Nate (00:00)
Hello physician moms and dads. I'm Nate Renneke, certified financial planner and primary advisor.
Chelsea Jones (00:07)
And I'm Chelsea Jones, also a certified financial planner and primary advisor here at Physician Family Financial Advisors.
Nate (00:15)
I feel like Chelsea is this is the time of year where people kind of recalibrate with with their money. So we
Chelsea Jones (00:21)
Mm-hmm.
Nate (00:21)
have a lot of questions this week about kind of it feels like like how should I be approaching my finances rather than any specifics, which
Chelsea Jones (00:31)
Mm.
Nate (00:33)
I like to answer. So I'm looking forward to this. But we have I th I would say an asking for a friend question that is maybe
Maybe a little more detailed than normal. We try to make these asking for a friend questions ones that we got that are really simple and people might be a little bit embarrassed to ask, but what's our asking for a friend question this week?
Chelsea Jones (00:57)
asking for a friend question this week is actually one that we get this is probably one that I hear most often.
Nate (01:04)
Mm-hmm.
Chelsea Jones (01:05)
but it's what's the difference between a Roth and a regular retirement account?
So this is a great question. It's really important to understand so that way you know which which type is better for you. but basically the Roth account it it all comes down to when you pay the taxes on the income that you're deferring, right? So the Roth account, when you put money into a Roth, you're paying the taxes up front and then the money grows tax free. And when you take it out, no additional taxes owed.
But the quote unquote regular or traditional or pre-tax, those all kind of mean the same thing in this context, retirement account means that you're you're gonna pay taxes on that income later. So you're taking a deduction now. So it lowers your current taxable income and then get taxed later. And which one makes sense for you depends on your current tax rate and what you think you're
income and therefore your tax rate's gonna be at some point in the future. you know, you usually think now, what's my tax rate now? What's my tax rate in retirement? if your tax rate is higher now than later, the regular or the pre-tax is better. if your tax rate is lower or the same the w as what you expect it to be later, then the Roth makes a lot of sense.
Nate (02:32)
Yeah. Yeah. I f I feel like this is like all a heavily debated topic. I actually I shouldn't say that. I debate this topic. most
Chelsea Jones (02:44)
Yeah.
Nate (02:45)
of the time it is more Roth, more better. That's how that's how people who are into finances at least a little bit, or maybe their parents taught them about finances, they just think Roth is king. And to me, this is
A little aggressive, but it sort of just feels like lazy planning. It's
Chelsea Jones (03:06)
Mm-hmm.
Nate (03:06)
well, it's tax free. And because the theory is that or math supports this, but r dollar for dollar, a dollar in a what what this person asked was they call it a regular retirement account, which we take that to mean like a traditional four one K, just a
Chelsea Jones (03:28)
Mm-hmm.
Nate (03:28)
Pre-tax,
you put the money in, you don't pay taxes on it now, but then you pay taxes on it later. Dollar for dollar, it'd be better to have money in a Roth. But the problem is it's not dollar for dollar. In that, in extreme examples, if you put money in a pre-tax account, when you put a dollar in there, if you wanted to put that same dollar in a Roth account, it would cost you 50 cents. So
Chelsea Jones (03:56)
Mm.
Nate (03:57)
If if it's if I if you you only have one dollar to invest, that's it. And one you get to put the full dollar and the other you get to only put fifty cents in it.
And so, yes, it it it's nice when you get to the end and the Roth has, you know, growth in there and that 50 cents is growing over time and you don't pay taxes on it. But the other one with compound interest is going to be theoretically twice as much money. And so
Chelsea Jones (04:24)
Mm-hmm.
Nate (04:24)
it's har it Roth is still amazing. We love Roth, but it's not that simple for high-earning f families. And so when you think about this.
it just needs to be you can't really bring preconceived ideas into it. You need to look at your plan and decide which one is better. For physicians, typically it would be to get as much money in pre-tax as you can and do some form of Roth or some form of you know, saving that doesn't get taxed in retirement and having a nice
Chelsea Jones (05:00)
Mm-hmm.
Nate (05:01)
spread over.
pre-tax, Roth, and even brokerage accounts that get taxed in a totally different way. But really simply put, one, you pay taxes later, that's the Roth. One, I'm sorry, one you pay
Chelsea Jones (05:15)
Right, that's yeah.
Nate (05:16)
taxes later, which is the pre-tax. And then the Roth account, you pay taxes now. So you can look at your tax bill from last year, you can see how much you pay taxes now, and you'll probably come to our side of the fence with wanting to
Chelsea Jones (05:31)
Mm-hmm.
Nate (05:33)
defer as much as you can today.
