Personal Finance Cat

• Episode 74 - 50 / 30 / 20 Budgeting Rule Explained

  Summary:In this episode of Personal Finance Cat, we explore the popular and beginner-friendly 50/30/20 budgeting rule, a simple framework for managing your money without stress or spreadsheets. Originating from Elizabeth Warren’s book All Your Worth, the method divides your after-tax income into three categories: 50% for Needs (essentials like rent, groceries, and insurance), 30% for Wants (non-essentials like dining out and entertainment), and 20% for Savings and Debt Repayment (retirement, emergency funds, and paying off extra debt).I explain how to apply this rule using a $4,000 monthly income as an example, showing how it breaks down into $2,000 for needs, $1,200 for wants, and $800 for savings and debt. You are encouraged to track your own spending and plug your numbers into this model for insight.Final takeaway: While the 50/30/20 rule is a great starting point, personal finance should be tailored to individual goals. The key is spending with intention.

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• Episode 73 - Investing for Millennials: What You Need to Know in Your 20s and 30s

  Summary: This episode offers a practical guide for millennials looking to build wealth through investing. Here are some key points to consider:1. Understand the Basics of InvestingBefore we dive in, it’s important that we understand the fundamentals. Investing means putting our money into assets like stocks, bonds, or real estate with the goal of growing our wealth over time. We should also get familiar with key concepts like diversification, asset allocation, and risk tolerance to make informed decisions.2. Set Clear Financial GoalsWe need to define what we’re investing for. Whether it’s a home, retirement, or a big life event, setting clear goals helps us choose the right investment strategy. Typically, short-term goals call for safer investments, while long-term goals can take on more risk for greater potential returns.3. Start Early, No Matter How SmallTime is our biggest advantage. Even if we can only invest $50 a month, starting early allows our money to grow significantly thanks to compound interest. We should consider opening a brokerage or retirement account and set up automatic contributions to stay consistent.4. Educate Ourselves on Investment OptionsWe have several investment paths to explore:- Stocks offer potential for long-term growth- Bonds provide more stability and fixed income- Mutual funds & ETFs give us diversification with less effort- Real estate can be a solid option for those interested in property5. Keep an Eye on FeesWe should be mindful of investment fees, as they can quietly reduce our returns over time. Looking for low-cost index funds or ETFs and comparing platforms will help us minimize expenses and stay aligned with our financial goals.6. Stay Informed and Adjust Our StrategySince life and the market are always changing, we should stay informed and revisit our investment strategy regularly—at least once a year. Adjusting based on new goals or circumstances keeps us on the right track.7. Avoid Emotional DecisionsIt’s easy to react emotionally during market dips, but we need to remember that investing is a long-term journey. By sticking to our plan and avoiding panic, we’re more likely to reach our financial goals.

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• Episode 72 - How to invest in an IRA account for kids

  Summary:In this episode, I discuss how parents can set up an IRA for their children to give them a significant financial head start. While IRAs are typically seen as tools for adults, kids with earned income are eligible to contribute, making it possible to benefit from decades of compounding growth. A Roth IRA is usually the best choice for kids because contributions are taxed upfront—ideal since children typically have little to no tax liability.Parents can open a Custodial Roth IRA on behalf of their child using their Social Security Number and by choosing a brokerage like Fidelity or Vanguard. Eligible earned income includes jobs like babysitting, lawn mowing, or working in a family business—with proper documentation.In 2025, kids can contribute up to $7,000 or the total amount of their earned income, whichever is less. Contributions don’t need to come directly from the child—relatives can match the amount earned. Once funded, it's best to invest in long-term growth options like index funds or blue-chip stocks.By starting early, even modest contributions can grow into substantial savings by retirement. This strategy not only builds wealth but teaches kids lifelong financial skills.

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• Episode 71 - 401k vs Roth IRA: Which is Better?

  In this episode, I dive into the key differences between retirement accounts—401(k), Roth IRA, and Traditional IRA—to help you create a tax-efficient plan for the future.I start with a story about two friends, James and Robert, who earned the same income but chose different retirement paths. James used a 401(k), deferring taxes now but paying them in retirement. Robert chose a Roth IRA, paying taxes upfront so he could enjoy tax-free withdrawals later. Fast forward 30 years—they both have $1 million, but Robert walks away with more after taxes.I explain why a 401(k) is appealing: pre-tax contributions, employer matches, and higher contribution limits. But I also cover the downsides—like taxable withdrawals and required minimum distributions (RMDs). Then I talk about Roth IRAs, which offer tax-free income in retirement, no RMDs, and more investment choices—though they do come with income and contribution limits.I also walk you through the difference between Traditional and Roth IRAs, and how converting a Traditional IRA to a Roth—when done right—can be a smart tax move.Bottom line: if you want both tax savings now and flexibility later, consider using a mix of retirement accounts. Your future self will thank you.

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• Episode 70 - How much do you need to retire comfortably?

  In this episode, I explore the key question for any future retire: how much do you need to retire comfortably?Key Takeaways:- The Reality of Retirement Savings: A couple, Lisa and John, thought they had enough savings ($1M), but they underestimated inflation, healthcare costs, and lifestyle changes. By age 75, they were worried about running out of money.- The 4% Rule: A common rule suggests withdrawing 4% of savings annually to last 30 years (e.g., $80K/year requires $2M in savings). However, experts warn that market downturns and inflation require flexibility.- Three Key Factors to Consider:1. Lifestyle: Travel, location, and family proximity impact financial needs.2. Healthcare Costs: A couple may spend $300K+ in retirement, making insurance and HSAs important.3. Income Sources: Social Security (~$1,800/month) helps but isn’t enough; rental income and part-time work provide stability.4. Smart Retirement Planning: Mike, another retiree, built multiple income streams (downsizing, dividends, consulting) instead of relying solely on savings.Action Steps:✔ Use the 4% rule as a guideline but stay flexible.✔ Account for inflation, healthcare, and lifestyle changes.✔ Diversify income with investments, rental income, or part-time work.✔ Start planning early to maximize security.For more insights, the next episode will cover 401(k) vs. Roth IRA: Which Retirement Plan Is Best for You?

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