2648: [Part 2] Could You Be Saving Too Much Money? by Jessica Jokisch of ChristineLuken.com

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[00:00:39] Greg, our host from Optimal Relationships Daily, is here to help ease you into a peaceful

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[00:01:10] This is Optimal Finance Daily, episode 2648.

[00:01:14] Could you be saving too much money?

[00:01:16] Part two by Jessica Yolkish with ChristineLukin.com.

[00:01:20] And I'm your host and personal finance enthusiast,

[00:01:23] Diana Mariam.

[00:01:24] Today's post is actually a continuation from yesterday. And I'm your host and personal finance enthusiast, Diana Mariam.

[00:01:25] Today's post is actually a continuation from yesterday.

[00:01:28] If you're new here or skipping around, be sure to listen to yesterday's episode first.

[00:01:33] That's episode 2647.

[00:01:35] But if you're all caught up, let's get right back to it and hear part two as we continue

[00:01:40] optimizing your life.

[00:01:48] Could you be saving too much money? Part Two by Jessica Yolkish with christenluchen.com.

[00:01:53] Prioritize buying memory capital.

[00:01:57] Another book, Happy Money,

[00:01:59] The New Science of Smarter Spending

[00:02:01] by Elizabeth Dunn and Michael Norton

[00:02:03] demonstrates that people's satisfaction

[00:02:05] with spending money on things decreases over time.

[00:02:09] However, people's satisfaction with money spent on experiences increases over time.

[00:02:15] Why is that?

[00:02:16] Because you're investing in memory capital.

[00:02:19] You're buying memories with friends and family that you can relive in your mind or by telling

[00:02:24] the stories to other people.

[00:02:26] And you can enjoy that memory capital until the day you die.

[00:02:30] This is probably why our elderly relatives enjoy telling the same stories over and over

[00:02:35] again.

[00:02:36] They're cherishing their memory capital.

[00:02:39] Does this mean you shouldn't spend money on material things?

[00:02:42] Of course not.

[00:02:44] Just be mindful of

[00:02:45] how much long-term enjoyment you'll get out of them. You might want to give preference

[00:02:49] to buying things that facilitate memory creation. For example, I know a couple who bought a

[00:02:55] ski boat specifically to entice their high school and college-age kids to spend quality

[00:03:00] time with them. They are regularly building memories with their kids

[00:03:05] at the lake and are happy with their purchase.

[00:03:08] Give money to charity and your kids now, not later.

[00:03:13] A major point of resistance people have

[00:03:15] with a die with zero philosophy is the kids.

[00:03:18] I mean, even the Bible says,

[00:03:19] a good man leaves an inheritance

[00:03:21] for his children's children.

[00:03:23] To be clear, Perkins is not advocating you give zero money to your children or charity.

[00:03:28] Quite the opposite, he is recommending you give it to them at a more optimal time before

[00:03:33] you die.

[00:03:35] If you ask any charity when they need donations, the answer is going to be now.

[00:03:40] Of course, no charity is going to turn down a huge one-time windfall. But smaller, regular donations ensure that charity is helping people and will continue

[00:03:48] to do so for many years to come.

[00:03:51] So what about the kids?

[00:03:53] The average age for children to receive an inheritance from a parent or other relative

[00:03:57] is 51 years old.

[00:03:59] In Dye with Zero, Perkins brings up some compelling reasons to give money to your children before

[00:04:04] your soul passes into the great beyond.

[00:04:07] As I stated earlier, when you're young you have an abundance of time and health, but

[00:04:11] less money.

[00:04:13] By giving money to your kids, nieces and nephews before they're a half century old, you can

[00:04:18] give them the magical trifecta, money, time, and health.

[00:04:23] Giving money to your kids in their twenties for experiences like a backpacking trip through Europe

[00:04:28] or a mission trip to South America could be life-changing.

[00:04:32] You might choose to help your grown children with a down payment on a house,

[00:04:36] pick up the tab for the family vacation to Disney, or relieve them of a major car repair bill.

[00:04:42] One big benefit of not waiting to transfer at least some of your

[00:04:45] wealth to your kids before you die is that you actually get to watch them enjoy it.

[00:04:50] Currently the IRS allows you to give up to $16,000 per year to any individual tax-free.