Chelsea Jones (05:36)
Yeah. And one last thing I'll note is because I've had this conversation plenty of times with clients. and they they do kind of ignore that er swile tax payment, like using the dollars you would have paid in taxes 'cause you deferred to invest. but also just comparing both of them with the the Roth account, since you're prepaying taxes sometimes.
a fifty percent between federal and state. The return in the Roth has to be enough to make up for those taxes that you paid and keep up with the growth that would have happened in the traditional account too. And so
Nate (06:17)
Mm-hmm. Exactly. If
if it in order to make it the same amount of money, which
Chelsea Jones (06:21)
Yeah.
Nate (06:22)
doesn't happen because you typically have the same investment strategy in both accounts. It's sort of an out-of-sight,
Chelsea Jones (06:27)
Mm-hmm. Exactly. So
Nate (06:29)
out-of-mind thing, I think. they just pay the taxes. Yeah. They just pay the taxes
Chelsea Jones (06:32)
Yeah, which I understand. I get it, but
Nate (06:35)
and get the money in. But with a real plan, you're not
Chelsea Jones (06:39)
Mm-hmm.
Nate (06:39)
choosing between one dollar here or one dollar there, or one dollar here or fifty cents there. You're saying
What's how much money do I need to save to achieve my goals? And with that
Chelsea Jones (06:50)
Mm-hmm.
Nate (06:50)
plan, you're not I think so I have an example of this, which is my grandfather was a big saver, and we would argue about Roth versus traditional. Okay, so he says Roth is always better. And but I'm talking to a guy that never made more than $50,000 a day in his life. So he didn't pay
Chelsea Jones (07:12)
Yeah.
Nate (07:12)
a lot in taxes, and he might have only had
$500 a month to save.
Chelsea Jones (07:18)
Mm-hmm.
Nate (07:19)
Okay, which was plenty for him, by the way, because someone making $50,000 a year, saving $500 a month, it turned into replacing his income when he retired. But for s for someone else who has excess money and they're trying to determine how much do I need to save so that I can spend the rest, the the math and the the plan is totally different. It's you can
Pick and choose where the money goes and you don't have to pay all the taxes now. So, you know, my grandfather who thinks that many of our, you know, our listeners, they had parents in a similar situation. they they may have never paid been outside of the twenty two, twenty four percent tax bracket. And when they get
Chelsea Jones (08:06)
Mm.
Nate (08:06)
into retirement, they're gonna be in the twenty two percent tax bracket. So Roth is better.
Chelsea Jones (08:12)
Uh-huh.
Nate (08:12)
But that's not your situation.
So it's okay to hear people say that and think nobody is right or wrong. They might be right for themselves.
Chelsea Jones (08:23)
Yeah. Exactly.
Nate (08:26)
Okay. We got four good questions.
Chelsea Jones (08:28)
Alright.
We do, let's get into them. The first one comes from a pediatrician in Oregon. They said my husband and I both make good money and we cannot agree on anything. He wants to save every dollar and I want to actually use some of it. Who's right? Someone has to be right, right?
Nate (08:46)
Someone Yeah.
Yeah. Unfortunately, usually I would say both are right. and the problem is that you're building some resentment against each other in your marriage, which is tough. and then the person who wants to do all the savings, they're gonna be the reason you have s the millions of dollars you need to retire.
But the person who wants to do the spending is looked at as the villain. Yet they're the only fun that anybody ha like
Chelsea Jones (09:22)
Mm-hmm.
Nate (09:22)
they're the reason for fun in your house. So the question is why do you make money in the first place? Do you make it so that you can hoard it all? Or do you make it so that you can have enough and enjoy some? And
Chelsea Jones (09:34)
Mm-hmm.
Nate (09:35)
the and another issue is people who are very, very frugal, they don't really enjoy. I'm saying enjoy enjoy some.
It's not enjoyable to them to waste money. And they define, everyone defines what their version of waste is. a friend of mine who is has much more money than me is much more successful than me. I mean, like, he's just he's just crushing it at life. And we went on a vacation with them this year. He will not order anything other than water at dinner.
Chelsea Jones (10:10)
Mm.
Nate (10:10)
And I can't stand it. I'm like,
Chelsea Jones (10:12)
Ha
ha ha.
Nate (10:14)
I was just like, you know, what are you doing? We're on vacation. You know, like you don't I mean, g get get something with some lime in it, like something.
Chelsea Jones (10:23)
Yeah.
Nate (10:24)
but he just and so I asked him about it. And he said, that's doesn't that's not my idea of fun. Like wasting money at a restaurant? to me it's not a waste, but to him it is. So this
Chelsea Jones (10:38)
Mm-hmm.
