Category: Financial

Financial

Financial Advice From Betterment’s LGBTQ+ Community

Andrew Green

While not everybody feels that their identity affects their finances, queer people face disproportionate levels of homelessnness, carry more debt, and have more healthcare hurdles than their straight, cis-gendered peers.

This Pride month, we’re highlighting stories from members of Betterment’s queer community and sharing the creative ways that they approach money in their everyday life.

Get to know our employees with a fun fact.

Troy Healey, 401(k) Client Success Manager (he/him): I lived in South Africa for a year.

Crys Moore, Product Design Manager (they/them): I’m an avid rock climber. I’ve climbed all over the U.S, as well as Mexico and Cuba.

Sumaya Mulla-Carrillo, Social Media Coordinator (she/her): In addition to my full time job, I’m also a professional dancer.

Ricky Whitcomb, Customer Support (he/him): I love cooking and run a food/cooking Instagram account.

Woot Hammink, Banking Operations Manager (he/him): My family has farms on three continents!

Maria Howe, Sales Development Representative (she/they): I almost never wear matching socks—must be my Aries energy.

The path to financial freedom looks different for everybody. Here are some of the goals we’re working towards.

Woot Hammink, Banking Operations Manager (he/him): My partner and I have been mulling over buying a home! It’s a big, scary investment in a place like New York City.

Crys Moore, Product Design Manager (they/them): Saving for a house.

Sumaya Mulla-Carrillo, Social Media Coordinator (she/her): Saving for a trip to Italy, and also working towards 1.5 million in retirement.

Maria Howe, Sales Development Representative (she/they): Now that I’m on top of my student loans, my partner and I are starting to save for a home.

Ricky Whitcomb, Customer Support (he/him): Saving for my wedding.

Troy Healey, 401(k) Client Success Manager (he/him): Saving for a cruise ship trip for post COVID-19 travel!

Healthy habits make all the difference in doing what’s best for you and your money. Here are some ways our employees are reaching their goals.

Sumaya Mulla-Carrillo, Social Media Coordinator (she/her): I use auto-deposit for pretty much every account, and I also save any windfalls or extra money from dancing professionally towards my financial goals.

Troy Healey, 401(k) Client Success Manager (he/him): Automation! I deposit $100 every Tuesday into my cruise savings!

Ricky Whitcomb, Customer Support (he/him): Prepping my lunches as opposed to ordering out, and saving a percentage of my paycheck.

Woot Hammink, Banking Operations Manager (he/him):

First: Recurring deposits to a Home Ownership goal. We’ve got to start from somewhere.Second: We check in with each other frequently, and talk about what we’re open to and comfortable with. Since we’re not married, ownership gets even more complicated.

Maria Howe, Sales Development Representative (she/they): This may be counterintuitive, but after a lot of time spent in grad school and having a tight budget, little indulgences (like dinner out with my partner) are key to making sure I don’t go wild and break my budget.

Crys Moore, Product Design Manager (they/them): I auto-deposit into my house goal. Otherwise, I’d spend that money on something else.

Our approach to money can change drastically over time, and as we age, perspectives on money shift. Members of the BetterPride community shared advice to their younger self.

Ricky Whitcomb, Customer Support (he/him): Open a savings account and don’t touch it.

Crys Moore, Product Design Manager (they/them): Money is real and has real consequences. It’s not monopoly money. That student loan debt comes back around. Choose wisely young Crys!

Maria Howe, Sales Development Representative (she/they): I’d tell myself to go look up IRAs! I knew so little about tax advantaged accounts until working at Betterment. My money could have worked harder for me if I had known more.

Woot Hammink, Banking Operations Manager (he/him):  I’d first agree with my younger self that money should be more colorful than our green USD. I’d also take saving earlier more seriously, and spend less money at Dairy Queen.

Troy Healey, 401(k) Client Success Manager (he/him): Just make sure if you are going to spend it, you got it in the bank!

Sumaya Mulla-Carrillo, Social Media Coordinator (she/her): Take it slow and steady. I always want to achieve my goals as fast as possible, but in reality I have to slow down and stay the course for a while before seeing results.

Has your identity influenced your relationship with money in any way? Why or why not?

