MONEY financial advice

How Vanguard Founder Jack Bogle Invests His Grandchildren’s Money

Ahead of Father's Day, Bogle also talks about the investment advice he gives—or doesn't give—his children.

Just a few days before Father’s Day 2015, MONEY assistant managing editor Pat Regnier interviewed John C. “Jack” Bogle, the founder and former CEO of Vanguard, the world’s largest mutual fund company. The elder statesman of the mutual fund industry—and a pioneer in index investing—talked about the investing advice he gives his children, one of whom runs a hedge fund, along with how he invests, and doesn’t invest, on behalf of his grandchildren. Look for an in-depth interview with Bogle in an upcoming issue of MONEY.

Read next: Where are Most of the World’s Millionaires?

MONEY stock market

A Financial Planner’s Investment Advice for His Son — and Everyone Else

family on roller coaster
Joe McBride—Getty Images

Father's Day has a financial adviser thinking about important lessons to be passing along.

A friend recently asked me to recommend a book for his son on buying and selling stocks.

As I pondered his request, I started thinking about the various books I’ve read or skimmed over my 24-plus years of working in financial services. Initially, I was overwhelmed with titles. Then I started thinking about my own teenaged son and the difficulty I was having getting him to think differently about his money—that he won’t always be able to depend on his parents to help him out. Anyway, I thought if I couldn’t compel a 14-year-old to change his ways, what could I say to my friend’s son, who’s in his 20s?

Finally, I asked myself what would I say—not bark, I promise—to my own son if he were in his 20s and came to me for investing advice? This is what I came up with:

You can go to just about any investment site (e.g. Vanguard, Schwab, or Fidelity) to learn the fundamentals of investing. You need to know, however, that the process of buying and selling is not hard. The real challenge is knowing what to buy, when to buy, and when to sell. If you plan to make investing a career, there is a lot more you need to know than you can learn from a website or book. That would require another conversation.

For now, I would advise you to think long and hard about why you want to invest. In other words, take time to map out your life goals for the next three to five years and the financial resources you will need to achieve them.

Simply saying you want to invest “to make money” will not work when you are invested in a fluctuating market. Short-term volatility can be a bear (pun intended). You have to be willing to ask how much money you can withstand losing when the market goes down, as well as how much profit is enough. As the old Wall Street saying goes, bulls make money in up markets, bears in down markets, and pigs get slaughtered. You also have to be willing to ask yourself how long you plan to stay invested, no matter how much the market fluctuates or falls.

Why am I focusing on declining markets and roller-coaster, up-and-down markets? It’s because people tend to fixate on rising stocks and profits, but pay very little attention to the markets’ inevitable declines. Everyone loves bull markets, which are great for the average investor. But when the market heads south quickly or takes a long, slow journey to the cellar, someone who was looking to make a quick profit can suffer a lot of stress.

Finally, I hope this short note does not come across as too preachy. I congratulate you on your interest in investing, and I will end by saying you are way ahead of the game because you’re thinking about investing now instead of later. Good luck.

Read next: The 3 Most Important Money Lessons My Dad Taught Me


Frank Paré is a certified financial planner in private practice in Oakland, California. He and his firm, PF Wealth Management Group, specialize in serving professional women in transition. Frank is currently on the board of the Financial Planning Association and was a recipient of the FPA’s 2011 Heart of Financial Planning award.

MONEY psychology of money

Here’s How to Know If You Need a Financial Therapist

Gregory Reid; prop styling by Renee Flugge

Looking to have a healthier relationship with your money? This could be the answer.

Imagine that you know exactly what you should be doing with your money, but can’t quite bring yourself to do it. Maybe you’re still giving cash to an adult child who probably should be supporting himself. Perhaps you and your spouse have constant arguments about money. Or maybe you’ve lost plenty taking risky bets on the market—and now you’re taking even bigger chances.

For some problems like these, you could consult with a financial adviser. For others, you might be better served by seeing a psychologist or couples counselor. But a small number of professionals propose you should consult with another type of practitioner: a financial therapist.

Using both psychology and fiscal expertise, financial therapists try to fill a vacuum they perceive between psychologists who are unsophisticated about money and financial advisers who are inattentive to the human side of personal finance.

