Jonathan Clements
ABOUT Jonathan

Jonathan Clements is the founder of HumbleDollar.com and author of nine personal finance books, including his latest, From Here to Financial Happiness: Enrich Your Life in Just 77 Days. Born in England and educated at Cambridge University, Jonathan spent almost two decades at The Wall Street Journal in New York, where he was the newspaper’s [...]


Joe Anderson
ABOUT Joseph

As CEO and President, Joe Anderson has created a unique, ambitious business model utilizing advanced service, training, sales, and marketing strategies to grow Pure Financial Advisors into the trustworthy, client-focused company it is today. Pure Financial, a Registered Investment Advisor (RIA), was ranked 15 out of 100 top ETF Power Users by RIA channel (2023), was [...]

Alan Clopine

Alan Clopine is the Executive Chairman of Pure Financial Advisors, LLC (Pure). He has been an executive leader of the Company for over a decade, including CFO, CEO, and Chairman. Alan joined the firm in 2008, about one year after it was established. In his tenure at Pure, the firm has grown from approximately $50 [...]

Published On
May 29, 2018
Jonathan ClementsJonathan Clements

Jonathan Clements (HumbleDollar.com, former Wall Street Journal columnist) talks about how to get from here to financial happiness and success, defeating the instinctual urges ingrained in us by our hunter-gatherer ancestors – urges that often lead to financial failure. Plus, it’s graduation time, should you give the grad in your life the gift of a Roth IRA? Listen and learn why your graduation gift might actually be worth $2 million. And what are the chances that you’ll be subject to an IRS tax audit – by agent Will Smith?? 

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Show Notes

  • (01:26) What Are Your Chances of Getting Audited – by Agent Will Smith??
  • (11:25) Jonathan Clements: Our Ancestors Set Us Up For Financial Failure
  • (19:52) Jonathan Clements: From Here to Financial Happiness
  • (34:34) It’s Graduation Time: Should You Open a Roth IRA For Your Grad?


“I’m Jonathan Clements and this is Your Money, Your Wealth® with Joe Anderson and Big Al Clopine.”

Our hunter-gatherer ancestors did not have to worry about saving diligently in 401(k) plans for four decades so they could retire to endless rounds of golf, bridge, and early-bird dinner specials. Instead, they were focused on surviving until tomorrow. And in many ways, that is how we operate in the financial world. We’re focused on surviving until tomorrow. We consume as much as possible today, we get panicky over losses, we’re brimming with self-confidence that we can win today – and all of those things are terrible for our long-term financial future.” – Jonathan Clements, HumbleDollar.com

From HumbleDollar.com, former Wall Street Journal personal finance columnist Jonathan Clements joins us today on Your Money, Your Wealth® with the secret to getting from here to financial happiness and success, defeating the instinctual urges ingrained in us by our hunter-gatherer ancestors – urges that often lead to financial failure. Plus, it’s graduation time, should you give the grad in your life the gift of a Roth IRA? Visit YourMoneyYourWealth.com and click “Special Offer” to download our Roth IRA basics white paper for free, then listen and learn why your graduation gift might actually be worth $2 million. But first, what are the chances, that you’ll be subject to an IRS tax audit – by agent Will Smith?? Here are Joe Anderson, CFP® and Big Al Clopine, CPA, with some silliness, and some answers.

01:26 – What Are Your Chances of Getting Audited – by Will Smith??

JA: We have a fantastic show. Fantastic.

AC: We do. I can’t wait.

JA: I usually hate it when I hear that coming right out of the chute.

AC: Yeah. And you say it every week. (laughs)

JA: I know, because I don’t have anything else I say. (laughs)

AC: It’s your patented open. (laughs)

JA: Yes, “this show is going to suck royally.” How about that?

AC: Luckily when the podcasts come out, they take that part out because it’s cheesy. (laughs)

JA: But I’m pretty excited today though, we have Jonathan Clements, he’s a writer. I’ve been following them for many years. He wrote for The Wall Street Journal.

AC: Yeah, 20 years or so.

JA: Close to 20 years, he’s written about eight or nine personal finance books. He’s very consumer-advocate, he’s got a great website folks, HumbleDollar.com.

AC: Wow, you’re getting me excited.

JA: Yeah. No, I’m really excited. Andi, I don’t know how she bribed him to come on.

AC: We don’t ask. (laughs)

JA: She’s like, “do you have any interest to have Jonathan Clements on?” And I was like, “Are you kidding me, of course!” And she’s like, “OK yeah great, because next week we have Barack Obama.” (laughs) “The following week we’re going to have Barbra Streisand. She’s going to sing the opening.”

AC: I think Brad Pitt’s coming on the week after.

JA: Oh my god, I can’t wait. So yeah, I’m pretty excited. So we’re going to talk a little bit about his books, and I don’t know. We’ll see where the wind takes us.

