Am I Managing My Money Wrong? - Make it Make Cents Listener Questions!

You can have $100,000 sitting in savings and be terrified to invest it. You can make $200,000 a year and still feel trapped by your paycheck. And you can have $1 million saved for retirement and wonder whether you really need to keep saving so much. In this episode of She’s Talkin’ Money, we’re doing something a little different: a full episode of Make It Make Cents, where I answer the real money questions women are asking when they’re doing well financially but still aren’t sure what to do next. First, we’re talking about what to do when you have a large amount of cash sitting in savings but you’re scared to invest it. We’ll look at the risk of investing versus the risk of staying in cash, why your time horizon matters, and whether gradually investing the money could help you finally get started. Then we’re tackling a question I hear from successful women all the time: “I make really good money, so why do I still feel financially trapped?” One listener is considering taking an $80,000 pay cut for a job she thinks she’d actually enjoy. We’ll talk about how to figure out whether you can afford a lower salary, what financial freedom actually means, and how to build a plan to leave a high-paying job instead of feeling stuck indefinitely. Finally, we’re talking about what happens when you’ve spent years being a great saver and start wondering whether you can finally enjoy more of your money. If you’ve already accumulated significant retirement savings, do you really need to keep saving at the same aggressive pace forever? Or could some of that money start funding the life you want right now? Because doing well financially doesn’t automatically mean you know what to do next. The goal isn’t simply to accumulate the biggest account balance possible. It’s to understand what your money can actually do for you — and make decisions that support the life you want. Have a money question you want me to answer on a future Make It Make Cents episode? Send me a DM on Instagram @shestalkinmoney. Your question can be anonymous, and you don’t need to include any identifying financial details. https://www.instagram.com/shestalkinmoney/ If you’re ready for personalized, judgment-free financial guidance, learn more about working with Shari. Shari Rash is the founder of GWA Wealth, a virtual advisory firm helping women make confident, values-aligned decisions with their money. Visit https://www.gwawealth.com/ Learn more about your ad choices. Visit megaphone.fm/adchoices

• 0:01Speaker 00

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• 1:27Speaker 03

  You can have $100,000 sitting in savings and be terrified to invest it. You can make $200,000 a year and still feel completely trapped by your paycheck. And you can have a million dollars saved for retirement and wonder whether you really need to keep saving so much. Here's what I find interesting about all three of these situations. These women are doing well financially. They've worked hard, they've accumulated money, and they're making decisions that on paper look pretty responsible. But they're still questioning whether they're doing the right thing. And that's what we're getting into today. We're doing something a little different with a full episode of Make It Make Sense,

• 2:12Speaker 03

  where I answer the money questions women are thinking about, but don't always know who to ask. And I've got three situations today that I think a lot of you are going to relate to. We're talking about investing when you're afraid of losing money, whether you can afford to leave a high-paying job, and when you've saved enough to actually start enjoying more of your money. And we're going to get into the numbers because sometimes the answer isn't that you just need to save more.

• 2:50Speaker 03

  I'm Shari, 20 years in personal finance, founder of GWA Wealth, and deeply invested in helping women actually understand their money. I've seen firsthand how often women are given bad, generic, one-size-fits-all financial advice. This is She's Talkin Money, the money podcast for women who make good money but want more. Okay, so let's start with Lauren. She's 42 years old. She's accumulated a pretty substantial amount of cash. Here's her question. Shari, I have about $100,000 sitting in a high-yield savings account, and I know I probably should be doing something else with it. I already have an emergency fund.

• 3:34Speaker 03

  I'm contributing to my 401K, and I really don't need this money for anything in the next 10 years. But honestly, I'm terrified of putting it into the stock market and then watching it drop. I worked really hard to save this money, and the thought of losing a big chunk of it makes me sick. Am I making a mistake by keeping it in savings? And if I should invest it, how do I get over the fear of losing it? I, I think this is a great question, Lauren. It's so real. And I think it's a position a lot of us have been in at one point of, I worked really hard to save this money.