Nate (10:39)
is a tough, tough question to address because there's psychological things.
things involved that y you can't tell a really frugal person who is frugal by choice that like let loose and spend some money because that is so uncomfortable for them.
Chelsea Jones (10:55)
Mm-hmm.
Nate (10:55)
But on and the other issue is that that person is oftentimes looked at as the the prudent person, the smart person, because they save. But but in in my humble opinion,
That there's there's only so far that that can go. It's not
Chelsea Jones (11:14)
Yeah.
Nate (11:15)
smart to not enjoy some of your life, or at least allow your family and be okay and happy for your family to enjoy th that your resources in a different way than you.
Chelsea Jones (11:27)
Mm-hmm.
Nate (11:27)
So I believe these people need counsel and they need to understand each other better why one likes to be frugal and why one wants to.
Use money as a form of enjoyment or use money
Chelsea Jones (11:42)
Mm-hmm.
Nate (11:42)
as a form of buying back their time.
Chelsea Jones (11:45)
Yeah.
Nate (11:47)
and if you don't do that, you will argue about this until the day you die. I've seen this in my personal I my my grandfather that I just talked about argued with my grandma about money constantly. I have seen people come through our doors where pretty much the only reason they're here is that they cannot get on the same page about money.
Cause they have plenty
Chelsea Jones (12:09)
Mm-hmm.
Nate (12:10)
'cause the frugal one is saving all of it.
Right. So you have to get on the same page about money. and usually I think that is done with at first a technical plan that tells the frugal person you have plenty of money and then an understanding of each other to know why you want to how and why you want to spend money on certain things.
Chelsea Jones (12:37)
Yeah. Yeah, knowing the the values and like what actually brings utility when you spend the money is really important 'cause I don't know. I could see unless I think in this situation the husband's the frugal one, unless
Nate (12:53)
Mm-hmm.
Chelsea Jones (12:54)
he's sat and like actually thought about it, he may not even know like why he feels
Nate (13:01)
Yeah.
Chelsea Jones (13:02)
that way.
It's just kind of learned and so it's important to to actually ponder those things and consider
Nate (13:09)
Mm-hmm.
Chelsea Jones (13:10)
what what is actually valuable to you. so that
Nate (13:13)
Mm-hmm.
Chelsea Jones (13:13)
way you're not just making making this decision off of a a gut feeling without, you know, working through it with your spouse.
Nate (13:22)
Yeah. It it is mostly learned.
Chelsea Jones (13:25)
Yeah.
Nate (13:26)
and from the same people that taught you that more Roth, more better are the same people that didn't make enough to save and enjoy at the level that the spender
Chelsea Jones (13:34)
Yeah.
Nate (13:35)
wants to spend. And so, you know, I think I was the first person in my family to pay for someone to mow my yard.
Chelsea Jones (13:44)
Mm.
Nate (13:45)
And I was almost embarrassed about it. But my my
Chelsea Jones (13:49)
I know I was the
first one in my family to pay a cleaner. When I told
Nate (13:53)
Yeah.
Chelsea Jones (13:54)
my brother, he was like, Is your husband that messy? I was like, first of all. Yeah.
Nate (13:56)
What? Yeah. Right. we're all that messy. You just live with it.
but I my the the person who cuts my graphics his name is Rodolfo, and he's
Chelsea Jones (14:11)
Mm-hmm.
Nate (14:12)
been doing it for years, and he's like the greatest guy ever. He talks to my kids and he's a soccer ref, and my son plays soccer, so they talk about soccer.
And he has just been fantastic. And I look at that and I pay him $200 a month. I had to give him a raise because he wouldn't take one. And I was like, $200
Chelsea Jones (14:28)
Mm-hmm.
Nate (14:29)
is it? I can't believe I don't have to spend my entire Sunday every week
Chelsea Jones (14:34)
Yeah.
Nate (14:35)
working on the yard. I get to spend it with my family. And t to a very frugal person, they're looking at that like, I want to save that $200 a month. And to me, I'm looking at that as a very reasonable way.
To buy back some time that I desperately want and need to build relationships with my family so that I can continue to work and work really hard Monday through Friday and sometimes Saturdays. You know, and so it's it that these are all things that are beat into you, whether or not you like it or not, at a young age. And it's okay to make good, prudent decisions that are not the same decisions your parents made. But
Chelsea Jones (15:19)
Mm-hmm.
Nate (15:19)
This takes counsel and it took me a lot of time to come to these conclusions on my own because again, you know, it's not exactly br breaking generational cycles to hire a lawn guy, but
Chelsea Jones (15:31)
Yeah.
Nate (15:32)
it's it sort of felt like that. Like, you know, it is okay
Chelsea Jones (15:34)
Yeah.