The field is a tiny one with a brief track record: The five-year-old Financial Therapy Association trade group has 200 members, compared with the Financial Planning Association’s 23,000. Anyone can call himself a financial therapist; no license or training is required. So finding a good therapist might be hard, but well worth it for certain types of issues. Here’s how to figure that out.


The aim of financial therapy, says Brad Klontz, a psychologist and financial planner, is “to find out what aspects of your upbringing, your money beliefs, or your relationship with money are causing you distress, sabotaging you, or keeping you stuck.”


Therapists, then, try to help you match your actions around money to your goals. Do you have a budget but can’t stick to it? Did your financial planner tell you last year to raise your 401(k) contribution, but you still haven’t done so? A financial therapist can help you out of your rut. If you and your spouse can’t resolve disagreements over supporting aging parents or investing your retirement savings, a therapist can help break the logjam.

What a financial therapist can’t do depends on his or her particular background. An investment adviser who has studied financial therapy can’t treat psychological disorders or fix your marriage. A psychologist specializing in money issues can’t pick investments for your IRA. Amanda Clayman, a social worker and financial therapist in New York City, won’t participate in decisions about buying or selling assets. “That’s outside of my training,” she says.


Some financial therapists will delve into your past in sessions reminiscent of psychoanalysis; others assign homework to get you to change your habits. One exercise Klontz suggests is writing down associations with words like “spending,” “investments,” “power,” and “work.” Exploring those answers can articulate and help alter what he calls “money scripts,” or core beliefs that underlie your behavior around money.


To find a therapist, start with the FTA’s member directory ( Practitioners tend to be mental-health professionals, social workers, or financial planners.

Ask potential therapists about their approach and their training. Those who aren’t financial planners should have some kind of therapeutic licensure, such as an advanced degree in marriage and family therapy, psychology, or social work. If you’re talking to a financial planner and not a counseling professional, look for a willingness to refer you to such a therapist if your problems are beyond her area of expertise.

Also clarify a therapist’s limits. Though Klontz, for example, is both a psychologist and a financial planner, he won’t handle the same person’s therapy and portfolio.


Rates vary widely, but psychologists and social workers charge about $100 to $150 an hour, on par with conventional therapy. Financial advisers tend to charge more. Financial therapy per se isn’t covered by insurance, but sessions with a licensed health care provider are covered for diagnosed mental-health conditions. “Anxiety or depression can be an issue,” says Maggie Baker, Ph.D., a financial therapist in Wynnewood, Pa. As with couples counseling, though, therapy for two will come out of pocket.

Read next: Are You and Your Partner a Money Match?

MONEY Kids and Money

The 3 Most Important Money Lessons My Dad Taught Me

father letting son swipe credit card at cash register
Monashee Frantz—Getty Images

Many of our financial dos and don'ts are instilled by parents at an early age. Here's what my father passed along to me.

One of the responses I often hear from clients toward the end of a financial planning meeting is, “This sounds good. I’m going to talk to my dad about it.”

For many of us, our mothers and fathers have played a profound role in shaping our financial habits—so much so that we still discuss our plans with our parents well into our adult lives. Whether it’s deciding where to invest retirement savings, how much to pay for a first home, or how much of each paycheck to invest in a 401(k), we sometimes go to our parents to help make decisions and to doublecheck we’re on the right path.

These conversations with many of my clients have me thinking about the values and habits my father instilled in me at a young age. Three very powerful lessons come to mind:

Live Within Your Means

On my eighth birthday, my father began to teach me how to live within my means. As I write those words, it sounds funny, even to me. He sat me down and taught me about an allowance. He was going to provide me with a weekly stipend that I would later come to realize was my means. I was going to have a set amount of money that I could spend on anything I’d like. The only catch was that once I spent it all, I couldn’t buy anything else until the following Friday when I received my next allowance. At the age of 8, I began to learn how to budget, how to save, and how to spend wisely.

Plan For the Future

At 14, my father took me to his bank’s local branch to open my first savings account. We sat down at the desk with the bank manager and I shared that I had saved $370 and I needed a place to keep it so it would grow. Entering high school, I knew I wanted two things on the day I turned 16: a driver’s license and a car. If I was going to make them both happen, I was going to need a plan. Dad and I worked out a savings plan to help me save the money I earned from a part-time tutoring job. It took me a bit longer to save up for my first car than I anticipated, but planning and saving to reach a future goal is a valuable life lesson—one I share with my clients every day..