• 4:15Speaker 03

  I cannot stomach losing any of it in like a blink of an eye. So the first question I would ask is, what is this money actually for? So Lauren, what are you planning to use this money for? Before we decide where the money should go, we need to know what it's supposed to accomplish. So are you saving for a renovation, a second home, college expenses, something coming up in the next few years? In this case, she's telling us she has a separate emergency fund and doesn't anticipate needing the money, the $100,000, for at least 10 years. That changes the conversation. Money that needs to be available in the next year

• 4:59Speaker 03

  has a very different job and a different allocation than money that can stay invested for 10 or 15 years. There is a risk of investing versus the risk of staying in cash. So Lauren is worried about her $100,000 turning into $70,000. That's a legitimate concern. Markets decline, and sometimes they decline significantly. But there's another risk she needs to consider. What happens if she leaves that $100,000 sitting in savings for the next 10 years? At a hypothetical 3.5% interest rate that high-yield savings accounts are giving us on average right now,

• 5:44Speaker 03

  $100,000 would grow to approximately $141,000 over 10 years before taxes. Which, that doesn't sound half bad, right? Oh, $141,000, just keeping my money just sitting there? But we need to consider inflation and the possibility that savings account interest can decline. Inflation is the purchasing power of your money. So even if it's worth $141,000 in 10 years, that does not mean you're going to have $141,000 worth of purchasing power 10 years from now. With, we hear about inflation and inflation keeps going up,

• 6:28Speaker 03

  $141,000 does not equal $141,000 when it comes to 10 years from now, what your money can purchase. So you're actually probably breaking even or maybe even losing slightly as far as purchasing power goes with that 3.5 interest rate in comparison to inflation. So now let's compare this with a hypothetical 7% annual investment return. So over 10 years, that same $100,000 would grow to approximately $197,000 before taxes and fees. That's a roughly $56,000 difference

• 7:09Speaker 03

  just from investing at that 7% hypothetical rate of return. But of course, 7% is not guaranteed. She could earn more, less, or experience losses, especially right in the beginning of opening up this investment account, which would not be a fun experience for her. But her savings rate isn't guaranteed to stay at 3.5% either. And the point of this is not that she should chase a particular return. We're not going to be savings account hopping, right, to grab that extra 10 basis points, 0.1% of a interest rate that the, that the bank is giving. It's that, the point is that avoiding market volatility

• 7:53Speaker 03

  doesn't mean she's avoiding every financial risk. She's just thinking about the risk that she's most concerned about, which is market risk. But as a planner, I need to think about all the risks. Inflation risk obviously being a big one. So what happens when the market drops? Historically, the stock market has experienced significant downturns and has recovered. Research from Russell Investments examining the S&P 500 declines of at least 15% between 1976 and 2022 found an average decline of approximately 30%

• 8:35Speaker 03

  followed by an average return of approximately 39% during the 12 months after the market bottom. So what this is saying is, when there's a decline, there's generally a return to answer it. And that does not mean every downturn recovers in one year. And it also doesn't tell us when the bottom will occur. But it helps explain why trying to wait until investing feels completely safe can keep people on the sidelines for years. So let's say Lauren decides she wants to invest, and then boom, the market declines.

• 9:19Speaker 03

  And we have day after day of declines. And Lauren just goes, well, I'm going to wait till we're done declining until I'm going to invest again because I don't want to invest than risk losing money. Well, the problem is we never know when the market is done. And then what happens? The market recovers. And then you're like, well, is, when should I get in now? The market's recovering. So then you might be buying in at a higher price point. So we don't want to try to time the market. We don't want to wait until the market's at its bottom or what we think is its bottom to start investing again because we never know when that bottom is going to be. We could decide we're going to get in,

• 10:03Speaker 03

  and then the next day it rebounds and it's at a higher price. So here's what I'd consider for someone like Lauren. Instead of investing the entire $100,000 tomorrow, you could gradually invest it over the next four to six months. For example, $25,000 a month for four months. That's dollar cost averaging. Now, I will say historically, investing a lump sum has, has outperformed gradually investing the same amount approximately two-thirds of the time in Vanguard's research. So generally speaking, you are better off just dumping the whole thing in.

