Jean Chatzky: How to Unlock Wealth and Maximize Your Earnings | Finance | YAPClassic

27:52And I felt the same way when I first had kids. My former father-in-law said, well, when are you stopping working? because all of his other daughters and daughters-in-law had stopped working. And I said, yet not me. I'm not doing that. We will figure out how these kids will have care during the day. And the way that we did it was that my ex-husband didn't travel for work, and I did. And that balanced us out for a very, very long time. If you are in a relationship where the egos are clashing or where your partner can't support your success or doesn't want to support your success, then it's not going to work.

28:36It's just going to fail. Have you ever seen the movie Beautiful Girls? No. Okay, you have to watch the movie Beautiful Girls. It's old, 20 years probably. Natalie Portman and Annabeth Gish and Timothy Hutton and Matt Dillon, a whole bunch of people. But the part of that movie that sticks with me is there's a very successful woman in it. She's dating Timothy Hutton, and he is a piano player in a bar who also happens to be an accountant. And he's been putting a whole lot of pressure on himself to get a real accounting job so that he can keep up with her. And finally, she just said, musicians are sexy.

29:24Accountants are not sexy. Musicians are sexy. Giving him the permission to continue to do this thing that he enjoyed and continue to bring that sexy energy to their relationship, which is what she needed from him. And so that's the balance I think that you're looking for. There's a lot of lean in Sheryl Sandberg's book that people have dismissed over the past number of years. I think the thing that really holds up from that book is the importance that she put on selecting your partner. She picked a guy that she knew was going to let her be her and let her do the work that she wanted to do and help them create a life where that was going to be possible.

30:12And that's what you need. Yeah. More generally, for everybody tuning in, I just feel like it's just harder to find traditional roles and partners anymore for men and for women. And I just would love to understand even more advice from you for the young people tuning in. How can men feel like men and women feel like women in their relationships when everything sort of getting switched around in terms of who's the breadwinner. I just feel like it's so difficult for us to date. I think the way that you do it is by knowing yourself and knowing your partner and closing ranks. This is your business and it's your partner's business and it's not your mother's business or your mother-in-law's business or your friend's business or Instagram's business, It is nobody's business but yours.

31:01And if it's working for the two of you, then who the hell cares, right? What anybody else has to say. You just have to respect the boundaries that you've created with the two of you and what that allows you to do. Look, I'm the breadwinner in my marriage. I have been for many years. My husband is largely retired. He works about 15 hours a week these days, he's older than I am. And he had an incredibly successful career. But the fact that I out-earned him, he could care less. He knows the value that he brings to our marriage. I certainly know the value that he brings to our marriage. And it's nobody else's business, really, despite the fact that I'm talking about it on your podcast.

31:55I love it. Thanks, Jean, for all of that. Okay, so women are getting richer. Can you talk to us about how women are gonna treat this newfound wealth compared to how men traditionally have treated wealth? Men have traditionally invested it and women traditionally have been slow to the party. If you, again, and you pulled out a whole bunch of statistics, I'm grateful for that. But one of my favorites is that women keep about 70 % of our assets in cash. Men keep about 60%. It's a really big and important difference because investing our money is the only way that we are going to make sure that it is working as hard as we are working ourselves.

32:40And so what we're starting to see is women move into the ranks of being investors, wanting to be investors, wanting to learn about investors, whether you've got all your money in a 401k where you put it in a target date fund and you let that fund do its thing or you're buying individual stocks, we wanna learn. I was telling you about my investing club. I run this investing club with Karen Feinerman, who is one of the panelists on Fast Money on CNBC. She's a hedge fund manager. You would love her. She's so brilliant. And we're teaching 300 women and growing how to invest every other Monday night on Zoom.

33:26And we pick stocks together and we talk about diversification and trends and everybody can ask their questions. And investing is the kind of thing that is hard for women because there are no right or perfect answers. There's some parts of personal finance where if you ask me a question, I can give you an answer and I can be 100 % right. What is the best cashback credit card? I can look at them all. I can run the numbers. I can give you an answer. I can know that I'm correct. What's the best stock? Can't do it. Because no perfect answer exists because we have backward-looking information and not forward-looking information.