Maria Howe, Sales Development Representative (she/they):  As a queer person who was socialized as a woman, I subconsciously didn’t think of myself as a future breadwinner during formative years. Now that my partner and I are at the point in our lives where we are saving for goals like a house and family, I’m more aware of living in a society where a gender wage gap exists and I’m working hard to catch up!

Crys Moore, Product Design Manager (they/them): Even though I have a ton of skin privilege because I’m white, being visibly queer sets me back compared to my cisgender heterosexual peers. Society works for them in ways it doesn’t work for me. Most things are a bit harder.

Sumaya Mulla-Carrillo, Social Media Coordinator (she/her): Yes and no—I don’t think it influences my spending or saving habits, but I do know that I’ll eventually have more expenses around having a child, or any legal fees that come with adoption. I’m always mentally preparing myself for that major life expense.

Ricky Whitcomb, Customer Support (he/him): When I was younger I definitely felt the need to have the nicest brands and newest styles and now I’m a very happy boring dresser who doesn’t spend his paychecks on jeans.

Troy Healey, 401(k) Client Success Manager (he/him): No! I am a frugal spender… frugality applies to gay or straight!

Woot Hammink, Banking Operations Manager (he/him): Definitely! Being in a “nontraditional” relationship blurs a lot of lines when it comes to long term planning and saving. I’ve never felt like I have a traditional “Game of Life” style plan, where a simple path can lead me to success.

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Financial

Personal Finance Stories From Our AAPI Community

Andrew Green

Advice is a powerful way of connecting families across generations. In honor of Asian American and Pacific Islander Heritage Month, we asked members of our Asians of Betterment community to share personal finance advice from their parents.

Financial advice is rooted in our experiences.

While our families grew up at different times and in different countries, many still have a shared experience of moving to the United States that left an impact on their advice for how to grow their wealth through saving.

Eric Pan, Senior 401(k) Operations Associate: I’ve accumulated subtle frugal habits from my parents since I was a minor. From observing my mom pick off slightly rotten parts of the vegetable prior to checkout so it weighs less, to being scolded for tossing a soda can into the garbage instead of the recycling that could be redeemed for cash at the supermarket, their advice has been ingrained in me.

Kim Pham, Brand Designer: We used cash for everything. Credit cards were such a foreign concept to me growing up—I didn’t even get my first card until I almost graduated college. We always had the mentality of not spending what we didn’t have. To this day I still take that to heart, but I also understand the efficiency and importance of credit cards and building credit.

Anwesha Banerjee, Legal Counsel: My parents taught me about getting a bank account and a (starter) credit card early and paying it in full each month, to start building good financial habits and credit. Also, they emphasized strong and quick mental math—you can’t get cheated if you know your numbers!

John Kim, Mobile Engineer: My parents were responsible spenders and liked to save. They taught me not to make purchases off of impulse and I learned how to live within my means happily.

Jeff Park, Software Engineer: My family’s perception of money has always been heavily influenced by historical events that affected my family over generations. My father’s family, for example, were scholars in the nobility class, and for all intents and purposes, they were pretty well-off. My grandfather was a university professor in the early 1920s, but due to his vocal criticism of the Japanese occupation, he and his family were forced to leave their wealth behind as they ran away to China to avoid criminal prosecution.

My mother’s family also saw their wealth significantly decline due to the Korean War. As both my parents looked abroad for sustainable opportunities, they brought with them an understandable fear that events outside of their control can significantly affect their well-being. Prudence and savings were often preached in my family, and we were always told that it is often better to forego immediate petty pleasures for the peace of mind of a prepared tomorrow.

Thi Nguyen, Senior Technical Recruiting Manager: My family comes from humble beginnings, and I remember my dad working every single day and only taking time off when he was sick. We never got any advice directly, but understood that working to earn money was tough. My parents never really cared about material things, but we always had food on the table. It taught me that it’s okay to spend money on necessities (food, clothing, housing), but I needed to stay humble in how I spent my money. I learned to be frugal and always love a good deal.

“Save where you can, spend when you need to.”

-Thi Nguyen

Taking care of our families always comes first.

Family is a recurring theme in the way that our community thinks about finances. Our parents instilled a strong sense of frugality and saving, but taking care of family financially, both at home and abroad, always comes first.

