The Average American Needs HOW MUCH to Feel Comfortable in 2026?

Introduction: How Much Does the Average American Need to Feel Comfortable? (0:00)

Rebie: How much does the average American need to feel comfortable in 2026? The answer surprised me. You be the judge. We’re going to share the numbers and break down what you need to take away.

Bo: Rebie, I am so excited to talk about this because I thought that the numbers that we got, the information that was put out by the Economic Policy Institute was absolutely asinine. It blew my mind. We’ve had a lot of folks over these past couple years talking about inflation, inflation, inflation, inflation, inflation. We’ve heard this the costs of the things that we buy on a daily basis are getting more expensive and more expensive and more expensive. And so I think a lot of people are feeling that sort of strain. They’re feeling that it’s tightening up. But when it comes to okay, what is actually required? What does it take to actually feel comfortable? What does it take to be able to make ends meet? Some of the numbers that we found in our research I just thought in my opinion absolutely bonkers.

The Study’s Shocking Income Requirements (1:01)

Rebie: Yeah, this is a specific study based on data from the Economic Policy Institute. And obviously like Bo said this is on everybody’s mind like we are interested to see what they came up with. But the conclusion that they came to, so here’s the first number is that a single adult needs an income of $106,745 per year.

Bo: So say that again. If you are a single individual with no dependents, in order for you to live comfortably on average in America, the income required to do that is $107,000.

Rebie: But wait, the numbers get bigger. So if you add two adults, like a couple in a household with no kids, the number goes up to above $138,000. And then if you add a kid to the mix, we are at $194,000 of income to live comfortably. Three kids, they say $278,000. So we are almost to $300,000 for a typical American family to quote unquote live comfortably according to this study. What do you think of this?

Bo: And we’re going to talk about this in a moment, but we know what the average income or the median income for most Americans are. So what this is suggesting is that if this is what it takes for one adult to live comfortably or this is what it takes for a household with a child or two children or three children to live comfortably then that must mean that the vast majority of Americans are not living comfortably because the vast majority of Americans fall below these income thresholds and I just refuse to believe that. Now, I’m not minimizing the fact that yes, inflation is a real thing. And yes, the cost of the things that we use on a daily basis have gotten more and more expensive. But the idea that in order for you to be comfortable, in order for you to live the life that you want to live, in order for you to have a beautiful today and a great big beautiful tomorrow, you have to hit these income numbers, I think is just out there. I think it’s totally wonky.

Breaking Down the Numbers by Geography (3:00)

Bo: Now when they did the study they did acknowledge there was some variance by geography and we know that all the time like if you live in one of the higher cost of living areas part of the country obviously what’s needed from an income standpoint would likely be higher but what they found is that for a single individual again single individual no dependents the average income needed was about $107,000 but when you look at lower cost of living areas the average income needed was as low as about $87,000. So that’s $20,000 less notably in like states like Mississippi and of course Ohio. Now I’m not doing it. I’m not doing I’m a bulldog. You think I’m going to do that on air? Not a chance.

Rebie: But then there are although yes of course everyone’s going to say like what about big cities in California and yes cost of living there is much higher. We get that. But the numbers here, they get outrageous. Just to be really frank, in my opinion, in California, a single adult to live comfortably needs as high as $163,000 of income. And then if you add in the kids, like a three child household, according to the study, allegedly needs $480,000 in California to live comfortably.

Bo: So, if you are a family of five in the state of California, you need half a million dollars in order to live comfortably. And what I think is so frustrating is that I think that this could be very discouraging.

Rebie: Yes. I think that’s why I’m getting a little heated about it like who has what’s percentage of people is making $500,000 a year even in California.

Bo: Yeah, we did a show a number of years ago and it was hey what do you think you know “what percentage of population makes x dollars” and if I remember the numbers right the average American thinks that one in four people make half a million dollar a year $500,000 a year and in reality it is like a fraction of 1% like it is so so so much lower than that and so I think that these numbers become discouraging so what we said in true money guy fashion is Let’s dive in. Let’s actually see why did they come up with these numbers? Yeah. Like how are they quantifying? What are they calling comfortable? And when we actually dug into the numbers, I think it got interesting. And I think what the Economic Policy Institute defines as comfortable is different than what I would define as comfortable.

Rebie: Same. For instance, there is some hope hidden in this data. The estimated costs were high. Like for example, transportation costs alone for a single adult were over $1,000 a month. So you can see how that automatically just inflates all of these numbers. It’s assuming you’re spending a lot on like car payments and gas and like public transport. That’s a lot, especially like in perpetuity, like for a significant amount of time.

Bo: And there might be a season where you might spend $1,000 a month, but in order to be comfortable, you have to spend $1,000 every single month on car payments, every single month on gas, every single month on utilities. That just seemed high, but I didn’t think that was even the most remarkable number. There was another little nugget that they put in there, and again, this is what they are defining as living comfortably. They said that the discretionary spending for a single adult would need to be somewhere around $2,600 a month. $2,600 a month in discretionary spending. Whatever you want, just fun money. And I think that for a lot of Americans that would be a big fun money budget.

Rebie: Yes. And listen, if you have that, if that’s your goal, awesome. That would be great. But to say that that’s what you need to be comfortable, that’s a bridge too far for me. That is a giant discretionary spending income for a single individual like just for one person just on whatever they want in my opinion.

