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Not trying to post here with an intent of bullying etc not actually specifically wanting an individual response though I think it would be of value to him. But given RDQ’s repeated themes of criticising outlets he comes across for missing some vital element of personal finances like tax or being fraud like FIRE sub 50 and maintaining that any spreadsheet or budget approach to life is unnecessary or too stressful, I truly think he would benefit from trying to learn how it might be done.
So recommendations for 101 level online tools a numerical neophyte might play with to put together a basic financial plan for a new graduate starting the workforce.
Let’s say we give them a starting salary of 60k and student debt of 100k. And no further handouts from parents or grandparents. Payrises will be fair and steady but no massive leaps and or stock option bonanzas.
Then perhaps if we can persuade the world’s biggest hold out against spreadsheets and modelling to engage then it becomes an easier sell to younger generations. 😉
“Payrises will be fair and steady but no massive leaps and or stock option bonanzas”
This caught my eye after reading “https://paulkedrosky.com/life-under-two/“. I perceive that there is a difference in expectations between “our” generation (assuming that folks on this forum are north of 50 (even 60) and have experienced that steady upward pressure) and, well, those who are Crypto/YOLO-ing thru their adulthood.
Nice piece – brings together a bunch of emerging realities into a plausible scenario.
I’m actually not that concerned for the young. They have the gift of youth and the brighter ones will find ways to harness AI whether that’s to get paid for 2 or more remote drone jobs at the same time or to outsource work entirely to their personal avatars. But if you are young you may as well invest your work capital in start up type businesses with potential to give you a multi banger exit in short order than corporate giants who will can you without blinking next reorg cycle,
It’s more than plausible though that there will be two track prosperity with even greater divergence than today.
I think I am concerned – because there’s no obvious path upward to investing in anything specific. It’s increasingly clear that the ROI of a college degree has disappeared – and one of the advantages of such a degree was (historically) that it prepared one for a variety of career paths. Today’s alternatives – electrician being touted – seem to offer returns but at the expense of future flexibility.
Young folks probably wouldn’t heed your advice, but what advice would you give them other than “start up type business”?
I still believe in the power of education. But the way it’s become commoditized at undergraduate level has massively decreased the value for most : unless they are in really vocational programmes or a specific prestige degree they are only really a hygiene factor.
A maths degree from a top programme still really has a difficulty threshold that makes grads very valuable as quants/ actuaries/AI specialists.
Med school obviously has its own value and it’s the ultimate globally portable career that will always be needed.
I’m astounded at the tiny number of vet schools in the US.
Related, I just read this: https://derekthompson.substack.com/p/young-people-face-a-hiring-crisis
I bought my daughter (20) I Will Teach You to be Rich, by Ramit Sethi, and also recommended a few YouTube channels to look at. I didn’t push anything on her because I know her personality, and the Sethi book is aimed at young people like her.
She now has a net worth of $15k, no student loans, and saves a large percentage of her income (part-time jobs and internships) in her Roth IRA and her high-yield savings account.
We did buy her a car (used, ten years old), but I told her that once she graduates and starts working a job, the life support is being cut off. Not that it’s a lot, but I said you’ll be paying for your own cellphone, your own car insurance, food, etc, and then you’ll figure out how to manage your money.
She is considering buying a duplex or fourplex and renting out the extra units, but that will depend on where she ends up.
There’s so much information available these days for those who are interested in learning about finances. I’m sure a lot of it was there 35 years ago, but I didn’t find it back then!
I remember reading Money and Inc magazines at Barnes & Noble and noticing that they were basically selling you on a different set of funds every month. No VTSAX of FZROX recommendations back then!
I believe the value of Humble Dollar is the opportunity to hear from others on topics of shared interest and to understand from their writings that we don’t all do things or see issues in the same light. I like my budget spreadsheets but understand Mr. Quinn’s approach and how that works for him. In reality, don’t we all use what works for us?
Great summary of many hours worth of reading prior posts!
I think that should be everyone’s goal. No matter how, if it works for you, do it.
I don’t disagree with any of this. But I do think it is a fine line between not writing stuff down and allowing oneself to lapse into laissez-faire ness. And if you have the wrong “character” prevarication and or willful avoidance can prevail (“It’s all hard and complicated I’ll tackle it some day”).
And I believe modern retirement (in the DC not DB era) does need some planning or else it is something that you shoot in the dark somewhat on from investment strategy to retirement date to drawdown strategy. At the very least having worked through your own plan and checked it against other very good tools out there re failure rates/monte carlo sims etc gives you confidence around the big decisions and “permission to spend” for those used to a lifetime of saving. I believe it also provides some core emotional resililience to help recognise that down days/months/years in the market should not impact on happiness.
My purpose in this thread was really to challenge around thinking about the example we set to younger people and those needing help on the journey. There are fantastic tools out there and no one needs to be Einstein to write their own spreadsheet. In such an environment with richness of resources isn’t it generally poor advice to say “I didn’t do any of that and look how I aced life”?