AC: Yeah. Well here’s what I’m excited about. I have the 2017 IRS data book. (laughs) This is good stuff to open a show with.

JA: What do you got? You gonna just start spewing out numbers?

AC: I’ve got 60 pages of numbers. (laughs) Here’s what I want to tell you – a couple quick facts, and then I want to talk about your chances of being audited, because I think that’s kind of interesting – at least it is to me. Maybe not to you and any of our listeners. (laughs) But I guess right off the bat Joe if you look at how much our government raises from taxes – revenue – $3.3 billion.

JA: $3.3 billion, all right, and they spend $7.8 billion. (laughs)

AC: Yeah they spend more than that. Yeah. (laughs) So from companies, it’s about $345 million. From individuals, it’s about $1.8 billion. So the individuals are paying a lot more than the companies.

JA: Really! That’s interesting to me. You would think these big corporations would be paying a little bit more. How many companies are there?

AC: I dunno, lots.

JA: Right? I would say, what, isn’t it 80% of all companies are very small businesses. Maybe even more than that, 85%?

AC: Right. And some of that is skewed, because the pass-through businesses, S-corps, are showing up as individuals, I think. Then employment taxes, Social Security is a billion – actually about $1.1 billion. So that’s where our taxes are coming from. So see, you were interested in that. (laughs)

JA: That was very interesting. That was good.

AC: (laughs) Now what about audit? Do you worry about being audited, Joe?

JA: No, I don’t really at all. Not even a little bit.

AC: You don’t? You should.

JA: Why?!

AC: With what you’ve got going on your return. (laughs)

JA: I’ve got Uncle Al over here! (laughs)

AC: Just sayin’.

JA: No, there’s nothing. I have a W-2. My schedule A is nothing extravagant. Got a little mortgage interest, charities, state and local taxes…. my million dollars of unreimbursed business expenses? That jet I bought for business to take to Fiji? (laughs)

AC: Yeah that’s what I’m thinking of. They took that out for 2018 so you have to come up with a new strategy. (laughs) So there are about 150 million individual returns filed each year. You’re one of them

JA: Okay. I am one of the 150 million.

AC: So they’re going to audit about 900,000. At least, that’s what they did last year. So that’s .6%. Less than a percent.

JA: 60 basis points.

AC: Right. But there are certain cases where you might have a higher chance of being audited. Like for example, if your income is between $200,000 and a million.

JA: Yeah a little bit higher chance, what, about 2%?

AC: if you don’t have, like a pass-through business, like an S-corp or sole proprietorship, it’s .8%. So it’s actually not that much different. But if you do have a business return on there, it’s 1.6%. So now, if you make more than a million. So I don’t know if that’s you or not, but…. (laughs) So you would have a 4.4% chance – if that were you.

JA: All right, so I’ve got a 95% chance.

AC: Of not being audited.

JA: Well, if I had a million dollar income. (laughs)

AC: (laughs) That’s a big if.

JA: (laughs) Yeah, let’s start there first. I wouldn’t mind getting audited if I had a million dollar income, come on.

AC: Now corporations, for C-corporations it’s about a 1% chance. So a little bit higher than individuals, but a partnership, S-corporation, .4 and .3% chance.

JA: So are they calling an audit those things you get the mail saying, “Hey…”

AC: Yes. So that’s a that’s a really good question. So out of the 900,000 audits for individuals, about – in rough numbers – 200,000 were actually you had to see an agent. 700,000 were just you got a letter in the mail saying, “we disagree, there is a discrepancy. Either pay it or tell us why you don’t agree.” And that’s not as bad as a face-to-face with an IRS auditor.

JA: Yeah with Will Smith? What’s that movie?

AC: I forget. I know you’re talking about.

JA: (to Andi:) Not Men In Black! Men In Black he’s not an IRS agent, he’s an alien agent!

AC: Even I knew that. It’s Men In Black II. (laughs)

JA: No! Dammit! What is that movie, when Will Smith is… and it’s like dark, it’s a dark, gloomy movie. And something bad happened and he’s like an IRS agent and he’s helping people. (to Andi:) You got a computer, right?

AC: Anyway, so I thought you’d be quite interested in those stats.

JA: Yes, that was quite interesting. (laughs)

AC: So do you want to know how not to be audited?

JA: Yeah. Just do the right thing. I would imagine if everything is legit, you still have the chance of getting audited.