What You Can Control (7:05)

Bo: And so what I would encourage you guys to recognize is that maybe you’re not at one of these incomes. It doesn’t mean that you’re behind. Remember the median household income is about $84,000. So what this is saying is on the median there are very few households in America that are actually living comfortably and I just don’t think that that’s the case but we know that personal finance is exactly that it is personal and so you have to define for you and your life what does comfortable mean so what are some of the things that you can do how can you take this information and what can you do when you think about creating a comfortable lifestyle for yourself? Well I think that you have to focus on the things that you can control. What stays inside of your onus of control? And the very first of those is just simply living within your means. Yep. If you don’t have a large income, if you don’t have a lot of discretionary cash flow, maybe spending $1,000 a month on transportation would not be inside your means. Maybe having a $2,600 a month slush fund or fun money fund is not inside your means. So, you have to figure out what that means for you.

Rebie: It’s important to note that that not being in your means is very very normal. Like that is the vast majority of Americans are not able to spend $1,000 a month on a car payment very often. Nope. And so yeah, like living within your means isn’t always super popular, but it’s powerful powerful stuff if you just make those decisions when you make those big purchases like a car can make all the difference.

Bo: Well, and that’s why we have rules that you can use. If you buy a car, we want you to follow 20/3/8, 20% down. Don’t finance for any more than 36 months. And don’t let your car, your transportation cost, your car payment be more than 8% of your income. You can do the same thing for houses. We have our 3525 rule because a lot of times it’s not the latte decision. It’s not the $5 a day that cause people to live outside their means. It’s these big decisions. It’s the automobiles. It’s the homes. So, make sure you understand for you where do your means end and what does it mean to live inside of those.

Rebie: Yeah, you can check out moneyguy.com/resources if you want more information on those car buying and home buying rules.

Bo: Another thing that you ought to think about as well is that when it comes to personal finance, and Rebie, we talk about this all the time. When it comes to making financial decisions and trying to like impact your financial life, there really only two levers that you ever get to pull.

Rebie: Oh, yeah. I thought you were going to say Do you know what those levers are? I do. And it’s I think I think that sometimes people don’t like this answer, but it’s so simple. It’s actually great news in my opinion. You can pull the lever of you can make more income. That’s it. You can rise up in your career. You can side hustle. You can use your opportunities and resources to get more income or you always have the option to lower your expenses. You can see where you can cut, how you can get creative, how you can adjust. And so those are really your two options. And you have a lot of control over those options. Sometimes it may take a while to figure that out. I understand it may take some time to pull those levers fully, but they’re there for you and that is something that you can control. So definitely evaluate your levers before getting discouraged about, you know, where you are or your financial journey.

Bo: You know, there’s a wonderful couple that we recently sat down with on Making a Millionaire. If you’ve not had a chance, make sure you subscribe to the channel right now because every other Monday we release a brand new Making a Millionaire episode where Brian and I get to sit down from a real financial mutant just like you and do a deep dive into their personal finances. And what I think is really interesting is recently we sat down with a young couple and man, they were not doing stuff wrong. They weren’t overspending. They didn’t have crazy housing. They didn’t have crazy automobile, but they had literally cut their expenses down so low. They had cut it down to the bone. The conversation we finally had to have with him is, hey, you have exhausted the lever of expenses. You have to figure out how do you control that income lever. How do you go out figure out a side hustle? Maybe one of the individuals, maybe you need to go back to work. You have a highly sought-after skill set. Maybe there’s some way you could figure out how to monetize that. It was a great conversation for them because no matter whether you have $10 or $10 million, those are the two levers that you have to operate with. So recognizing that and recognizing again what’s inside your control can be unbelievably valuable because sometimes just a little bit can go a long way.

Rebie: And that brings us to our third point. Be sure you’re bedazzling your basic life. As Brian would say, since he’s not here today, we will definitely say his phrase because it’s so true. Take advantage of the low-cost experiences, especially if you’re in a season where your expenses can’t go too much lower or your income hasn’t gone up to what you want just yet. I think that there’s a lot of opportunity to make memories with your community, with your family that aren’t super expensive. We’ve talked all the time. You’ve said how when you went to Disney World, it was like this big milestone. Your kids love the pool almost more than the park, you know? And it’s just kind of one of those reality checks where like it’s wonderful to go to Disney and if you get to do that and plan for that, amazing. But you don’t have to do that to enjoy your life or dare I say to live comfortably. Which is what this is all about, right? I think the reason I took such issue with this is because I think the study kind of erases the seasonality of your life. Like there might be a time where you do have that discretionary income. There’s going to be a time where you do not and it doesn’t have to be neither one of those has to be forever or is promised to be forever. And so I think that there’s a lot of freedom when you see like, okay, maybe I do have to buckle down for a year or two to pay off this debt, to build up this emergency fund, to invest even though I’m in the messy middle, but then there’s going to be another season where, oh, we do have a little more income as a household. Somebody went back to work. I got a raise, we got a bonus. Like, I think that’s why I didn’t like the study. So, that’s my opinion. I am excited to hear what you guys think about these numbers and we hope that we were able to dig into why they were reported the way that they are and really take it back to what you can control about your own personal financial situation and your own levers that you can pull, income and expenses.

Bo: So, and one of the things I love is a lot of Americans are arriving this conclusion, hey, I don’t feel comfortable. I don’t know if I’m doing the things that I’m supposed to be doing. I don’t know if I’m doing them the ways that I’m supposed to be doing. That’s one of the very reasons why we came up with the financial order of operations. We wanted you to have a guide to help you know exactly what you ought to be doing with your next dollar. Hey, maybe one of the reasons that I don’t feel comfortable right now is I never actually got my fully funded emergency fund, my fully funded emergency reserve. Man, I bet if I finished step four and I had that in place, that would allow me to feel more comfortable in other areas of my life. Or maybe I don’t know if I’m saving enough. Okay, well, financial order of operations, I get to 25%. Okay, now I can spend freely. I don’t have to worry. Am I doing the things that I should be doing? So, if you want your free copy, you can go to moneyguy.com/resources and check that out as we go into a new year, this is a great time to re-evaluate. Hey, where am I? What is my highest deductible? Do I have it covered? How much are my monthly living expenses? Do I have a fully funded? Am I maxing out my employer benefits? Am I putting money in my Roth IRA? Am I doing the HSA? Now, we’ve already done an episode of this. A lot of the numbers are changing in 2026. So just because you were set to max out in 2025 does not mean that you’re automatically set to max out in 2026. So let the financial order of operations be your guide so that you can start living both a comfortable today as well as a great big beautiful tomorrow.