There has been a lot written about whether it is nature or nurture that defines how each person’s individual character develops. My parents were thrifty and so am I, but my sister is not. She grew up hearing the same things, and seeing the same actions being modeled. How to account for this?
While some people do change, it is my opinion that for the most part they do not. If you are a saver and you don’t budget you will probably come out ok. And if you are a spender, will a budget actually help you?
Humble Dollar and similar websites offer a lot of helpful financial information. Given the low levels of financial success in the population of the US, one might think that HD servers would be crashing from the demand. But, alas it isn’t happening. A long time ago when I was in a marketing department we used to talk about why customers weren’t motivated to do one thing or another. The boss used to say, well, that’s your job, when they oughta wanna, but they don’t.
Well said.
For all my faults, strange habits, counterintuitive behavior, cavalier attitude and just winging it, I have met all my goals, financial or otherwise and we have as about a secure future as possible.
Could another strategy have created more wealth? Quite likely, but I am very pleased where we stand among our peers – which I regularly monitor for self satisfaction.
Chalk it up to luck and good fortune if you like, but results matter.
i certainly understand how others want to approach the future differently. Everyone should do what makes them feel secure.
I think spreadsheets and budgets can be helpful to the minority of people inclined to use them. At the end of the day, Quinn is correct when he states that It always comes down to the behavior of the individual.
I disagree. Here’s why:
If we say it’s behavioral, we also have to accept that behavioral activities are as important as the behavior of the person (because we’re flexible and learning the right behavior is possible). Such that a budget can train a person to have the correct behavior.
I turned to my friend Gemini for this question and it gave a list of ways a budget can change behavior, but as I read them I can’t see it. For example;
Building Discipline and Habits: Consistently sticking to a budget, even with small initial goals, builds financial discipline. Each small success reinforces the positive behavior, making it easier to maintain over time.
But what behavior is needed to stick to a budget? That’s like saying an alcoholic is fine if they don’t take a drink.
If a budget helps a person fine, but to accomplish anything takes the person to act appropriately and to me that is up to the individual.
years ago there was a woman I worked with who could not control her spending. Her husband tried to get her to budget her money, instead she took a loan from her 401k and then took a second. She related all this to me. Once she wanted a new couch and her husband said they couldn’t afford it. She bought one identical to one her sister had and told her husband her sister gave it to her. Not sure how she got away with that.
You’re making a strawman argument. I’m not arguing that all tools have a 100% success rate at behavior modification.
My point is that we know that behavior modification works. The point of the HD is to share information that can help people modify their behavior to have greater personal success.
It’s pretty obvious that a budget and the free high quality planning tools that are out there have the potential to not only inform (provide steps to get where you’re going) but also that they can give people a method for behavior change.
There’s really no counter argument to the idea that people are growth oriented and that tools of all sorts are an important part of that experience. I’m not sure how anyone using the internet on a computer or phone can argue against the centrality of tools in our lives and how powerful they can be in learning new improved behaviors.
But what behavior is needed to stick to a budget? That’s like saying an alcoholic is fine if they don’t take a drink.
Isn’t that exactly how programmes like AA work? 1 day sober at a time, baby steps to build up to months, years, decades? Such that the self achievement in being sober becomes an asset that is worth more than the fleeting urge for a drink?
It is really hard to understand what you are objecting to. Are you saying in the analogy that AA isn’t going to help for someone that is a chronic alcoholic because they are flawed anyway? Or that achievement in AA is nothing to do with the programme and its imposed discipline but all on the individual?
No I’m saying it is the individual behavior, motivation or whatever that is necessary to make the program work. Mostly on the individual.,Depending on what data you want to believe the AA success rate is between 5% and 50%, nobody claims higher.
But individual behavior, motivation is malleable.
Some behaviors are more desirable than others and tools that increase the good behaviors have more value than what they do on the surface.
All of your machinations are your behavior mods, you’ve created little rituals that lead you to the desired end result.
So 5-50% say of people who are bad at managing their money might become better behaviourially by adopting a budget based approach. That’s not worth having because it’s not 90%?
People fail because they are human. It doesn’t disprove those that benefit from an approach. Most diets “fail” – it doesn’t make the concept of diets and nutritional balance invalid. Your advice feels a lot more like just saying “don’t be fat – eat less”.
You do have a unique way of interpreting things for sure.
I don’t see how equating saying “eat less” to your mantra of “just save first” is a massive leap in interpretation. They are both very generic and neither provide any quantification of inputs or possible outputs.
But you’re the words guy not the numbers guy.
Empower, Rocket Money, Nerd Wallet, whatever free spending tracker works for them. Get started right away on the 50-30-20 rule (essentials-luxury-savings) and that’s after tax/payroll deductions.
The strength of the correlation between knowing where the money goes (at the very least at the 3 envelope level) and controlling spending and increasing savings/investment is known.
Add Boldin for the planning (ignore the Empower planner). It’s so user friendly, walks you thru, you could skip tons and get back to them later.
