It’s safe to say that most of us are looking forward to leaving 2020 in the dust — and that may be putting it mildly. It’s been an incredibly challenging (even heartbreaking) year for millions of people, and we are all ready to move on to bigger, better, brighter things.
But how can we truly, successfully move into 2021 with open minds, open hearts, and a healthy dose of much-needed optimism when we still haven’t ‘recovered’ from 2020? Many of us are still reeling from the loss of a job, a subsequent cross-country move that our job loss necessitated, or even the loss of a loved one. It’s so hard to put our ‘New Year, New You’ hat on, when mentally and emotionally, we still feel… stuck.
Thankfully, to guide us on how we can all move on with life, work, relationships, and money, and make 2021 a truly wonderful year, we’re joined by none other than #1 New York Times bestselling author, Gabrielle Bernstein. For over 15 years, Gabby has been transforming lives — including her own. Her eight books include: ‘The Universe Has Your Back,’ ‘Super Attractor,’ and her latest, ‘You Are the Guru.’ You may have previously caught Gabby on Oprah’s Supersoul Sunday, or leading the Guinness World Records’ largest guided meditation with Deepak Chopra… because although she started her career by hosting intimate conversations with just 20 people in her New York City apartment, she now speaks to tens of thousands of people in sold-out venues throughout the world… and on The HerMoney Podcast!
Listen in as Jean and Gabby dive into some of her more profound insights, including one of our favorite quotes: “Don’t dance around the perimeter of the person you want to be. Dive deeply and fully into it.”
Listen in as Gabby discusses her Manifesting Challenge that she’s starting Jan. 1, and defines exactly what Manifesting is. (For a complete course, Gabby lays it all out in her book, “Super Attractor: Methods For Manifesting A Life Beyond Your Wildest Dreams.”)
Gabby offers her best tips for getting rid of our fears and de-stressing during incredibly trying times, and weighs in on how we can all start our New Year off in a positive place. Listen up for her guidance on the one thing we can all do to ensure 2021 is our best year yet.
“Forgive yourself, your circumstances, the people in your life, the people that you’ve resented, for whatever happened in 2020, so that you can clear the slate and move into 2021 without all that baggage,” Gabby says.
In Mailbag, Jean tackles questions on investing in real estate, what 1099 workers should do to save for retirement, and offers advice on how to “pay back” your mother for helping take care of your kids. Lastly, in Thrive, Jean gives us four ways to create enjoyment from money in the New Year.
This podcast is proudly supported by Edelman Financial Engines. Let our modern wealth management advice raise your financial potential. Get the full story at EdelmanFinancialEngines.com. Sponsored by Edelman Financial Engines – Modern wealth planning. All advisory services offered through Financial Engines Advisors L.L.C. (FEA), a federally registered investment advisor. Results are not guaranteed. AM1969416
Gabby Bernstein: (00:02)
Forgive yourself, your circumstances, the people in your life, the people that you’ve presented for whatever happened in 2020, so that you can clear the slate and move into 2021 without all that baggage.
Jean Chatzky: (00:20)
HerMoney is supported by Fidelity Investments. Whether you’re celebrating a milestone or adjusting to the unexpected, Fidelity’s there to help you navigate life’s important moments with confidence. Visit Fidelity.com/HerMoney to learn more.
Jean Chatzky: (00:38)
Hi everyone. I’m Jean Chatzky. Happy New Year to all of you wherever you are in the world. Thank you so much for joining me today on HerMoney as we head into 2021. I think it is safe to say that most of us are looking forward to leaving 2020 in the dust. It has been such a challenging, even heartbreaking year for millions of people. We are all beyond ready to move on to bigger, better, brighter things. But how do we do that? How do we do that successfully? How do we move into this new year with open mind and open hearts and a healthy dose of optimism, when we still haven’t recovered from 2020. I mean, many of us, we’re still reeling from a job loss or a loss of a loved one. It is so hard to put on our new year, new you hat when emotionally, mentally, we still feel stuck. But, fortunately, we have probably the most amazing person we could have to help guide us through this. Help is on the way in the form of, none other than New York times bestselling author, Gabrielle Bernstein. For over 15 years, she has been transforming all of our lives, including her own. She’s got eight books. All of them bestsellers. Her latest is called, “You Are The Guru.” You may have caught Gabby on Oprah’s SuperSoul Sunday, or leading the largest guided meditation in the world with Deepak Chopra. Gabby, it is so, so nice to have you here.