Live Stream Q&A – Knowing Your Number (15:02)

Rebie: Well on that note this is a live stream day so we’re going to be answering a lot of your questions. If you have a personal finance question make sure you drop it in the chat below and we are going to answer them. Awesome. So, we’re going to kick it off with Silas’s question. He says, “Is there an age or a net worth level where I must know my number?” He’s referring to his retirement number. “I’m 30 and everything seems speculative this far out from retirement. I feel like I should just save a bunch.” And that’s all he says, but I’m feeling like maybe he’s feeling he’s flying blind a little bit. What would you say to Silas?

Bo: Silas, you’re 100% right. And this is going to be a hot take, cold water, whatever you want to call it. But I think so many young people, they love personal finance and they love the details and they love the spreadsheets and they love the Monte Carlo and they love all of those parts and pieces. But when you are 30 years old, and let me just speak from my experience. My 30-year-old self and what my preferences were, what my thoughts were, my future looked like is very different than what my 35-year-old self was. And just having a five-year spread, a 5-year change, there were so many variables that were different. That same thing is true exponentially. So when it comes to thinking about a 30-year-old who’s looking at retiring at 60, 65, 70. That’s why we tell folks early on in your journey, you don’t have to know your number. You don’t have to It’s okay to play horseshoes. You just want to be directionally right. That’s why we tell you that the sooner you can start saving 25% of your gross income, the earlier you will be able to give yourself options to figure out, okay, what is my number and where do I need to be? So early on in the journey, don’t focus on the finish line. Focus on the pacing. Focus on 25%, 25%, 25%. We have a great deliverable if you go to moneyguy.com/resources called How Much Should You Save? Once you go see this, it will tell you, okay, am I saving what I should be saving? Well, if you’re doing that and you’re moving directionally in the right place, you don’t have to have all the answers. So, but your question, Silas, was is there a specific age or a specific net worth where I do need to know my number? Yes, but it’s not a specific age, and it’s not a specific net worth. It is at that point where you are seriously considering financial independence. You want to know that before you put in that resignation, before you decide to tell your boss what he can do with a job, whatever that thing is for you, you want to make sure that you know your number, that you’ve stress tested your plan, and you’ve factored in all the variables. Hey, I know how often I’m going to change automobiles. I know in this crazy healthcare marketplace that we work, I know how I’m going to have health insurance. I know how much I want to spend on travel. I know what I’m going to count for later in life. I know if I’ve got to cover the cost of college or weddings or any gifting. I know if I want to relocate whatever those things are in your situation. You have not only defined your number, but you’ve also stress tested that number to make sure that the future that you hope for, the future that you’re dreaming about is actually realistic and is actually attainable. So for us, a lot of folks begin to have those conversations when they’re five, seven, eight years out from actually making that decision. So long as you’ve been directionally doing the thing you’re supposed to be doing, saving 25%, saving 25%, saving 25%. But if you are someone and you like to have a goal and you like to have an idea of the destination, that’s why we did the know your number course. You can go to learn.moneyguy.com. And Brian and I, we used to call this because we’d sit down with prospects who were thinking about hiring us. We’re like, “Okay, well, what do you want your money to do?” Like what’s the goal? Right? And we’d pull out our calculators and our pens because we’re nerds and we just do some like quick back of the napkin math. What we were doing is on the fly, we were doing the know your number course to give them a loose idea of what the destination looks like and then helping them paint a path of how to get from where they are today to that destination. That know your number is supposed to be a directional indicator of am I moving in the right direction? And so, Silas, for you, you’ll be able to define, okay, when do I need that? When do I need to know that? But if you don’t know it and you don’t care about it today, that’s totally okay. Try to get to 25%. And the rest will take care of itself.

Rebie: Yeah, Silas, I’m in a similar boat. Like, I’m in that age range. I use the know your number tool and it at least helped me see like, okay, I know I want more than this or like if I’m saving this much, how much am I going to have? It still gives you like a ballpark. I recognize that number may change or like I don’t know exactly when I will need to be financially independent and that’s fine but it still gives me a benchmark to shoot for and kind of confirmation that like okay if I’m saving this 25% or if I’m saving this x amount I should have enough to do something you know be dangerous retire in some way and that is really helpful. So, go to moneyguy.com if you have not checked out the know your number course if you’re interested in doing that.

Net Worth Statement Time (20:23)

Bo: You know, I told myself that I was going to answer the question really quickly. I was like, “Oh, I’m going to show them how fast I can do this.” Just because, you know, like speed, I don’t know. It’s like developing a skill set that maybe is not natural, but I didn’t do it fast. Hey, by the way, I think Oh, go ahead. It’s end of the year. You know what that means? Net worth statement time. Net worth day is almost here.

Rebie: Have you done yours yet?