AC: You could, but here’s why you would be more likely to be audited than others. If you put the wrong numbers down on your tax return – in other words, your W-2 says you made $60,000 and you put 40,000. Well, guess what, the IRS has your W-2, so they’re checking it. So that would be an issue – mismatching. Or maybe you got $10,000 of interest income and you didn’t put it down. Or maybe you had $10,000 of dividends, and you put it as interest income, and they mismatched it. Or things of that sort. So mismatching is a reason you get audited. Another one Joe is when you have a million dollars in your miscellaneous itemized deductions – like you. (laughs) That’s a pretty high number compared to the average. So that’s a more likely chance of being audited, and then the third way that you get audited is basically, sort of luck of the draw if you are in a certain profession that they decide they want to go after. Like for example, in the past, they have decided not all attorneys file accurate tax returns, and they focused on attorneys one particular year. Sometimes they focus on, a lot of times it’s independent contractors, because not all of their income comes through on 1099s. And guess what, you’re still supposed to report it, even though you don’t get a 1099.

JA: Cash jobs. (laughs)

AC: Cash jobs, right. Underground economy. (laughs) We’re not recommending it, but it happens.

JA: Yes, Seven Pounds is the movie, folks. Will Smith, I believe it was probably in the late 1990s, early 2000s… 2008 is what I meant to say. (laughs)

AC: Give or take 20 years. (laughs)

JA: I’m just going off of what Will Smith looked like from memory.

AC: He doesn’t age.

JA: He looks great. He’s probably…

AC: You haven’t aged either.

JA: Thank you very much.

AC: I have. Because I’m older.

JA: He’s probably 40, right? 45?

AC: Probably close to your age.

JA: He’s probably a little bit older than me. I was a big fan of Fresh Prince of Bel Air.

AC: So you remember he was older than you when you were watching it.

JA: Yes.

AC: So he’s approaching 50.

JA: No, he’s probably 45. He’s probably several years older than me.

AC: Like 1.

JA: I’m the same age as Tiger Woods.

AC: Are you?

JA: Yeah. He looks pretty good too.

AC: I always know what age you are because I take mine minus 17. And I’m good at math.

JA: Take the square root? 1968. (The year Will Smith was born – Andi looked it up)

AC: He’s older than you thought. He’s going to be 50 this year.

JA: Yeah. 49. There you have it.

For the record, now that the Obamas have signed that Netflix deal, they’ve decided they’re too busy to be on the show, and Barbra Streisand can’t come up with lyrics for our opening music, so our guest next week will actually be Dr. Wade Pfau, returning to Your Money, Your Wealth® to discuss how much you can really, practically spend in retirement. To make sure you hear it, all you’ve gotta do is visit YourMoneyYourWealth.com and subscribe to the podcast. It’ll download right to your device and you can listen whenever you want. While you’re at YourMoneyYourWealth.com, you can check out the show notes and transcripts, and listen to previous interviews with investing experts like Paul Merriman and Larry Swedroe. I’ll see if I can’t get Will Smith on the interview calendar, but in the meantime, let’s find out from Jonathan Clements how to overcome the negative financial urges we inherited from our ancestors.

11:25 – Jonathan Clements: Our Ancestors Set Us Up For Financial Failure

JA: Alan, it’s that time of the show.

AC: It’s my favorite time of the show.

JA: It is? Why is it your favorite time of the show?

AC: Because we get someone way smarter than we are, and we actually learn something.

JA: Yes. We have a great guest today – Jonathan Clements. Jonathan is the founder of HumbleDollar.com. And I don’t know what, has he written about 8 different financial books, and his latest is a really good one, it’s How to Think About Money. He was with the Wall Street Journal for, I dunno, 20 years and he was a personal finance writer. Go to HumbleDollar.com – it’s extremely funny, very knowledgeable information to help you with your overall financial life. And I’m just happy that he must not be busy today because he decided to join us clowns talking about some financial planning. So Jonathan, thank you so much for joining us. Welcome to the show.

JC: Hey, I appreciate you having me on, Joe and Al.

JA: You’ve been a journalist for quite some time, and when we talk about journalists on this show when it comes to market crashes or booms and busts, when people read or go to the media, media is not necessarily their friend because they do different things. But in your instance, I think you’ve helped people for many, many years doing the right things with your money. And you wrote a pretty funny blog, I think it was back a little bit earlier this year when the markets were a little bit jittery, and you were like, “well, here are some articles that you’ll probably expect to come out because of the volatility in the overall market,” which I thought was hilarious, by the way.

JC: Yeah, well there’s a basic problem when it comes to the media and the financial markets, which is this there’s a disconnect. You have to put out a newspaper every day. You have to update a website hour by hour. And yet, what you should do with your financial life moves at a snail’s pace. If you make one major investment decision a year, you’re probably exerting yourself too much. (laughs) The fact is, you do not need to watch your portfolio every day. You do not need to be trading minute by minute. You don’t need to be paying attention to all of this nonsense. And yet, newspapers still need to publish. So yeah, they’re going to be focused on short-term performance and they’re not the only ones. Mutual fund companies push the latest, hottest fund, Wall Street brokerage firms put out reports predicting what’s going to happen stock prices in the year ahead, analysts are coming up with new stock picks all the time. We’re just inundated with financial information that is really completely and utterly useless.