Gabby Bernstein: (02:28)
It’s so nice to be with you. It’s so wonderful to be with you. Thank you for having me.
Jean Chatzky: (02:30)
Happy New Year.
Gabby Bernstein: (02:31)
Happy New Year to you.
Jean Chatzky: (02:35)
It has been, as I was just trying and kind of failing to say. It’s been such a hard year for people. And one of the things that I know about you is that you launched your personal journey right after hitting a hard patch in your own life. I was wondering if you think that bodes well for all of us in this moment.
Gabby Bernstein: (02:57)
I think when we go through difficult times in life, that can often be the catalyst for our greatest change. I personally have appreciated a lot of the discomfort that I’ve experienced, in retrospect. Because I can see clearly all the lessons that I learned, all of the spiritual assignments that were presented to me, and most importantly, my resilience to make it through and to become new on the other side. When we choose to perceive difficult moments through the lens of faith, rather than fear, they can be wildly transformational and life changing.
Jean Chatzky: (03:42)
I can so relate to that. I moved many, many times as a child, and I feel like each move, although difficult, I mean, I just remember tears streaming down my face every single time as we were driving out of that home. Every single time, it was a new start. A fresh start. A new opportunity. And it definitely made me stronger and more resilient along the way. And this, I think if we can approach this as a fresh start, that’s a really good way to look at it.
Gabby Bernstein: (04:16)
It’s the gentler approach. It’s a simpler path to choose that perspective.
Jean Chatzky: (04:21)
You’ve said before that your mission is to bring a higher level of consciousness to the world. Can you explain a little bit about what that means to you?
Gabby Bernstein: (04:30)
We all have experiences from our childhood and our past where we have felt inadequate or unlovable. We’ve built up belief systems of being separate, not being good enough. Feelings of separation create more separation, creates more separation. When we raise our level of inner awareness, our consciousness of others begins to change. Our experience of the way we show up in the world begins to change. So my mission, my vision of helping awaken people to their spiritual connection, to their higher level of consciousness, to a resource part of themselves is one, to help the individual, but then two, to help the whole. Because as more people wake up, the greater the world will be. The more impactful we will see the movements that are being created. And there’ll be more positive momentum driving us forward. It begins with the individual.
Jean Chatzky: (05:32)
It’s sometimes hard for individuals who don’t think of ourselves as particularly spiritual or particularly tapped into that side of ourselves to embrace it, to get going. I mean, I am more of a spiritual person than I used to be. I used to just sort of say, you know, the woo stuff is just not for me. But as you meet people along the way, how do you get them to open up to that part of themselves?
Gabby Bernstein: (06:03)
I believe that the people that find their way to me, whether it be a chance encounter or someone reading one of my books or someone entering my world through social media, will not be guided there unless there is a part of them that is willing to wake up in that way. If they’re not, then I won’t be on their radar. It just won’t happen. They won’t read the book. They won’t read the post. They won’t come to the talk. So by the time somebody finds my work, in whatever form that is, they’ve already said, yes, consciously or unconsciously. They’ve said yes to expanding their inner awareness. Whether they call it spiritual or they call it personal growth, or they call it feeling better or manifesting, whatever they want to call it, I don’t care. All I care about is that they call upon it. When they have found their way to my work in whatever form, they have already internally said yes to change. They wouldn’t find me otherwise.
Jean Chatzky: (06:59)
One of my favorite quotes of yours, and you have many that are fabulous, is don’t dance around the perimeter of the person you want to be. Dive deeply and fully into it. How do we start to do that in 2021?
Gabby Bernstein: (07:16)
I have a funny story about that quote. I didn’t think, often like most great quotes, they’re not written down or thought through. I was on stage giving a talk and my best friend was in the audience. And at the end of the talk, all of a sudden, I said, don’t dance around the perimeter of who you’re here to be dive in fully and completely. Then I completely forgot I said it. And my girlfriend wrote it down and took a photo and put the caption on it. And it was just like this moment for her. And I realized it was such a beautiful message for all of us that I ultimately wanted to reiterate in different forms. So that was one of those moments of channeling something that you weren’t aware that was going to come through you. What does that mean to me, to dive in fully and completely? It means that we say yes to the awareness of a desire within us, that we do whatever it takes to release the blocks to the presence of that desire, that we really make a commitment to move forward, even if it’s small steps forward, to dive in fully and completely to the people that we are here to be. That sometimes can be uncomfortable. That can sometimes be messy. That can sometimes feel funky. That can sometimes seem like a disaster because it’s not what we wanted to do, or everything could fall apart. But when we see all of the different moments in our life as an opportunity to dive in more completely to who we are here to be, then we can actually show up for life with a greater sense of purpose and awareness of what we’re actually here for.