Bo: Oh, no. You’re the 31st. I never cheat. I never ever cheat. This is it’s so silly. I purposely for the past I don’t know month or like I haven’t even logged in to look at my accounts because I don’t even want to have an idea. I don’t even want to I like to be surprised. But here in two days I will go in and start you know it takes a while to put it all together but start putting together all the numbers and it’s so exciting. If you’re someone who’s never done your net worth before, you’ve never tracked it, you’ve never looked at it, this is an amazing time to start right at the end of one year, beginning of the next year because it lets you know where you are because how can you know if you are on track, ahead of the curve, behind the curve, maybe you don’t even know where the curve is if you don’t know where you’re starting at today. And a net worth statement can bring that to light. So, if you want a free template, we have one at moneyguy.com/resources. Or if you want to use the exact same tool that I use, that Brian uses, that Rebie uses, you can go to learn.moneyguy.com and check out our tool that we built ourselves and has a dashboard with all kinds of fun, interesting information. This is a wonderful time to start doing that.

529s and Net Worth Statements (22:01)

Rebie: Absolutely. I have a question about net worth statements up next from katrinecraft, I believe it is. It says, “Hi, Money Guy team. Longtime listener, first-time caller. That’s always fun. Nice to hear from you. My husband and I filled out the net worth tool for the first time yesterday, which is very exciting. Do we include the kids 529s anywhere? So, let’s talk about some of these like extra investments and accounts around. How do you put those on the net worth statement or do you at all?

Bo: Yeah. So, what is a net worth statement? It is simply a listing of all the things that you own beside all the money that you owe and then you net those two and you come up with what your net worth is. And so when we think about things that we own, we’re thinking about, you know, assets. We’re thinking about cash, checking accounts, savings accounts, investment accounts, Roth IRAs, 401ks, primary residence, business interest, real estate, those types of things. Liabilities, we think about all the money that we owe. 529s, while they do seem like they’re an asset because they are an investment account, we consider 529s to sort of be like a prepaid future expense, it’s this future expense that I’m going to incur and I’m kind of, you know, it’s like a glorified sinking fund. I’m going to have this thing that’s going to happen in the future. So, I’m going to fund this sinking fund today to be able to satisfy that. Because of that, because those dollars aren’t actually part of our true financial independence journey, they’re more of a income statement item than a balance sheet item. For all you accountants out there, we like to consider 529s on the footnotes. They’re not actually your assets. They’re an expense that you’re likely going to pay. You’re going to help your kid pay at some point in the future. So, if you use our net worth tool, you’ll notice there’s a footnotes page. Well, on the footnotes is where we want you to list that kind of stuff. We want you to list all of your insurance policies, your life insurance, your disability insurance, maybe your property and casualty stuff if that’s important to you. We want you to list the important people, your accountants, your attorneys, your insurance agents, your financial advisors. And we also want you to list all of the other outside assets. This could be 529 accounts, custodial accounts, UTMAs, UGMAs, other types of assets that aren’t necessarily in the net worth statement, but you still want to have an accounting for, you still want to keep track of. So for us, me and Brian, I know Rebie does the same. 529s are a footnote item, not an actual net worth sheet item.

Rebie: That was a great answer. Katrine Craft, thank you for the question. I was thinking I think I’m going to make today a tumbler day. Whoa, nowhere. So, Silas and katrinecraft, if you would like a Money Guy tumbler, just email [email protected] and we will send one to you. Bo is modeling the tumbler for me today. It can also be a koozie if you would like to put a can in and keep your beverage cold as well.

Paying Off Low-Interest Mortgage (26:18)

Rebie: All right, I’ve got another question queued up for you. It’s from NWWinnursing6068, I believe. That’s a complicated username, but the question is, I have $23,000 left on my mortgage with a low interest rate of 2.375%. Should I pay it off? Should I pay it off? I’m in step eight of the FOO and have $35,000 cash on hand, no other debt, or should I invest the cash I have? It’s a little unfair that I’m asking this when Brian is not here. So maybe we can speak a little bit for him because this sounds like a question that Brian himself had.

Bo: I mean, Brian was in this exact spot. He had a low balance mortgage. It was at a low interest rate and he had cash available to pay it off. Now, here’s what you said NW that I thought was great. Hey, I’m in step eight. And this is a little bit of a hot take. Not a hot take. This is something that people forget. When you’re in step eight, you get to do what you want to do. You get to choose, right? Like if you want to pay off your low-interest debt, by all means do it. It’s really fine to do. If you want to go buy a nicer car or you want to go on a trip or you want to pick up some new hobby in step eight, you get to define what you do with your dollars. So, is it okay? Should you do it? You totally can if you want to. It depends on what your goals are. What I’d love to know about your overall financial situation is how far along in the wealth building journey are you? If you got a couple million bucks saved and invested working for you, then likely $23,000 of capital going to extinguish that mortgage is going to be immaterial to your financial life. If however, you’ve been a debt crusader and you’ve got $50,000 of investment saved up and you have this because you’ve been prioritizing paying off the mortgage and you got $23,000 left on it. I’m going to argue that $23,000, depending on your age, could potentially work harder for you than if you go satisfy and extinguish that debt. So, I’d want to know a little bit more about your situation. But my leaning is this is fairly immaterial for you. And if it’s fairly immaterial for you and it’s, you know, like Forrest Gump said, this is just one less thing, there’s no problem with you paying it off. Even though there’s probably an arbitrage, you could invest that in cash and make more. At some point, you just don’t want to have anymore. You don’t want to deal with a mortgage statement. You don’t deal with a mortgage company. And that’s okay. Step eight, you get to choose. You get to create your own adventure.

Rebie: I like that. Create your own adventure. Well, NWWinnursing6068, you get a Money Guy Tumbler since we answered your question. And if you would like one, just email [email protected] and we’ll send that out to you.