Start Today

When I was 16, I sat down again with Dad to learn about a Roth IRA, retirement planning and perhaps, most importantly, compound interest. I learned that by starting early and investing, my money could grow. By opening an investment account and saving into my Roth IRA with the possibility to earn compound returns, I could potentially become a millionaire when I was older—a crazy thought for a 16-year-old. We charted out a simple savings plan to invest a portion of each paycheck I earned—a savings and investing program I follow to this day.

On the occasion of Father’s Day, I thank you, Dad, for instilling many of my financial values and habits at a young age—habits that will continue to shape the decisions I make for years to come.

Read next: 3 Financial Lessons For Dads on Father’s Day


Joe O’Boyle is a financial adviser with Voya Financial Advisors. Based in Beverly Hills, Calif., O’Boyle provides personalized, full service financial and retirement planning to individual and corporate clients. O’Boyle focuses on the entertainment, legal and medical industries, with a particular interest in educating Gen Xers and Millennials about the benefits of early retirement planning.

MONEY migraines

Don’t Let Migraines Hurt Your Finances

Getty Images

Americans lose an estimated 113 million work days to migraines.

If you have never experienced a migraine, consider yourself blessed by a thousand angels.

Sarah Hackley wishes she could say that. The Austin-based writer and editor suffers from headaches so severe, “it feels like someone is jamming an ice pick into my temple while dropping an anvil on my head.”

Nowadays, she gets attacks at least twice a week, sometimes daily. But twice in her life time, the 31-year-old mom of two has experienced migraines that lasted for an astonishing two years.

Migraines may not exert just physical pain or emotional duress. They could hurt the pocketbook, too, and blow up the most careful financial planning.

Hackley quit her job, working part-time from home, and has spent many thousands of dollars visiting specialists around the country. She isn’t saving much for retirement.

“Migraines are a huge deal for your finances, because they influence what you can do,” says Hackley, author of “Finding Happiness with Migraines.”

Saving is already hard for most Americans. Throw in a debilitating condition that can leave you bedridden, wracked by pain, sensitive to light, noise or smells, and unable to work. How will your bank account fare then?

“Part of the suffering is that migraines take such a huge hit on people’s lives and finances,” says Carolyn Bernstein, clinical director of the Comprehensive Headache Center at Beth Israel Deaconess Medical Center in Brookline, Massachusetts.

“You are unable to go to work, you are using up all your vacation time, and you are prevented from being able to advance in your career,” Bernstein says.

Costs to Wallet, Life

These recurring headaches torture a surprising number of people – about 36 million Americans, or 10 percent of the population, according to the New York City-based nonprofit Migraine Research Foundation.

Each year, that translates to 113 million lost work days, a cost to employers of $13 billion, and $50 billion in annual healthcare services.

Migraines can torpedo finances at multiple stages of your career. They can affect your education, by encouraging sufferers to drop out; your prime earning years, by hampering productivity and promotions; and your golden years, with the pain pushing you into early retirement.

“When migraines are out of control, they can set people up for a lifetime of underachievement,” says Dr. Richard Lipton, vice-chair of neurology at the Albert Einstein College of Medicine in the Bronx, New York.

Part of the challenge is that migraines are mysterious and individual in nature.

Still, there are a few key strategies migraine sufferers can use to minimize the financial hit.

Don’t Suffer in Silence

“See a doctor and get treatment right away,” advises Lipton.

A tailored personal strategy might include taking preventive medication on a daily basis, avoiding triggers that could range from missing meals to getting irregular sleep or drinking alcohol, and having additional medication on hand for when the migraines hit.

To control ongoing healthcare costs, consider medical savings accounts. You will be forking out for everything from deductibles to co-pays to out-of-network services, and you should at least be using pretax money to cover all that, saving you on the order of 30 percent.

Bernstein provides this example: If you are on three different medications to control your migraines, each one with a co-pay costing $10 a month, that’s $360 for the year.

Add in physical therapy 10 times a year, each session with a $25 co-pay, for another $250 annually. Other treatments like acupuncture could prove effective, but might not be covered by your insurance plan.

Protect Yourself

If attacks are causing you to be away from work fairly consistently, you may be seen by higher-ups as someone who cannot be counted on, and miss out on plum assignments or promotions. Or worse, be first in the firing line if there are staff cutbacks.