34:11And so we have to trust in the historical accuracy of what has come before. That is difficult for a large portion of women who like to know the answer to any question before we even ask that question. We have to get comfortable, and the way to get comfortable is by actually doing it. And one thing that has really, really helped when you look at Gen Z and millennials is that we're now being, across the board, automatically enrolled in these 401k and other retirement plans at work where we have them. The money's being automatically invested into a default, like a target date fund. So you're investing whether or not you are doing the work of investing yourself in many cases.

35:02And if you can allow yourself to sit with that and get comfortable with the fact that you're not only doing it, but you're doing it pretty well, that helps people. I love that. This was to me such an interesting conversation. Honestly, I feel like this whole gender wage gap and transfer of wealth, it's really shifting everything. Let's move on to some more general advice, tactical financial advice. I wanna start with the concept of financial freedom, right? I feel like the concept of financial freedom has changed, especially for millennials, for Gen Z. How do you think we should go about thinking about financial freedom?

35:39Well, I'm interested in knowing how you think it's changed. What is it to you? Well, I feel like now it's more about enjoying life, doing what I want, right? It's really not about becoming a billionaire. It's what's the amount of money that I need where I can live comfortably, buy what I want and enjoy life, work out, be healthy, sit in the sun. You know, that's what I think of. That's pretty much my definition too. It's just my definition I think extends for a longer period of time because of my age, right? So I look at this and I think I want all of that But I want to be able at some point to just work when I want to work and know that those things will continue for as long as I live.

36:30So I think that's where the disparity in financial freedom comes in. I think younger generations define it in terms for today and older generations define it in terms that include a retirement that might last for three decades. So one of the things that I think a lot of my listeners are probably going through right now, we've got a lot of 30-year-olds, is buying or renting. And traditionally, when we're talking about the American dream, financial freedom, a lot of it is also like being a homeowner, right? Do you feel like it's important to be a homeowner? Do you feel like it's a good investment strategy?

37:07And what are some of the things we should think of renting versus buying? I feel like being a homeowner is a helpful way to save money over the long term. If you think about buying versus renting, month to month, right now, the costs are actually closer than they've ever been. But when you own, you are putting equity, you're building equity in this house. And that is a form of forced savings. And what happens if you get to the end of the road, if you pay down a mortgage for a long enough period of time, or even if you swap out of it and out of a couple of homes, but you've built up some equity and then you build up some more, you end up with this cushion of cash.

37:59And you can use that cushion to supplement your standard of living. You can use it to pay for long-term care. You can use it to keep a roof over your head. You can use it to sell and move to Costa Rica. You have choices because you have this additional cushion. And if you've rented your whole life, unless you took the difference between the renting cost and the buying cost, which is a lot slimmer than it used to be, and you put that away every single month, you don't have that additional sum of money. So that's where being a homeowner, I think, is additive to your bottom line. There are other differences.

38:41We know in a whole bunch of different situations that autonomy is one of the things that make people happy. You're happier at your job if you feel like you've got enough autonomy to rearrange the furniture or to put your own stuff up on the walls or to decide that you're going to come in at 930 rather than 9 o 'clock. You're just happier. And you are happier where you live if you feel like you have enough autonomy to make the place what you want it to be. And you're more likely to have that if you own rather than if you rent. But there are a lot of cases where you shouldn't own, right? If you're not going to be someplace for five years, I don't think you should buy.

39:28The cost of buying is just too steep. I don't think that mortgage rates at this level should stop people who want to be in a place for six, seven years and more. You'll eventually, hopefully, get an opportunity to refi that loan. But there are cases where renting is just better. You gave such good advice. Like, I'm in this predicament now. Now, to your point, I see a lot of my friends who have been homeowners and I see them like really leveling up because every time they switch a house and they'll make like 200 grand and they just keep playing with that money and growing it and growing it. So I do see a lot of my friends who have dabbled in home ownership do really well.