JA: Where should people – there’s good information, there’s bad information, but I think the average individual has no clue of what they should be paying attention to.

JC: Well I think for starters, when you read the newspapers, when you watch CNBC, and with most financial radio shows, you should really treat them as financial entertainment. If you enjoy the markets, you get a sense of excitement watching them go up and down you’re intrigued by the hot money managers, the hedge fund managers, the stocks that are rising and falling – all that is fine. But it is entertainment, and you don’t want to be acting on it. If you want to be wise with your money, what you should probably do is sit down and read a handful of the really good books about money. Read some stuff that Jack Bogle has written, or read some of the books by Charlie Ellis. Read some of the books by Bill Bernstein. If you read their books, they’ll give you the basics you need to know in order to build a decent portfolio, and then somehow or other, you need to find a way to stick with it – and that’s the real problem. Figuring out what to do with your money is really pretty straightforward. The real problem, and the reason why financial advisors are often required is because, even if people can figure out what to do with that money, they simply can’t get themselves to do it.

AC: Well you wrote a really good book yourself, How To Think About Money, and one of the key points in the book was that people need to rewire their brain because we think about money, we think about investing, perhaps, the wrong way. Can you elaborate on that?

JC: There’s this intriguing part of economics called behavioral finance. And what behavioral finance has done is detail all of the bizarre things we do when it comes to money. And some of the key things that we do is. one. we’re overconfident. We tend to think we know things that we really don’t. Two, we suffer from something called “loss aversion.” When the markets go down, that is much more painful to us than when markets go up. And so when markets go down we have a tendency to panic and sell. And three, we tend to have an extremely short-term perspective. We’re super kind to our current self, and we’re not at all kind to our future self. And a lot of this comes from the instincts that we inherited from our hunter-gatherer ancestors. Our hunter-gatherer ancestors did not have to worry about saving diligently in 401(k) plans for four decades so they could retire to endless rounds of golf, bridge, and early-bird dinner specials. Instead, they were focused on surviving until tomorrow. And in many ways, that is how we operate in the financial world. We’re focused on surviving until tomorrow. We consume as much as possible today, we get panicky over losses, we’re brimming with self-confidence that we can win today – and all of those things are terrible for our long-term financial future.

JA: You write about a pretty good picture if you think back, of the hunters and gathers, once you find something you’re going to gorge and eat the hell out of it because you don’t know if you’re going to survive tomorrow. The herd mentality is that it’s all survival. But we’re still using those survival techniques a 100 plus years later when it comes our overall finances and it’s really difficult. It’s ingrained in us. It’s difficult to get out of that.

JC: Yeah, there are two parts of our brain – there is the sort of fast-moving instinctual part, and the much slower moving contemplative part. And most of the time, we go through our lives using the instinctual part of our brain, and it’s an enormous help. The instinctual part of our brain tells us to jump out of the way before the car hits us. It tells us to pull our hand away from the hot stove before we get truly scorched. Most the time, the instinctual part of our brain is a huge, huge help to us. Except – except when it comes to managing money. When it comes to managing money, we do not want to act on instinct. What we want to do is hit the pause button and allow the contemplative side of our brain to weigh in. And that could be as simple as being in the store, you want to buy this thing right now. It’s like the equivalent of walking into McDonald’s and smelling the Big Mac. You just want to eat the darn thing. What you have to do to avoid spending money you can ill afford to spend, is to walk out of the store for ten minutes, walk around the parking lot, whatever it takes, and think about it. Think about all the other possible uses of the money. Think about the bills you have to pay. Think about the goals you want to save for. And at the end of 10 minutes, there’s a good chance that you will decide that impulse purchase is not the right way to spend your money. And it’s similar with other parts for our financial lives. When we’re tempted to make that big trade, because we think we know what’s going on in the financial markets, we should hit the pause button. Give it a day or two. Give it a week, give it a month – it doesn’t matter whether you act today. And allow the contemplative side of your brain to weigh in.

Brushing up on your financial literacy will also help you make better money decisions. While the contemplative side of your brain is working its magic, sign up for one of our two-day retirement classes in Southern California, or learn Financial Strategies for Turbulent Times at our free monthly Lunch ’n’ Learn events in San Diego. Visit the Learning Center at YourMoneyYourWealth.com to sign up now. If you’re in Southern California or visiting soon, you can get the tools and confidence you need to prepare for a successful retirement: sign up for our two-day retirement courses or our Lunch ’n’ Learn events in the Learning Center at YourMoneyYourWealth.com.