Jean Chatzky: (08:53)
Is there a trick or a way, you talked about small steps, is there a special way to do that at a time when there’s so much negativity in our lives? I mean, we’re still dealing with this pandemic. And yes, we’ve got vaccines coming our way and that’s wonderful. But the cases are still enormous. And the financial situation for many, many people is still incredibly fraught. And there are still businesses that we’re just not sure are going to make it.
Gabby Bernstein: (09:25)
One of the things that I believe is imperative right now, regardless of how dire your circumstances may be in, and particularly for those who have the most dire circumstances, is we have to really consciously choose where we are putting our energy, in particular when someone is really suffering. Because when we focus our energy on the problems, rather than seeking solutions, we actually perpetuate the problem. Now, when things are really tough, it’s really hard not to focus on the problem, but that’s when we need to focus on the solution most. So we have to cultivate a part of ourselves that is open to the awareness of seeking solutions rather than problems. When we open up our consciousness to seek solutions, we begin to hear that inner intuition that says, make that phone call. Or we stumble upon the article that is going to give us the exact direction on how to get the lead for the next job that we want. When we’re focused on the problem, we actually start to manifest more of the information that would support that problem. So when we make that subtle shift of choosing, even if it’s for a moment a day to seek solutions, rather than problems, we create a different awareness of what’s around us. That awareness is ultimately what we manifest. The information that we filter. The world that we see.
Jean Chatzky: (10:50)
Can you give me an example of what shifting your mindset like that looks like?
Gabby Bernstein: (10:54)
I have a method in my book, Super Attractor, called the choose again method. The first step is to notice the negative thought that you’ve been repeating, and the problem that you’ve been seeking, and notice how it makes you feel. And the second step is to forgive yourself for having that thought, which is a very important step, because it gives you this opportunity to recognize, oh, that’s just a thought that I keep thinking, it’s not the truth of who I am. It may be an experience I’m having, but it’s not the truth of who I am. Then the third step is to choose the next best feeling thought. So that would be in, let’s say the case of someone who’s suffering financially, the thought is I’m afraid of not making money. I’m afraid of not making money. Then they forgive themselves for having that thought. The third step, choose again, may not be, oh, I’m a millionaire. It can’t be that. Or I’m going to make money tomorrow. It can’t be that because they won’t believe in it. But it can be something along the lines of I’m open to creative solutions. Or I have a podcast that has given me amazing information about how to make money on the internet. Or there’s this great resource that I heard about that I can send my resume through too. I know that if I write a great cover letter that can really help me create a better opportunity. Those little subtle adjustments in your thinking, and in your conscious patterns of thoughts will, like I said, open you up to the awareness of solutions rather than problems.
Jean Chatzky: (12:20)
You have a lot of great methodologies and that’s not the only one. In “You Are The Guru,” you share six messages to help us move through difficult times like these with certainty and with faith. Can you talk about your favorites?
Gabby Bernstein: (12:37)
One of my favorites is actually what we’ve been talking about, seeking solutions rather than problems. We’ve definitely covered that, but I have to acknowledge that it’s one of my favorites. The idea of in stillness, we receive is one of the messages. When we recognize that in stillness, we can listen, we are more receptive, we are more conscious and aware of the voice of inspiration intuition, the positive resourced part of ourselves can come through. That’s so important, particularly in times like this. Listening to that inner wisdom. Then of course, there’s the final message, which is you are the guru, which is extremely important right now. When we place our goals and desires and beliefs and faith in the hands of another human, we will be bummed out eventually, because when that idle falls, we fall with them. We have to be really aware and conscious of that. We have to show up for our own inner wisdom rather than putting all of our eggs in one basket. And that doesn’t mean that people won’t influence us or inspire us or teach us, but we can’t rest our hat on somebody else’s belief systems. We have to really hone and get grounded and faithful in our own.