Nate (15:34)
for me to not do everything myself.
Chelsea Jones (15:38)
Exactly. There's not enough time for everything. So you gotta it's okay to buy back your time. All right. Well, our next question comes from a mid-career physician in the Midwest. They said, What are the pros and cons of taking out a variable universal life insurance policy as a mid-career physician?
Nate (16:00)
Yep, this is a listener question that I got. here's the thing. so we've gone through variable universal life insurance before. We have a really popular episode called it's it's I think it's called unwinding your VUL policy. so I I won't get into exact specifics about it, but here's what I know. I have yet to meet a physician. Like a brand new doc comes through our doors.
that understands what the VUL policy that they bought, what it is.
Chelsea Jones (16:36)
Mm-hmm.
Nate (16:38)
They have no idea what it is. And then they look to me, which I I we have no dog in this fight. They could keep it. You know, we don't charge we're not trying to gather assets over here. We don't charge
Chelsea Jones (16:51)
Mm-hmm.
Nate (16:51)
based on how much money people have. So if they wanted to keep it or there's a good reason to keep it, I would I would have no problem recommending that they keep it. But
Chelsea Jones (17:01)
Mm.
Nate (17:03)
if you can't understand what you bought.
That means it was sold to you and you didn't actually buy it. No so I also have not met a physician that that says, I want, without prompting or being sold something,
Chelsea Jones (17:18)
Mm-hmm.
Nate (17:19)
I want a life insurance policy that lasts my whole life, that is paired with my investments, and gets a lower rate of return than all the rest of my money, but
I but I have life insurance and you know until I die. I just I have never had anyone
Chelsea Jones (17:40)
Yeah.
Nate (17:41)
ask for that. Now, so but but that's what it is. So the the pros of it are you have permanent life insurance. But
Chelsea Jones (17:50)
Mm-hmm.
Nate (17:51)
if you're planning correctly, you usually physicians don't need permanent life insurance. And permanent life insurance is expensive. The reason it's expensive is you're going to die.
Chelsea Jones (18:04)
Yes, they are going to pay out the life insurance benefit at some point.
Nate (18:05)
Yeah. Right. The reason
term life insurance is is relatively cheap is that you're probably not going to die by the time that policy runs out. So if you get a term life insurance policy until you're 65, odds are you're not going to die. If you get a permanent life insurance policy, they are going to pay you the money. So
Chelsea Jones (18:29)
Mm.
Nate (18:30)
it's a forced savings account, is the way I look at it, and and it's just expensive.
So why tie that with your investments? I mean, it it it's it's just cheaper and it usually to to separate the two, and usually you don't need permanent life insurance. But the pros would be if you did. Okay. So you know, we have very few situations where
If someone didn't plan well, maybe their family is in a position where they do need liquidity at death. They need they need life insurance when they die, maybe for a disabled child or something. They need some life insurance. But that would assume that they didn't plan well either. Because the families that fit that bill, they normally do plan well because they've had a disabled child for many, many years. So they saved well for many, many years.
Chelsea Jones (19:27)
Mm-hmm.
Nate (19:28)
it it's just
I don't see a lot of pros. It this is not a pros or cons ex question. This is a suitability question. Does
Chelsea Jones (19:39)
Yeah.
Nate (19:39)
this suit your situation? And and what the last thing I'll say is that it's very uncommon for it to suit anybody's situation.
Chelsea Jones (19:49)
Yeah.
Yeah. 'Cause when we we always work on every time I get a life insurance question with from a client, we always work on it together. It always comes down to is it the best tool available to accomplish what you're wanting to accomplish? And like you said, most of the time that answer is no. 'Cause the insurance agents can promise, you know, tax free income from this policy and this and this and it's just most of the time not as good as it sounds.
Because
Nate (20:18)
No.
Chelsea Jones (20:20)
it's expensive and you're better off, you know, having your own having the big pile of money that we always talk about in a taxable account. So
Nate (20:26)
Yeah. Yep.
Yeah. And and this is not, you know, you should have insurance. Because before you can accumulate the money that you're hoping to accumulate, you have an income to replace. But i
Chelsea Jones (20:42)
Mm-hmm.
Nate (20:43)
i if you really feel strongly about having life insurance longer, get a policy that goes for longer. You know, get a term policy that goes for longer. It's just it's just less expensive. So,
Yeah, I have never I have never recommended it out of the box. But some people come in and you're and you know, they can't get term life insurance. That's another one. Maybe they have a health issue that they literally can't get insurance and they should go out and get some permanent insurance because their family needs insurance. So if you have
Chelsea Jones (21:15)
Yeah. They should keep
the permanent insurance that they were sold because they can't
Nate (21:19)
Exactly. Right.