• 10:46Speaker 03

  But I'm still suggesting to consider dollar cost averaging. Why? Because Lauren's biggest problem isn't that she doesn't know how to invest. It's that she's afraid to start. Dollar cost averaging can help make, make her become comfortable with the process. It gives a plan instead of requiring one enormous decision. Dollar cost averaging does not protect Lauren from market losses, but it may help her actually get the money invested. But I'd also pay close attention to what she's investing in. If Lauren's telling me she would panic if her account dropped 30%,

• 11:27Speaker 03

  I'm not automatically recommending an aggressive all-stock portfolio. I'd consider a diversified, moderately conservative allocation based on her circumstances and risk tolerance. Investing doesn't mean you're going 100% equity.

• 11:46Speaker 03

  And also, investing isn't just about how much risk someone can mathematically afford to take. It's also about how much risk she can emotionally tolerate without abandoning the strategy. It would be a failure if Lauren went into a 100% equity portfolio. The market dropped, she freaked out, and she pulled out her money at a loss. That would be a failure because she, one, had an emotional reaction to what was happening, and then she's pulling out her money at a guaranteed loss. She's not waiting for the market to recover. So Lauren, you do not need to find the perfect moment to invest.

• 12:31Speaker 03

  You need a plan for the money that you won't need for a long time, an investment allocation you can live with, so not too aggressive, and a way to get started that doesn't leave you paralyzed by fear.

• 12:47Speaker 03

  If you have a money question you've been sitting on, I want to hear it. Send me a DM on Instagram at @shetalkingmoney. It could be about investing, retirement, changing careers, or just figuring out whether you're making the right financial decisions. I'm going to be answering more of these questions in an upcoming Make It Make Sense episode. Okay, now we have a question from Melissa. She's 44 years old, makes a good salary, and has done a lot of things right financially. But she's questioning whether all that financial success is actually giving her the life she wants. So here's her situation.

• 13:29Speaker 03

  I make about $200,000 a year, which I know is a really good salary. I own my own home. I've saved about $650,000 for retirement, and I'm putting money away each month. But here's the thing. I feel completely stuck in my job. I don't hate what I do, but I definitely don't love it. And I feel like I can't leave it because I make too much money. There's another job I'd really enjoy, but it pays closer to $120,000. I keep telling myself I can't afford that kind of pay cut. How am I making this much money and still feeling like I have no financial freedom? How do I figure out whether I can actually afford to take the other job?

• 14:13Speaker 03

  So the first question I'd ask Melissa is, Melissa, what does financial freedom actually mean to you? Because Melissa may be defining financial freedom as having enough money to never work again. But what if that's not what she wants? What if financial freedom means being able to take a job she enjoys, even if it pays $80,000 less? What if financial freedom means I just want to be able to buy whatever I want? What if financial freedom means I don't need to keep looking at my bank account balance to make sure I have enough? So what does financial freedom look like? And that was Melissa's question.

• 14:57Speaker 03

  How am I making this much money and still feel like I have no financial freedom? From this question, her definition of financial freedom may be, can I afford to take a lower-paying job? That's what we need to get to because if I'm answering your question based off of financial freedom, I may have a different definition of what financial freedom is. So what if financial freedom means being able to take a job she enjoys, even if it pays $80,000 less? What if retirement for Melissa isn't stopping working entirely? What if it's finally having the freedom to do the work she finds fulfilling? That's a very different financial goal.