Jean Chatzky: (13:53)
I noticed you use the word intuition a little bit ago. And I think part of the issue for many people is, even when we feel our intuition, even when we feel it in our gut, we don’t necessarily trust it. And if you can’t trust your own intuition, it’s harder to trust that you are your own guru. So how do you get there?
Gabby Bernstein: (14:17)
Trusting your intuition is a habit. It’s a pattern we have to create. We’ve lived in a pattern of fear. We have to undo that pattern by strengthening our faith one small step at a time. That can be through meditation. That can be through prayer. That can be through positive intention. That can be through reading spiritual self-help books like mine or other teachers. That can be through following the practices in those books. Not just reading the book, but practicing, living, moving through the steps of the book, witnessing the miracles that occur when you show up for these types of practices. So it’s really an undoing of all the fear-based belief systems that we’ve placed upon our intuitive faith, our intuitive spark. We all have an ever-present faucet of inspiration that’s moving through us at all times, but we block it with all the fear-based perceptions that we’ve built up about ourselves and about the world. So it’s a dismantling of all of those fearful perceptions so that we can step into the remembrance of the inspired person that we are.
Jean Chatzky: (15:21)
I want to talk a little bit about your manifesting challenge, the challenge that you’re doing starting January 1st. But before we do that, let me remind everyone that HerMoney is proudly sponsored by Fidelity Investments. Some of life’s important moments are planned for way in advance. Others, like 2020, we just didn’t see coming. But as always, Fidelity’s here to help you navigate both the joyous and the unexpected with confidence. And their resources, their guides, their tools, can help get you through important financial decisions when you need it most. Visit Fidelity.com/HerMoney to learn more. I’m talking with #1 New York times bestselling author, Gabby Bernstein. Okay. The manifesting challenge. We can’t really understand it until we understand what manifesting is. So can we begin there?
Gabby Bernstein: (16:19)
Manifesting is a lot of what we’ve been speaking about already. When we change our inner compass, when we start to shift the way we think and therefore shift the way we feel, we become what I refer to as a super attractor. We become more magnetic, more aware of the good stuff. Therefore, we can show up for it. More positive in our energy, positive in our thoughts, positive in the vibe that we put out towards the world. Therefore, we become a magnet for what we desire. We attract what we are. We attract who we are. When we adjust our attitude, we adjust our energy and our energy is what attracts. So this 21 day manifesting challenge is awesome because it’s attitude adjustment. It’s a mental adjustment. It’s a claiming of what it is that we desire, being unapologetic about what we desire, releasing the blocks to the presence of those desires, so that we can become super attractors. Really create the life that we want to live. Really step into the people that we want to be. And effortlessly manifest our desires, which is absolutely possible because the 21 days that I put forward in my challenge are the first 21 days that I do every single year in the new year. They’re my methods. They’re foolproof. I have worked them and worked them and work them and mastered them to share them now.
Jean Chatzky: (17:43)
I know for a lot of the women listening, and maybe some of the men too, when we talk about manifesting the life we want to live, a lot of minds go right to financial freedom, financial security. It’s really important to the listeners of this show. If that was what you were trying to manifest, what would be your first focus?
Gabby Bernstein: (18:05)
First, I would help the person focus on the ways that they’re blocking that financial freedom, the belief systems, the stories, the ideas. And we’ve already given you the choose again method, which would be an excellent practice to begin the practice of undoing those fear-based belief systems that are holding them back. I’d also look at the ways that you may limit your capacity to attract, limit yourself with your thoughts. So helping the person become unapologetic about what it is that they desire without any limitation. It’s the limiting belief systems that keep us stuck in the stories that we don’t want to be in.
Jean Chatzky: (18:41)
That can be hard, particularly when it comes to money I think. You know, we limit ourselves because it feels, somehow, like we’ll be judged if we say I want financial freedom. I want financial success. I want to make more money. I mean, however you want to put it, right? It’s one of those statements that you put out there and then you think, okay, is everybody in the room just looking at me?