40:15That's inspiring to me. It's just that in New York, it gets crazy. It's so crazy. So I feel like people who are in different cities also have a different experience. That's way easier to buy a house if you live in the suburbs, you know. But you have more choice now than you used to have. I know young couples who are thinking they live in New York where the price of homeownership is unsustainable. They're looking at Philadelphia. They're looking at Charlotte. They're looking at other places where because they can work remotely, they could keep their jobs. They could make some friends and they could be homeowners and have a standard of living that just is a little bit easier.

40:58Okay, so something that you talk a lot about, and I was looking around your website and I saw that you were like, what is your money type? And you have this quiz that people can take for their money type on hermoney.com. So talk to us about money types. What is that? Why is it important to know? It's important to know how you're wired and why you're wired the way you are. The money type is love languages, right? If you ever read the five love languages, money type is that, just for money. So we worked with a PhD who developed this in-depth tool that has been tested on men and women to help figure out why you are the way you are with money.

41:45I mean, you may know that it is hard for you to spend or easy for you to spend. You may know that you have trouble losing money or more or less trouble taking risk than other people. You may know that you would do anything for the members of your family, even if it meant putting yourself at financial risk. All of these things are tied up in our five personality types. And I would bet just knowing a little bit more about you and about your audience, that if people went to hermoney.com and they took our diagnostic, our questionnaire, our money type quiz, you've got an audience that is full of what we call visionaries.

42:31A lot of entrepreneurs are visionaries. And visionaries have to be careful when it comes to their own personal finances, because it is really tempting to throw all of your money against the business and think that that business is going to be your retirement plan. And we know the statistics on businesses that succeed versus fail. And you give up a lot of years trying to get that business off the ground and very quickly you can get yourself in trouble. The other thing that I like about money type so much is that we're not all just one type. We've got a primary type. And then we have a couple of secondary types that make up our personality.

43:13And if you know your money type and your partner's money type, it's helpful in navigating the relationship and the conversations that the two of you have about money. I was recently on a different podcast and the hosts had taken the money type questionnaire and they said, I feel so seen because there's something about this diagnostic. It just gets people. I felt this way the first time I took it and I'm a producer. That's my primary money type with a little bit of connoisseur, which means I like to spend in as well. And it's really true. And it's really interesting that a test can get you so well.

43:59It's so true. And I'm happy that you brought up relationships because I actually recently ended a relationship. And one of my primary reasons was our views on money were so different. He's richer than I am and was so cheap. And I was just like, I can't do this. I like to live a life of luxury. I like to spend my money. Not that I'm frivolous, but it's just like, what's the point of choosing such a hard job if you're not? Right. If no one's spending their money, why are we working so hard? Yeah. And it's good that you figured this out before you got engaged to the guy or worse, married the guy, right?

44:36In my house, we say this is why we work. And we say it for exactly the reasons that you just described. We work hard and we work hard so that if we want to get on a plane and fly across the country, we don't have to think about it. This is the payoff of working so hard and producing. And I acknowledge we are definitely privileged. I'm fortunate to have a career that I love, which makes working hard feel like not working as hard. But this is why we work. If they didn't pay us, we wouldn't work so hard.

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47:59Happy New Year, Yap Gang. I just love the unique energy of the new year. It's all about fresh starts and fresh starts not only feel possible, but also feel encouraged. And if you've been thinking about starting a business, this is your sign. There's no better time than right now. 2026 can be the year that you build something that is truly yours, the year where you take control over your career. and it starts with Shopify. I've built plenty of my own businesses on Shopify, including my LinkedIn Secrets Masterclass. So it's a two-day workshop. People buy their tickets on Shopify. And then my Mastermind subscription is also on Shopify.

48:34I built my site quickly in just a couple of days. Payments were set up super easily. And none of the technical stuff slowed me down like it usually does because Shopify is just so intuitive. And this choice of using Shopify helped me scale my masterclass to over$500 ,000 in revenue in our first year. And I'm launching some new podcast courses and can't wait to launch them on Shopify. Shopify gives you everything you need to sell online and in person, just like the millions of entrepreneurs that they power. You can build your dream story using hundreds of beautiful templates and set up as fast with built-in AI tools that help you write product descriptions and edit photos.