19:52 – Jonathan Clements: From Here to Financial Happiness

JA: You know, I do a lot of spin classes. And on these news spin class bikes, they’ll tell you how many calories you burn. And so this morning, actually, I’m on this thing, and I’m like, “I gotta burn another hundred calories.” I have a certain goal. And you know how hard it is when you’re tired to burn that other 100 calories? And I’m thinking, “man, this is like just a stupid candy bar.” So the next time I’m urged to eat something that’s 100 calories, I’m like, I’m going to think twice about it because it was a pain in the ass to burn it off! So when you’re thinking of it, “I want the Big Mac,” or “I need to spend the money,” or on the other side, “I need to get out of the overall markets, because I think the markets are going to go to zero,” if you just take a step back and kind of, “hey, have you been here before? Have the markets been here before?” I think people would be a little bit better. But the volatility in the markets I think is a lot harder for people to restrain themselves, versus maybe a purchase. What are your thoughts on that?

JC: I think that is true, and the key here is not to sit there by yourself and stew on the question without talking to others. One of the reasons that spin classes are so effective is because you’re in this room with other people who are also working hard, and you’re inspired, and you feel competitive, and you really want to get the most out of the class. You want to show everybody else in the class that you’re working hard. When it comes to a lot of financial decisions, what we do is we make them in isolation, without talking to other people, and as a consequence, we often get it wrong. So if you’re in the moment where you’re going to go out and buy the new Beemer that you can’t afford, or you’re at the point when you’re going to sell everything and move to cash, because you feel panicky about the financial future, talk to somebody. If you talk to somebody, even if they’re not a financial expert, they will probably help you to have some perspective about your situation. Simply articulating what you want to do will make you think about it and realize, “hey, maybe my rationale that getting out of stocks and going 100% to cash really isn’t that smart.”

The other great thing about talking to other people is that we suddenly feel the burden of their expectations. So there’s a reason, when we make New Year’s resolutions, that we tell other people about them. Because suddenly we’re committed. Because we know that other people have heard that we’re going to lose 15 pounds, that we’re going to exercise four times a week, that we’re going to try to buy that new home by the end of the year, suddenly we feel the sense of obligation and there is a greater chance that you will follow through. As I tell people, if I say to my wife, “I’m going to get up and go to the gym in the morning,” I’m going, because I don’t want any recriminations. (laughs) But if I just tell myself that I’m going to go to the gym in the morning, it is so easy to roll over and go back to sleep.

AC: (laughs) Right. Yeah, that makes sense. Just thinking about this whole thing about the fear that sort of takes over when the market declines, and we really haven’t had a market correction in a while. But it seems like when we do, I mean just thinking in the past, because, as you mentioned right at the beginning of the interview, there’s so much on the media that we listen to, and then it’s like you start hearing people say, “the market’s going down to zero,” and then you hear people say, “well this is new, this has never happened before,” and then you start thinking, “well, I guess that’s true. Maybe I should sell.” And it’s hard to make good decisions I guess when you’re not thinking rationally.

JC: Unless you think that the economy will never grow again, we are going to be stuck here forever, we’re never going to see further improvements in our standard of living, we are never going to see companies grow again, why would you get out of the stock market? I mean the stock market, in the end, is a reflection of global economic growth. As long as the economy grows, the stock market will rise. I can’t tell you which stocks are going to go up. But I know that if you own a broad basket of stocks, and the global economy continues to grow, that will flow through to corporate profits, and eventually stock prices will reflect that. The problem in the intervening period is that people change their view on what stocks should be worth. Sometimes we think the stock should be worth 25 times the earnings. Sometimes we think that they should be only worth 15 times current corporate profits. And that’s speculative return – the bouncing up and down is what freaks people out and causes them to sell. But if you focus on the long run economic growth, and realize that as an investor in the stock market you’re going to be the beneficiary of that, you should be a much more tenacious investor. So don’t bank on figuring out whether the right price-earnings ratio for stocks is 25 or 30 or 15, instead, bank on the fact that the global economy will keep on growing. And if it keeps on growing and you’re invested in the stock market, over the long haul, you’ll be happy with the results.

JA: You know in your latest book, the last step that you talk about is, to win you can’t lose, or don’t lose. Tell me what is your thought process behind that? Help our listeners to say, if you really want to win in this world of finance or retirement or anything else, you can’t lose. Tell me more.

