Ep.52 / How to Be Financially Prepared - From New Babies to College to Retirement

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We are going to be getting some great financial advice from Melissa Dincher, a Financial Advisor at UBS. She’s discussing how to prepare for major life events, how to save for college, how to save for retirement, and don’t worry you’re not too late! Melissa was a corporate attorney who spent 10 years at home with her children, she was head of the PTA and was basically the mom who helped Brooklyn Heights get through Covid. Since rejoining the workforce, she's a wealth manager at UBS and her focus is on holistic wealth management and financial planning with a strong tilt towards supporting women.

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In this episode you will learn:

Tailoring your specific financial goals to your lifestyle
The smart way to save for college
Why it’s never too late to start saving for retirement
The biggest mistake people make with their finances

Show Takeaways:

Are your finances in order? If not then this episode has tons of great advice to help you.

“So a 529 plan is the best thing that you can do today to save for college. It’s specifically for education like college or grad school, tuition, room and board. It can even be for private school. And if your child doesn't use it, you can actually transfer to one of your other children or yourself or a parent or any family member. It compounds, so you're gaining interest and earning money not just on your investment, but on those earnings too.”
Why you should start investing in a 529 early:
“So for example, if you invest a hundred dollars a month, which is $1,200 a year, not a crazy amount of money and an annual return of 5%, you will have $35,400 at the end of 18 years. But if you wait nine years before starting to invest with that same 5% return, you would only end up with $13,900. That's a big difference of over $20,000 just by starting earlier.”
“It starts with knowing what you have, your income expenses, assets and liabilities, and then taking it a step further and tailoring it to your specific goals and lifestyle.”
“It's never too late to start saving for retirement. It's so important no matter what age you are, to take advantage of your company's 401k plan, if that's applicable to your situation.”
“It's so important to have that kind of rainy day fund or just to have emergency savings and then also just continue to review it and update your plan regularly.”

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EPISODE LINKS:

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FULL EPISODE TRANSCRIPT

Kim (00:02):

We are going to be getting some great financial advice from Melissa Denture, a wealth manager at ubs, how to prepare for major life events, how to save for college, how to save for retirement, and so much information. I would tell you to grab your notepad, but we send out our blog and newsletter.

(00:19):

This is Mom's exit interview, the show for moms who want to craft the career and life they want. Each episode, you'll meet inspirational moms across various industries and levels who are working and living life on their own terms, and they'll bring you actionable tips from finance to business development to happiness, to crushing that imposter syndrome. I'm Kim Wittford. I was a burnt out media executive at Netflix, US Weekly and in TV news. I wanted a career where I was fulfilled at work but present at home with my kids. So I started working for myself and I love it, but not every day was easy or is easy. I wanted to explore with all of you how other moms were creating careers on their own terms. They're carving out flex jobs, starting their own businesses, they're taking back control. Join me and make work, work for you instead of the other way around.

(01:23):

So we're talking all about finances today and I wanted to bring you into something that I'm working on for myself and for my business. I am just starting to work with a business coach who's helping me organize my packages, figure out my pricing, what makes sense for what and how do I scale? What does that mean? Basically, we all have those things we're really good at and love doing, and then the stuff we kind of have to do or struggle through and don't really have the base knowledge or the love of it. And so I've been building my business and it's been going great. I've shifted. So after being in journalism and media for so long, I began with working in corporate clients. So I had worked at Fox and Inside Edition and Netflix and launched the video unit for US Weekly. So naturally my first big clients, when I went on my own, it was like People Magazine, very similar to what I had done before.

(02:13):

Great people there. I had an amazing experience working with them. But I've been shifting to want to do more project-based work and work with more business owners. So what does that mean? I really didn't have that many friends or peers that have done that. My context is working in an office writing and making really cool video branded content and then also leading a team. When you work for yourself, the offerings and what you charge and how you find clients was kind of all new to me. So I've been learning it as I go. I'm obviously good at marketing because that's my background is video marketing and on-camera media training, but the other stuff is totally new to me. So I have finally been investing. I took one course, which had was great, helping me scale my online courses, a course for courses. I know the irony.

(02:55):

And then I'm just started working with a business coach who helps you with your pricing and your offerings. And her name is Belinda Rosenblum at Own Your Money. And I'm just really excited because I finally got on QuickBooks things that seem like such not a big deal up being a mental hurdle. And I see that with my clients. They'll kind of get stuck on something and can't move past. And for me, I mean I literally launched an entire video unit out of an office and turned it into a TV studio for us weekly. But somehow the small things for my own business feel like a roadblock in my mind. So, oh, how do I collect credit cards or, oh, I don't know, QuickBooks. And I had been kind of working off of a Google sheet for a long time. I do keep records, but it's not that organized.