Kim Pham, Brand Designer: My parents taught me the importance of spending money on family. When my parents first came here they had to build their own wealth from the ground up, which meant a lot of sacrifice. Our family values spending and sending money to our family here and abroad, more than material possessions.

Cat Gonzalez, Product Marketing Manager: My mom always taught me that family comes first with your finances. While you are saving for your own goals, make sure to save enough to take care of your family. Help them make sure they have enough to reach their goals as well.

Erica Li, Software Engineer: My family taught me to recognize and prioritize your financial goals. Work towards reaching them even if it means sacrificing from other areas. My dad made $30 a month in China before getting the opportunity to immigrate to the United States. His biggest goal, in addition to learning English and acclimating to an entirely new culture, was to save enough money to bring my mother and I over as well.

Once my mother and I settled in the United States, new goals and expenses appeared: buying a house in a good public school district and starting a college fund for me. Saving for these goals wasn’t such a smooth journey. My mother had to transition from a stay-at-home role to working alongside my dad as our financial circumstances fluctuated. They took up multiple jobs and sacrificed retirement savings to put money towards these goals.

We eventually bought a house in New Jersey, and I was lucky to have had financial support from my parents during my college years.

Our financial perspectives shifted over time, too.

Part of the beauty of the advice passed from generation to generation is how it evolves and adapts over time. Times change, environments change, knowledge changes and our perspectives shift with that. Our community members, many of whom grew up in a different country than their parents, shared how their personal outlook on finances evolved from that of their families.

John Kim, Mobile Engineer: I definitely took after my parents saving habits and learned to expand that mentality through investing.

Nima Khavari, Account Executive: Moving to the [United States] and watching my parents adapt to a consumer driven economy based on access to credit was a significant observation. Remembering them trying to understand credit scores and how to improve it in order to purchase a home left a lasting impression.

Erica Li, Software Engineer: Now that I’m all grown up, my parents are no longer putting away money towards goals for my benefit. Alongside catch-up retirement contributions, it makes me happy to see that my parents are finally using their money for pleasure. They recently bought themselves a new car after having their old one for 20 years. Also happy to say that they finally replaced their stove with one that has a working oven!

Anonymous: My family made every financial mistake in the book. I can’t blame them since they immigrated to this country without knowing English and [without a formal financial] education. They fell for every scam, pyramid scheme, loan shark, didn’t know how credit worked, and lost everything.

However, it was an opportunity to learn from their mistakes. After seeing what my parents went through, I learned how credit and financing worked magic, financial planning, and how to recognize cons. I wouldn’t be as financially apt if it weren’t for their experiences—a huge motivation for why I’m studying for the CFP® exam. The plan is to go back to immigrant communities and warn others from making the same mistakes.

Kim Pham, Brand Designer: When I was younger, we didn’t invest and we held all our money in savings accounts. This was a hard habit to unlearn. My entire life growing up my parents would instruct us to put all our money into our savings account, mainly because they didn’t know enough about investing. It helps that I work at Betterment because now I learned how to diversify my portfolio, and that investing isn’t—and shouldn’t be—as hard as it seems.

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Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER
™
certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

Did you miss our previous article…
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Financial

What are New Comparability Profit Sharing Plans?

Andrew Green

To retain their tax-qualified status, 401(k) plans are prohibited from discriminating in favor of key owners, officers, and highly compensated employees. Some small businesses that want to help their employees save for retirement may put off offering profit sharing contributions due to the financial burden of a “pro-rata” allocation compared to what the owners might get.

For these types of small businesses, a specific profit sharing plan design may provide the solution. Called new comparability, it allows businesses to remain in compliance while making larger contributions to its older participants, typically owners and highly compensated employees.

Different Testing Approach

Most profit sharing plans (i.e., pro rata, integrated plans), are deemed to pass nondiscrimination automatically using the safe harbor approach, while new comparability plans are required to pass the general test to prove its not discriminating against non-highly compensated employees.

New comparability allows employees to be segmented into more groups so that owners can be considered separately from, say, non-owner HCEs.  In addition, testing is based on projected benefits at retirement that are derived from contributions, rather than on the contributions themselves. This “cross-testing” is a bit of a hybrid approach whereby the 401(k) (a defined contribution plan) is tested as if it were a traditional pension (i.e., defined benefit) plan.