Chelsea Jones (21:20)
go out and get termed to replace it.
Nate (21:22)
Exactly. So there are some not pros and cons, I would say, but there are some people who this is suitable for. but if you're not one of those very few, it's just term plus a some s a bunch of saving.
Chelsea Jones (21:38)
Mm-hmm.
Nate (21:39)
And that sounds like a bunch of saving. I mean, i i instead of putting it in the V U L, put it somewhere else where it where it has a theoretically a better return and lower fees.
Chelsea Jones (21:49)
Mm-hmm. And more flexibility and all the good stuff that comes with saving money. Okay. Our next question comes from an OBGYN in New Hampshire. they said, I started with the hospital group mid lear mid year last year because they offered me my dream setup. It was a short commute, pay and benefits were competitive and the culture was exactly what I was looking for. They just got acquired this year and now everything has changed.
Is it worth it for me to switch to locums at this point?
This this is something that I'm seeing more and more of the the acquiring private practices are getting acquired by it's usually optimum, but
Nate (22:34)
Yeah.
Chelsea Jones (22:36)
but just bigger organizations and you know the work is just not the same. and I just gotta say with this client in particular, she had worked so hard to like find that job that provided that balance. So
We were both kind of heartbroken with this. We had to meet
Nate (22:54)
Yeah.
Chelsea Jones (22:54)
again to discuss another job change. but this, you know, ended up coming down to it was more of a financial decision at this point, because unless she was willing to move to a different state or a different area, she wasn't gonna find that culture that she was looking for.
Nate (23:12)
Mm-hmm.
Chelsea Jones (23:13)
and so we just got down to quantifying like
What does locums give you, even though it's a higher pay? Is it equivalent or does it replace the benefits that you get from this other job? and when we looked into it, really, you know, the other job offered a retirement match, but it was like somewhere between three and six percent, I can't remember. So it was a good amount, but the thing that really surprised her was the cost of health insurance.
Nate (23:46)
Mm-hmm.
Chelsea Jones (23:47)
'Cause you know, at the the the job, the non locums job over here, they pr they paid for most of the health insurance premium. But when we went onto the open market place to see what an equivalent health insurance high deductible plan would cost, it was like almost two thousand dollars a month. So
Nate (24:04)
Yeah.
Chelsea Jones (24:05)
when we did the math, she had to make like I think fifty or seventy five thousand dollars more with locums to just be, you know.
Apples to apples in terms of compensation. and in her area the locums just the pay wasn't that much more than a regular
Nate (24:24)
Wow.
Chelsea Jones (24:25)
W Two job.
Nate (24:26)
That's surprising to hear. I mean, everybody's
Chelsea Jones (24:28)
Yeah.
Nate (24:28)
every area is unique, but normally locums, you you end up doing the math and you're like, they're kind of similar. It's almost as if the hospital knows that they need to pay twenty five percent more. You know, and then it just
Chelsea Jones (24:39)
Yeah.
Nate (24:41)
comes down to a question of whether or not you want to find locums jobs and sort of like, you know, have more flexibility. But I you know, it's important that everyone doesn't just assume
That locums is easy and right for them because I've seen peop I've seen doctors just like this. they get into a locums gig and they get t two, you know, kind of cushy locums gigs, and they're like, This I'm making more and it's not even twenty-five percent, it's thirty-five percent more, and I work less, and it's great. And then I've had others that are like there's no they have to fly to go do,
Chelsea Jones (25:18)
Yeah.
Nate (25:19)
you know, to their locums job. So
It's a really great question to ask, you know, your advisor because then they can
Chelsea Jones (25:27)
Mm-hmm.
Nate (25:27)
actually look at your situation. But so did you did she end up staying?
Chelsea Jones (25:35)
She went to go back and neg she ended up going back to negotiate with the non-Locums job to see if she could get, you know, some kind of per diem setup or something. Cause
Nate (25:48)
Okay.
Chelsea Jones (25:49)
she really values the flexibility and work life balance. That's what she's just chasing, trying to find.
Nate (25:57)
Mm-hmm.
Chelsea Jones (25:58)
and
Yeah. It was like I think with her specifically, she was like promised this contract that would fit really well. But because of the, you know, hospital being acquired and all of the administrative, you know mess that goes on, it was hard for her to get get the offer in writing. So she just went back to try to get it in writing.
Nate (26:23)
Mm-hmm.
Chelsea Jones (26:24)
So
Nate (26:25)
Doctors don't like to negotiate. I've learned this over
Chelsea Jones (26:29)
No.
