HUMBLEDOLLAR ISN’T THE FINANCIAL website for everybody. Instead, it’s the place that folks end up after they have made their fair share of youthful financial mistakes—and they’re ready to settle down and get serious about money. I even briefly toyed with adding a tagline to the site: “Where Money Grows Up.”
What does grown-up money look like? It’s less about the size of your nest egg—and more about attitude. Here are 21 signs you’re a HumbleDollar reader:
WHEN I LAUNCHED HumbleDollar at year-end 2016, my plan was fairly simple: I wanted to take my money guide, which I had been publishing as an annually updated book, and make it freely available on the web—and, because it was on the web, I could easily update it throughout the year. In addition, I planned to blog once a week and see if I could interest others in also writing.
I had earlier been blogging every week or so at JonathanClements.com, but I didn’t want the new site to be all about me, so I went searching for a new name. After months of racking my brain—and banging names into GoDaddy, only to discover they were already taken and were often on sale for some outrageous price—I woke up in the middle of the night and started playing with iterations on the word “humble.” I climbed out of bed, powered up my laptop and discovered HumbleDollar.com was available—for $9.99. The site went live on Dec. 31, 2016, kicking off with a blog devoted to humility.
In the 16 months since, traffic has picked up considerably—this year’s number of monthly pageviews is roughly twice last year’s level—and I’ve gone through two revamps of the homepage, one last September and one last month. Today, the site has not just the comprehensive money guide and four or five blogs every week, but also a steady stream of pithy homepage features: our daily insight, intriguing statistics, ideas to ponder and actions to take. My goal: Even if you head to the site every day, you should always find something new and interesting to read.
MONEY MAY NOT BE the root of all evil, but it does seem to be the source of much stress. A therapist once told me it was the No. 1 reason that couples came to see her. Today, fewer Americans express satisfaction with their financial situation than they did in the early 1970s—despite living more than twice as well. The Federal Reserve found 44% of American adults either couldn’t handle a $400 financial emergency or would cover it by going into debt or selling household possessions.
Much of this angst could be avoided with just a handful of simple financial steps. Suppose you’re the parent of young adults in their 20s. What would it cost to set them on the right financial path, so one day they, too, will be HumbleDollar readers?
It is, alas, not nearly as cheap as I had hoped—which may explain why so many Americans lead lives dogged by money worries. Consider the price tag on six key financial steps:
1. Build up an emergency fund. You might open a high-yield savings account for your kids and add $250 every month, with perhaps both you and your children chipping in. The monthly sum is arbitrary, but the idea behind it isn’t: You want your adult children to have enough set aside to muddle through at least a few months. That’ll provide a modest safety net—and, I suspect, significantly reduce your children’s day-to-day money worries.
2. Pay off credit card debt. Among older college students who carry credit cards, the average balance is some $1,100, according to a 2016 study. Got kids who accumulated card debt during their college years? You might help them pay it off.
3. Stash $250 every month in a Roth IRA. While debt can be depressing, saving money is uplifting: It gives you hope the future will be brighter.
A Roth is a great investment vehicle for those in their 20s, thanks to the decades of tax-free growth they’ll enjoy. True, they won’t get the initial tax deduction that traditional retirement accounts offer. But for those in their 20s on relatively low salaries, that tax deduction probably isn’t worth all that much.
An added bonus: Roth contributions can be withdrawn at any time, with no taxes or penalties owed, as long as you don’t touch the account’s investment gains. That means the Roth could supplement your children’s emergency fund.
4. Purchase health insurance. You may have the option of keeping your adult children on your employer’s health plan until they turn age 26. If not, consider helping them buy coverage on their own. In their 20s, this will be relatively inexpensive—perhaps $300 a month, depending on how competitive the local insurance market is, and maybe even lower if your adult children qualify for a tax credit.
Make no mistake: The potential downside of skipping coverage is huge. Indeed, as a parent, helping to pay for your adult children’s health insurance ranks as financial self-defense. If they need major medical care and don’t have coverage, you will undoubtedly ride to the rescue—and it will likely cost you dearly.
5. Buy $250,000 in term life insurance. If someone doesn’t have a spouse or children, this probably isn’t necessary. But for those in their 20s, the insurance would be cheap, perhaps $330 a year. Want to turn your adult children into buyers of term insurance—and steer them away from costly cash-value life insurance? That $330 might be a small price to pay.
6. Get a will. Your adult children may have relatively few assets, so this might also seem unnecessary. Still, wills are cheap: LegalZoom.com’s starting price is $69 and Nolo.com is $59.99. Once your adult children have a will, it will become part of their financial mindset—and there’s a decent chance they’ll update it regularly.
To be sure, there are other potential steps you might take, like subsidizing your adult children’s 401(k) contributions—assuming they have access to one—or helping them buy disability insurance. But you’ll likely find the above six steps already carry too steep a price tag. Add them all up and the first-year cost might be $11,000.
What if you cut the six steps down to three—and focus on building up your children’s emergency fund, paying off credit card debt and purchasing health insurance? Even that could potentially cost almost $8,000. If you can swing it, it would make a great graduation gift. What if you can’t? If you have sound financial advice to offer, that could be just as valuable.
HERE ARE THE SEVEN most popular blogs from last month:
Last month’s second most-visited page, after the homepage, was April’s newsletter. Folks also flocked to our list of the most popular blogs from 2018’s first quarter and to a blog published at the end of March, Four Pillars of Investing.