How Can I Know If I'm Saving Enough?

"​​Even though I'm maxing out my 401(k) at work I don't feel like I'm saving enough. How do you deal with this feeling?" We'll walk you through that question and more in today's Q&A episode! Jump start your journey with our FREE financial resources Reach your goals faster with our products Take the relationship to the next level: become a client Subscribe on YouTube for early access and go beyond the podcast Connect with us on social media for more content Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:06Speaker 00

  Military Money Minute has a question for you. It says, "Super excited for the show. Dumb question."

• 0:13Speaker 01

  No dumb questions.

• 0:14Speaker 00

  Right, that's what I thought. That's why I'm asking it. "Even though I'm maxing out my 401(k) at work, I don't feel like I'm saving enough. How do you deal with this feeling?"

• 0:25Speaker 01

  This is, Bron, we've talked a lot about this. A lot of financial mutants have this, I don't know if it's insecurity or lack of confidence. "I'm not doing enough. I'm not saving enough. I'm not, I'm not, I'm not, I'm not." It's one of the very reasons why we came up with the Financial Order of Operations. Bron, will you hold the thing up? Can you hold the thing up for me?

• 0:46Brian Preston?

  Oh, yeah. I can do it.

• 0:48Speaker 01

  It's one of the reasons we came up with this nine-step tried and true process of what to do with your next dollar. If you want your free copy, you can go to moneyguy.com/resources and download yours. One of the reasons that we did that is we wanted to free financial mutants from that thought, "Oh, am I doing enough? Oh, am I putting my money in the right places? Oh, I'm making the right decisions?" If you can follow the Financial Order of Operations and you can arrive at the place where you're saving 25% of your gross income for the future, for your future financially independent self, what that allows you to then do is free yourself from the guilt and the lack of confidence in "am I doing enough?" It's why we came up with the 25%.

• 1:32Speaker 01

  A lot of people think it's this restrictive thing that's going to make it difficult and hard and I've got to strive to get there. It's actually the exact opposite for true financial mutants. It is a liberating thing. Once I get that, then I can spend abundantly on all the stuff that I want to spend on and all the areas that I want to spend because I know that I'm doing what I'm supposed to be doing in the places I'm supposed to be doing it for my future self. So, one of the things I would ask Military Money Minute is, all right, if you're maxing out your 401(k), what's your gross income? And are you at 25%? And have you been following the FUE? And do you have a fully funded emergency fund? And have you done the Roth? And have you done the HSA? And have you done all of these things? And if you have, then you can...

• 2:18Speaker 01

  You can relax and know that you're doing the stuff that you're supposed to be doing.

• 2:22Brian Preston?

  I think about all the content that's out there in personal finance. You know, forever, Suzy had tremendous successes that people would call in and say, hey, I want to get my, my hurt dog needs to have their leg, you know, fixed. And she'd be like, no.

• 2:38Speaker 01

  No, no.

• 2:39Brian Preston?

  Put them down, you know, you know, hey, I haven't taken the kids on vacation in six years. Can I take the kids and lose Suzy? No, you know, I think truthfully, this is why as humans, we are, we, sometimes I love the human condition, but there's other times you're like, man, sometimes we just like watching negative events occur in place. And that's where those shows, and even Dave, I think a lot of times people, it's kind of like going to a NASCAR event, there's more people listening to Dave to hear, when is he gonna yell at somebody?

• 3:08Speaker 01

  That's right.

• 3:08Brian Preston?

  Kind of like you go to watch and see if there's going to be.

• 3:11Speaker 01

  You don't go for the left turn.

• 3:13Brian Preston?

  Or maybe a hockey match where you're hoping there's a fight, you know, I think, I think it's the spectacle of those things that draws people in. And then here, here we are, we're kind of loading you up with all this, you know, financial mutant knowledge, but there is a true risk that I deal with all the time is that anybody who's good with money, and you realize pretty quickly after you start learning the basics, that you have a risk within yourself is that you could very easily go from financial mutant to financial miser. That's a disaster because it's going to make your loved ones around you miserable. You're going to miss out on a lot of life by thinking that this sum of money that's waiting out there at some point in the future is going to solve all your problems. And that's why we've tried to, and people think,

• 3:58Brian Preston?

  why did y'all come up with this? Why are you selling this? And like, because we give away so much. And I think you guys get used to everything being free, but then every now and then like, no, we can't answer this because finance really is personal. We need to give people a tool so they can figure out, are they ahead of the curve, behind the curve, or right where they're supposed to be. So that's why we came up with the Know Your Number course. It's not only a course, it's actually a tool. So you can actually type in all your data points. You can play around with your savings. Rate, the inflation rate, your rate of return. And it's going to tell you, hey, are you on track to reach your goals? Are you behind? Because one of my favorite things about being a financial planner, I think a lot of people get it wrong. And they get this false impression by the Susies, the Davs of the world. And that they think everything we do is that we are the break.