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49:49There's a lot of keeping up with the Joneses with social media, a lot of comparison, feeling like you need to keep buying. And for instance, with me, I feel like I always got to buy so much clothes because I'm always photographed in my outfits. And then suddenly I don't want to wear the same thing again. And so talk to us about how we can avoid overspending. Well, first of all, are you not on the real real? You should just be turning over your closet. I mean, this is what I do because I'm the same. I do a lot of appearances and I don't want to be wearing the same thing all the time. And I wear it a couple of times and I send it to the RealReal and I buy something else on the RealReal and I run a credit and it makes me feel like I'm shopping for free, even though it's not quite shopping for free, and that I'm doing something a little bit better for the environment.

50:41And so that's my shopping suggestion. But when it comes to overspending in general. I think that the secret is that most people have absolutely no idea where their money is actually going. So when we teach budgeting and we have a program called Finance Fix where we teach budgeting and how to do this in a way that you can actually save something, we put people through this process of figuring out where their money is going. We use technology to do it so you don't have to do it by hand. And once you see where you've been using your money, then you have the tools and the ammunition to make changes about where you consciously want to use your money.

51:29And so it's not don't buy the coffee, right? Everybody's least favorite example. It's if the coffee is the thing that lights up your day, then by all means buy the coffee. But if you could care less and really what you want is a little bit of caffeine to help you get out the door, then make it at home and have a sip and go about your day and spend your money on something that you actually value. I know where all my money is going. It's Sephora and Revolve. All my money is just going straight there. Okay, let's talk about paying down debt. A lot of people have student loans. A lot of people have debts.

52:11You've got this avalanche method. Talk to us about the best strategies for paying down debt in your opinion. The cheapest way, the cheapest, fastest way to pay off debt is to just stack it highest interest rate to lowest interest rate. Pay off the highest interest rate debts first while making the minimum payments on the rest. once that high interest rate debt is gone, then you just move on to the next one and so on and so on and so on. The student loan debts are a little bit of a different beast. Long-term debts, student loans, mortgages, car loans, you basically wanna try to pay those off on the schedule that you're given.

52:51If you're struggling with your student loan debts and they're federal debts, then you wanna make sure you're enrolled in an income repayment program through the Department of Education. We're getting some changes to those programs that are helpful. As long as you're enrolled, you should get notified of the changes and they should come your way. But don't let paying student loan debt faster get in the way of doing important things like grabbing the match from your 401k. Because if you look at the return on your money, the way that we think about or the way that we should think about return on your money is equivalent to the interest rate.

53:36So if you're paying off a student loan debt at 6%, that's like getting a 6 % return on your money. If you're getting 50 cents on the dollar as a match in your 401k, that's a 50 % return on your money. And you can't not get that because you want to pay off the debt at 6%. You just pay off the debt at 6 % a little bit slower. Let's talk about improving your credit. So I actually recently messed up my credit because I was putting all, yeah, it was really dumb. I was spending everything on my business credit cards and I just thought it was good that I wasn't spending on my own credit cards. And like, I was like shutting down my personal credit cards.

54:19And then I realized, oops, I wasn't supposed to do that. You need to actually have credit cards. And I always used to, because I have a lot of cash. I would just pay it off, pay it off to zero balance. And you're actually not supposed to do that. Oh no, you are supposed to do that. You are supposed to do that. Tell me about it. Because I feel confused about what should we actually be doing with our personal credit? You should be using your personal credit cards and you should be paying them off every month. Just to zero. Pay them off to zero. Interest rates are way too high. The average credit card interest rate, I just looked this up yesterday, is 28%.