JC: When I think about losing, I think of it in two different categories. There are the big losses and there are small losses. The small losses are the gradual reduction from your returns that occur every time you buy a mutual fund with high annual expenses. Every time you realize capital gains taxes and have to send off a check to the IRS. Every time you trade, and you incur commissions and all the other transaction costs that come with buying and selling stocks. That is the slow financial death – the gradual subtraction from your wealth that occurs over time. But there’s also the big financial death. What happens when you start to do things like not having disability insurance, even though you can’t really afford to self-insure. IE, if you suffer a disability, your family is going to be on the breadline. Not having health insurance. Betting everything on a handful of stocks or a single sector of the market. With strategies like these, you can roll along for years, completely oblivious to the risks you’re taking. Perhaps but you’re pretty damn smart. And then one day, boom, your whole financial life falls apart. Suddenly you discover that you’re the idiot who has bought masses of rental properties at the top of the housing market in 2006. You’re the one who suddenly has the enormous medical bills that you can’t afford to pay. You’re the one that owns tech stocks en masse at the beginning of 2000 and you end up losing three-quarters of your money. Those are the big potential financial losses, and you need to figure out ways to avoid those big losses -because if you suffer them, it could set back your financial life by 10 or 15 years.

JA: You know I think that’s really well said – some of these risks that people face, they don’t even potentially realize the amount of risk that they’re actually taking. To your point, they might think that they’re a genius because, “hey, look at my balance sheet it, looks pretty good and I’m taking care of my family.” But all of a sudden you have either concentrated stock risk or you don’t have any type of ancillary insurances in case your income disappears and you can’t save any more money and now you’re selling that stock when it goes down. Someone’s entire financial house could blow up very, very quickly.

You wrote another great book. It’s The Money Guide. Tell our listeners about that – I mean, anything you ever want to know about money, it’s just sitting right here. So I’m a Certified Financial Planner, and I think Jonathan, you’ve taught me more in this book than the whole curriculum. (laughs)

JC: So I wrote two editions of The Money Guide. One came out at the beginning of 2015, and then the second came out of the beginning of 2016. But putting it out was a bit of a hairy exercise. So what I would do – and my wife was not entirely happy about this – but what I would do was, I’d work on the book through the year, and then on December 31st, after the markets closed, I would start updating all the numbers in the book, based on where the financial markets had closed as of December 31st. So there wasn’t a lot of champagne drunk that night, because I spent hours updating the book. (laughs) Then I would ship it off to Amazon, and the next day it would be available as an e-book, and it would be available as a paperback. So it was sort of cool ,you finish your book one day and it’s available for sale the next day. The downside was, it was an enormous amount of work, and there was always this risk that something was going to go wrong and I wasn’t going to get it out. So what I did was I took that book that I used to charge good money for, and I put the entire contents on my website. My website is HumbleDollar.com. And if you go to that website, that book that I used to charge for is now on the web and available for free, and I update it everyday. Everyday I’m in there and I’m updating the numbers. I learn something new and I change some of the text. So if you want to look at that book, and look at it for free, go to my website and all you’ll have to do is look at a few nasty ads. You can even ignore those if you want. (laughs) And all of the information is there – I run the website as a public service. I barely break even on it. But what I’m hoping is to take the financial knowledge that I’ve gathered over more than three decades and make it available for folks so that they can make smarter financial decisions.

JA: Jonathan, we’ve got a couple of minutes left here, but tell our listeners a little bit about your story. I’ve been following you for many, many years, but I think you have an interesting story. Could you share it with us?

JC: Sure. So I spent the past 33 years writing and thinking about money. And for most of that period I’ve been a financial journalist. I spent almost 20 years at the Wall Street Journal, where I was the newspaper’s personal finance columnist. I also worked for Forbes magazine. But in addition, for six years, I went over to what my friends called the dark side. I spent 16 years at Citigroup, where I was Director of Financial Education for the U.S. wealth management business, and that gave me a unique perspective on the business. It gave me a lot more respect for what it’s like to be a financial advisor and having to help clients. It made me realize that not everybody can get it done on their own. I spent six years at Citigroup, I got a little bit tired of going to meetings, dealing with lawyers, dealing with compliance people, I’d saved up enough to retire, so I called it quits. I went back and I’ve been doing some journalism. I now run my own website, I do a certain amount of public speaking, and I’ve done a bunch of books. So I have a new book coming out in September, it’s my ninth book, and it’s called From Here to Financial Happiness, and it’s a day-by-day guide on how to get your finances in financial shape. So that’s what I’ve been doing for the last 33 years. (laughs)

JA: Everyone, you’ve gotta check HumbleDollar.com, HumbleDollar.com. I have The Money Guide here that I actually spent some good money on – I got the 2015 edition, but now I’m just going to go get my updated version for free, compliments of Jonathan Clements, so HumbleDollar.com. Any parting words of wisdom that you can share?

JC: I think the issue that we’ve been talking about here, and I would encourage everybody to adopt as their own, is this notion of pausing before financial decisions. And it’s not simply that you will make smarter financial decisions if you pause. You actually may find you get more pleasure from your money. And what do I mean by that? Well, if you’re going to plan your next vacation you should plan it a year ahead of time because that will give you a year in which you can imagine all kinds of possible vacations. You can have these wonderful trips in your head, and then once you settle on where you’re going to go, you can spend months thinking about what a great time you’re going to have. There is a great likelihood that will be the best part of the vacation. Similarly, if you’re going to make a major purchase, if you’re going to remodel the house, think about it for a year. The period of anticipation will give you great pleasure – again, maybe even greater pleasure than actually finally buying that new car, buying that new living room furniture, or getting the kitchen remodeled. So pause, take your time, and enjoy that long period of anticipation.