• 15:43Speaker 03

  Look at where your money is going. The next thing I want to understand is your actual financial situation. How much cash do you have available? What are your investments? What does your mortgage cost? What is she spending each month? Because making $200,000 doesn't automatically mean Melissa has an extra $80,000 available to give up. She might have substantial expenses. That might be the financial freedom issue. I make a lot of money. Why do I not feel ahead? The answer may be because you have a lot of expenses. You have a big nut each month that you need to pay for. Melissa may be saving aggressively.

• 16:28Speaker 03

  She may have built a lifestyle around her current income. And none of that means Melissa is bad with money, but we need to know where it's going. So what I want to know is, what matters more to Melissa? And this is where I'd start asking Melissa about what she values. What do you enjoy spending money on? What makes you happy? Is traveling important? Do you love your home? Melissa, do you want to be able to eat out frequently, shop, or take spontaneous trips? Then I'd ask, what's more important to you right now? Maintaining all of those things or making this career change? Because financial planning involves trade-offs.

• 17:11Speaker 03

  I'm not going to tell you you have to stop going on vacation just because you want to change jobs. But I am going to help you understand what choices you have. Maybe Melissa decides she's happily happy to give up a few things she enjoys, a few things she enjoys spending money on to have a job she enjoys. Maybe she decides those other experiences matter more right now. And either answer can absolutely be reasonable. So what does an $80,000 pay cut actually mean? So Melissa is considering going from $200,000 to $120,000. But that isn't necessarily an $80,000 reduction in take-home pay.

• 17:57Speaker 03

  Her taxes would likely change. Her benefits may change. Her retirement contributions might change. We need to look at what the new salary would actually mean for her monthly spending and saving. Then we can ask whether that works with the lifestyle she wants. And honestly, maybe the answer isn't changing jobs tomorrow. There's another possibility here. What if Melissa is 44 and wants to make this change by 48? Maybe she stays in the $200,000 job for another three or four years. And during that time, she has her eye on the prize. She saves aggressively. She builds up investments and cash and then creates a plan to leave.

• 18:42Speaker 03

  So she's not leaving based on emotion. She's leaving based on her structure that she created. What's also important is that the job she has right now that she doesn't particularly enjoy also has a purpose. It's helping her reach a specific goal. So instead of feeling trapped indefinitely, she knows what she's working toward and what needs to happen before she can leave. But if the numbers already support making that change today, she may not need to wait. This is one of the things I really enjoy about financial planning at GWA Wealth. We're not just looking at whether someone can afford to retire at 65. We're looking at what they actually want their life to look like

• 19:27Speaker 03

  and how to use the money they've accumulated to make that possible. Sometimes the answer is saving more. Sometimes it is adjusting spending. And sometimes it's realizing you have more flexibility than you thought. So here's my takeaway for Melissa. Making a lot of money doesn't automatically make you financially free. Financial freedom is having enough clarity about your money that you can make decisions based on what matters to you, not just what your paycheck allows you to maintain. So Melissa, what I would say is, let's come up with a plan. What does being financially free look like to you? And how can we use your money to achieve it?

• 20:08Speaker 03

  And it may mean you cannot take the new lower-paying job today. It may just mean you need to create a plan in order to get there. If that's the goal, make less money but have better quality of life, we need to make sure the situation you're in right now is set up appropriately to support that goal in the future. Okay, so we have one last question, and this comes from a situation I think a lot of successful women eventually find themselves in. They've spent years being disciplined about saving, and now they're wondering whether they can finally ease up a little. So here's Jennifer's question.

• 20:52Speaker 03

  I've been really aggressive about saving for retirement since I started working, and I recently hit $1 million in my retirement accounts. I make about $180,000 a year, and between my 401K and other retirement savings, I'm putting away about $30,000 a year. But lately, I've been wondering if I really need to keep saving this much. I'd love to travel more, fix up my house, and just enjoy some of the money I'm making instead of always putting it away for later. I don't want to make a stupid decision and regret it when I'm older, but I also don't want to spend my entire life saving for a retirement I might not even enjoy.