Roth IRA Contribution Timing (29:09)

Rebie: Next question is from Madison Blanchard. It says, “My husband didn’t contribute to a Roth IRA in 2024.” Okay. Is it too late to move the money now before the end of the year? You think she meant 2024 or you think she meant 2025?

Bo: You know, I think she meant 2025. Madison, if you’re still watching and in the chat, let us know. Because those are two different things. This will be this will be a quick one. If he did not put money in a Roth in 2024, unfortunately it is too late. You have missed the window to be able to fund a Roth IRA contribution for 2024. If however you meant to type in 2025, one of the beautiful things about Roth IRAs or IRAs in general is they’re kind of like little time machines. You can get into the next year and say, “Uh oh, I didn’t fund. I didn’t put my money in there.” You have up until the tax filing deadline up until April to be able to fund your Roth for the prior year. So even though you didn’t fund it by 12/31, you could still go put money in your husband’s Roth or he could go put money in his Roth in January, February, March of next year. No harm, no foul. There are a number of accounts that will allow you to do this. You can do this for HSAs. You can do this for solo 401ks. You can do it for SEP IRAs. You can do it for profit sharing if you’re an employer and you have a employer sponsored plan. So it is not too late to fund for 2025. It is too late to fund for 2024.

Bo: Good answer. Honestly, when I was scanning I was thinking she meant 2025. Those are two very different answers. You’re really behind on that 24 contribution. 24 are too late. 25. Yes. Do it now. That’s the answer.

Finding Your Financial Mutant Match (30:59)

Rebie: All right. I’m going to ask you a ridiculous question. Uh oh. But somebody asked it and I kind of want to know what your response is gonna be. Brandonleonard377 says, “Good morning, Money Guy team. I’m 26, single, and at around 340K net worth,” which sounds like he’s doing amazing. So, shout out to you. Finding a partner who shares mutant values is proving to be difficult. Have you considered making a spot for single mutants to meet? How does he find love, Bo? How do mutants find other mutants? Or do you have to? What do you think?

Bo: Matt, I’m going to need you to work on let’s start snowballing names of our dating app. I don’t know what it’s going to be, but I need you to come up with a really good one. We’ll have that ready for you in Q2. Here’s what’s really interesting. I think a lot of financial mutants, depending on your level of mutation, find it hard to find other people that are the same as them. I will use my wife and I as an example. I’m a big-time financial mutant. I like live and breathe this stuff. I do this for a living. I talk to you guys about it all the time. I just love talking about it. People all the time say, “Man, how did you and Brian come up with the idea to do the podcast?” I was like honestly the podcast is nothing more than you guys seeing conversations me and Brian were having either way even the cameras weren’t on this is the stuff that we talk about. These are the kind of things that we go through. And so trying to find someone who has that same level of desire and attention and affinity for personal finance might be difficult. And you know my wife she’s not watching right now because I know her and the kids are in a movie right now. But if she were watching, she would not be offended me saying this. She’s not exactly a financial mutant. I mean, she understands how to make wise financial decisions. She understands the basics about live on less than you make and save and invest for the future. But if I was like, “Hey, babe, talk about how to execute a backdoor Roth.” And she’ll say, “What?” She could tell you what a Roth is, but she’s not going to know the intricate nuances. And that’s okay because what matters in our relationship, Brandon, is that we have the same goals. Meaning that, hey, we know we want to be able to do this for our kids and create this kind of life and have this sort of freedom and use our money to accomplish these sorts of things. So long as you can be on the same page about the goals, you don’t necessarily have to be the exact same type of mutant. Now, what happens though is when you do meet that person and when you first start interacting, there’s a little bit of friction, right? We did you know what our search function on the website is so good now. Yes. If you go to moneyguy.com and you search love marriage dot dot dot and finances. It was an episode that we did right before I got married where basically walk through me as a financial mutant all the things that I was going to just absolutely convince my non-financial mutant wife of and it’s hilarious going through how we’re going to spend money and what’s the budget look like and all this kind of stuff. And then I tracked every single dollar for an entire year meticulously and we did a revamp to see how close I was. And boy was the first year of marriage for us an education. And it was way more of an education for me than it was for her.

Rebie: So, I would tell you where do you meet, you know, other financial mutants? Well, our Reddit thread is really good. You know what I mean? It’s pretty popular. If you don’t follow us on socials, you can go follow any of our socials. That is where other financial mutants hang out. See, but we wouldn’t do this to be really frank with you. We would not do this in order to have people meet in a romantic way. But if there was a community that was just for mutants, would somebody like this use it? That’s what I’m saying. That’s kind of where I’m going with this. I’d be curious to know actually. Please tell us in the chat.

Bo: I’m not suggesting that you begin propositioning in the Reddit thread. What I am saying though is that that is where like financial mutants hang out. That’s what financial mutants do. They like to hang out on the Facebook page. They like to interact with folks. So, I think that’s where they hang out. What matters more is when you’re searching for this person, does this person value the same stuff that you value? Yeah. Does this person care about, hey, one day, you know, hey, I really want to travel one day. I don’t ever want to leave my house. It’s going to be some stuff more difficult beyond finances.

Rebie: I think that that’s the thing like are you aligned generally speaking in life and like do you respect each other enough? Like, are you looking for someone to just go along with you no matter what? That’s gonna be difficult. Or like is your partner same thing like is your partner wanting nothing to do with money and just wants to spend all the time and doesn’t want to listen to you. Like that’s a whole that’s a bigger problem.

Bo: That’s right. That’s exactly right. I think and Brandon, let me just go ahead and give you a heads up. At 26 with a $340,000 net worth, you’re crushing it. You’re absolutely crushing it. Objectively, take away all the love stuff, you’re in a fantastic spot. I don’t think that in order for you to be happy, you have to find another 26-year old that also has a $340,000 net worth and is doing the exact same stuff that you’re doing.