Plans using this method are able to pass testing and be compliant because younger NHCEs have more time until retirement, and so their projected benefit based on lower contributions falls within an acceptable range of the projected benefit of older HCEs receiving a larger contribution.

Using the new comparability plan design, a plan could, for instance, make 401(k) contributions of 10% to owners and 6% to NHCEs. Or contribute 10% to one owner, 8% to another owner, and 5% to NHCEs.

Minimum “gateway requirement”

To take advantage of the new comparability profit sharing plan design, the contribution to all NHCEs must be a minimum of:

One-third of the highest contribution rate given to any HCE; or5% of the participants gross compensation

Firms Well-Suited to New Comparability

The new comparability profit sharing plan design is a good solution for companies with fewer than 50 employees that have a group of older owners and/or HCEs that are important to the success of their organization.

Companies that tend to implement this design feature include:

Law FirmsMedical PracticesAccounting FirmsService Companies

Plan sponsors interested in this feature can include the profit sharing contribution in their plan documents as discretionary, meaning they are never obligated to make a contribution in any given year.  This is helpful, too, since your employee demographics will likely change from year to year and so may your profit sharing allocation decisions.

In addition to the benefits that a retirement plan provides to employees, profit sharing plans provide real benefits to small business owners. Profit sharing contributions are tax deductible and not subject to payroll taxes (e.g. FICA).

The new comparability profit plan design gives small business owners significant flexibility to offer a 401(k) that meets the needs of their organization.

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Financial

Latinx At Betterment Members Share Generational Financial Advice

Andrew Green

Latinx people aren’t a monolith—we come from a variety of countries, speak many different languages, and are part of every racial group. But even so, when it comes to being Latinx and living in the U.S, we share experiences rooted in generational cultures, family, and social and economic strife due to the immigrant experience.

In honor of Hispanic American Heritage Month (HHM), we asked our Latinx employees to share their experiences with personal finance and how they give back to their community through the advice they’ve learned.

What advice did you receive from your parents and elders about managing money?

Gabriel Talavera, Software Engineer: My mom always taught me to maintain good savings. You never know when something will come up—like car trouble or any other unforeseen incident—where having good savings in place will help you get out of a tough spot.

Kenny Reets, Sales Development Representative: When I was younger my mother always mentioned to never spend every dollar in your pocket, because you don’t know if you’ll get another one tomorrow. Growing up and being a person of color (POC), as well as Latinx, I’ve always wanted to be financially independent and not be in the “rat race,” as some would call it.

Natalie Rodriguez-Jackson, Software Engineer: My dad always told me that I should be tracking my finances. He’s not computer savvy, so instead of using Google Sheets or Excel, he actually drew spreadsheets on a notebook instead. The cool thing is that now, the notebook is about 35 years old so it’s filled with some interesting data. Today I use an app to track my spending and savings rates.

Nicole Ramos, Sr. FP&A Analyst: Growing up, I did not receive much financial advice. My parents struggled to manage their cash and expenses. They often came to me and my sister for help understanding different aspects of finances that they had not learned or were having trouble understanding. They had strong feelings about needing to have cash and not going into debt as a result of their personal experiences.

Michael Mayaguari, Junior Software Engineer: Since a very young age, my mom always taught me the importance of budgeting, saving, and spending on necessities only. She always said “every penny counts,” teaching me that no matter how small things are, they matter. Growing up in Ecuador had an impact on this advice because I realized how my mom was talking from her own experiences with money management and raising four children with a limited budget.

Jackeny De Los Santos, Sr. Operations Associate: I come from a very poor farm, so “money talks” were uncommon. We relied on land goods for consumption and funds my mother would send from NYC to DR as income resources.

How does being Latinx impact your personal financial planning?

Nicole Ramos, Sr. FP&A Analyst: They say that millennials are poised to inherit the largest intergenerational wealth transfer in history of $30 trillion. I will not be receiving anything. Growing up, my family lived paycheck to paycheck and their income combined is less than I make now—all as they supported a family of 8+. Living without a safety net and being the only one of my immediate siblings who has completed college, I have to be very mindful of my expenses and savings. For me, personal financial planning is more than just personal, it’s familial. I need to ensure I am planning for the unexpected not just for me, but for my siblings as well.