Gabby Bernstein: (19:07)
I think that any statement that we put out with a confidence and faithfulness will be well-received, period. I just know that. I think that people don’t pick up so much on what it is that you’re saying. They pick up on how you’re saying it. For years, I felt like a resistance when I would claim my desires because I was claiming them, right? Forcing them. When we claim them internally, when we ground ourselves in the service and the love and the passion and the purpose behind our desire, then we can own it. Then we can become unapologetic about it for ourselves. And when we stop apologizing about our desires for ourselves, others will really be grounded and behind those desires for us. You know it. You’ve seen people, I’m sure, in your career where they’re really confident financially and abundance comes to them naturally. And I don’t think that when you are in the presence of someone who’s confident in their desire or their attracting power, that it’s a turnoff. It typically turns us off when there’s a lot of ego behind it, I need that thing to feel good enough. But when it’s just, I know that this is what I desire. I know that I’m worthy of these desires. Then a lot can, a lot can be seen differently.
Jean Chatzky: (20:23)
If you have a spouse or a partner, and you’re embarking on a manifesting challenge or some other shakeup for the start of the year, is it important to bring them along for the ride?
Gabby Bernstein: (20:36)
Only if they want to go along for the ride. Don’t even attempt to bring them if they don’t want to go.
Jean Chatzky: (20:43)
If they want to go, is this more powerful when done together?
Gabby Bernstein: (20:47)
Oh yeah. I think that if you are in a partnership with a friend or a romantic partner or even a child, like adult children, and you do a manifesting challenge like this together, rock on.
Jean Chatzky: (21:01)
Aside from the challenge, what would you say are the top one or two things that our listeners can do right now, today, to ensure that they have a kick-ass 2021.
Gabby Bernstein: (21:13)
Forgive yourself, your circumstances, the people in your life, the people that you’ve resented for whatever happened in 2020, so that you can clear the slate and move into 2021 without all that baggage.
Jean Chatzky: (21:29)
Gabby Bernstein. Thank you so much. I’m excited about giving everybody a little bit of a boost as we head into this new year for which we’re all grateful.
Gabby Bernstein: (21:40)
Jean Chatzky: (21:41)
And we’ll be right back with Kathryn and your mailbag,
Jean Chatzky: (21:50)
HerMoney’s Kathryn Tuggle is with me now. Hey Kathryn. Happy New Year.
Kathryn Tuggle: (21:55)
Hey Jean. And happy new year to you too. Happy 2021.
Jean Chatzky: (22:00)
Thank the Lord.
Kathryn Tuggle: (22:02)
It’s just gotta be better. It just, it can’t be worse.
Jean Chatzky: (22:05)
It cannot be worse.
Kathryn Tuggle: (22:07)
It’s not possible.
Jean Chatzky: (22:08)
No, no, it is not possible. And I, and I think, first of all, thanks for getting Gabby on. I think having her with us is a great way to start the year. Although I do want to just suggest for anybody who is feeling a little disorganized as well, go back and listen to our, I mean, I think all the New Year’s shows that we’ve done have been really, really helpful and good. And so, if you’re looking for organization, go back and listen to the show that we did with Julie Morgenstern. If you’re just looking for an overall kick in the butt, go listen to the show that we did with Robin Arzon from Peloton. I mean, they were all phenomenal and Gabby just adds to that. I think, we all just need a serious zhuzh when it comes to our mindset right now.
Kathryn Tuggle: (22:57)
Yeah. I couldn’t agree more. I just love any show that has to do with new beginnings and, honestly, for any time of year, because we don’t need the calendar to tell us that we can make a change in our life or have a fresh start if we need one.
Jean Chatzky: (23:12)
Yeah. No, I think that’s right. All right. Let’s help some of our listeners get a good start to the year.
Kathryn Tuggle: (23:18)
Yeah, absolutely. Our first note comes to us from Kelly. She writes, hi Jean and Kathryn. Your podcast has been hugely empowering for me to stay motivated on my financial goals and keep my sights set on the future. I’m wanting to reach financial independence by means of real estate, so I can eventually pivot my career into something more flexible and passion aligned, even if it isn’t as lucrative. But I haven’t yet decided on what. My question centers around the idea of risk with money that I’d like use for a down payment on an investment property in the next two to three years. I’d like to use it to supplement my retirement income, cashflow now, equity longterm. I know typical advice is to keep the money in savings if the goal is to buy the large item within three to five years. But I’m struggling to rationalize keeping those funds in cash at such low rates instead of growing in the market because my timeline is flexible. My goal is two to three years, but buying the investment property is very much a want. So if the market dipped, I could easily postpone the purchase while waiting for recovery. Is the answer staring me in the face one way or another. I want to make my money work for me and have a goal of purchasing a property every three to four years, but I’m not sure if I’m being naive and overlooking something. I know typical rules like keeping short-term money and savings are there for a reason, but I’m just not sure when the rules don’t apply.
