Managing Money in Your Marriage and How to Build Wealth Without a Side Hustle
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
Sean Pyles and Elizabeth Ayoola tackle common wealth-building myths and financial planning challenges in this episode of NerdWallet's Smart Money Podcast. (01:41) The hosts deliver "money hot takes," with Elizabeth debunking the notion that business ownership is the only path to millionaire status, while Sean argues that Roth IRAs are overrated compared to Roth 401(k)s. (14:36) They then interview married couple Naomi and Andrew, who are navigating how to best allocate an extra $1,430 monthly after completing daycare payments.
- Main themes include wealth building strategies, retirement account optimization, and couples' financial alignment on goals and priorities
Speakers
Sean Pyles
Sean Pyles is a host of NerdWallet's Smart Money Podcast and serves as an expert in personal finance topics. He brings extensive experience in financial journalism and helps listeners navigate complex money decisions with practical, actionable advice.
Elizabeth Ayoola
Elizabeth Ayoola is a co-host of NerdWallet's Smart Money Podcast and a Certified Financial Planner (CFP). She brings personal experience as both a small business owner and traditional employee, along with expertise in retirement planning and investment strategies for late-starter savers.
Key Takeaways
Business Ownership Isn't Required for Wealth Building
Elizabeth challenges the prevalent social media narrative that entrepreneurship is the only path to millionaire status. (02:41) She emphasizes that consistent investing from a traditional 9-to-5 job can effectively build wealth over decades, pointing to Fidelity's data showing 544,000 401(k) accounts with balances over $1 million. This takeaway is crucial for professionals who feel pressured to start businesses but would benefit more from focusing on skill development and maximizing their employment income for investment purposes.
Roth 401(k)s Often Outperform Roth IRAs
Sean argues that Roth 401(k)s are superior to Roth IRAs due to higher contribution limits and no income restrictions. (05:38) While Roth IRAs cap contributions at $7,000 annually for those under 50, Roth 401(k)s allow at least $23,500 in contributions without income limitations. This strategy particularly benefits high earners who want tax-free retirement income but are restricted from traditional Roth IRA contributions.
Align Financial Goals Through Shared Values
Naomi and Andrew demonstrate the power of establishing core values as a foundation for financial decisions. (15:01) Their weekend retreat to identify five shared values—including generosity, margin, and wisdom—provides a framework for making money decisions together. This approach helps couples move beyond surface-level disagreements about spending to deeper conversations about what truly matters to them as a partnership.
Emergency Funds Should Reflect Crisis-Mode Spending
When calculating emergency fund needs, couples should consider their bare-bones budget rather than current lifestyle expenses. (26:09) Elizabeth explains that in a true emergency, families would cut back on dining out, entertainment, and even retirement contributions. This reframes emergency planning from maintaining current lifestyle to ensuring basic survival, often requiring less savings than people initially think.
Multiple Financial Goals Can Be Pursued Simultaneously
Rather than tackling financial priorities sequentially, families with surplus income can allocate funds across multiple goals. (28:04) Elizabeth advises that Naomi and Andrew can simultaneously boost emergency savings, increase retirement contributions, fund their child's education, and save for home improvements with their newfound $1,430 monthly surplus. This parallel approach prevents analysis paralysis and maintains momentum across all important financial objectives.
Statistics & Facts
- According to Fidelity Investments, 544,000 of 24 million participant accounts in 401(k) plans had balances over $1 million in 2024. (03:46) This statistic was shared by Elizabeth to support her argument that traditional employment can lead to millionaire status through consistent retirement investing.
- Naomi and Andrew currently save $1,430 per month for daycare, which represents their second-highest monthly budget line item. (23:18) This significant expense will soon become available for other financial goals, demonstrating how major life transitions create opportunities for financial optimization.
- The couple currently contributes 17% of their combined income toward Roth accounts and 401(k)s, with a total retirement balance of $515,000 at ages 36 and 40. (27:27) This puts them on track to retire comfortably at 65, illustrating successful early retirement planning.