JA: That’s well said. I’m…

AC: You’re going to Minnesota.  You’ve already thought about that. (laughs)

JA: (laughs) No, I’m looking to buy a new set of golf clubs. But I’m telling myself I’m not going to buy them until I reach a certain handicap.

AC: Yeah, so that’s going to be a long pause. (laughs)

JA: It’s going to be a very long time. It’s going to be a very, very long time before I get those new clubs, Jonathan. (laughs)  Jonathan Clements, he’s at HumbleDollar.com. Check that out for sure. And then hopefully we can get you back on the show when your new book comes out.

JC: That would be great. Thank you so much for your time, Al and Joe.

If you’ve got a money question, email it to info@purefinancial.com, or call (888) 994-6257 and Joe and Big Al can answer your question live during Your Money, Your Wealth®. Whether it’s about taxes, investing, or making sure your portfolio is ready for market volatility as you approach retirement, there’s a pretty good chance these fellas can give you the insight that will help you make better money moves. Email info@purefinancial.com or call (888) 994-6257. That’s 888) 994-6257 or email info@purefinancial.com

34:34 – It’s Graduation Time – Should You Open a Roth IRA for Your Grad?

Hey, welcome back to the program, the show is called Your Money, Your Wealth®. My name is Joseph Anderson, I’m a Certified Financial Planning Professional or Practitioner. I think that’s what it is. I’m practicing to be a professional.

AC: Yeah. How’s that going?

JA: It’s going. It’s a process. And then I’m with Big Al Clopine, Alan Clopine. He is a CPA. It’s graduation time, Alan. It’s a good reason to discuss helping your kids become financial grownups.

AC: OK. That’s a good idea. I need more of that. (laughs) What am I supposed to do?

JA: I got a bunch of show prep here that I didn’t really prep much on. (laughs) I’ve got a couple of questions for you, Al. Should you be considering an IRA for your high school or college graduate? What do you think?

AC: I’d say yes.

JA: I think that is one of the better gifts that you could possibly give a college graduate.

AC: Especially a Roth IRA.

JA: But they need the income.

AC: They need earned income.

JA: The problem is that they’re getting full-time jobs and they still can’t fully fund a Roth, because you need at least $5,500 of income. And the jobs aren’t paying is what I’m trying to say, there. (laughs)

AC: (laughs) Full time? I think there’s minimum wage.

JA: So if I gave a 22-year-old, let’s say this, so graduation is coming up. The party’s probably this weekend, you might be driving to Little Johnny’s graduation party. If you have a couple Benjamins that you could give out, let’s say you give $5,500 to our young graduate. And so he’s got 40 or she’s got 45 years till retirement. So he’s going to plop that into a Roth IRA. And he’s going to let that grow for 45 years. All right. 45 years, that’s a long time, so you could get a little bit aggressive with that, so I’m going to give that about an 8% rate of return. So what you actually gave junior there, is $2.1 million. So if you give $5,500 into a Roth IRA at age 22, you have 45 years to age 67, full retirement age, that $5,500 growing at 8% over the next 45 years will be $2.1 million.

AC: So that’s a better gift than a car.

JA: A card, or a car? (laughs) You don’t want to give a car, that’s a depreciating asset. So you buy, whatever, a nice BMW with a bow on it?

AC: Right. I’ll tell you what, your graduates couldn’t be more thankful at the moment. “I’m getting the BMW.”

JA: It’s all about now. Not about tomorrow. You’ve got to start looking at the future self.

AC: Yeah. You know speaking of graduates, I was just in Costco and you have all these flower leis. I guess a lot of graduates wear the flower leis at graduation now.

JA: Did you?

AC: No.

JA: I didn’t either. A flower lei? That’s like Hawaii.

AC: But that’s a common thing. They had a whole bunch of them, and I didn’t even make the connection that it was for college graduates.

JA: You were thinking, wow, a lot of people are going to Hawaii?

AC: I was thinking, “a lei? I’ve gotta get one for Anne because she loves them. So I bought one. When I checked out, they said, “oh, who’s the graduate?” I go, “what do you mean? I just like leis!” (laughs) Anyway, that’s how I learned it’s graduation time, Joe. Well, I have a story as to someone that did not successfully get their kid graduated – do you hear about this? The 30-year old that got evicted by his parents?

JA: Yes, they went to court!

AC: Yeah they went to court and actually evicted him.

JA: Yes, and they won.

