Life Support
Rand Spero | Sep 3, 2019
A NEIGHBOR COMPLAINED to me that his car insurance rates soared after a fender bender. I assumed that he or his wife were involved. But it turned out he was referring to his daughter’s accident. Even though she was 27 years old and had a good paying job, he continued to assume financial responsibility for her car. Is this smart parenting—or does it stymie our children’s transformation into well-rounded adults? When my friends and I graduated college, most of us had to pay our own bills. But it seems today’s timeline for parental responsibility is being extended by huge student debt, high housing costs and disparity in job opportunities, as well as a trend toward greater parental involvement in our adult children’s lives. Studies show that, when young people are starting out, they report high levels of economic stress, especially those with sizable student loans or who are living in communities with exorbitant housing costs. On top of this, nearly half of today’s young adults reportedly face downward mobility, relative to where their parents stand. Understandably, both parents and their offspring find this hard to accept. Perhaps parents, as well as their adult children, need to modify their expectations. Indeed, this could be a great chance for young adults to develop self-confidence by working through some difficult economic tradeoffs, such as saving money by opting for a less-than-perfect living arrangement or by forgoing an expensive health club. One option for parents is more targeted financial assistance, with the goal of helping children launch themselves into the adult world. For example, helping to pay for a smart phone may seem like a luxury, but it’s an essential tool when job hunting. How much support the parents provide should also vary with the family’s situation. Continuing to pay the bills of adult children…
Read more » Help Yourself
Rand Spero | May 10, 2019
FAMILY MEMBERS OFTEN look to me to “sort out” their financial problems. That’s no great surprise: I’m a fee-only financial planner. But I’ve resisted the “financial fixer” role. Instead, I try to act more as an educator—by reframing the issue at hand and encouraging family members to take an active role in solving their problem. Consider three examples: 1. I have a relative who graduated from an expensive university. He was understandably concerned about his high level of student debt. Less understandable: He was prepaying his low-interest student loans, while continuing to rack up high-interest credit card debt. Rather than telling him what to do, I asked why he insisted on paying off his student loans faster than required. He explained that it represented graduating to the next stage of life. I told him I appreciated the emotional appeal—and then reframed it as a financial issue. I asked him to research his current credit card interest rates, as well as his student loan rates. He found out that his highest credit card rate was 20% and his student loans had remained at 5%. He calculated the actual amount of interest he was paying. It became apparent that he would be much better off by first lessening his credit card debt. 2. My son moved home after college, so he could save money while starting his new job. By living at home, he was able to sock away more than $15,000, which sat in a bank earning 0.03% interest. He’s frugal and good with numbers, so I reframed the miniscule yield as a challenge: If he could earn more than $300 a year by taking an hour to move the money to a higher-yielding online savings bank, would he do it? Rather than me presenting this as something he “should do,”…
Read more » Monthly Affliction
Rand Spero | Aug 19, 2019
MY ELDERLY MOTHER'S credit card was recently compromised. This required her to move all her automatic payments to a new credit card. That, in turn, prompted her to reevaluate these various charges. Her cable bill, for instance, had gone up more than 15% over the past two years. My mother complained that, while she gets many channels, she only watches broadcast TV. She dropped the cable package. As she added the autopay information to her new credit card, my mother noticed another service she no longer needed. She has an Apple watch, which allows her to call for emergency help if she falls. That meant she no longer needed the separate monthly lifeline service to which she subscribed. Without a doubt, there are many benefits to setting up automatic payments, including ease of use and avoiding late fees. But unless they're properly managed, these autopays can cause problems and waste funds. Companies know that consumers are more lax in reviewing their autopay bills and tend to keep the services for longer. Annual automatic renewals can sneak up on us and—next thing we know—we’re charged for an entire year. My mother, like many of us, pays more attention to bills that require her to write a check. Want to save money and avoid problems with your autopays? Follow these seven steps: 1. Make a list. Create a comprehensive list of your various autopay charges, along with each company’s contact information. This will help you—and your executor. 2. Review. Look over each autopay on a regular basis. Check to see if the bill has gone up. My health club slipped in a 12% rate increase. When I questioned the increase, it was removed. I wonder if they added this fee to all autopay members and waited to see who’d notice. 3. Get it…
Read more » Bearing Gifts
Rand Spero | Dec 24, 2019