• 4:43Speaker 01

  Just the no, no, no.

• 4:44Brian Preston?

  We are not the break. My biggest thing is to try to train financial mutants to enjoy and maximize this one life that you have. Now, look, I don't mind being the bad guy when I need to be the bad guy. But most of the time I'm the coach telling you, hey, it's A okay. Go live your best life because that's what our secret sauce is. I'm a numbers nerd, but I am the most sentimental person out there on the future. And I'm trying to help you get that perfect mix, that recipe that lets you get to be your older self and look back at your twenties, your thirties and forties and go, man, I did that right. And yet I still have reached all my financial goals. And that's what we're building here with the Money Guy Show.

• 5:27Speaker 01

  That's great.

• 5:27Speaker 00

  Awesome. Great question. Thank you, Military Money Minute. And we are always appreciative of everybody being here and continuing to ask great questions. Jack W. has another question for you guys. He says, I'm 18. Headed to.

• 5:41Speaker 01

  Hey, good for you for tuning in.

• 5:43Brian Preston?

  That is, when I look at our demos, you know, we do great. From 25 to about 45, we are locked in.

• 5:51Speaker 00

  Sweet spot, yeah.

• 5:52Brian Preston?

  You know, and we never have to worry when all the kiddos get brought in and they say, hey, is your content? Because we have to make sure, Jack, you are an outlier and that you're going to be the better for it. Because let me tell you, I don't even do it. Yeah, I do have it. 18. Every dollar an 18 year old has is worth $108. Wowzer.

• 6:13Speaker 00

  So, speaking of that, the question says, I'm headed to college and wondering, what's the best thing to do with my money, investing wise? School is paid for, which is awesome. Congrats. And I do have minimal expenses. So, we've got a young and true financial mutant on our hands right here. What would you tell him about investing while in college and personal finance in general?

• 6:38Speaker 01

  I'm gonna go theoretical and behavioral and you can go specifics if you want. Here's what I think is the best thing you can do at 18. One, the entire world is your ocean, you have your entire life ahead of you, which means you have so much opportunity to unleash the eighth wonder of the world, which is compounding interest. And so what's great at the age of 18 is you kinda can't screw it up unless you don't do anything. And so what I would encourage you to do is if you have minimal expenses and you have some sort of income coming in, maybe it's part-time work, maybe it's even excess scholarship or grant money, because you said school is paid for. One of the things I would encourage you to do is figure out, how can I set up an automated investing plan?

• 7:23Speaker 01

  Maybe it's 20 bucks a month, 40 bucks a month, 50, 100, whatever the number is for you, start with something. And I don't mean like take a thousand dollars and go pick a stock and buy that stock today and hope that it does well, because that's like a 50/50 gamble. Maybe you pick a good stock, maybe you don't pick a good stock. What I want you to do is I want you to put some money to work every single month. And you can buy a low-cost target retirement index fund or a low-cost S&P 500 index fund. And every single month, have the same dollar amount. Just go to work and invest 50 bucks a month, 50 bucks a month, 50 bucks a month, 50 bucks a month. Because what I hope happens is as you go to college at 18 and you go through, let's say you're gonna be at school for four years, and you get to age 22 and you come out of school,

• 8:09Speaker 01

  I want you to look at that account that you've been dollar-cost averaging into. And I want your mind to be blown at what's happened just over a short four-year timeline. How much those dollars have grown. And what I hope happens is that you get addicted to saving. So when you start your very first job, now it's not, okay, I'm only gonna do 100 bucks a month. I'm gonna do 5% of my pay, 10% of my pay, all the way up to 25% of my pay. And if you can do that as early as possible, you are gonna set your future self up to have tons of flexibility and tons of choices on what your life is gonna look like in the future.

• 8:46Brian Preston?

  Jack, especially I love when a young person catches our content, because I'm gonna go even outside of money here.

• 8:54Brian Preston?

  Because you're getting close to going to college. Be very serious about...

• 9:00Brian Preston?

  Being deliberate on not just choosing a job, but a career that you want to do for the rest of your life that actually can be rewarding. I think so many students, when I talk to them and I say, what's your major going to be? And I find out they don't really know. They choose something that sounds interesting, but they haven't thought about what am I actually going to do with that, that major? Don't go because a class will be just interesting to you. I remember when I was at Georgia.

• 9:24Speaker 01

  Five assistant.

• 9:25Brian Preston?

  Well, I had an extra class because I'd exempted out some math classes. So they let me just choose anything and was it entomology is study of bugs.