Rebie: Also, you’re giving yourselves more options. That’s right. Like now, so if you did get married and like you do decide you want to do something like with the kids later, what like you’re setting yourself up really well to be able to do that. Really well. So, I think that’s great. Some names for our dating app. Okay. Have come up. We’ve got Net Worth. Oh, that’s good. Do you get because it’s not net Matt, that’s good. Mutual Mutants, that sounds like an insurance company. Mutants Mingle. That’s the winner. Bo’s like done and done. We’re launching. Hey, let’s Can you go by that URL real quick? Let’s make sure we get that locked down. Oh, man. Somebody said, oh, where is it? They had a tagline. Mutants Mingle. They said, dating app tagline, your love can grow 88 times over. Hey, look at that. That was a little cringe, but I had to read it anyway. Anyway, mutants mingle. Fun question. Thanks for playing along in the chat there with us. That’s so good. Mutants mingle.

Kid’s Roth IRA Setup (37:18)

Rebie: All right. Tumbler. If Brandon wants a Tumbler, we’d love to send you one. Just email [email protected] since we answered your question. All right. Next question is from Chaosmedicine. My 11-year-old is making between $50 to $100 a week working for the neighbor. He hears you guys in the car, which I love that. I love it. And he wants to do a Roth IRA. Would it really be as simple as filing a tax return and starting with Fidelity? He’s 11 years old. What? Yeah. I mean, I think he has earned income. What else do they need to know?

Bo: Yeah. So, to answer your question, Chaos, yes. It is a simple if you file a tax return you claim the income that he’s receiving then yeah you can contribute up to 100% of his compensation or the IRA max whichever is lower. So if he makes you know 100 bucks a week 52 weeks in a year can’t do the math in my head but if he makes like five grand then he could put five grand into a Roth IRA which is great to the earned income. I tell parents this a lot though because you have to answer the question is it worth it and I don’t mean like is it worth it like obviously saving in a Roth and compounding interest you know from age 11 till 65 is obviously worth it from like a mathematical standpoint but what you really care about with your son is that you want the behavior there. So, I tell a lot of my clients, hey, I know that you want to do this. How about instead of doing this one, have you taught them the basics of finance? They have a bank account. They understand how like saving works. Like, hey, I want to take my money and put it in there. They got that. Okay, great. Well, next, once you get past that, you can absolutely do the Roth IRA. You can absolutely set that up. But a real easy thing you could do is you could set up a custodial account. And you could say, “Hey, let’s set up a custodial account. You make 100 bucks a week. You put 50 bucks in here. Your dad’s going to match at 50.” And what you can do is you can start the behavior of doing that without having to have it inside the Roth structure. Again, I love the Roth structure. Don’t mishear me that I’m saying don’t do the Roth structure, but there are some there is more nuance to it and there are some steps required to make that happen. There are other lower-step ways to get them involved. So what I tell a lot of again these are like friends or clients is hey why don’t we do the UTMA/UGMA account until your kid gets their first actual tax form until they get an actual W2 an actual 1099 so that way you’re not like having to think about consolidating the income from the neighbor for raking leaves or whatever you have an actual tax form that’s going to substantiate filing the tax return. It’s just something to think about. But yes, if you want to claim the income on a tax return, file the tax return, boom, your son is off to the races.

Rebie: Yeah, I love that he’s listening and I love that he wants to do that. So, keep up the great work, parenting work. That’s awesome. And hopefully that gives you some options that can keep him excited and hopefully set him up well for the future.

Bo: You know, I’ve got my 10-year-old doing this. Did I tell you about this? My 10-year-old Barrett. I told her I was like, “Hey, babe, you’re 10. It’s almost car time.” Now, it’s not really almost car time because 16 is car time, but it takes a while. And I was like, “Hey, here’s what mom and I are probably going to do. We’re probably going to do a third, a third, a third with you. You save up a chunk of money. That’ll be a third of your car. Mom and dad will throw in a third. And then mom and dad will loan you the other third because I want you to have a payment. I want you to understand what it’s like to have to make a payment and we’ll be the bank. So, a third, a third, a third.” And I was like, “So, you need to start making some money.” Well, she came up with this great idea for a trash can valet service. This is so great and I’m going to brag a little bit because I can. She came up with this idea. Well, we have some friends who do it, and so we put our trash out on Thursday nights because it runs on Friday. So one Thursday night, she just went for everybody on her street and she marked down all the people whose trash cans were out. So she knows that they’re Friday morning delivery folks, right? Well, I helped her put together this little pitch where she’d knock on the door and she’d say, “Hey, can I ask you a quick question? Question number one, does your trash service run on Friday?” And they’d say, “Yes,” because we had already done that, right? And she’d say, “Hey, question number two. Have you ever forgotten to take it out before it ran?” And I gave her like, if they say “No,” do this. If they say “Yeah,” she was like, “Oh, yeah. My dad has too. And boy, does he get frustrated about that, but guess what? I have a solution for you. I’m starting a trash can valet service where every Thursday at 7 p.m. I’ll take your trash out.”

Bo: And it was awesome. She knocked on so many doors and she got so many nos and she loved it. It was such a wonderful experience to see her have the resilience to go knock, do her pitch, ask, get a no. I am so thankful that she had the experience of getting all those and she did get some yeses. So she’s making like tens of dollars a week, which is great. But she has like five or six clients and what’s great is she now has a responsibility because of Christmas or New Year’s, the trash day got bumped. And I was like, “Yeah, I got an email. Everything’s bumped back one day. So you got to bump back your service.” And it’s just been really fun to see that kind of take hold. And now to get the bank account opened and get her to deposit. It’s just a super fun thing. And if we can instill those types of behaviors in our kids at 10 years old, 11 years old, I just think that’s awesome.