As a result, “ask your doctor for a letter to give to your Human Resources department,” advises Bernstein. “That way you won’t get penalized for having migraines. Once it’s documented, you have some degree of protection.”

As for Sarah Hackley, she is able to work only a few hours a day, or a migraine is triggered, laying her out for a full week.

But with the help of doctors and fellow sufferers at online communities like, she can at least manage her money and her migraines.

“It’s an expensive condition, but all the support out there is invaluable,” she says. “You can’t put a price on that.”

MONEY credit cards

6 Credit Card Vows Every Newlywed Couple Should Make

uniquely india—Getty Images/photosindia

Never commit credit betrayal.

You might think new marriage survival is all about figuring out how to divide household chores, but marital money discussions are just as important as whose turn it is to do the dishes.

As these couples and experts share, setting up some credit rules after the wedding is the best way to ensure that plastic doesn’t put a damper on your post-honeymoon bliss.

1. Get the conversation going.
Although it helps if you have a handle on your partner’s finances before walking down the aisle, once you decide to co-mingle money in marriage, it really makes sense to talk about credit guidelines, says Kathleen Burns Kingsbury, a wealth psychology expert and author of “How to Give Financial Advice to Couples.” “Especially in the beginning of a marriage, you’re both more open,” she says. If you’re already working with a financial adviser, you can easily add credit cards to your meeting agenda.

Otherwise, you should start your own dollar discussion. “It may sound boring and dull, but spend 15-20 minutes once a month to check in on spending, savings, credit cards and debt,” says Kingsbury. If you’re the spouse who is more money conscious, you can say something like: “I’ve heard about some couples getting into trouble when they’re not talking about money, so I want to make sure this part of the marriage is cared for.”

You can even try to make the task more fun, says Jeff Motske, author of “The Couple’s Guide to Financial Compatibility,” by planning a “Financial Date Night.” “Couples can discuss their short- and long-term goals with one another at a favorite restaurant over a nice bottle of wine,” he says.

2. Set limits that work for you.
Paul Moyer, owner of, and his wife Amy (who are both personal finance coaches in Anderson, South Carolina) started having financial meetings in the very first month of their marriage.

“That is also when we laid down some ground rules for spending. With credit cards, we started with no spending that was not in the budget, and when we did spend money, if it was over $20 we had to consult with the other person,” he says.

No matter what amount you decide on (author Motske and his wife go as high as $400), you can follow the same principle. “Working together is the only way to make our budget work each and every month,” he says. “In fact, we have never really had a fight over money in 10 years,” says Moyer.

Setting limits doesn’t necessarily have to revolve around a dollar amount, says Kingsbury. What works for her own marriage is that she and her husband have come to understand what the other person values. “My husband and I spend a fair amount on skiing. But we’ve consciously decided we are allowed to spend that money for those experiences,” she says. If your hobbies don’t mesh, that’s fine, too, as long as each person is allowed some judgment-free flexibility to enjoy their own thing.

In addition, take the time to understand your partner’s spending style. “It’s important to be respectful about your partner’s money personality. Someone can come into the marriage thinking credit is only for emergencies. Another might use credit for everything to earn points,” says Kingsbury. An honest conversation is more productive than finger-pointing, she adds.

3. Share statements.
In their three years of married life, Amanda and Chad Harmon of Provo, Utah, have moved “from ‘proving’ themselves to trusting each other,” says Amanda. Because her job is with a credit card security company, SecurityMetrics, she instinctively is on watch to protect her personal credit accounts from being hacked.

“When hackers test the authenticity of stolen credit cards, they often make small purchases at fast food restaurants or gas stations. I want to make sure I catch any type of fraudulent activity,” she explains.

Her method is to save every single card receipt. “It was a pain at first and took a few months to get my husband on board, but now we save all our receipts in a little basket and have a mini finance meeting at the end of each month to reconcile the receipts with our credit card statements,” she says. That way, not only are they guarding against fraudulent purchases, but they each know what the other spends during the month.

Kingsbury says that the Harmons’ strategy is smart. “In my marriage, I’m the one who pays the bills, but when the bill comes in, my husband and I review it and have a conversation,” she says. Ideally, no matter who is in charge of sending payments, both members of the couple should look over the statements.