GIVING GIFTS DELIVERS significant emotional and health benefits, or so says the research. But I find much depends on how the actual giving takes place. My best giving lesson occurred many years ago. At a rural busstop on the island of Crete, off the coast of Greece, I sat next to an old local woman dressed in ragged clothing and torn shoes. Neither of us spoke the other’s language. She carried with her a small bag of fresh peaches and motioned for me to take one. I smiled and declined. But she was persistent, so I assumed she was offering to sell me one. I took out some money. She shook her head “no.” Instead, she handed me a huge peach and gestured that I taste it. After biting into the delicious fruit, I let out an appreciative sound and grinned. As we both got on the bus, the old woman’s face unfolded with an amazing smile of pleasure. I was moved by her simple humanity and her willingness to share something she viewed as so special. But other times, giving feels disingenuous. I think about my former employer. I was assigned to be secret Santa to a co-worker I disliked. Nothing about the experience was positive. All I remember was that my gift expenditure matched the recommended amount. I’ve had similar negative experiences when purchasing other gifts solely out of obligation. Even giving to a worthwhile charity can result in different reactions, depending on how we approach it. I feel more connected when I mindfully focus on a charity’s mission and goals. If, in addition to contributing financially, I get involved by volunteering, my commitment grows even more. But when I view a charitable contribution from a purely economic perspective, something feels lacking. As a financial advisor, I understand that a close review…
Read more » Human Factor
Rand Spero | Jun 17, 2019
MY BIGGEST INITIAL mistake as a financial planner: underestimating the power of emotions. My office is located near top universities such as Harvard, MIT and Boston University. I assumed my well-educated clients, many with strong quantitative backgrounds, were simply looking to me for additional analytical insights. Instead, my clients proved to be as human as everybody else. One top academic statistician, who claimed to be frugal and cautious, shared with me an annuity policy he purchased from a close friend at his church. Because my client had a trusting relationship with this person, he didn’t bother going through the insurance prospectus. If he had read the annuity’s fine print, my client would have noticed it included a large upfront commission. When I presented this information when we next met, it was unclear who he was more annoyed at, his salesman friend for not being transparent about the commission—or me for pointing it out. Over time, I learned that, what may appear to be clearcut from a financial planning perspective, can be more nuanced once you factor in emotions. I had a brilliant academic insist on depleting his retirement account to purchase land, thereby protecting the panoramic view from his patio, which he loved. My risk-reward analysis favored keeping his retirement account in place. This academic praised my retirement analysis and told me that, as his advisor, he did indeed expect to hear about the downside of spending his retirement funds. Yet he still went ahead and purchased the land. A decade later, my client remains content with his choice. The psychologist and economist Daniel Kahneman won a Nobel prize for demonstrating how our cognitive judgments are influenced by innate biases. For example, he showed that we feel our economic losses much more deeply than our gains. In his book Thinking, Fast…
Read more » Generational Perspective
Rand Spero | May 8, 2025
Many Humble Dollar readers, including myself, are on the older side - approaching retirement or already retired. Readership tends to be relatively affluent and educated. Our financial and social perspective may at times be influenced by a generational outlook. At the risk of overgeneralizing, here are some possible baby boomer versus Under 40 year old viewpoints: Artificial Intelligence Baby boomer: A new development with many unknowns and exciting possibilities. AI could play a dangerous role in future scams targeting them. Under 40: A helpful resource for day-to-day usage. AI could pose a threat to their jobs and future career path. Social Security Baby boomer: A dependable economic safety net which hopefully will not change. Under 40: An employment tax which may or may not provide benefits by the time they retire. Homeownership Baby boomer: A foundational investment which provides a major source of savings and wealth. Under 40: Limited inventory and priced out of certain markets. It could feel unattainable without some parental support. Work / Life Balance Baby boomer: An entitlement after a lifetime of hard work. Under 40: Why should they have to wait until they are older to enjoy life? Will working even harder matter anyway? Economics of Family Baby boomer: Having a family has been part of traditional planning. Under 40: When is the right time (if at all) for children given financial challenges? Have you noticed any differing perspectives between generations which may be interesting to explore?
Read more »
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Beyond Bank Accounts
ArticleSanjib Saha | Jun 13, 2026
I OPENED MY FIRST bank account in the US at a local credit union (CU) close to my workplace. The CU had several convenient offers for employees of our company. With minimal effort, I opened checking and savings accounts, got free checkbooks and a credit card despite having no credit history in the US.