Rebie: That’s amazing because that resourcefulness will go with her everywhere, you know, like for the rest of her life. I love that so much. Are you a customer?

Bo: Of course I am. Of course I am. I was like, “You better go sign up right now.” I do get super annoyed when I forget. There’s nothing more frustrating than not taking the trash out because we go through some trash.

HSA as Emergency Fund (43:50)

Rebie: Let’s see. We got another question. It’s from Davidlinsmeyer7797. He says, “Is this a FOO hack? My employer contributes $4,500 to an HSA. Should I invest that even if my wife and I are still building our three-month emergency fund?” Because in the FOO I will hold up the sheet in honor of Brian. You can get this for yourself for free at moneyguy.com/resources. Step four is emergency reserves and then you kind of get going with HSA and Roth investments.

Bo: Yeah, but you know what this one I’m going to I’ll see you but I’m kind of going to raise it feels like it’s step two employer match. It is employer related. It’s unclear to me if it’s required that you put money in or they put money in. It says my employer contributes. So, if I were sitting here, this is the way I would think about this. And by the way, $4,500 into your HSA. It’s great. I don’t know that I’ve heard of that aggressive of a contribution from an employer before. So, that’s incredible. Everyone in the chat’s going to ask who you work for. But here’s the way that I might think about it. If I don’t have a fully funded emergency fund, I get the $4,500 into the HSA, what I might do is in the interim, I might have it sit in cash and I might think of that as part of my fully funded emergency fund as I’m building up cash because a lot of the emergencies that we have when life comes our way are medical emergencies. Well, if you have money inside an HSA, you then have that money to be able to use. So what I would do is I would leave that in cash until I got to the point to where I had a fully funded emergency fund. Then once I get that three months, four months, six months, whatever is for you, once I get my emergency fund fully funded, then boom, I go invest those dollars. So I let the dollars stay in there. I still get one of the tax advantage because your employer put it in there, but I still have the money there ready and primed for future growth once I’ve completed step four. That’s probably the way that I would think about it if my employer was putting that money in there. $4,500.

Rebie: I know. If that’s truly just the employer putting it in, that’s awesome. That’s wild. Well, David, if you would like a Money Guy Tumbler, just email [email protected]. And just in case, I don’t know if I gave Chaos Medicine Tumbler for his question, you can email [email protected] in case I forgot to say that. Thanks for the questions.

Balancing Kids’ Savings Goals (46:30)

Rebie: I have it on good authority. I haven’t been as dialed into the chat today, but apparently there were singles in the chat exchanging info. Just like looking connecting on LinkedIn. What if that is so official?

Bo: What if like two or three years what if two or three years from now we sit down with a Making a Millionaire guest and they’re like and their story was it was the Money Guy show that the Money Guy chat. Do you realize if Brian ever was able to have a Hallmark movie made after something that happened with the Money Guy show?

Rebie: Honestly, that he would be happy just to imagine the Hallmark story, just to hear your story. It doesn’t even have to be a movie. That’s wild. He would love that. That’s wild. No pressure, but fall in love and get married. Okay, thank you. Awesome. Want to do another question?

Bo: Yes, ma’am.

Rebie: We’ve got one from Aarongray2660. It says, “Hey, money guy. First baby coming in February.” Okay. We’ve had several people in the chat say their first baby is coming soon. So, congrats to everybody and congrats to Aaron. It says, “If trying to do step five, how do we balance saving for our kids intermediate goals like for 529 versus gifting them the tools to make their own wealth like a car, test prep, etc.” So, I think they’re talking about like we have some money to save for our kids. We say 529s a lot. We talk about those. What about saving for a car? What about saving for bigger expenses? Test prep is interesting. I’ve never heard that before.

Bo: Yeah. Will you hold the FOO up for me real quick? Yes. If you’re in step five, that’s like the Roth and HSA step. That’s the step where you are building towards future financial independence and you’re saving up tax-free dollars. So, your question like, okay, where do 529s fall? Nowhere near there. 529s are like a step eight. So, like you got to get through step five, through step six, into step seven, onto step eight before you start funding 529s. But then you threw in some other stuff there like, hey, what about cars test prep? What about giving them the tools to be able to build their own wealth? And I love the language that you use there. What I hope for all three of my kids is that I am able to instill in them not this idea that mom and I have done well and mom and I have been able to build up to a certain level of wealth but I want to instill in them hey these are the behaviors necessary so that I can build my own wealth and I can stand on my own two feet. I care a lot more about that than like, all right, let me put money in account for them and let me fund their 529, let me do the I mean, all those are wonderful things, but I want them to have those tools. And so I do think it’s one of those things you’re going to have to know your own financial situation. I have a number of like friends that I grew up with and the deal was, hey, if you want a car, you got to go out and get it. And I have some that the parents said, hey, we’ll get you a car. And I have some it was like a joint effort. So, like you’ll have to determine what’s available and appropriate for your financial situation, for your family situation. I think those short-term goals like test prep, cars, I think that those are more like current expenditures that by all means, you want to set your kids up for success. I mean, it’s so funny. When I was coming, you know, I got a fairly unique background. I didn’t know about test prep. Like, no one ever told me that you could like study for the SAT. I took the ACT, right? That it wasn’t popular where I came from, I guess. But I didn’t know that was like something you could like prep for and do all this stuff. Man, it would have been awesome if I would have known that, right? And so if you can like instill in your kids, I found out I was 10 points on the SAT off of like unlocking tons of scholarships. Well, it doesn’t matter. I was 10 points off. But you’re I get it. Like you’re saying like now there’s so much information like people are so aware of that or depending on where you are economically. And so if you have the mechanism to set your kid up for success in those areas, absolutely you should do those. I do not think that those are in conflict with step five. Step five should be something you’re already doing. Putting money in the HSA, putting money in the Roth IRA, building up those tax-free accounts, and also figuring out how can I set my kid up with the tools and skills necessary to be able to make great decisions later on in life.