• 9:35Speaker 01

  Okay, yeah.

• 9:36Brian Preston?

  I was like, this is the most interesting class that I've ever taken. And I loved every day that I was in that class. And look, I'm sure there's some very successful bug doctors or bug studiers. But if I would have chosen my choice of career off of what I found exciting on class load, that was a heck of a lot more fun to go to that class than it was accounting.

• 9:56Speaker 01

  You mean governmental accounting and studying bugs are not the same?

• 9:59Brian Preston?

  Completely different. But that's why, Jack, you have to be purposeful with every second that you have, especially on a college campus, because it's not cheap. I mean, I will tell you, you need to be deliberate with your time on campus. So find a job that can be rewarding, but also has a market value.

• 10:16Speaker 01

  What percentage of the general population ends up going to school and not, not even working in the field?

• 10:20Brian Preston?

  So let me give you, because I love this stat and I love how just symmetrical it's come up in our last two surveys of our clients. 74% of people with college degrees do not work in their field of study. That is an absolute dumpster fire of decision making. Meanwhile, you look at our millionaire clients, we survey them. It's somewhere, but it comes between 72 and 74% depending on what year you look at our survey results, do work in their field of study. Do you see how you allocate, part of being successful is allocating your time and your resources much more efficiently than the rest of your peers? So get a good job. Second thing, you are a billionaire of time. That's right. You might not have much money, but you have so much time.

• 11:04Brian Preston?

  You're literally a billionaire. If you count how many seconds you still have left to be on this planet. Don't waste that huge opportunity. People you're looking ahead of you like who are in their 30s, 40s, even 50s, and you know, man, I hope I have that. You could have that, but they will never be able to have what you have, which is billions of seconds of time. Be very deliberate with that. I want you, everything that you come into contact with, whether it comes with money or time, I want you to think about, just like I tell you, a dollar has the potential to become 108 dollars. If you can understand that concept, you'll spend differently, you'll save differently, you'll give differently because you understand what it's worth. And then I'm going to give you

• 11:49Brian Preston?

  the other side, which is a little softer. Once you put some of these things into motion, and that's why we give you the financial order of operations, make sure you enjoy your 20s. Make sure, well, enjoy your teens, and then enjoy your 20s, and then enjoy your 30s, because nobody likes a miser, but you've got to get the work in first, so then you can live your best life without regrets.

• 12:12Speaker 01

  Favorite date night or favorite activity to do in college on a budget, like not having tons of money? What was the thing that young Brian Preston said, now this is a good time, I would go do this when I was in college?

• 12:26Brian Preston?

  Oh, it's different. Like, date nights, I don't mind sharing. Here was the game plan for a financial mutant. I would actually spend money on the first two dates because you had to set the hook. And then, but then after that, you know, it was cook at the house, go hang out with friends, do trivia nights and things like that. But you got to set the hook first, you know, and actually take them to someplace.

• 12:47Speaker 01

  Take them out somewhere nice, take them to Olive Garden, Lock and Dab.

• 12:49Brian Preston?

  But with buddies, I mean, you could, I use, some of my favorite memories, I even go back to high school, is sometimes driving to things, like go to a concert or something. The time in the car, you have five guys piled into a car, and you're just goofing off on the way to a concert. The driving to the concert in the car was more fun than actually the concert. And that's what, so just make sure, get around people you love spending time with, and then just enjoy that moment. Because I will tell you, as an older guy, I look back on my life, and you don't realize those lightning in a bottle moments that you take for granted in the moment, and then you get, you know, 20, 30 years beyond it, and those people aren't around, maybe they live geographically in different places. And you go, man, make sure you find people you care about, and try to get as much time with them as possible.

• 13:35Brian Preston?

  I love that. Oh, I love that. Jack, you're gonna do so good.

• 13:39Speaker 00

  Oh, yeah. Jack W., really glad you're here. Thanks for submitting the question. All right, we've got a question from David L. He says, "How should you save for a home? Using a high-yield savings account or a brokerage account with index funds? I'm curious what time horizon would make it safe enough to expect the higher returns from index investing? What do you think?"

• 14:04Speaker 01

  So this is, one, we get asked this question all the time as well, and I think a lot of people are curious. Now, I can tell that David's been listening to our content because he kinda already set the table a little bit. When it comes time to save for a home, first question you have to answer is, "How much do I need to be saving?" Right? A lot of financial personalities out there will tell you that when you buy a home, you must put down 20%. That is not something that we subscribe to, nor is that something that we have practiced ourselves in our own financial journey. For first-time homebuyers, we give you a little flexibility. Rather than having to put down 20%, we think it's perfectly acceptable if you only are able to put down 3.5%, 5%, 10% on your first home purchase. We have an entire

• 14:48Speaker 01

  home buying checklist that you can go check out. You can go to moneyguy.com/resources and check that out. But you have to define, okay, number one, how much money do I need to save? And then the second thing you have to determine is, all right, what's the timeline on which I need to acquire these funds? Am I buying a home in the next 2, 3, 4 years? Or do I not know when I'm gonna buy my home? I just have like this idea that one day I want to enter into homeownership? Because depending on those two answers will dictate how you should begin thinking about accumulating those.