Motske and his wife take statement sharing a step further by using what he calls the “three-highlighter method” to identify any excessive spending that might be taking place, and ultimately avoid bitter arguments later. “Use three different colored highlighter pens to differentiate a) necessary expenditures; b) those that you really wanted; and c) frivolous ones,” he explains. Seeing your spending habits in living color helps both of you make better decisions moving forward, and achieve financial goals together.

4. Don’t downplay secret spending.
In our society, it’s almost become a sitcom punch line that spouses go on spending sprees behind each other’s backs. What may start out innocent enough — maybe a sale that you couldn’t pass up and then just “forgot” to mention — can quickly grow into a pattern of credit betrayal. “Secret spending breaks down one of the pillars of a relationship — trust,” says Motske. “A lack of trust here soon spills over into other areas of your relationship, which can ultimately erode the bond between you.”

When you consider that a March 2014 Money magazine poll found that the No. 1 source of money arguments was “spending too much on frivolous purchases,” you can see why some spouses opt to avoid conflict by hiding their credit use. Of course, once you go down that path, now you’ve done something worse by lying to your partner.

5. Make future credit decisions as a team.
Another rule to have once you’re married should be regarding new credit accounts. Because lines of credit can be opened as an individual, it can be tempting to just go ahead and do so any time a retail store asks if you want to apply for a card, but that approach can be dangerous.

“As a rule, we do not take out new credit,” says Moyer. “The only time we even consider new credit is if we are making a large purchase (appliances, furniture, etc.), and the store offers us a reasonable percentage off to get a credit card with them,” he says. In those cases, the Moyers make sure they have the cash on hand to pay off the new card immediately.

Having a similar guideline in place for your marriage can help prevent debt from getting out of control.

6. Nip problems in the bud — together.
Not every marriage starts off debt-free, and credit card balances can creep up, but how you handle such situations can set the tone for your marriage. “Be compassionate if your partner has credit card debt. Chances are they didn’t intend to get in over their head financially,” says Kingsbury. Ask questions to find out how it happened, and make a plan to pay off the credit cards as a team, she suggests. If you feel you need assistance to deal with debt to meet your bigger financial goals as a couple, then get help. “Finding a skilled couple-friendly adviser can be important step in a marriage,” says Kingsbury.

Read next: Are You and Your Partner a Money Match?

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MONEY Financial Planning

6 Incredibly Common Financial Mistakes You Really, Really Don’t Want to Make

Adam Gault—Getty Images/OJO Images RF

Have you made any of these money mistakes?

We all make mistakes, and through them, we learn. But when it comes to finances, it is best not to take the trial-and-error approach. Avoiding some of the following financial mistakes might save you a great deal of money and heartache.

1. Cashing out a retirement account to pay off loans. Substantial income tax penalties can hit you if you tap into retirement accounts before a certain age. Even if there are no penalties, cashing out an entire account at once potentially puts you in a higher tax bracket.

The amounts you withdraw before you reach 59½ are called early or premature distributions. They may be subject to an additional 10% tax. (As always, there are some exceptions to this rule, so consult with a qualified accountant, financial advisor or the Internal Revenue Service.)

The Great Recession forced many people to tap into retirement accounts to pay mounting bills and loans. This was a measure of last resort, but the moral of this story is: If you have to take a distribution, you should at least understand the tax implications up front and mitigate the impact.

2. Missing retirement account rollover dates. You can move your wealth around by receiving a check from a qualified retirement account and deposit that money into another retirement account within 60 calendar days.

If you miss the deadline, the IRS treats the amount as a taxable distribution. Further, your 401(k) plan provider withholds 20% for federal income taxes. You have to add funds from other sources equal to the gross distribution to avoid possible tax penalties.

The lesson here? Rollover your accounts using a trustee-to-trustee transfer whenever possible. Having your custodian send your funds to another directly may be a better way to do a rollover.

3. Failing to update beneficiaries. Forgetting to remove a former spouse’s name as the beneficiary on retirement accounts or insurance policies happens. This could result in failing to provide for your children, a new spouse or other loved ones. Check your beneficiary designations annually and when a major life transition, such as a marriage, divorce or birth, occurs.

4. No will. If you do not have a will, when you die, the laws of intestacy determine who receives your assets. Drafting a will helps you maintain control of these important matters. Speak with an attorney to discuss preparing a will that documents where you want your money to go when you’re gone. Once you draft the will and name the beneficiaries or guardians, review it every few years and when things in your life change.

