginner's course. It teaches you how to invest in index funds and ETFs. We talk about some of the stuff we talk about just now. If that sounds like Spanish to you, you have no idea what I'm talking about.

That is exactly, uh, what we talk about here. So that is another piece of this as we put this all together. So those are some of the reasons. It's just track record. It is the fact that they actually track the real index, which is the real reason for me. And it's the fact that if you trust the brokerage house, and I trust Vanguard, I trust Fidelity as well.

Currently. You know who I don't trust Robinhood. But anyways, that's one where, where it all comes together. So that's exactly why. Let's jump to the next question. Alright, last question, and I actually get this question a lot, and really this comes back to the Stairway to Wealth, which we talk about here. So they said, so I've literally watched all the podcasts and I still can't figure out what to do.

Should I start my 4 0 1 k Roth I r a, or just invest through Vanguard and Fidelity straight up in a taxable brokerage account into the s and p or both? Or all three. Thank you so much. So we have a program that's completely free called The Stairway to Wealth, and you can download it at master money.co/resources.

The Stairway to Wealth, and the reason why it's called the Stairway to Wealth. It is literally step by step exactly what to do with your money. In the Stairway to Wealth. We start off how to handle your finances, all these different things. Then we go into the investing portion. Once you're ready for that, once you get the front end done, then we go into the investing portion.

So there's. Phases to this thing, there's levels to this bad boy. And so what we're doing here with the Stairway to Wealth is literally giving you a step-by-step guide. 'cause what I found out early on is that people want that step-by-step guide. Now the Stairway to Wealth pulls from so many different sources that I learned from very early on.

Sources like Ramit sat, who has the Wealth Ladder of creation. There's sources like The Money Guy Show who has some great stuff on their financial order of operations. The Stairway to Wealth. It pulls from so many different places. There's Dave Ramsey in his baby steps. So there's a lot of different places that I actually pulled this from to actually compile this all together.

And as time goes on, I try to make it better and better. We're actually coming out with a 3.0 version and potentially doing some other cool stuff with the Stairway to Wealth, which I can't really talk about yet, but I'm excited to talk about later. And so once we have this all put together, we are gonna continually make this better.

That's my promise to you, is that we will continually make the stairway to wealth better. And so once we go through this, I want to. Show you exactly how you can actually put this together. But when it comes to investing, we have an investor's checklist, and in Index Fund Pro, you can actually get this investor's checklist that goes deeper than what I'm about to talk about now.

But the Investor's Checklist is part of Index Fund Pro. So if you want that checkout Index Fund Pro. But inside of this, here's the order because you're looking at three different things here. So number one is your 4 0 1 K match. You wanna get the 4 0 1 K match first because it is completely free money.

If your employer does not offer a 4 0 1 K match, skip the step. So if you can't get one of these things, skip the step number two is the Roth I r a. So you mentioned the Roth I R a. I would go Roth I r a next, especially if your adjusted gross income or a G I is below that, like 32% range, roughly there. If it's above 32%, you need to talk to a C P A.

To figure out exactly what you should do based on your financial situation, what your standard deduction is. A lot of different things factor into that. But if it's below that 32% a G I, which most of you most likely are, then I would definitely look at the Roth I R A first, or the Roth 4 0 1 K, which is my.

Favorite account, 22,500 bucks per year into a Roth I r a Woowee. That really, really gets me excited over here. Uh, and then last we have the 4 0 1 K or if you are into rental properties. Rental properties is your thing. You could do it at that 4 0 1 K level. You can get those rental properties at that 4 0 1 K level, just max out that Roth first, and then go into rentals.

That's what I did early on. And then decided, oh, I wanna do both once I started to increase my income. And then lastly, once you do all those, then you can go taxable brokerage or rentals. If you'd prefer to do the 4 0 1 K first, then you can go taxable brokerage after that, or other wealth accelerators if you want to.

Also. So a lot of options here as we. Go in tandem with a lot of these pieces here. But that's the order for this situation that I would consider do some more research on. Obviously, it's not specific financial advice, I'm just talking about what I would do in that situation. So you can do more research on that.

See if that's the best option for you. Talk to your C P A, talk to your other folks who are on your financial team. Now, listen, I hope you guys learned a ton in this episode. Really, really ex. Excited for you guys to hear this one. If you guys have any questions, make sure to hit me up on Instagram, TikTok, Twitter at Master Money Co.

Make sure you sign up for the newsletter. Also, the Master Money newsletter. We want to grow that newsletter and give you as much value as possible in that newsletter. So there's some cool things we may do in there. Freebies, all kinds of stuff. Maybe a group coaching call for people who are actually subscribing to the newsletter.

So really, really excited for that. And. If you guys get value outta the show, share it with your family, share it with your friends. That is the most valuable thing that you can do for them is teach them and give them a financial education. Listen, thank you guys so much for investing in yourself because that's what you're doing when you listen to this podcast, is you are investing in yourself.

I truly appreciate each and every single one of you listening, and I will see you on the next episode.

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