Rebie: Yeah. And I think it is interesting like with cars like you just mentioned not to just repeat but how you’re getting creative with your oldest daughter about potentially doing like a third a third a third so she has the experience of like having a car payment has to save up a little bit of money so like there are other I don’t know there is some creativity that could go into these two and you could do a little of all if you will so I don’t know I thought that was an interesting question and good answer from you too.

Overcoming Fear of Roth IRAs (52:53)

Rebie: All right. Next question is from Dr.bodde07. He says, “I’m 36 years old, single income family of four. I only have 401ks. How do I get past the fear of messing up getting a Roth IRA or a spousal Roth IRA? I think he means getting it wrong. Investing is very intimidating to me.

Bo: Well, so, okay, let me answer the second part of the question first. Investing in and of itself doesn’t need to be intimidating because the world has made it so so easy. This is one of the reasons why we love target retirement index funds. If you can answer two questions, how much can I save? When do I need the money? You’ve answered everything you need to know when it comes to investing. So, if you’re 36 years old, let’s say that you want to work for another 30 years. 2025 plus 30 is 2055, right? I’m always so nervous about doing that math. That’s 2055. Go look up a target retirement index fund. You could do Fidelity, Vanguard, Charles Schwab, fill in the blank. Target retirement index fund 2055. And you just put the money in there, right? Like that’s an easy way. You’re going to have an allocation right now. It’s 30 years out. It’s going to be more aggressive and then as it gets closer and closer, it’ll get more and more conservative. So, don’t let that be the hindrance. Like investing is intimidating. Don’t let it be intimidating. If you can answer those two questions, then you can invest. Now, when it comes to the Roth and spousal Roth, let me make it easy for you. If your income is under a certain threshold, well, here’s you’re a single income household. Only you work. A lot of people don’t recognize that even if your spouse does not work, you can contribute to an IRA, not only for yourself, but also for your non-working spouse, so long as the total income you make is high enough to max both them out. So, you know, if the limits are $7,000 a year for Roth, so long as you make more than $14,000, you could put $7,000 in your Roth and you can put $7,000 in your spouse Roth. It’s not any harder than that. So, like if you’re under the income thresholds to be able to contribute directly to a Roth and it’s like I don’t know $250,000 the numbers change. It’s like somewhere around that for a married couple. If you make under that amount then you can just put money directly in a Roth. Go open a Roth, go open a Roth for your spouse and dump the money in. If you make more than that, that is where it gets a little more nuance. That is where it gets a little more complicated and you can do what’s called the backdoor Roth where you can open a traditional IRA. You can make a non-deductible contribution which means you put money in there and you just don’t take a deduction on your tax return and then you can convert that to Roth and it will be a tax-free conversion assuming you don’t have any other IRAs no SEP IRA no SIMPLE IRA no traditional IRA no IRA rollover so long as you do not have those then you can do a tax-free Roth conversion if you do have those well then it gets a little more messy but you’ve already said to me, Dr. Bode, that you only have 401ks and assuming that you didn’t roll over those old 401ks in an IRA and they’re still in the 401k structure, then doing backdoor Roths is not something incredibly difficult for you. I understand the apprehension. That’s why if you go to our website and go to moneyguy.com and just type in backdoor Roth, just type that in on our search function. You’ll be amazed at the articles, at the videos, at the tutorials, and all the stuff that will come your way that will help walk you through the right and accurate way to do it without running afoul. It does not have to be difficult. Don’t let lack of desire to do a smidge of research be the thing to miss out on a great opportunity. I had a call with a prospect yesterday. I was considering hiring the firm and I was like, “Man, here’s what I’m so nervous about if you don’t hire us. I just told you that you are prime candidates for doing backdoor Roths and you haven’t done it for this many years. I’m nervous if you don’t hire us, you’re not going to do it. You might need to hire us just so that we can continue to like prod you forward to go take advantage of this planning opportunity.” It sounds like Dr. Bode, you might be in that same exact position.

Rebie: Yeah, some resources for you. Like Bo said, go search backdoor Roth or Roth on our website, moneyguy.com. We also do have an ebook all about Roth IRAs. If you just wanted to like read up and feel more confident, go to learn.moneyguy.com. And then like Bo said, if you truly are getting to that complexity point where you feel like you should just explore and maybe talk to somebody, see if you need that extra set of eyes, that extra help, you can click on become a client at moneyguy.com. So basically go to moneyguy.com, have all your problems solved. No, don’t. That’s not actually true. But there is a lot of amazing resources there that really can point you in the right direction and hopefully make this a little bit less intimidating because there is just such opportunity here that we would hate for you to miss if it’s available to you.

Happy New Year (57:54)

Bo: So man, this was a fantastic 2025. We could not do this without you guys. If you guys didn’t show up, if you didn’t watch the show, if you didn’t tune in, if you didn’t subscribe, we wouldn’t be able to do ah we’d still do it. Just not as many people would know about it. And so we’re so eternally thankful that you guys allow us to be part of your financial journey. Our commitment to you is if you keep showing up, we will keep delivering information so that you can do money better. I hope you all have a wonderful close to 2025 and an amazing start to 2026. For Brian, for me, for Rebie, for the entire Money Guy team, happy new year. Money guy team out.