(03:38):

And so I'm sort of trying to just level up and invest money in myself and my business because I do believe very, very strongly you need to spend money to make money. And so it's been really exciting. I'm actually happy to spend the money because I do know that I'm going to make more money, but also have more clarity and head space, feel confident in my pricing and what I'm offering. And it just feels really, really good to invest in myself. So I wanted to share that with you cause I know a lot of you are pivoting or growing your business and sort of struggling with those things that don't come naturally. We all are like, this is what I do. I love to write, or I love to sell houses, or I'm a doctor or I'm a healthcare consultant. And then when it comes to actually the other stuff, the marketing or showing up on video or the accounting, that's not what we love.

(04:24):

And so we have to push through in those areas and figure out ways to do it better, more efficiently and still make it a part of our business even if it's not all of our business. So I want to share that win with you because I love hearing your wins and please keep the feedback coming. I love every single note. I read them out. Thank you. Keep 'em coming and you can always message me at Kim rit and speaking about growing your business. I am, as I mentioned, scaling my business. And you can work with me in all sorts of ways. I do on-camera media training for executives and business owners, how to get confident on camera, be better in public speaking and shine no matter the venue. And I also teach people, business owners how to become a thought leader through video and podcast.

(05:03):

It's something very specific, but I've definitely harnessed it. It's been amazing to see my clients thrive. So if that's interesting to you, check on my website, Kim rit, r i t tb e r g.com, or message me on Instagram or LinkedIn. I am so excited to have Melissa Denture here with me. I know her for many years in Brooklyn. She's a fellow parent and she has a really interesting pivot of her own. She was a corporate attorney and then took 10 years to raise her kids who are 10, seven and four. Melissa was head of the PTA and she was basically the mom who helped Brooklyn Heights get through Covid. And since rejoining the workforce, she's an amazing wealth manager at ubs. Her focus is on holistic wealth management and financial planning with a strong tilt towards supporting women, which I love.

Melissa (05:44):

Hi Kim. I'm so excited to be here today and share some financial tips and also some of the common mistakes that people make when it comes to their finances.

Kim (05:52):

Awesome. Let's start with some tips for major life events.

Melissa (05:55):

So no matter the life event, whether it's having a baby, buying a house, planning a wedding, retiring, the most important thing is to have a plan. And this starts with knowing what you have, your income expenses, assets and liabilities, and then taking it a step further and tailoring it to your specific goals and lifestyle. For example, how many kids do you want to have? Where do you want to live? How much do you want to travel? Do you want to buy a vacation home? Do you want to start your own business? How long do you want to work? And then based on these factors, we build a comprehensive financial plan that incorporates budgeting and saving, investing and planning. And so when we make this plan, we categorize your life into three buckets. We have your short-term needs, which is over the next three to five years perhaps buying a house, having a baby.

(06:44):

Everyone thinks the baby years last forever, but there's such a short finite period of time, unfortunately. And then you have your long-term goals, which is five years throughout your lifetime, and that you know is savings, long-term investing, retirement planning. And then you have your legacy, which is what you plan to leave your children or a philanthropy for example. And this is not just for the super wealthy, it's for anything. You have a little money, your home, personal property. And actually on that note, a big part of your financial plan is your estate plan. It's so important no matter how old or young you are or how healthy or busy you are to have a will or a trust with a designated guardian because if God forbids something should happen, you do not want the state to decide who gets your children or your assets. So basically failure to plan is planning to fail.

Kim (07:35):

Melissa, college costs are going up, up, up. It is so stressful. What are some tips to save for college?

Melissa (07:41):

So a 5 29 plan is the best thing that you can do today. A 5 29 is a tax advantage. Savings accounts specifically for education like college or grad school, tuition, room and board. It can even be for private school. And if your child doesn't use it, you can actually transfer to one of your other children or yourself or a parent or any family member. And it's for any type of school, cooking, school, art, school, business, school, so many possibilities. And the reason why it makes so much sense is because of compounding. So you're gaining interest and earning money not just on your investment, but on those earnings too. So for example, if you invest a hundred dollars a month, which is $1,200 a year, not a crazy amount of money and an annual return of 5%, you will have $35,400 at the end of 18 years. But if you wait nine years before starting to invest with that same 5% return, you would only end up with $13,900. That's a big difference of over $20,000 just by starting earlier.

Kim (08:46):

That really makes me want to stop eating those avocado sandwiches. Just kidding. But I love that. I love those tips. That's really helpful. So here's my question then. I'm sure people ask you this all the time, why not just invest in the stock market, which also has compounding? If you're going to save for college,

Melissa (09:02):

The answer is taxes. So with a 5 29 plan, what you put in could be tax deductible, all your earnings grow tax free, and then what you take out is not taxed. If it's used for education, that is a huge savings and money in your pocket.

Kim (09:18):

Melissa, all this talk about college makes me think about retirement. What are some tips about saving for retirement?