Jean Chatzky: (24:36)
I think the rules are rules and the reason that they’re rules. And first of all, this is a terrific, terrific question, Kelly. And I love that you have a goal of buying investment property. I think that’s a wonderful way to supplement the retirement that you could have in the future. It sounds like it’s also something that you enjoy. Rules are rules because when we break them, we line ourselves up to get kind of creamed financially. And so the markets have just been on a considerable tear. I mean, with the exception of their dip in March, from which they have rebounded completely, as we tape this show, we’ve just been going and going and going and going. It’s almost as if this is still a continuation of the longest bull market in history. And so, although you say you could easily postpone the purchase while waiting for a recovery, and I hear you wanting to grow this money so that you can buy more property, or buy the property faster, ask yourself what would have happened if you had a goal of buying the property in March, and the markets fell by a huge chunk. Would you have been frustrated? Would you have been sad? Would you have been demoralized? Or would you have been just like, well, that’s the way it goes and I’ll wait another two to three years in order to buy this property? Because, although it didn’t take that long for the markets to come back, it certainly could have. The other issue that I have with you saying that you could wait is, I think you say it in one paragraph and then in another paragraph you completely discount it. So when you say you have a goal of purchasing a property every three to four years, clearly this is something that you want to make routine. And the only way to make that routine is by having the money that you need for a down payment when you need it. So I would bite my tongue, keep my money in a place where I know it will be accessible to me for a down payment. And then, I just want to point out one other thing. So Kelly sent us, and many of you do this. She sent us more information than was in the question itself. She sent us a whole backstory on her finances and her plans for the future. And she is funding retirement, like a champ. She’s putting money into an HSA every year. She’s got a fully funded emergency account. She not only already owns one primary residence, but she already has one investment property. And she mentioned that she is going to hit her first retirement benchmark, having one times her annual salary put away for retirement by her 30th birthday. Spectacular, spectacular, spectacular, spectacular Kelly. You are doing so, so well. But I do just want to tell everyone who is thinking that they will buy investment properties as a portion of their retirement, that you may be able to back off those benchmarks by a little bit, because you’ll have income from those rental properties that will cover some of your retirement if you continue to go forward in this way. So I’d encourage you. Look, I’m not going to tell you not to save for retirement because please, save for retirement. While you can save, we save. But if you are going to do this consistently, it should be looked at as part of your retirement plan going forward. And lots of luck. Let us know how it’s going.
Kathryn Tuggle: (28:55)
Yeah, absolutely. So exciting. And she really is doing such a good job. The very idea that she is able to seriously consider taking this path is so exciting.
Jean Chatzky: (29:06)
Yeah. I mean, I love real estate. There was a story in the New York times, shortly before Thanksgiving. They’ve got a writer for the style section named Taylor Lorenz and she documents sort of pop culture trends. And she wrote a piece about Zillow surfing, about these people who just look at real estate property, after real estate property, after real estate property, as a way of traveling, essentially, when we can’t really travel. I love real estate porn. I mean, I just, I usually used realtor.com, but I’m going start using Zillow cause it did seem like it might be a better medium for the type of surfing that I like to do. But I know I do not have it in me to buy a stable of investment properties and manage them. I mean, that is just not in my DNA. But for anybody who is, I think this is a terrific way to build a stream of income that will last you after you’ve stopped working. And that’s really, really valuable.
Kathryn Tuggle: (30:12)
Absolutely. And I have to say, I just love to see women doing this too, because it has been such a traditionally male dominated field. It always makes me feel like, you go girl, when I hear about a woman doing this.
Jean Chatzky: (30:24)
Yeah. Without a question.
Kathryn Tuggle: (30:27)
Our next question comes to us from Terry. She writes, hello. My daughter is 22, recently graduated from college and started her first big girl job as a speech language assistant. When she started, she had a choice to become a regular employee and earn benefits, or to be a 1099 worker. She wisely chose to become a traditional employee, but now her company has informed everyone that starting at the beginning of the year, there’ll be moving to a 1099 status. Can you give us some best practices for being a 1099 worker? Any advice or resources would be greatly appreciated. Thank you.