Nate (26:29)
the years. They just like, can you just can we just do something that's fair? You know, like I was hired for this. Can I please just work? And I
Chelsea Jones (26:35)
Yeah. Can I just get to work and yeah. Mm-hmm.
Nate (26:41)
mean and oddly enough, maybe it's the the administration knows that they don't like to negotiate. Because a lot of times they'll just say no.
Which is a a shock to me. I mean, because we're in such short supply of good doctors. Like how
Chelsea Jones (27:02)
Mm-hmm.
Nate (27:02)
I mean, either they are either they know something I don't know, which is that doctors stay, which I also don't see. I I don't think that's the case. Most doctors don't just stay after they're being ab abused.
Chelsea Jones (27:14)
Abused, yeah.
Nate (27:15)
or these people are just morons. Can't can't
Chelsea Jones (27:20)
Yeah.
Nate (27:20)
you give her Fridays off?
And pay her less? I mean she's not even asking
Chelsea Jones (27:23)
Yeah, something.
Nate (27:24)
to make the same amount.
Chelsea Jones (27:26)
Yeah. And I think for her too, like one of the birthing centers or one of the hospitals where she was working at just got completely shut down 'cause there have been you know, there's some funding cuts and and whatnot. The
Nate (27:39)
Yeah.
Chelsea Jones (27:40)
our healthcare system is a bit of a miss. It has been for a while, but
Nate (27:45)
Well, I I'm gonna put a I'm gonna like put a PSA out there. All doctors should band together and ruthlessly negotiate. I know it's against your nature, but
Chelsea Jones (27:57)
Yeah, why
don't doctors need to have unions? I'm sure there are some out there that have unions, but
Nate (28:00)
Get out there, negotiate like
crazy, and they're not I haven't yet to see anyone get fired for negotiating. maybe it makes your your work environment a little less comfortable, but fight for what you're worth. I hear doctors say
Chelsea Jones (28:18)
Yeah.
Nate (28:18)
all the time, I feel so lucky to have this job and I'm thinking, they're lucky to have you. Doctors are in short supply. You're tr right.
Chelsea Jones (28:24)
Yeah, you're a trained professional yeah.
Nate (28:29)
Like
Chelsea Jones (28:29)
You're worth it.
Nate (28:30)
So
anyways, I wanna fight for my docs out there, but I don't I wish I could. I wish they could send me in there and negotiate for I'm like, sh sh taking Fridays off. Okay? That's what's happening. Yeah. Yeah.
Chelsea Jones (28:37)
Yeah. Hey. Union rep. That's what union reps do.
Okay, our last question comes from an emergency physician in Kansas. They asked, my parents never talked about money and I don't want to repeat that with my kids. They're currently seven and ten. But where do I even start?
Nate (29:00)
Yeah, I I have I have tried and succeeded and tried and failed at this,
Chelsea Jones (29:06)
Mm-hmm.
Nate (29:07)
which every parent does if they if they're any with anything they're teaching their kids. so some things that I I have some things that have worked for me, at least so far. My my kids are just about a year behind, so they're in the same boat. But we've been talking about money for a long time. and I think
It most importantly, you need to talk about what's relevant to them, which to me, relevant means they need to understand that to get money you have to work. But a seven-year-old working doesn't really look like an adult working, right? So, I I just talked earlier about paying for help and buying back your time. I still go back to old habits sometimes. I
I built, I rebuilt my fence a few weekends ago. And
Chelsea Jones (30:01)
Mm-hmm.
Nate (30:02)
I paid my six and almost nine year old to help me. They weren't much help. They were not much help.
Chelsea Jones (30:14)
Ha ha.
Nate (30:15)
But they were working. They were working the best they could. I mean, they were sweating. Wasn't much help? No. but but I did that so that they would know it's hard work to make money.
something an another important thing for them and households that make a lot of money is they kids need to understand that money is is finite. That it's not unlimited. It feels unlimited to your children because they can't ask for enough money that you wouldn't be able to give them. They're they just don't have a big enough appetite. So you have to teach them what the world would teach them if they were on their own. And if money is finite, that means that if you choose something.
Then you have to say no to something else. And
Chelsea Jones (30:58)
Mm-hmm.
Nate (30:58)
this is the big one. Okay. This is this is where you can start, which is you have to let your child make low-stake money mistakes.
Chelsea Jones (31:10)
Mm-hmm.
Nate (31:10)
So if they get an allowance, hopefully they worked for it, let them buy this stupid thing they want to buy. Let them do
Chelsea Jones (31:19)
Mm-hmm. Mm-hmm.
