Personal Finance Interview with Jeff Rose on Money Mangement for Mint.com
Growing up, Jeff Rose didn't get a lot of direction from his parents on how to manage money the right way. Both struggled with debt and even filed for bankruptcy - his father twice.
When he started his career he put away 3 percent away in his 401k and called it a day. It wasn't until he met a couple in their 60s who were nearing retirement and had just $30,000 in savings, no pension and small social security checks. Seeing the dismal state of their finances lit a fire under Jeff. He immediately started making the maximum contribution to his 401k and started a Roth IRA while limiting what he spent, even driving his grandma's old car to avoid a car payment.
"I stumbled into becoming a financial advisor and realized that most people who didn't start investing or saving for themselves didn't do it because they didn't want to, it's because they didn't have the right information," he told us. "I'm passionate about giving people the tools and resources they need to take action."
Jeff offers advice and tools for building a secure financial future on his blog, Good Financial Cents. We recently checked in with him to get his thoughts on how to start saving and investing.
Can you tell us about Good Financial Cents? When and why did you start the site?
Good Financial Cents is a personal finance and financial planning blog. I initially started the site back in 2008 as a way to differentiate myself among other financial advisors out there. I thought it would be a great marketing tool for my services, plus I really enjoy educating those on the basics of investing and financial planning.
What's the Money Uprising Movement?
The Money Uprising Movement is the core principle of what my blog is all about. Being a financial planner for more than 12 years, I've noticed a huge disconnect that people have with their finances. More and more people are investing and saving less and getting more and more into debt. The mission of the Money Uprising Movement is for people to take control of their money and work toward achieving financial freedom.
What is your Money Dominating Toolkit? Why should people check it out?
I commonly get asked, "What are the tools and resources that people need to really dominate their finances?"
Through both personal experience and also experience through my readers, I created several resources that would help people take charge of their money.
One of the favorite tools that I currently offer is "The six tools to get your money back on track." On top of that, we help people destroy bad financial habits and to work toward achieving their personal financial goals
What seems to be the hardest part about encouraging people to save money?
The hardest part about encouraging people to save is getting them to appreciate the long-term benefits of doing so. I like to draw illustrations on a notepad to show them what compounding interest really means. Most people that save $25, $50, $100 a month don't realize how much that can grow to be in the next 20 or 30 years. When they can actually see that a $50 a month investment into a stock mutual fund could grow to be $25,000 to $50,000 in 30 years, their eyes start to light up, and that's when I get excited.
What's the minimum you recommend individuals and families put into savings?
Since the average person probably only saves about 5 percent of their taxable income, when I tell them that they need to save 20 percent, they usually freak out, but keeping it real, 20 percent is the minimum of what people need to be saving.
With social security being unreliable and company pensions basically extinct, people have to start saving for themselves. Putting away 5 percent of your pre-tax money in your 401(k) isn't going to cut it unless you plan on working until your late 70s.
How should the amount people save change through their lifetime?
If people can get used to saving the 20 percent earlier on in life, then the need to increase that percentage isn't really necessary. It's those that start saving on the smaller side of the scale -- say 5 percent - who will probably most likely need to save more in the 25 or 30 percent range to make up for the difference.
What do you think are the biggest misconceptions about investing for people who have never done it?
No question, the biggest misconception is that you need a lot of money to get started. I've talked to so many young people that feel that they need $1,000, $5,000, $10,000 saved up before they can even start investing.
Most mutual funds will allow you as little as $25 a month to get going. That $25 a month will add up, plus it gets you in the habit of investing and saving for yourself, so it's much easier to increase it to higher levels when you start to make more money.
Why do you think investing is so important to securing a solid financial future?
Investing gives you options. I could think of so many people who are either stuck in a job that they absolutely hate or living in a city that they would rather not be in, if they had saved or invested and built up a sizeable nest egg that would give them the freedom to either leave that job to find a new one, or relocate. Those who don't have adequate cash savings through investing are a prisoner to their financial situation.
What type of investing do you recommend for people who want to get their feet wet but don't know where to start?
I like to encourage people to start with an online broker versus going to a brick-and-mortar location. Primary reason being is that most online brokerages are going to charge you far fewer fees than going through a local brokerage or even bank.
Two of my favorite online providers for beginning investors are Scottrade and Betterment. With Scottrade, people have to do a little bit more research in choosing their investments, but they do have an awesome toll-free number that they can talk to an investment specialist to help them out. Betterment does a lot of heavy lifting for you in choosing investments; you just have to let them know what your financial goals are and your timeframe.