Jean Chatzky: (31:01)
Terry, thank you so much. Congrats to your daughter on this first job out of college. And I don’t think we’ve had this question before, and it is an excellent question. Because especially in their first year, as 1099 employees, many people get into tax trouble. So a couple of things that I want to recommend, and I say this from the position of somebody who has been a 1099 employee for a very, very long time. The first thing is you got to put money away for taxes, and probably about 35% of whatever it is you’re bringing in. You’re on the hook for income taxes, which often have to be paid quarterly, but you’re also on the hook for self-employment taxes. When you work for somebody else, things like FICA are split between you and your employer. If you’re 1099, it is all on you. And that is a considerable chunk of money. So make sure that you are on top of that, and if you’re not on top of it, running a calculation using a tax software program, like a TurboTax or sitting down with a tax preparer or an accountant in advance, just so you make sure you’re putting away enough, is a very valuable exercise. Second, the benefit of being a 1099 employee is that you get a lot more in the way of deductions. There’s a lot of stuff that you can write off. Can’t write off everything, but you can write off a lot. And that’s home office expenses. You may able to write off your car usage for business, your mileage, the portion of your phone that you use for business, your health insurance premiums, the list goes on and on and on. And the point of this thread is that you need to document. Document, document, document. There are a lot of apps that can help you with things like this, but you want to make sure that you’ve got a system so that you’re capturing all your expenses and that if audited, if ever audited, you can prove your expenses. Third on the list, retirement. When you are not an employee, then somebody else is not setting up a 401k for you. You’ve got to do it yourself. And for your daughter at 22, she should open an IRA, probably a Roth IRA. She’s going to want to fund it automatically with as much as she can contribute toward the max, and the max contribution for this year is going to be $6,000 for her. And she should invest that money aggressively cause she’s so young, at a very low cost, and just keep putting money in. It will grow. I have a 26 year old son, he set up a Roth IRA right as he got out of college. We did this together. We sat down. He started contributing $250 a month. That was what he could afford at the time. He has since upped that. And he just loves going to that account and seeing how the money has grown. So that’s number three. Last but not least, you asked for resources. And the IRS actually has an excellent resource for self-employed individuals. So go to irs.gov and follow the thread to self-employed individuals. She’ll find a lot of her questions answered.
Kathryn Tuggle: (34:33)
Great advice, Jean. Thank you so much.
Jean Chatzky: (34:35)
You can tell I’ve been there, done that.
Kathryn Tuggle: (34:37)
Yeah, I know. It’s really such great advice. You’re so right about the tax trouble. I definitely had that happen to me when I first started working.
Jean Chatzky: (34:48)
Me too. I thought I had my tax situation nailed. I was an employee in my first job out of college, but then I was doing some freelance writing work and I didn’t even think about putting money away for the taxes on these freelance assignments where money wasn’t being deducted. And I got creamed. It was really, really scary. So I don’t want to see that happening to her.
Kathryn Tuggle: (35:14)
That is almost verbatim what happened to me. If only I had known you then.
Jean Chatzky: (35:19)
If only I had known me then.
Kathryn Tuggle: (35:20)
Our last question comes to us from a member of our private HerMoney Facebook group. She writes, hi Jean. Do you have any advice for paying your mother for helping take care of your kids? I went back to grad school at age 39 when my little one was two years old. I asked my mom to help me, since I could not afford the daycare costs of $1,500 a month. My mom helped me for about two years and while I gave her as much as I could, it was hardly anything as I was a poor grad student. I’m so grateful to have had her help. She made my dream come true. Now that I’m working and earning a good living, should I pay her back? And if so, how much? She lives in another country in the developing world and receives just a hundred dollars a month from her country’s social security program. She never saved for her retirement and did not earn much as a preschool teacher when she was working. For decades, she took care of me and my three siblings and my father, who was disabled and never worked. I usually send her a little money every month and I even bought my parents a condo. But now I have a family with two kids of my own, along with student loans, and I still haven’t bought a house for myself yet. I’m unsure how much I should continue sending to my parents. What’s right? What’s sustainable? I want to help them, but I also want to save as much as I can. I’d appreciate any thoughts or perspective you have to share. Thank you.