5. No power of attorney. A power of attorney (or POA) is an important document that allows you to select a point person (often a spouse or trusted family member) to make decisions on your behalf. This person can access your finances and help with bills, medical expenses and sign tax returns.

If you do not have a POA in place, and you become incapacitated, your family has to petition the courts for a conservatorship. This process often takes months, costs thousands of dollars and thus compounds the financial pressure.

The lesson here is to speak with an attorney to help select a POA, and while you’re at it, discuss a health-care proxy, your agent would make medical decisions on your behalf, should you be unable to convey your wishes.

6. Single-life only pension. When you start taking your pension benefits, you can choose to get payments that last for just your life or for the lives of both you and your spouse. This is an irrevocable decision.

The monthly payout is higher with a single-life pension versus joint ones. Many people often take the highest pension option available. They don’t realize that upon death, their spouse may end up relying solely on Social Security.

You might think that you will outlive your spouse, or that he or she does not need the income, but no one can predict the future. Consult with a financial advisor about your pension options and income needs.

Read next: 5 Old-School, Low-Tech Budgeting Strategies That Work

Heidi Clute, CFP, is the majority owner of Clute Wealth Management in South Burlington, VT and Plattsburgh, NY, an independent firm that provides strategic financial and investment planning for individuals and small businesses in the Champlain Valley region of New York and Vermont.

More From AdviceIQ:

MONEY Love and Money

Is Financial Responsibility a Turn-On?

MONEY's millennials talk about the importance of financial fitness in romantic relationships.

We may not put it in our Tinder profile, but millennials do care about a potential mate’s financial fitness. We care about it so much, in fact, we rank financial know-how higher than sexual prowess as an important factor in a long-term relationship. Millennials grew up with the 2008 financial crisis, so we know money doesn’t grow on trees.



6 Signs Your Finances Are in Great Health

stethoscope on $100 bill
Yuji Sakai—Getty Images

Rock your finances.

You have six months of take-home pay socked away in an emergency fund. You pride yourself on your 720 credit score. And you contribute enough to your company 401(k) to get a match.

If this sounds like you, then you deserve a big pat on the back—you’re well on the road to optimal financial health.

But what are the signs that you’re really rocking your finances—that you’re not just an “A” student, but picking up extra-credit points along the way?

To help you see if you’ve entered overachiever territory, we’ve rounded up six benchmarks that show you’re kicking your finances into high gear.

And even if you can’t tick off everything on this list, consider them aspirational new goals to work toward, so you can take your money game to the next level.

Telltale Sign #1: You’re a two-income household—but you can live off just one.

For couples who bring in two salaries, it can be tough to resist the temptation of lifestyle inflation—which makes it all the more impressive when you can comfortably live off one income and devote the other to long-term goals, like retirement or a college fund.

“It’s a good objective, although it’s fairly rare that people can do it,” says Kevin O’Reilly, a Certified Financial Planner and principal at Foothills Financial Planning. “It’s not unusual to see people with two incomes who can’t save anything.”

So if you’re part of a duo who’s resisted trading up your lives with every raise or bonus, consider yourself masters of living well within your means.

“[Living on one income] is a great discipline—and it provides a lot of financial help if one spouse loses a job down the road,” says Jean Keener, a CFP and principal of Keener Financial Planning.

If you’re not quite there, comb through your expenses to see which category of costs is eating into your budget the most, and use that as a starting point for paring back.

“If a significant portion of [your budget] is discretionary, it may be easy to cut back travel, make fewer trips to a restaurant, or buy clothes less frequently,” Keener says. “However, if [your budget] is going mostly to fixed spending, looking at larger items will lead to longer-term success. Making one big decision, like downsizing your house, [will be] generally easier than making small decisions about cups of coffee and Girl Scout cookies.”

Telltale Sign #2: Your net worth exceeds your annual income—and keeps growing.

Net worth is one of the most important barometers of financial health because it looks at your whole money life: your total assets (like the cash in your checking account, the current value of your home and your investments) minus your liabilities (such as student loans, credit card debt and what’s left on your mortgage).

While having a positive net worth is great, having a net worth that exceeds what you earn is excellent because it shows you’ve been diligent about building wealth, living within your means and paying down debt simultaneously—goals you don’t have to be in the wealthiest 1% to achieve.

