How to learn more about finances and saving

amother

OP ↓

Sat, Dec 09 2023, 10:59 pm

Is there a book or course or youtube video that can teach me how to be a responsible adult?? TMI

My job does not offer any benefits like pensions or matching 401k (I have read about that online but not sure what it is). If my paycheck is different every month, how do I know what to set aside for retirement? I am in my 20's, and the main breadwinner. I know when I reach a certain age I will get social security because I have taxes taken out of my paycheck, right? When I got married we put our money into a separate bank account, but we did not get a lot at all. We only have $22,000 in savings. Is there a special account or whatever I can open to transfer this money to so I can at least make some money off of it? When my baby was born and I got money as gifts, I put it into a checkings account for her. So there is $4500 for her. We don't have life insurance either. I want to get. How much is that a month? How does it work? Husband is not so savvy, doesn't make much at this time, and English is not his first language so I kind of take care of most things. Thank you and chag sameach!

amother

Ginger ↓

Sat, Dec 09 2023, 11:15 pm

I’m so happy you posted!

You can be getting 5% interest annually on your savings by putting them in a high yield savings account. I’m getting that at CIT bank - https://www.cit.com/cit-bank/bank/savings. The money is safe, it is FDIC insured meaning up to 250k in each account is insured by the government and will be paid back to you even in the rare event that the bank collapses. There are other high yield savings banks, you can google if you want to look for higher rates than 5% but I doubt you can find.

Life insurance is a priority as you have a child. The sooner you get it, the cheaper it will be. Please get it for you and your husband. I’m paying $70 monthly for 1 million dollar coverage for myself and my husband for the next twenty years. We plan to add additional policies each time we have another kid so that we’ll be covered for the next 20 years from when the child is born. The goal being that if the worst happens, we will have the life insurance coverage to pay for the child’s bills while they are still dependent on us which we estimate will be 20 years from when they’re born. After that they can get a job and take care of themselves.

Please do not get whole life insurance. It’s the way life insurance agents get paid the most so they push for it but most people would be better off with term policies and investing the rest of their money on their own.

ETA just want to clarify that I’m paying $35 for a life insurance policy for myself and $35 for a policy for my husband. Both are 1mill coverage for 20 years.

amother

↑ OP ↓

Sat, Dec 09 2023, 11:59 pm

amother Ginger wrote:

Thank you for explaining this so clearly. I will check out that CIT account tomorrow. I clicked the link but it says "We’re sorry, we couldn’t find the page you requested. It may have been moved, changed or removed." What type of account is it that youre opening?
What company did you purchase life insurance from? What do I even google or who do I speak to? $70 is very doable. I thought it was like $300 a month. Just shows you how little I know about anything

What happens down the road if BH a person never needs life insurance? The money they put aside each month was "wasted" ? Do they get it back?

amother

↑ Ginger ↓

Sun, Dec 10 2023, 12:12 am

amother OP wrote:

Sorry about that, this link should work: https://www.cit.com/cit-bank/b.....ount. Important note for others reading this thread, the 5% rate at CIT bank is only for those putting 5k or more in the account. If you’re putting less in, look for a different high yield savings bank account to open.

I got life insurance myself without using an agent because my agent wouldn’t stop trying to get me to do whole life insurance or convertible (that would mean the plan can be converted to whole life insurance from term if you decide to at some point during the term of your life insurance plan). I got it from Haven life insurance which is owned by Mass Mutual so it’s a stable company. You can apply online at https://havenlife.com/.

If you want to shop around, the website Term 4 Sale is great at giving estimated quotes. https://www.term4sale.com/

If you’re getting a term plan then you do not get any of your money back if you are blessed enough to not get a life insurance payout before the term expires. It’s worthwhile anyways, you do not want your crying child’s face plastered all over social media to get a few hundred thousand donated. I view it as one of my most important parenting responsibilities to make sure my child will be able to be taken care of financially even if I pass during their childhood.

With whole life insurance you do get some money back whenever the policy holder dies as they are covered for their whole lives but the premiums are very expensive and you do not get your money’s best worth unless you’re rich enough that you have maxed out all other investment vehicles and are doing whole life on top of that. The benefit of whole life insurance is that you’re pressured to put those hundreds into the plan but if you’re disciplined enough to put that money into an IRA and invest it in an index fund, you will come out far ahead assuming you don’t die young.

amother

↑ OP ↓

Sun, Dec 10 2023, 12:16 am

amother Ginger wrote:

With whole life insurance you do get some money back whenever the policy holder dies as they are covered for their whole lives but the premiums are very expensive and you do not get your money’s best worth unless you’re rich enough that you have maxed out all other investment vehicles and are doing whole life on top of that. The benefit of whole life insurance is that you’re pressured to put those hundreds into the plan but if you’re disciplined enough to put that money into an IRA and invest it in an index fund, you will come out far ahead assuming you don’t die young.