Jean Chatzky: (36:39)
I’m struggling a little bit with this question. I have to tell you, Kathryn. I don’t think, look, you bought your parents a condo. You’ve been sending money and you paid your mother to do this, which if she’s anything like my mother, she would have done for no money when you needed her, cause that’s just what we do as parents. I think the answer lies in getting very honest with your own numbers and your own financial situation first. This is one of those oxygen mask questions. Now that you’ve got these kids of your own, who you’re going to want to put through college, you’re going to want to buy a home that you can live in long term. You’re going to want to eventually get rid of those student loans of your own, and then your retirement is going to come along. So, although I totally get and appreciate this impulse to just give, give, give to your parents, I would look first at what you need. I would look second at what they need. I don’t know what life costs in the country in which your mother lives. And it could be that there is a much cheaper standard of living and that, because she has this condo, she’s actually doing fairly well. It’s tough for me to tell reading between the lines of your questions. I also would rally your siblings. I mean, you mentioned that your mother took care of you and your three siblings. How are they doing? And do they have the ability to join forces with you and come up with a sustainable plan for getting your mother through her retirement years? There’s a little too much missing here for me, in terms of the numeric detail, in order to offer you some specific answers. And so instead, I just want to ask you to really look at the numbers, and let the numbers, rather than the emotions, be your guide.
Kathryn Tuggle: (38:59)
I think that’s the best possible advice. Because whatever those numbers are, you have to put yourself first. So, just keep that in mind.
Jean Chatzky: (39:11)
And really bring your siblings into this conversation. If you’re having these thoughts, chances are pretty good that your siblings are having these thoughts as well, and that you can accomplish a lot more together than you can on your own.
Kathryn Tuggle: (39:25)
Absolutely. There’s a big difference between you having to help her out with a hundred dollars a month versus your siblings all chipping in and everybody gives her $25 a month.
Jean Chatzky: (39:35)
Or you help with a hundred dollars a month and your siblings also help with a hundred dollars a month. I mean, I don’t know what she needs. I don’t know what her cost of healthcare is, what her cost of food is, what the cost of utilities are. I have no idea how to wrap my brain around that because I don’t know even what country we’re talking about. And so numbers. More numbers. More data. More answers.
Kathryn Tuggle: (40:00)
Absolutely. Thank you, Jean, as always, for your insight.
Jean Chatzky: (40:03)
Thank you, Kathryn. And in today’s Thrive, let’s talk about some ways to create enjoyment from our money in the new year. In 2021, just like in all other years, our money will be a limited resource, which is why it’s so important to know how to derive the greatest amount of enjoyment from whatever you have. Here are a few of HerMoney’s favorite suggestions for creating enjoyment from money in this coming year. Number one, value experiences over things. There is a bounty of research that shows we get more enjoyment when we spend our resources on experiences rather than on things. And this makes sense. You get tired of the things in your closets and on your shelves. You want to replace them with new ones when they go out of style. Experiences are different. You document them for social media. Tell your friends about them and relive them each time you do. They somehow get better with age. And for that reason, they’re often a better place to allocate your spending. Second, up the social factor. For what it’s worth, you also get more joy overall when the spending helps you build stronger relationships, either with people or with causes that you care about. That’s another reason that experiences tend to resonate more than things do as solid uses of money. Because experiences tend to involve other people. Three, buy yourself some time. There is no question that women are time-starved. Using some money to buy yourself back some free time often equates to a big boost in enjoyment. Yes, this could be a manicure or a massage. But it could also be a housekeeper who can clean the kitchen so you don’t have to. Or a morning babysitter so that you can finally sleep in. And forth and finally, spend on others. There is one way that spending has been proven to bring us joy. It’s when we do it for other people. If you’ve ever watched someone open a gift that you took time out to pick specifically for them and saw it light up their faces, well then you know exactly what I’m talking about. But these days we don’t have to spend a fortune to show our friends we care, particularly since we may not be able to gather, to socialize in the way that we want. So break out those stamps, cards, letters, and tiny care packages and share some love since January and February can sometimes seem like a very cold let down after the holidays. The cheer you send this time of year can be especially meaningful and encouraging. Thank you so much for joining me today on HerMoney. Thanks to Gabby Bernstein for her calming voice, for the moments of Zen she brought to my day and my year, and her incredible words of wisdom to get our 2021 started off right. If you like what you hear, I hope that you’ll subscribe to our show at Apple Podcasts. Leave us a review. We love hearing what you think. We also want to thank our sponsor, Fidelity. We record this podcast out of CDM Sound Studios. Our music is provided by Video Helper and our show comes to you through Megaphone. Thank you so much for joining us and we’ll talk soon.