AC: They did. And now he’s writing a blog. (laughs) This morning I was reading – here’s what he said. He said, “Well, the reason I can’t move out is because I’ve been such a good dad.” He’s been focusing on, I guess. his son out of wed- not married, but his son or daughter. So that’s why…

JA: Were you going to say, “son out of wedlock?” (laughs)

AC: (laughs) I was, but I realized that’s my generation – that’s why I stopped, Joe. It’s like, “oh, here I go. I’m showing my age.” Anyway, so he’s a good father, that’s why he couldn’t work.

JA: Well that’s a good father figure. (laughs)

AC: But then in the next paragraph it said that he’s now banned from seeing the child. (laughs) So I guess he wasn’t doing a good job.

JA: The parents were like, “Alright Junior, can you please get out?”

AC: Yeah. Take your Volkswagen. (laughs) And they actually offered $1,100, and now he said, “OK, I don’t even want to live there anymore since you’re evicting me, but it’s going to take me a few months” is what he said this morning. A few months to move out. (laughs) Gotta give me some time. So we need your article on how to get your kid to be an adult.

JA: Well there’s a couple of things that you could do.

AC: Besides evicting? (laughs)

JA: a big thing. Yeah I got nothing. I don’t have any kids. (laughs)

AC: You have no idea. (laughs) You just make fun of me when I tell you what I did. It’s like, “Al, you need to go to parenting school.” You know, the funny thing about parenting is you learn how to parent after you’re already done.

JA: Right, “I should have done that, probably.”

AC: “Would have been a really good idea when he was 12 to do that. But at 27, I guess better late than never.” (laughs) You know, you do your best.

JA: That’s all you can do. Here’s what we’re going to do. We’re going to get into different ways to help young graduates with their financial future. First off, you gotta build up an emergency reserve.  I think sometimes they get these credit cards in college. I feel like – I was just in college, I’m like, “yeah you know, they get these credit cards college. Those damned hooligans!” You get a free T-shirt if you get a credit card.

AC: And sometimes some people hear the standard advice, which is, save three to six months of your living expenses. But when you’re just starting out, that’s impossible. So start with a couple hundred bucks and build from there.

JA: Pay off credit card debt. Here’s the deal though. You got to focus on – it’s not like, let’s just throw every ounce of extra cash to the credit card.

AC: That’s what Dave Ramsey says.

JA: You gotta build a cash reserve first because guess what happens. You don’t have a cash reserve, you throw everything to a credit card, and then something happens, and then you have no cash, and then you just go back to the credit card.

AC: You see the latest study that just came out, about half the people in America don’t have $400 for an emergency. Half.

JA: All right. So we’re talking to you, I guess. Stash $250 a month in a Roth IRA. We talked about that. $5,500, 45 years, would turn into $2.1 million at 8%. Got to get health insurance.

AC: Yeah. If you’re not employed with health insurance, you got to buy health insurance yourself.

JA: One of my good buddies is self-employed. He works as a contractor for TaylorMade, the gold company. So he tests their new equipment. He’s a really good golfer.

AC: That’s a tough job. “Let me go out of the course and test your equipment day after day.” (laughs)

JA: Right. So he’s testing stuff to see if they want to go to market with it. So he’s hooked up to all the machines. But he doesn’t have health insurance. And he was working out, he hurt his tricep, elbow and I’m just like, “dude, just go to the doctor.”

AC: Can’t afford it.

JA: Yeugh… can’t do it. That’s it for us today. Thanks for listening. For Big Al Clopine, I’m Joe Anderson, shows called Your Money, Your Wealth®. We’ll see you next time.


Now, it’s worth noting that if your grad never puts any more money in that Roth IRA, your $5,500 graduation gift earning 8% will grow to $175,562 in 45 years. That gift will be worth $2.1 million IF the grad continues to save $5,500 into the Roth each year for the next 45 years. And remember, they can add another $1,000 a year from age 50. That should help turn them into a financial grownup – and maybe they’ll be able to afford healthcare. For more on the Roth IRA, click Special Offer at YourMoneyYourWealth.com and download the free white paper.

Special thanks to today’s guest, Jonathan Clements. For more financial wisdom from Jonathan, visit HumbleDollar.com.

Subscribe to the podcast at YourMoneyYourWealth.com, Apple Podcasts, or your favorite podcatcher. If you’ve got a burning money question for Joe and Big Al to answer live on Your Money, Your Wealth, just email info@purefinancial.com, or call (888) 994-6257! Listen next time for more Your Money, Your Wealth, presented by Pure Financial Advisors. For your free financial assessment, visit PureFinancial.com

Pure Financial Advisors is a registered investment advisor. This show does not intend to provide personalized investment advice through this broadcast and does not represent that the securities or services discussed are suitable for any investor. Investors are advised not to rely on any information contained in the broadcast in the process of making a full and informed investment decision.