Ty ginger, I will check this out tomorrow. I truly appreciate it. So basically you pay $70 each month and iyh your kids will never need to use it. And since it isnt the full policy, you don't get this money back. Correct?

How many years coverage should I get life insurance for? 10, 15, 20 or 30?

I wish I understood what you mean by the bolded.
What is an IRA and an index fund? You think I would have learned something of importance in my graduate degree studies... but alas...

amother

Seablue ↓

Sun, Dec 10 2023, 12:18 am

amother OP wrote:

Ty ginger, I will check this out tomorrow. I truly appreciate it. So basically you pay $70 each month and iyh your kids will never need to use it. And since it isnt the full policy, you don't get this money back. Correct?

I wish I understood what you mean by the bolded.
What is an IRA and an index fund? You think I would have learned something of importance in my graduate degree studies... but alas...

Index fund is a basic fund that includes a variety of companies so it’s relatively safe and not risky

IRA is a way to save money for retirement- you can’t withdraw the investment until after age 65. Traditional IRA is tax deductible in the year you invest, but it’s all taxed as income when you withdraw at age 65 +. Roth IRA is taxed the year you invest it but grows tax free and all withdrawals after 65+ are tax free.
Both have maximum yearly contributions of $6500 per spouse ($7000 in 2024).

amother

↑ OP ↓

Sun, Dec 10 2023, 12:21 am

amother Seablue wrote:

Thanks for dumbing it down for me. I feel like an idiot. I will read up more about it.
Why do people need an IRA if social security is taken out of their paychecks?
So in 2024, people can only add $7000 a year to their Roth IRA account? That means every month people put into their account $500? And then at 65 years old they can take out all that money and use it for retirement?

amother

↑ Seablue ↓

Sun, Dec 10 2023, 12:23 am

amother OP wrote:

You’re not dumb, you’re smart for thinking of the future!
Social security is not that much and may not be around by the time we retire. IRA is investments so your contributions grow! If you put in 14k a year (7k a spouse) it can grow to a substantial amount! Then you can live off that money when you retire.
You can do $500 a month or a lump sum, whatever you’re able to - it just maxes out at a certain amount each year.

amother

↑ Ginger ↓

Sun, Dec 10 2023, 12:29 am

amother OP wrote:

You’re very welcome!

Yes, correct. I’d just use the term whole life instead of full.

It’s a very individual choice, picking the term you want. It depends how much you can afford, what your family’s expenses are, how many kids you plan to have and when you plan to have them. You want to make sure to have coverage until your last kid is independent and able to support themselves. An agent might be helpful in figuring out the best option for you.

Life insurance is very confusing. I’m sharing information I believe to be true based on my experience and research but you’ll find others who swear by whole life insurance.

Someone explained what index funds and IRAs are above.

Financial literacy should really be taught to us in school! I spent hours scouring the internet to figure things out.

amother

↑ Ginger

Sun, Dec 10 2023, 12:34 am

Regarding social security, you can actually create an account on the SS website and see an estimate of how much social security you can expect to receive based on the amount you’ve paid into the system so far. The website doesn’t work during late night hours weirdly so it is down now but I really recommend spending the time to figure out your social security status so that you can effectively plan for retirement.

Here’s the link - https://www.ssa.gov/prepare/ge.....imate

Most people, especially frum people, do not get paid enough from social security to live off it and need to save for retirement. It’s good that you’re starting now, some only realize this when they’re about to retire sadly. The frum lifestyle is so expensive that it is so hard to save for retirement but that just leaves the burden on your kids to pay your bills when you’re too old to work which is definitely something to try to avoid.

If you start investing now, compound interest will make your money grow a ton. I’m thinking about providing a link to a compound interest calculator but I feel like I’m posting too many links already haha.

amother

Peru

Sun, Dec 10 2023, 8:08 am

amother OP wrote:

What happens down the road if BH a person never needs life insurance? The money they put aside each month was "wasted" ? Do they get it back?

You don't get the money back. IYH you'll never need it. You're paying to get money if something c"v something happens but if nothing happens the insurance company keeps the money. Same way that people pay for homeowners insurance every month or car insurance. It's unfortunate that you're losing money but it still makes more financial sense that not having coverage.

It's not wasted. You are protecting your family. It's like saying you wasted money on car seats because your child was never in a car accident.

amother

↑ OP ↓

Sun, Dec 10 2023, 11:06 pm

amother Seablue wrote:

Ahh ok gotchya...
BTW, when you mean taxed the year you invest, how much extra do people pay?
We definitely would not be able to put in 14k a year, my husband didnt make any profit this year with his business and I dont have that much extra each month to put away. Maybe if I hustle and work really hard a few extra hundred

amother

↑ OP ↓

Sun, Dec 10 2023, 11:07 pm

amother Ginger wrote:

I saw my father today and mentioned the whole/term and he said I should do the whole term since then Id be able to take it out eventually and not have it "wasted"- but how much of a price difference would I be paying each month if I do whole vs. term?