Did I ever say I was opposed to modeling tools? I have played with both the Fidelity tool and what was New Retirement to see how they worked – not for actual planning as I was retired.
Let them do the work and hopefully the assumptions a person uses are reality. Somewhat different than building a spreadsheet though.
I do have to say that when I looked at the projected results I was skeptical and sometimes surprised.
I also said I monitored the growth in both SS and my pension before I retired. Both online tools.
As far as budgets go I asked Gemini the question. Why do I need a budget? And got a long list of what budgets do. Guess what, budgets don’t do anything, they don’t make you spend less or save more, that’s all up to the individual.
I have read a budget is necessary to determine how much you can save. I see that as counterproductive. Do that and some people will conclude they can’t save when in fact, they can’t spend.
Either a person is disciplined or not, focused on the future or not, a prudent spender or not, a budget won’t change that. An undisciplined person likely won’t stick to a budget in any case.
And, if a person is all those things, saves first and doesn’t go into credit card debt, they don’t need a budget.
As far as saving goes, set a stretch to start say 15 % of gross income. If that is initially too tight look at actual spending and if anything can be reduced or eliminated. If not, saving must be trimmed or income increased, but you don’t start by letting a budget determine saving.
It always comes down to the behavior of the individual.
I often watch HGTV where people are buying a home or renovating and give a top amount their budget allows. They then proceed either to say they can’t afford it when they are quoted something at the top of their budget or rationalize going over what they claimed was the limit.
I always love when you disparage budgets but you engage in some of the most complicated and strict budgeting behavior I’ve read about.
In this you disparage budgets and then conclude by recommending a form of budgeting.
Mathematically there is no difference between setting savings first or spending first. Most think the 50-30-20 (essentials-luxuries-savings) on a net basis is the easiest to execute and can be adjusted readily.
If you start at 50-30-20 but your first rental and all essential expenses come to 60% of your net paycheck. You can easily say you’ll do 60-20-20 or if you need more luxuries (cause people are different), you can do 60-30-10 but with a commitment to let all future salary increases flow to savings until you get to 50-30-20.
Budgeting is knowledge that used correctly creates pathways to succeed.
Budgeting is setting in advance the amount you will limit spending to for each item you need or desire to spend money on.
I have never done that in my life. And it means nothing if the budget isn’t adhered to.
I simply do not spend more than my net income including net of savings. How is that complicated? I have the money or I do without until I do. Needless to say, the essentials are always first.
That’s budgeting. The number of lines in a budget is arbitrary not mandatory. There are always limits on spending, you say so yourself, you don’t spend more than net income, that’s a limit.
I’m not sure why you think there’s no ground between a highly specified corporate budget and a basic cash flow budget that most individuals use? People can be as specified or vague as they want to be.
So that’s a straight refusal? I don’t know what childhood trauma triggered such aversion – being bitten by a rabid abacus? 😉
Let’s not rehash all the old aversion to budgets etc. Of course it’s all down to human behaviour. I just don’t think it’s particular encouraging of “desirable” behaviour to downplay what is such an important tool and suggest that looking at things solely in arrears is an adequate substitute.
Refusal to do what?
Put together a hypothetical model for a grandchild on graduation.
With the objective of seeing if you are willing to become an advocate for the type of thing you clearly fear/dislike/find unnecessary because it might help them in their lives.
Showing them how your mooted policy of “Save 15% first” translates into future FI might be really important in getting habits to stick and aiding their self-responsibility. And actually doing it rather than relying on Gemini or a more credible reference source might be more persuasive.
Yeah, that’s not going to happen. The oldest is three years from graduation.
However, one son opened brokerage accounts for his sons and they regularly invest. That son and one other are really into spreadsheets. One is a systems engineering.
My daughter’s husband is a managing director at a Wall Street firm so I’m pretty sure he is on top of things.
I have mentioned Boldin to them though.
It’s ok. I get it. You won’t make the effort to spend 5 minutes playing with a tool nevermind 30 minutes to make your own rough one. You’d rather read screeds and watch hours of Youtube videos in order to formulate a daily rant or two on a bunch of repetitive topics linked to your worldview.
Even if doing it might liberate you from your previously articulated concerns for your kids’ ability to retire or actually advocate for a grandchild who would like to FIRE pre 60 for a life filled with rewarding interests and voluntary work rather than career grind.
Can we all just get along?
We can – but I think Mr Quinn would be advised to dial back on his rants and self justification broadcasts if he isn’t prepared to put in the work on the things he so readily criticises. If he keeps ranting I don’t see why it should be passively accepted without challenge.
It’s not productive for the forum as a whole I’ll grant you.
If you don’t like what he’s serving, don’t order it. Mr. Quinn has been part of the Humbledollar menu for many, many years. Though maybe not to everyone’s taste, he’s at least enthusiastically contributing. Maybe it would be more “productive” if folks brought their own experiences to the table rather than trying to “challenge” Mr. Quinn. After all, variety is the spice of life!