There’s no hard and fast rule for how much your net worth should be. But for something aspirational, O’Reilly likes this equation from Thomas J. Stanley, author of “The Millionaire Next Door”: 10% times your age times your income. So if, say, you’re 40 and make $100,000, your target net worth would be $400,000.

But don’t let that number intimidate you—what’s really important is that you show an upward trend.

“Is your net worth growing? That’s a good sign that debt is going down and savings are going up,” Keener says. “Maybe you don’t think you have enough yet, but you’re headed in the right direction.”

Just make sure that you’re not relying on just one asset to get into the black. Otherwise, you may not be addressing all of your long-term savings goals.

For example, “[Your] half-million-dollar house is not necessarily something you’re going to use to fund your retirement,” says Cheryl Krueger, a CFP and founder of Growing Fortunes Financial Partners LLC. A healthy retirement plan covers a comprehensive mix of assets.

Telltale Sign #3: You can name what’s in your investment portfolio.

If you’ve been steadily stowing away 10% of your income into your 401(k), congratulations! Now, quick: What’s your asset allocation?

If you can answer that without reaching for old brokerage statements, you’re ahead of the game. “I have people who come in and say they’re good savers, but they haven’t touched their 401(k) allocation in 10 years,” O’Reilly says. “That’s a bad sign.”

Unfortunately, investing with blinders on isn’t altogether uncommon: One 2014 survey found that one in five people don’t know what goals they’re investing for—and about 12% don’t know which primary asset class their money is in.

So how can you go from clueless to someone who can answer the asset allocation question in five seconds flat?

For starters, keep tabs on where your accounts are housed, and don’t look at them as separate entities. Your portfolio as a whole should be reviewed to see if it’s meeting your investment objectives, whether that’s growth (taking on more risk) or preservation (taking on less risk to protect your principal).

“In a couple, typically one spouse knows more about the finances than the other, so they defer to the other person [on knowing where the money is],” Krueger says. “Or with single people, you see a lot who’ve changed jobs and don’t [even] know where their 401(k) is. It helps to be able to look at things all together.”

Once you’ve nailed down your total investment picture, figure out the frequency with which you’ll check on those investments—keeping in mind that you may have to tune out market noise. “You don’t have to look at the Dow every day, but you should be checking your portfolio every quarter or so,” suggests Keener.

Telltale Sign #4: You neither owe nor get a refund at tax time.

If you got to the bottom of form 1040 this year and netted close to zero, then you (or your accountant) did an excellent job of managing your tax liability.

“Penalties are a waste of money, and an unexpected tax bill can cause someone to invade their emergency fund or [resort to] high-interest credit cards to help pay the bill,” Keener says. “It’s also beneficial not to get a huge refund because you could be earning interest on that money over the course of the year, rather than giving an interest-free loan to the I.R.S.”

If you consistently owe or get a refund of more than $1,000, consider adjusting your withholding, so more or fewer taxes are taken out of your paycheck during the year.

Using your most recent W2, fill out the I.R.S.’ withholding calculator to estimate what your number should be—and remember to take note of any life changes that could affect your tax situation, such as getting married, having a child or changing jobs midway through the year.

Telltale Sign #5: Less than a third of your income goes toward debt.

Your debt-to-income ratio (DTI)—minimum monthly debt and mortgage payments divided by your gross monthly income—helps tell lenders how well you’re managing debt.

Although every lender varies, the oft-quoted benchmark for an acceptable DTI is 36%. Krueger, however, believes that percentage is still fairly high.

“I would say 10% or less of your gross income going to debt is a good indicator [of strong financial health]—and, of course, you want it eventually to go down to zero,” she says.

Krueger believes that aiming for less than the lending benchmark is prudent, because “between taxes and saving for retirement, having debt [take up] 36% of your income doesn’t leave much money for [other] savings.”

If you need to chip away at debt to improve your DTI, consider the “avalanche method,” which involves prioritizing paying down your highest-interest debts first, while still meeting the minimum payments on others.

Then, once you’re done paying off that first debt, you can apply that payment to your next highest-interest loan or credit card.

Telltale Sign #6: You’re done with car payments.

Being free and clear of auto financing is a double-whammy positive indicator. Not only have you eliminated debt—and likely improved your DTI—but “it means you’re driving your cars longer, and getting more value out of them,” O’Reilly says.

But living car-debt-free is something few Americans seem to be able to accomplish: At the end of 2014, the country’s automotive loan balances reached a record $886 billion, according to Experian Automotive.