Nate (31:21)
it. Let them run out of money. And
And the next time they want money, you are you are ruining the whole plan if you just buy it for them. So most recently, my son Mateo, he's been watching this show about a guy that catches fish in Florida. Okay. In Florida, I think you can just go down to like some low tide like sewer. That's what it looks like to me in the show.
And you just catch him with a net. Well, Mateo really
Chelsea Jones (31:55)
Yep.
Nate (31:56)
likes animals, and he's like, we're always catching frogs in the forest. And he thinks he can just go by this net and go down to the Oregon rivers and catch a fish. Like, you can't do that.
Chelsea Jones (32:06)
Ha ha ha.
Nate (32:09)
It doesn't work. I tried to explain to him it
Chelsea Jones (32:11)
Yeah.
Nate (32:12)
doesn't work a bunch of times, but he is dead set that he wants to buy this net. And I think I
Chelsea Jones (32:16)
Mm-hmm.
Nate (32:17)
just need to let him buy it.
Chelsea Jones (32:19)
Yeah.
Nate (32:19)
Right. But I'm trying to I'm trying to preserve his hundred dollars that he earned.
Chelsea Jones (32:24)
Yeah.
Nate (32:24)
And I think I just need to let him buy it and run out of money. And the next time he wants something, he has to earn it. And so we've done this many times. I'm for whatever reason I'm hung up on this net. But I've let him run out of money and he has no money. And he's and then hit
Chelsea Jones (32:39)
Mm-hmm.
Nate (32:40)
but his brother does. And his brother wants to go spend and he just doesn't have any and he's devastated.
This year is the first year after letting him be devastated multiple times where he is, he's like, I have to save money. I need, I need to have at least this much money. What if something comes up? So it is working. those are right. Yeah.
Chelsea Jones (32:57)
Yeah. He figured out the emergency fund.
Nate (33:03)
The emergency Pokemon fund. What if
Chelsea Jones (33:06)
Ha ha.
Nate (33:07)
the holy grail card comes up? And I, you know, and it's been
Chelsea Jones (33:11)
Mm.
Nate (33:11)
going really great. but those are tactical things.
Like allowance that's actually earned, letting them make mistakes. But here's the big one. your children don't really listen to you. They watch you. So
Chelsea Jones (33:27)
Yeah.
Nate (33:29)
if you are just spending money like it's nothing, if you never talk to your spouse about money, if you never talk about the importance of saving to your spouse in front of them or discuss like like I did with my spouse, hey, we need to start saving money for this fence.
And then you talk about the fence in front of them. And then we say, hey, if you know, if we pay someone to do it, it's going to cost, you know, 10,000. If we do it ourselves, it's going to cost three. what do we want to do? Do we want to carve out a whole, you know, long weekend to do it? Or do we want to just save and do it a year later? It's not just we can do it whenever we want. And
Chelsea Jones (34:08)
Yeah.
Nate (34:08)
even if it is for you.
There's something that you probably are saving for. Maybe it's a car, maybe a $10,000 bill you don't have to save for. But a car is something that most physicians, even who make great money, are setting money aside for. I have many clients that it's like they have a car fund. And so when you go buy the car, you can talk about this is our budget. This is what we save for, and we're going to stay within it. And you don't have to say numbers. You can say we have a budget, you know, when you drive by the
A car that they like, you know, you could say, that's not in our budget. We saved a certain amount and that's what we're going spend. And that
Chelsea Jones (34:46)
Mm-hmm.
Nate (34:47)
will start them, they will start asking questions about, well, like, what do you mean, a budget? so we can't afford we we don't have enough money for that. They my kids ask me that all the time. so we don't have enough money for that. And I said, Well, we have enough money to buy that, but but but we need that money for other things.
We need that money for this,
Chelsea Jones (35:08)
Mm-hmm.
Nate (35:09)
this, and this too. And we need to save. And I want to send you to college. So we don't just spend all our money. We don't.
Chelsea Jones (35:16)
Yeah.
Nate (35:17)
Me and mom don't. Mateo, you might, but we don't. And that's that's how mom and dad have this house. That's how mom and dad, that's how we do things. And so
Chelsea Jones (35:29)
Mm-hmm.
Nate (35:29)
you can just it the things that are going on in your head, you could just speak out loud.
without the dollars in front of it. And before you know
Chelsea Jones (35:37)
Mm-hmm.
Nate (35:38)
it, your kids will be asking you all sorts of questions. They'll want to know what you how big your mortgage is. Mike Mateo asks me, like, what do we owe on this house? I'm like, my gosh. Really? At eight
Chelsea Jones (35:46)
Yeah.
Nate (35:46)
eight or nine years old, you're asking me that? They'll just start asking. But they are soaking everything up that you're doing with your spouse, which is a lot of
Chelsea Jones (35:55)
Mm-hmm.