54:57That's insane. It's insane. You don't want to be paying interest on a credit card. So the way to do this is to understand that there are a couple of factors that go into your credit score and you need to simultaneously manage all of them. Number one, you got to pay your bills on time. If you pay late, especially if you pay late more than once, that's really going to hurt your score. The second, and this is where you got in trouble, is credit utilization. That's the percentage of credit that you have available to you that you're actually using. We want to keep that number below 30 % at all times.

55:40So if you have a heavy spending month, sometimes when I go on vacation, I have a heavy spending month that I spend more than 30 % of my credit limit on a card. If you do that, the thing to do is just pay the bill now. Pay it twice a month rather than once a month to bring the utilization down. The problem that you got into by closing those credit cards is that you shrunk the pool of available credit that you had and that hurt your score. The other thing that you did, another factor, it's not as big as the first two, but it's something called length of credit or credit history, the longer your credit relationships, the more beneficial it is to your score.

56:25When you close those cards, if they were the cards that you had had the longest, you heard that factor too. So that's how you do it. Yeah. And actually I did have a credit card that was with me for like so long. And then the credit card company ended the card and I was like, oh man, I'm really screwed. They ended it because you weren't using it, right? No, no. Like that type of card retired because I had it for so long. And then suddenly I was like, oh my God, I have no credit cards and I didn't even realize. I'm fixing it though. It's not that terrible, but I'm fixing it. Cool. So let's talk about investing in general.

57:03I'm just going to give you a general question. I actually asked Susie Orman this question when she came on the show. If you had$100 ,000 to invest, you already had your emergency fund, you already had savings, all that. You just had$100 ,000 cash. Where would you put it? What I'm doing with that kind of money right now is splitting it up and buying the stocks that we've been picking for our investing club, right? I have a diversified portfolio that is set up to get me to the retirement that I want to get to. I am on track. I have met my savings goals. So if this is quite literally free money, I'm going to put it into the picks that we're picking for our investing club.

57:49And so recently we've been looking at stocks like Lululemon, we've got JPMorgan Chase. We've got a bunch of stocks in the portfolio, but we add one about every month. And sometimes we sell one and I would do that. That's so cool. So this investment club is basically, you guys like all talk about stocks and give guidance to each other. How does one join your investment club? So you can go to hermoney.com. It's called Investing Fix. If anybody wants to try it out, you can do it free for a month. But the way it works is that every month we present four different investing options. We look at them on four different dimensions.

58:33How do they make their money? What do we like about them? What don't we like about them? And would we buy them at the current price? And then the club votes on what we add to the portfolio and what we take away from the portfolio. It's a democracy, democracy rules. And it's been a lot of fun. Some of the women in our club have stepped up and presented stocks that they're interested in. And some of those have been purchased for the club. One of our members suggested United Rentals and we bought that. It's been a huge win. So we're all learning from each other, which is just so amazing. That's so cool.

59:14So it's actually like you guys are pooling your money together and investing together? We're not. We run a group portfolio that the club itself runs and is invested by the votes that the club decides. but a lot of members like me are buying the picks for our own portfolios. I love it. Well, Jean, this was such an awesome conversation. I end my show with two questions that I ask all my guests. Then at the end of the year, we typically do something fun with it. So the first one is, what is one actionable thing our young and profiters can do today to become more profitable tomorrow? Start tracking your spending.

59:55Figuring out where that money is going for real. Yeah, if you don't know where it's going, then you have no control over what it's doing for you, whether it's a business expense or a personal expense. And I know it's tedious and I know it's boring, but sometimes boring is better. And what is your secret to profiting in life? And this can go beyond financial advice. That's my secret to profiting. And I got to tell you, I lost my mom recently and my lifelong friends came out of the woodwork and haven't left me alone in a good way, in the best way. And my secret is to invest as much energy as absolutely possible in those friends.

1:00:42That's so beautiful. It's so true. Sometimes you forget about relationships and nothing in the world is more important, I think, than relationships. 100%. Jean, where can everybody learn more about you and Her Money? So I'm on social pretty much everywhere at Jean Chatzky, and you can find us at hermoney.com. Amazing. Well, thank you so much for joining us on Young and Profiting Podcast. Thanks for having me.

1:01:13Thank you.