[00:04:57] If you're both married, both you and your spouse can each gift your child $16,000 for a total of

[00:05:03] $32,000. If your grown child is married,

[00:05:07] you can also gift their spouse the same amount tax-free. Please consult your tax pro for current

[00:05:13] IRS regulations on tax-free giving. How to not run out of money

[00:05:19] Running out of money in one's golden years is a huge fear for many people,

[00:05:23] which is the big reason

[00:05:25] for over-saving.

[00:05:27] Bill Perkins suggests long-term care insurance and annuities as the answer.

[00:05:31] I'm not a financial planner, so I don't recommend any particular type or brand of investment.

[00:05:37] But you might be wondering what exactly annuities and long-term care insurance are, so a basic

[00:05:42] explanation is in order. An annuity is a long-term insurance product are, so a basic explanation is in order.

[00:05:45] An annuity is a long-term insurance product that provides guaranteed income.

[00:05:49] For example, a $500,000 annuity would pay you approximately $2,396 each month for the

[00:05:57] rest of your life, depending on fees and rates of return.

[00:06:00] If you purchased the annuity at age 65 and begin taking payments immediately,

[00:06:05] you or your beneficiary are guaranteed to at least the amount you paid in, 500,000.

[00:06:11] If you die before that amount is paid out, your beneficiary will get the payments up

[00:06:16] to the amount that you initially paid for the annuity. You can think of an

[00:06:19] annuity as a DIY pension. Skyrocketing healthcare costs in old age are a serious concern that long-term care insurance

[00:06:28] addresses.

[00:06:29] Long-term care insurance is an insurance product sold in the United States, United Kingdom,

[00:06:34] and Canada that helps pay for the costs associated with long-term care.

[00:06:39] Long-term care insurance covers expenses generally not covered by health insurance, Medicare,

[00:06:44] or Medicaid.

[00:06:46] The Bottom Line

[00:06:48] The message at the heart of the book, Die with Zero, is summed up in its subtitle.

[00:06:54] Getting all you can from money and your life.

[00:06:57] The bottom line is to be intentional with your money, time, and health.

[00:07:01] Don't live on autopilot.

[00:07:02] Yes, saving for the future is a good thing,

[00:07:05] but saving too much money isn't. Don't forget to enjoy the present and buy more memory capital

[00:07:11] whenever you can. You want to be the old person with hundreds of amazing stories to delight

[00:07:17] your grandkids, not the one repeating the same four or five because that's all you got.

[00:07:23] Finally, please remember, there's no prize for being the richest person in the cemetery.

[00:07:29] The ultimate goal of money is to support your happiness, both now and later.

[00:07:38] You just listened to part two of the post titled Could You Be Saving Too Much Money by

[00:07:42] Jessica Yolkish with ChristineLukin.com

[00:07:46] And I'll be right back with my commentary.

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[00:09:32] I do think the book, Die was Zero,

[00:09:33] gives some good advice regarding inheritances.

[00:09:36] But here's something to consider.

[00:09:38] Maybe your kids don't need your money.

[00:09:42] The other day, I told our 11-year-old

[00:09:44] that I wanted to make him a t-shirt

[00:09:45] that says future millionaire on the back.

[00:09:48] I was asking him if he would like to wear something like that,

[00:09:51] or if he would feel like it was too pretentious.

[00:09:54] He said he would enthusiastically wear the shirt

[00:09:57] and then started talking about how excited he is

[00:09:59] to be a millionaire one day.

[00:10:02] So then I told him that I felt the need to clarify. We aren't

[00:10:05] going to give him a million dollars. We are going to show him how to be a self-made millionaire.

[00:10:13] To which he responded in his adorable squeaky voice, yeah, I'm going to turn a hundred

[00:10:18] dollars into a million dollars. He simplified it a bit, but I suspect he was thinking about investing in compound

[00:10:25] interest.

[00:10:27] As the saying goes, better to teach a man to fish than give him a fish.

[00:10:32] I intend to leave most of my money to charity if there is any left, because if I do my job

[00:10:37] right, my heirs won't need my money.

[00:10:40] They will be drowning in their own millions.

[00:10:44] I also think it's important to

[00:10:45] be careful when gifting money to kids because if they are financially illiterate, they will

[00:10:50] probably squander it. When I graduated high school, my mom gave me $10,000. It was a

[00:10:57] very generous gift that was gone a year later. I didn't know anything about money, and now I'm so glad that she didn't give me more.

[00:11:09] But that's going to do it for today.

[00:11:10] Thank you for being here and listening every day, and I'll see you tomorrow for more optimal

[00:11:14] finance daily, where your optimal life awaits.