• 21:34Speaker 03

  At what point can I actually ease up on saving and start spending more of my money now? So the first thing I'd ask Jennifer, and I enjoy this question because I think a lot of us can relate to it of, I just need to keep saving, keep saving, keep saving. And then you hit this bogey of a million dollars, which is awesome. And it's like, okay, this is, this is big, this is good. What, what can I do now? Like, do I just keep having the carrot dangle in front of me for all of my working life? So the first thing I'd ask Jennifer is, what do you actually want your retirement to look like? Does she want to retire at 55, at 65?

• 22:20Speaker 03

  Do you want to travel extensively? Do you plan to stay in your current home? Do you want to stop working entirely? Or do you want to continue doing something part-time? Because a million dollars can mean very different things depending on when you want to retire and how much you plan to spend. So here's something I've, I think is really important for Jennifer to understand. It's called the rule of 72. So you take 72 and divide it by your assumed annual rate of return to estimate how many years it would take your money to double. At a hypothetical 7.2% annual return,

• 23:01Speaker 03

  which is a reasonable expectation for market averages over an extended period of time, your money would approximately double every 10 years. So Jennifer is 43 and has a million dollars invested. At that assumed return, at 53, she could have approximately 2 million. At 63, she could have 4 million. And that's without contributing another dollar. Obviously, those aren't guaranteed returns, and actual performance varies, and inflation will reduce the purchasing power of those future dollars. But I want Jennifer to recognize something. The million dollars she's already accumulated could do a tremendous amount of work for her over the next 20 years.

• 23:44Speaker 03

  At some point, the growth of your existing investments may become more significant than the additional money you're contributing. So does she need to keep saving $30,000 a year? That's the big question. And I wouldn't automatically tell her yes. I'd want to run projections based on her retirement age, expected spending, investment allocation, account types, and other income sources. But if the numbers indicate she's on track, maybe she doesn't need to save $30,000 a year anymore. Maybe she could just reduce her contributions and redirect some of that money towards the things she wants to enjoy today. But that doesn't mean I'd recommend stopping retirement contributions entirely.

• 24:29Speaker 03

  If Jennifer has an employer 401K match, I'd still want her to contribute enough to receive the full match. That's part of her compensation. But if she's contributing well beyond that, we can evaluate whether she needs to keep saving at the same level. Maybe she continues saving $15,000 instead of $30,000. Maybe she makes a different adjustment. The specific number depends on the plan. The point is that saving the maximum amount possible isn't always the same as making the best financial decision. Here's another important distinction. Where is Jennifer's $1 million invested? Is it in traditional pre-tax retirement accounts? Is some of it in Roth accounts?

• 25:14Speaker 03

  Because those balances aren't necessarily worth the same amount after taxes. With a traditional 401K, withdrawals are generally subject to ordinary income taxes. With a Roth 401K, qualified withdrawals are generally tax-free. For example, if we assume a 25% effective tax rate on traditional retirement withdrawals, $1 million would leave approximately $750,000 after taxes. So someone would need approximately $1.33 million in a traditional retirement account to net out that 1 million after the assumed tax. Of course, Roth contributions don't provide the same upfront tax deduction,

• 25:59Speaker 03

  so we do have to consider today's taxes as well. But it's one more reason we can't look at Jennifer's $1 million balance automatically and, and, and automatically declare that she saved enough. What if she wants to retire early? If Jennifer wants to retire at 55, we also need to consider how she'll access her money. Most of her assets might be tied up in retirement accounts. Generally, distributions before age 59 and 1/2 can trigger an additional 10% federal income tax unless an exception applies, along with any applicable income taxes. There are exceptions and planning strategies,

• 26:42Speaker 03

  including certain employer plan distributions after separation from service in or after the year someone turns 55, but those rules are specific. We need to understand which account she has and how she'll fund the years before she can access retirement assets without that additional tax. This is also where having investments outside of retirement can create flexibility. There is an element also of enjoying your money today. So here's the other side of this conversation. Jennifer's 43. She's worked hard, she's been disciplined, she's accumulated a million dollars.