Michael Mayaguari, Junior Software Engineer: Moving from Ecuador to the US exposed me to the differences in lifestyles, culture, and habits. As a first generation, I was not exposed to the importance of long term investments until my high school teacher told my class to buy bonds or stocks once we turned 18. This advice was a huge factor in my interest to investigate, learn, and put into practice my personal financial planning and investments.

Jackeny De Los Santos, Senior Operations Associate: Budgeting includes sending money to immediate relatives (within and outside of the US). It was something I saw growing up, so it is an expected behavior.

Kenny Reets, Sales Development Representative: My financial planning revolves around building generational wealth, which requires me to be disciplined.

Tiana Duran, CX Associate: Every move I make I take into account that I have to financially help my three siblings, parents, and great grandmother, on top of making sure I am financially stable.

What financial advice do you give to your community now?

Jackeny De Los Santos, Senior Operations Associate: Pay yourself first, in terms of personal growth and investments. My immediate community in NYC was in the projects. Revolving debt and lack of resources for personal development was a reoccurring factor that impedes progress.

Natalie Rodriguez-Jackson, Software Engineer: Do some auditing of where all your money is. Credit card balances, available credit, income, expenses, liquid cash in bank or investment accounts, etc. Make a list of it all so you know what you have and what you’re working with. Do the same thing for all of your debts too. Get clear on your numbers so you know what you need to do to get to where you want to go.

Tiana Duran, CX Associate: I tell my younger siblings that it is never too early to set yourself up financially for the future, especially when you don’t have a lot of financial responsibilities.

Michael Mayaguari, Junior Software Engineer: Invest for the long term and in yourself.

“I tell my family and friends to build yourself a base of assets to fund your life of leisure…Investing in your future has to be first always.”

-Kenny Reets

Nicole Ramos, Sr. FP&A Analyst: Please prioritize paying off your credit cards. Do not be scared to invest your money for the long term. Be careful with day trading as that is not how the rich get rich and there are a lot of taxes associated with that. Think about what you are spending your money on and why.

Gabriel Talavera, Software Engineer: I always recommend setting goals for yourself. For instance when I was going to college and working, I would set savings goals for myself. I would try to get and maintain $800 in my savings, and then $1000, and so on until I felt like I had enough breathing room. Even now as I’m still kind of early into my career, I am working on various goals: Getting rid of student debt, saving for a house, etc.

What does financial stability mean to you?

Kenny Reets, Sales Development Representative: Financial stability means having complete control over my time and helping future generations gain time as well.

Michael Mayaguari, Junior Software Engineer: Freedom and peace of mind.

Gabriel Talavera, Software Engineer: It means to be able to live comfortably. To be able to not worry about having to go to the mechanic if your car is making noises cause you’re afraid of the bill. It means being able to afford to go on vacation and explore the world. Being financially stable means to have the ability to live life to the fullest and be comfortable doing so.

Jackeny De Los Santos, Senior Operations Associate: The ability to afford your cost of living without the need for employment.

Nicole Ramos, Sr. FP&A Analyst: It means having enough money to not struggle financially. To be comfortable enough to enjoy life and not live in fear or stress of how I will eat or where I will sleep next month. To feel confident that setbacks will be minor and not catastrophic. It also means having enough so that all of the above extends to my sibling as well.

Tiana Duran, CX Associate: To me financial stability means being able to live comfortably without having to sacrifice things like a work life balance just to support myself.

Natalie Rodriguez-Jackson, Software Engineer: Being financially stable means that my family and I have all that we need to thrive: To have enough to cover things like helping extended family, vacations, and educational experiences that will help my family and I live fuller and richer lives.

Begin your investing journey
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Financial

Fake It ‘Til You Make It or Get Indicted

Andrew Green


5:30pm ET LIVE premiere today – Subscribe for the alert!
Join Downtown Josh Brown and Michael Batnick for another round of What Are Your Thoughts? On this week’s episode, Josh and Michael discuss the biggest topics in investing and finance, including:
►Q3 Earnings Season – Let the “relative” disappointments begin!
►No Love For the Bull – It took a 102% gain (from the March 2020 low…

The post Fake It ‘Til You Make It or Get Indicted appeared first on The Reformed Broker.

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