We continue our series about analyzing the gurus! We’ll be spending time discussing several big personal finance names, their recommendations, and why we do or do not agree with those. Josh and Amelie discuss the Money Guy Show, their "Financial Order of Operations" framework, and their philosophy on goals and saving for retirement.
Top takeaways:
- A set of financial “rules” supposedly for everyone, doesn’t actually work for anyone.
- Paying off student loans (and mortgages) early may or may not be right for you depending on your specific situation
- The decision on which tax advantaged accounts to prioritize (e.g., HSA, Roth IRA, 401k) depends on your specific circumstances, and may change year to year
- Choosing a high deductible health plan just to have access to an HRA may not be the right solution for all families
- The order of recommendations assumes you have a 401(k) with an employer match
- Consider contributing to retirement savings, in parallel with other financial “steps,” even if it’s a small percentage compared to other financial goals
- Saving towards medium and long term goals may need to be part of your financial plan, prior to reaching the 25% retirement savings goal (e.g., new roof for home)
- The percentage of income to save for retirement depends on your specific circumstances, and a generic amount of 25% likely isn’t right for most people
- Oversaving for retirement may result in you being undersaved for everything else
- Saving for life goals are important to incorporate into your financial plan throughout your life, not just after you complete a set of checklist items
- Any generic framework will fail to adequately address your individual goals and values, both now and in retirement
- Tax diversification in multiple tax buckets (e.g., tax free, income, capital gains) is a side effect rather than a goal in financial planning (the goal is to lower lifetime taxes paid)