Nate (35:55)
pressure. And it's why you communicate very well with your spouse or you work on that. And it's why in this first question that got asked,
about can't not being able to agree with your spouse about money is so important that you get counsel and
Chelsea Jones (36:09)
Mm-hmm.
Nate (36:09)
you figure that out because your children are watching. And if you're
Chelsea Jones (36:13)
Yeah.
Nate (36:13)
arguing about money, that's how they they will treat their spouse. They will argue about money. So
Chelsea Jones (36:19)
Mm-hmm.
Nate (36:20)
it's a it's a lot on your plate, but it's actually pretty straightforward. You just start talking out loud in front
Chelsea Jones (36:27)
Yeah.
Nate (36:27)
of people.
Chelsea Jones (36:28)
Really is that simple or can be that simple. And I
Nate (36:31)
Mm-hmm.
Chelsea Jones (36:31)
think it's really important to do too because like a lot of things, if you don't teach them some w they're gonna learn about money somewhere at school
Nate (36:38)
Yep. Yep.
Chelsea Jones (36:41)
from, you know, other kids. And that could be that could go either way, right? So it's so funny. My
Nate (36:47)
Mm-hmm. Yeah. I learned
I I I because that my parents split, so everyone had a different philosophy. Everybody would pay me differently. You know what
Chelsea Jones (36:58)
Yeah.
Nate (36:59)
I learned? The people who didn't make a lot of money are very stingy with how much they'll pay. And I didn't
Chelsea Jones (37:05)
Mm-hmm.
Nate (37:06)
think of it that way. I didn't think of my grandpa's that way. But he's like, I'll pay you five dollars an hour to go out there and cut down those blackberry bushes. And I learned, you know what? When I grow up,
I don't think I want to be cutting down blackberry bushes. Cause that was really hard. And that was only five dollars. And then if you go to somebody else that maybe is better with money or better at earning money, they are like, Well, you know, I they're they're explaining to me I would prefer to go make money than spend money than do this myself. and I'll pay you ten dollars an hour. So I
Chelsea Jones (37:40)
Mm.
Nate (37:40)
like the idea when when my boys helped me with my fence, I paid them more than they should have gotten.
Chelsea Jones (37:47)
Mm-hmm.
Nate (37:47)
But
it was hard. And I don't want them to work for nothing. So there's a balance. Like when you're young, all you have is time and energy. You have no skills. You have no wisdom. So you kind
Chelsea Jones (37:58)
Yeah.
Nate (37:58)
of have to work for less than you think. But if you know, like there are people out there who have jobs that are worth money, much like mom and dad make as doctors. I should go do something like that with my time. Cause I only have so much time. And and if you do that for your children.
They won't need a trust fund. They just won't. They'll know that they work really hard, they gain the good good skills that they will go out and earn. And they'll also know that mom and dad, no matter how much money they made, they had to save for that vacation. And they did and
Chelsea Jones (38:32)
Mm-hmm.
Nate (38:33)
they enjoyed it. But it's not, it's not infinite.
Super important, like we we've been talking about kids and money for years, but the more and more social media it tricks people into thinking everybody has money. Like what I talk
Chelsea Jones (38:47)
Mm-hmm.
Nate (38:47)
about with my friends is not investing. I talk about how whatever you're seeing is not real. It's on debt because I work with people who
Chelsea Jones (38:55)
Exactly.
Nate (38:56)
have real money and they don't drive those cars.
Chelsea Jones (39:00)
Yeah. I know I was talking to a client. I was I was surprised even by this. But I was talking to one of my retired clients and they're like, We're gonna go get a new car, you know, you know Bob's ninety seven Subaru is it's about time to replace it. I was
Nate (39:17)
Yeah.
Chelsea Jones (39:17)
like, my goodness, you drove that car for thirty years and you
Nate (39:21)
Yeah.
Chelsea Jones (39:22)
have like you have millions saved. You could have bought
Nate (39:25)
Mm-hmm.
Chelsea Jones (39:25)
a new car a long time ago, but they just didn't it worked fine.
So they kept it. They decided to use money for other things. So
Nate (39:34)
Yeah. Yeah. Okay, I think that is it for today. Thank you everybody for listening. If you liked this episode, be sure to subscribe so you don't miss when we release one every week. you can also rate us anywhere you're listening. And if you'd like to work with us, you can visit physicianfamily.com to schedule an interview. And if you're not ready for that, you can also send us a question, just like this variable universal life question today at podcast at physicianfamily.com.
if we don't answer on the show, we'll answer your question by email. So either way you're gonna get an answer from us. and just remember until next time, you're not just making a living, you're making a life.