Melissa (09:24):

It's never too late to start saving for retirement. It's so important no matter what age you are, to take advantage of your company's four [inaudible] plan, if that's applicable to your situation. Most companies match a certain percentage of your salary, which is free money. And if a 401K doesn't apply to you, think about other IRAs which are individual retirement accounts. You need to focus not just on the short term, but on the long term as well. One constant is the value of long-term investing, the ability to invest over a long horizon in order to build up your assets and perhaps even borrow against them one day if you need to. The stock market has long-term average annual returns of about nine to 12%. And although that can vary significantly, look at the last couple years, those that stick it out through all that noise and volatility end up better off in the end.

Kim (10:17):

Yeah, it took me a few years I think, to really start digging into my 401k. And then as I started investing even really small bits at first when I was very young, I really after a few years could not believe because of that. And I think it's it's advice that you're like, oh, sure, sure, sure. And then you start doing it. You look at your statement like a year or two later and you're like, oh, that was a very effective mechanism. Yeah, I'm glad I did that. So thank you so much for that. And what are some of the biggest mistakes people are making with their finances?

Melissa (10:47):

The biggest mistake I see is investing on your own and trying to time the market. And I'm not just saying this because I'm a financial advisor, but you really need a financial advisor because it's complicated. And that doesn't mean that you should avoid investing. It's just that market timing doesn't work over the long term. A big mistake people make is to buy when the market goes up on the assumption that it's going to go up further and then sell when the market goes down on the assumption that the market is going to continue to go down, when in fact many of the stock market's greatest gains have occurred just after some of the biggest losses. And you don't want to miss out on that growth or be forced to buy back at a higher price. Also, you don't know the huge array of investment options out there.

(11:30):

And it's crucial to diversify so that if one area goes down, like equities for example, you maintain wealth in other areas like bonds or cash or alternative investments, it's so important to have proper asset allocation. Actually, another common mistake is thinking you don't have enough money to have a financial plan or a financial advisor. And again, I'm not saying this because I'm a financial advisor, but no matter your situation, a plan can help you understand where you are and where you want to be. It can help you save and spend your money in a really smart way. Everyone's story is different. You may have a mortgage or you may not have health issues or aging parents that will need care. A financial advisor can help with budgeting, saving insurance, tax optimization, estate planning strategies, mortgages, retirement planning. People sometimes don't realize the potential benefits. And also having somebody deal with that gives you back time to focus on your business, your career, and most importantly, your family.

Kim (12:32):

Tell me, Melissa, what's another mistake that people make when dealing with their finances?

Melissa (12:37):

I mean, I'd say neglecting to plan for an unexpected expense. For example, a death in the family or a death of a spouse, death of a parent, a divorce, or losing a job or even moving or even rising inflation. Look where we are now with the increased cost of living. I'm sure you've noticed it in your groceries. I mean, it's so important to have that kind of rainy day fund or just to have emergency savings and then also just continue to review it and update your plan regularly.

Kim (13:08):

So when you're doing that better planning for long term, when something happens, you're not like, oh my God, I'm up against a wall. I don't have that. And again, you were talking about having, oh, I'm an advisor, here's my tips. But truly, if you have someone who's been helping you, you'd not as much back up against a wall when you're at that point at which a big life change happens, whether it's right, a death or a sickness or something like that. And so again, we're talking about really that long-term planning, investing, and I guess it's like from your perspective, everybody has a different plan. When someone comes down their situation, their age, their life stage is all depends.

Melissa (13:45):

Yes, every everybody's story is different and unique and it's so important to plan for your specific circumstance.

Kim (13:52):

Okay, Melissa, any closing tips?

Melissa (13:55):

I would say it's so important to talk to your kids about finance. The greatest wealth transfer in history is taking place over the next 20 years with an estimated 84 trillion to pass down from the baby boomer generation to millennials, gen Z and Gen Y, basically our kids, it's called the Great Wealth Transfer, and it's already started. They're expected to inherit an estimated 27 trillion by 2045 and are expected to hold five times as much wealth as they have today by 2030, which is not that far away. So it's really critical that they understand finance earlier on. And then again, you don't need a minimum amount of money to invest in any of the things we talked about.

Kim (14:41):

Thanks so much to Melissa for all that great information. If you want to connect with her, you can reach her on LinkedIn at Melissa Denture, D I N C H E R.

(14:53):

Thank you so much for listening. Make sure to drop a review and if you want to send in a real mom moment that we'll share on the air, check out moms exit interview.com. And if you're a professional or small business owner looking to grow your brand through amazing content with no silly dances and with no burnout, check out my website kim whitford.com and you can hit contact to chat with me. And thanks for listening. Like this is the most amazing community. You guys send in the best feedback, so share it with your friends. Let anyone know who you think would appreciate it. And this is Mom's Exit interview. I'm your host and executive producer Kim Rit Bird. The show is produced by Henry Street Media. Jillian Grover edited this episode, and Eliza Friedlander is our editorial producer and publicist. I'll see you next time.

Kim RittbergJune 7, 2023Comment