I was so pleased with the convenience that I handled all my banking needs through this CU for many years. That included direct deposit of my salary, payments and withdrawals, a car loan, and certificates of deposit (CDs) as my savings grew. I still maintain my checking account here and occasionally enjoy special favors as a longtime loyal customer.
Eventually, I realized that I earned very little interest from the bank deposits. I shopped around, found other banks with better rates, opened several accounts here and there, and moved my money around.
I felt good about being proactive and getting a better return on my cash reserve. But that feeling was short-lived as I started learning more about personal finance and investments. Tired of chasing yields in bank accounts, I eventually embraced US Treasurys (debt issued and backed by the US Government) as my alternative to savings accounts and CDs.
For those unfamiliar with US Treasurys, think of them as CDs with maturities ranging from four weeks to 30 years. They're widely used as a "safe investment" by individual, institutional and even sovereign investors around the world.
There are some key differences, though. Bank deposits are insured only up to $250,000. US Treasurys, on the other hand, are backed by the full faith and credit of the US Government. Therefore, there is virtually no default risk regardless of the investment amount.
Treasury interest rates, both short-term and long-term, are heavily influenced by monetary policy actions of the US Federal Reserve (Fed). Treasury interest rates directly affect many interest rates we encounter in everyday life: bank accounts, CDs, mortgage, car loans, personal and business loans, and so on.
Treasury interest rates are often higher than comparable bank products. Why? Because the intermediary financial institutions take their cut for operational costs and profits. Result? Suboptimal, or sometimes almost non-existent, interest on bank deposits.
But wait. What if I need my money back?
With bank deposits, I can walk in and withdraw cash from my account. If my money is locked in a CD, I may have to pay a penalty for early withdrawal, but I can still access it fairly quickly. What happens if I'm holding Treasurys? Do I need to wait until maturity?
That leads us to another important aspect of US Treasurys: their extremely high liquidity.
I can certainly buy newly issued Treasurys and wait until maturity, but I don't have to wait for these events. Investors around the world buy and sell Treasurys in the open market every day, making them one of the most liquid investments in existence.
Their liquidity, safety and meaningful return make Treasurys a compelling alternative for both short- and long-term cash reserves.
Sounds interesting? That's exactly how I felt after doing my own research. All I needed to figure out was the best way to invest in them.
Instead of buying Treasurys directly from the US Treasury, I use my brokerage accounts and buy and sell individual Treasurys or Treasury exchange-traded funds (ETFs) in the open market, just like stocks or funds. (I used to participate in Treasury auctions through the brokerage account to buy new issues and set my holdings to auto-roll upon maturity, but I eventually stopped doing that to keep things simple.)
For annual expenses and short-term cash needs, I like short-term, highly liquid, Treasury ETFs with a practically negligible expense ratio.
For money expected in three to four years, I favor short- and intermediate-term Treasury Inflation Protected Securities (TIPS) ETFs. TIPS have a lower interest rate compared to equivalent regular Treasurys, but their principal is adjusted with inflation, helping mitigate the risk of unexpected inflation.
For cash reserves further into the future, five years or more, my preference is a ladder of individual TIPS bonds, each maturing in a specific future year. Bond trading is slightly more involved than ETFs or stocks, so target-maturity TIPS ETFs can also be a reasonable alternative despite their slightly higher management fees.
Is there a catch compared to keeping money in conventional bank accounts?
I can't think of any, but there are two noticeable differences worth understanding.
First, unlike money sitting in bank accounts, Treasury investments fluctuate in value because they constantly change hands in open markets. For short-term Treasurys, the fluctuations are usually tiny. For intermediate- and long-term Treasurys, the swing can be more noticeable, especially when there's a major change in the interest rate expectation. Thankfully, these fluctuations are usually modest, and over time Treasurys often come out ahead compared to bank deposits.
The second difference deserves a bit more attention.
With a bank account, you can get hold of your money almost immediately. Treasury investments, however, may take a couple of business days to turn into spendable cash. You need to sell the ETF or bond during market hours. Once the transaction settles, usually the next business day, the proceeds can then be transferred out to the checking account for spending. In some cases, you may be able to carry on your spending activities directly from the brokerage account.
Over time, I shifted most of my liquid savings to Treasurys because of the improved result. Yet I still see many people leaving large cash balances in bank products or chasing yields from one bank to another.
I suspect the main reason is simple: lack of familiarity with US Treasurys.