• 27:23Speaker 03

  She wants to travel, she wants to improve her home, she wants to enjoy her life, and those are legitimate financial goals. We spend so much time talking about the importance of saving for retirement that sometimes we forget the purpose of accumulating money in the first place. It's not just to have the biggest account balance possible when you're 65. It's to be able to use your money to live the life you want. And some experiences are more enjoyable or simply more possible at 43 than they may be at 73. That doesn't mean being irresponsible or ignoring the future. It means recognizing that there may be room for both.

• 28:06Speaker 03

  So Jennifer, don't stop saving just because you hit a billion dollars. But don't assume you have to keep saving at the same aggressive place forever either. Figure out what your future actually requires, then decide how much of your money you can confidently enjoy today. I want you to think about these three situations. Lauren has $100,000 sitting in savings because she's afraid to invest it. Melissa earns $200,000 but feels like she can't leave her job. Jennifer has a million dollars saved for retirement but isn't sure whether she can start spending more. All three of these women have accomplished something financially, but they're still wondering whether they're making the right decisions.

• 28:49Speaker 03

  And I think that's something a lot of women can relate to. Because doing well financially doesn't automatically mean you know what to do next. The point of financial planning isn't just to accumulate more money. It's to understand what your money can do for you and make decisions that support the life you actually want. If you're doing well financially but still have questions about whether you're saving enough, investing right the right way, or making the most of what you've accumulated, that's the kind of work I do with women at GWA Wealth. We look at your entire financial picture and build a strategy around what you want your money to make possible.

• 29:31Speaker 03

  You can learn more by clicking the link in the show notes or at GWawealth.com. And I want to hear from you. I want Make It Make Sense to become a regular part of this show where we tackle the real financial questions you're dealing with. Maybe you're wondering whether you can afford to change careers. Maybe you've inherited money and you don't know what to do with it. Maybe you're saving a ton but aren't sure whether you're saving in the right places. Whatever your question is, send me a DM on Instagram at she's talking money. You don't have to share your name or identifying financial details on the podcast. If I feature your question, we can totally keep it anonymous.

• 30:13Speaker 03

  And if today's episode reminded you of a friend who's dealing with one of these situations, send it to her. Thanks for listening, and I'll talk to you next time. Shari Rash is an investment advisor representative with GWA Wealth. Advisory services are offered through GWA Wealth, a registered investment advisor registered with the state of South Carolina. Opinions expressed herein are solely those of Shari Rash and do not reflect the opinions of GWA Wealth. This podcast is produced by Money Sheik, which receives compensation from third-party advertisers who ads may play during this program. GWA Wealth and Shari Rash do not endorse, recommend, or approve any of the products or services advertised during this podcast.

• 30:57Speaker 03

  The content provided herein is not intended to provide any tax or legal advice or provide the basis for any financial recommendations.

• 31:13Speaker 01

  They're running a cover two defense. But you're running to get game day deals on Uber Eats. Keep everyone at tonight's watch party fed with deals from your go-to restaurants. Or stock up with deals on your favorite snacks and groceries. Whatever the occasion, get game day deals on Uber Eats all season long. It's not football without food. Uber Eats, order now. Terms apply. Product availability varies by region. See app for details.

• 31:44Speaker 02

  This episode is brought to you by State Farm. Football has a play for just about everything. You can go deep, keep it on the ground, or draw up something nobody sees coming. And whether you want to run a flea flicker or the tush push, you need a plan to fit your unique situation. That's why State Farm takes the time to get to know you so they can help personalize coverage for your life and budget. Now that's a solid game plan. Like a good neighbor, State Farm is there.