• 15:22Brian Preston?

  Well, always, you know, look, cash versus access to cash. I mean, if you really want to know how I think about this, guys, I literally gave you the end-up story in Millionaire Mission on how I think is the biggest thing I run into with financial mutants is you guys think cash is trash and you do everything in your power to try to put it to work to Actually, your detriment when the music stops of bad things. Remember when it rains, it pours when bad things happen. So learn from me, read the section on Millionaire Mission. It's really when we talk about doing rainy day done right with cash reserves. You're going to hear what a knucklehead I was because I thought I was so smart and you can learn from my experience.

• 16:06Brian Preston?

  I would also give you a visual. If something is a solid vision, meaning that it is in the future and you know in the next three years that you're going to do something, that's liquid cash. I mean, because there's just, there's just nothing that, because you know it's coming up. There's always a chance that there's going to be a volatile moment if you have equity investment, especially S and P 500. You could lose 40% in about a five month period and you'd be like, what the heck just happened? And you couldn't even react fast enough, even you wouldn't want to react because you know, nobody tries to catch a falling knife. It's a disaster. So that's what can happen if you know something's happening in three years. However, maybe you're just in this stage of life and this is something you and I are now at this point.

• 16:50Brian Preston?

  Like we have this commercial building and you and I have enjoyed this commercial building and we've decided, hey, we might want to do another commercial building, but we don't know. We're really waiting for the right time, the right opportunity, the right thing to come our way. So that's not a clear picture. That's a fuzzy picture and there's no timeframe. It might be three years, it might be four years, it might be seven years in the future because there might need to be a big economic thing to happen for this to be good for us. Because that's so fuzzy, I am going to treat that as more of an opportunity to where maybe I'm going to have a balance of a, hey, I need, I know I have enough coming up, plus I need emergency reserves. So this part here is going to stay in a high yield savings account because it's locked in.

• 17:32Brian Preston?

  But maybe this part over here, because it's so fuzzy, I'm going to allocate a portion of this into investments so that money can actually grow and not just be sitting out there stagnant. So I would say, Take a picture of what you're looking at and how clear is it? If it's within three years, lock it down. If it's out there more in the future, it's going to be more of a balanced of probably a mix of cash plus investments.

• 17:56Speaker 01

  Agree, fully.

• 17:57Speaker 00

  That was great. Well, David L, I hope that that helps you think through that. Great question. We really appreciate you being here. We love hearing what's going on in your financial lives so that we can speak to it and hopefully just help you think through it and discuss it and bring a little bit more, helping you bring a little bit more peace of mind to your financial situation. What?

• 18:19Brian Preston?

  I said clarity. I was trying to stay on the whole theme.

• 18:21Speaker 01

  Y'all finish each other's sandwiches. You see that?

• 18:24Speaker 00

  So cute. Love it, love it, love it. Well, hey, we do really love answering these questions. We're here every Tuesday, 10 a.m. Central. But in the meantime, or over the holidays, if you ever need to keep these questions going, keep these conversations going, head to moneyguy.com. Moneyguy.com/resources, in particular, is just chock full of free resources that are meant to be there for you when you need it, so you can do a little bit of a deeper dive on some of these things that we're talking about, or just have it documented, so you can be reminded of it more often than just on our Tuesday live streams or podcasts and all of that. So be sure to head to moneyguy.com. We're really grateful you're here.

• 19:01Brian Preston?

  Guys, we love doing this, and a big thank you to you guys. You know, I even missed a key part earlier when I was talking about Jody did the studio tour. She made my day when she said she was looking more forward to meeting me than going to the Post Malone concert. So you can tell, us financial mutants, you guys are wired a little differently. And we don't take it for granted, and we love every moment that we get to create this type of content and give you all this information that we load you up with if you go to moneyguy.com/resources. And remember, what sits underneath all of this is that there's a better way to do money. So respect the foo. I'm your host, Brian Preston. Mr. Bo Hanson.

• 19:45Brian Preston?

  Money Guy team, out.

• 19:47Speaker 03

  The Money Guy Show is hosted by Brian Preston. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities laws and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guy Show. The information provided is for informational purposes only and does not constitute financial, tax, investment, or legal advice.