Of course, this doesn’t mean you should sink a hefty lump sum into your car loan just to be rid of it.

“[Not having a car payment] is a positive indicator [of financial health], but with interest rates so low right now, having a car loan isn’t necessarily a bad thing,” Keener says. You could, for instance, consider using that money instead to beef up an emergency fund, pay off higher-interest debt or invest in something with better returns.

In other words, what having no car payment really signals is that you’re getting as much bang for your auto buck by driving your car until it dies—which can yield a significant savings, considering the average auto loan now surpasses $28,000.

So before you trade up for the latest model, consider whether you really need that rich Corinthian leather, or whether the money could be better served for retirement—or a new-car savings account, so you can pay cash for your next ride.

“Financially, you’re much better off if you continue driving the car as long as possible and view it as a depreciating asset that’s just transportation from point A to point B,” Keener says. “As long as it’s reliable and safe, it doesn’t need to be replaced.”

LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the individuals interviewed or quoted in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.

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MONEY Financial Planning

The New Money Rules for 30-Somethings

parent instructing 30-something son
Richard Drury—Getty Images

Today's 30-somethings may be smarter about money than their parents were.

Maybe it is time for a millennial remake of that 1980s boomer angst television show, “thirtysomething,” because there are more 30-year-olds in the United States than ever before.

Within nine years, almost 45 million Americans will be in their 30s, according to U.S. Census Bureau data. As their parents did a generation ago, they are starting to settle down and buy houses and cars.

But unlike their parents, they are toting heavy college debt burdens, juggling $200+ cell phone and Wi-Fi bills, and facing a financial marketplace far more complex than when Hope and Michael Steadman, the central characters of “thirtysomething,” first started worrying about being too materialistic. (The generations do have something in common: watching a TV show just to make fun of it is still popular.)

Today’s 30-somethings may be smarter about money than their parents were: They are not calmly expecting any large institution to take care of them, and they know they have to compete with the biggest cohort ever in a challenging job market, said Catherine Hawley, a Monterey, California, financial adviser who has many 30-something clients.

So old financial advice will not apply. Here are some fresh new money rules for the latest greatest generation.

– Be strategic about your career. “Our greatest asset is our ability to earn money,” said Sheryl Garrett, a Eureka Springs, Arkansas, fee-only financial adviser. Think carefully about what you want your future work life to look like, and invest time and money into getting there. Keep up your schooling and your skills, network via social media and professional organizations.

– Open a Roth IRA, even before you feed an emergency fund. The Roth individual retirement account is one of the best tax-favored saving mechanisms around. Once you put money into a Roth, it can grow without the earnings ever being taxed if they are not withdrawn until you are 59-1/2. Over decades, that is an enormous benefit.

If you are cash strapped, you can jump start your savings by using a Roth IRA as your emergency fund, too, at least until you have enough money to fund both retirement savings and emergency savings, suggests Hawley.

That is because there are no penalties for withdrawing the money you contributed to your Roth in the first place. You can start your Roth and know that in an emergency situation – job loss or health crisis, for example – you could get at the money you invested. Of course, it is better not to tap the Roth, but this double-counting strategy is better than not having one in the first place.

– Order your debts. If you are still carrying credit card debt, pay it off as quickly as possible. Do not be in such a rush to pay off student loan debt, especially if it consists of federal loans with a relatively low interest rates. Pay your monthly minimums on those low-interest loans while you build up savings and pay off other debts first.

– Get the 401(k) started. You still have a lot of time for compounding of income to work in your favor, but only if you start soon. Aim to put 10 percent of your salary into your retirement.

– Those 529 plans? Meh. Invest money in a state-sponsored college savings plan, and you will save taxes on the buildup in that account. Some states also offer a tax credit for a portion of those contributions. But you give up a lot for that. You give up liquidity at a time when you might also need to buy life insurance, save up for a home down payment and pay for a car seat and diapers.

“The 529 plans would be way down my list of my priorities,” said Garrett, who admits she does not have one for her child. It is not that they are a bad idea, just that they are hard to fund at a time when there are so many other financial goals and investments to make.

If you live in a state that offers a tax credit for 529 plans, you can set one up in your own name (to maximize the tax breaks), name your child as a beneficiary, and use it to sweep financial gifts for your child, without shorting your own retirement or other savings plans.

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