Katie Gatti Tassin: ‘Openness Has Been a Bit of a Secret Sauce’

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Our guest on the podcast today is Katie Gatti Tassin. She’s the creator of the Money with Katie blog, podcast, and newsletter, which was acquired by Business Insider’s Morning Brew in 2022. The Money with Katie Show podcast is consistently one of the best-performing finance-related podcasts. Katie started up Money with Katie after stints as a content designer and writer for other firms including Meta, Dell Technologies, and Southwest Airlines. She received her bachelor’s in Communication & Information Sciences from the University of Alabama where she was a presidential scholar.

Background

Bio

Money With Katie

The Money With Katie Show

Resources

Mr. Money Mustache

Mad Fientist

Wealth Planner

“The Monetization of Self: Personal Brands and the Business of Influencing,” The Money With Katie Show, podcasts.apple.com, Jan. 19, 2023.

“JL Collins: The Case for Simplicity,” The Long View podcast, Morningstar.com, April 5, 2022.

Key Financial Lessons and Investing

“4 Simple Index Fund Portfolios That Would’ve Beaten the Total Stock Market Over the Last 25 Years,” by Katie Gatti Tassin, moneywithkatie.com, Nov. 8, 2021.

“How to Navigate Your Options While Setting Up Your 401(k),” by Katie Gatti Tassin, moneywithkatie.com, Oct. 19, 2022.

“Achieving Success With Target Date Funds,” by Chris Pedersen, paulmerriman.com.

“Making Sense of Cryptocurrency,” by Katie Gatti Tassin, moneywithkatie.com, May 17, 2022.

“How to Confidently Start Investing: A Beginner’s Guide,” by Katie Gatti Tassin, moneywithkatie.com, Aug. 29, 2022.

Financial Independence

“Why Hitting ‘Half FI’ Is More Likely 75%,” by Katie Gatti Tassin, moneywithkatie.com, July 28, 2021.

“Why You Actually Need Less to Retire Early (Than in 30 Years From Now),” by Katie Gatti Tassin, moneywithkatie.com, Aug. 2, 2021.

“Why I Want to Retire Early,” by Katie Gatti Tassin, moneywithkatie.com, April 14, 2021.

Saving and Debt

“A Tale of Two Budgets: An Honest Look at My Lifestyle Creep,” by Katie Gatti Tassin, moneywithkatie.com, Sept. 19, 2022.

“Bonus Episode: Student Loan Forgiveness, Repayment, Taxes, and Inflation With a Certified Student Loan Professional®,” The Money with Katie Show, podcast.moneywithkatie.com, Sept. 1, 2022.

“How to Cut Your High-Interest Debt’s Payoff Time and Interest Paid in Half,” by Katie Gatti Tassin, moneywithkatie.com, Sept. 16, 2020.

Housing

“Hot Takes on Home Ownership: Keep Renting,” by Katie Gatti Tassin, moneywithkatie.com, Dec. 9, 2022.

“The #1 Way to Substantially Impact Your Financial Situation,” by Katie Gatti Tassin, moneywithkatie.com, June 23, 2022.

“Are Homes Actually More Expensive in 2022?” by Katie Gatti Tassin, morningbrew.com, Sept. 28, 2022.

“Does the Dream of Home Ownership Rest Upon Biased Beliefs? A Test Based on Predicted and Realized Life Satisfaction,” by Reto Odermatt and Alois Stutzer, Journal of Happiness Studies, Vol. 23, Sept. 14, 2022.

Financial Anxiety

“How to Cope With Financial Anxiety,” by Katie Gatti Tassin, moneywithkatie.com, Nov. 1, 2021.

“How Your Money Anxiety Might Actually Help Build Wealth,” The Money with Katie Show, podcast.moneywithkatie.com, Sept. 21, 2022.

Transcript

Jeff Ptak: Hi, and welcome to The Long View. I’m Jeff Ptak, chief ratings officer for Morningstar Research Services.

Christine Benz: And I’m Christine Benz, director of personal finance and retirement planning for Morningstar.

Ptak: Our guest on the podcast today is Katie Gatti Tassin. She’s the creator of the Money with Katie blog, podcast, and newsletter, which was acquired by Business Insider’s Morning Brew in 2022. Money with Katie podcast is consistently one of the best-performing finance-related podcasts. Katie started up Money with Katie after stints as a content designer and writer for other firms including Meta, Dell Technologies, and Southwest Airlines. She received her bachelor’s in Communication & Information Sciences from the University of Alabama where she was a presidential scholar.

Katie, welcome to The Long View.

Katie Gatti Tassin: Thank you. I’m happy to be here, Jeff.

Ptak: It’s our pleasure to have you. Thanks again for coming on. We want to start out talking about your story, your decision to start up the blog, newsletter, and podcast lineup called Money with Katie. What audience and what needs were you trying to address with your content?

Tassin: I started the brand with the blog in April 2020 and then expanded from there. But I really started it as a means of sharing what I was learning about money management with other women my age, because I noticed at the time that none of us really knew what we were doing, and a lot of the information that I could find was one of two things. Either it was really, really detailed but super dry, or it was so hypertargeted to women that it was almost patronizing in nature, like it was this very “Yas queen” oversimplified vibe that I didn’t really get much out of. So, I wanted to provide a resource that was really rigorous in its depth and in its research, but also entertaining and funny and relatable, because selfishly, that’s what was fun for me to make.

Benz: You went on this journey where you’re trying to build your knowledge of investing in personal finance. I’m curious to know, as you were working on that and on that path, what were the key resources that you found useful?

Tassin: My entry into the personal finance world was through the lens of the Financial Independence, Retire Early movement. So, I joke that it’s kind of like you decide you want to get into rock climbing and then you go take your first lesson from Alex Honnold. It was this very intense, extreme philosophy, but it really shaped my early perspectives about what was required to be successful with money. So, at the time, I was listening to a lot of ChooseFI. I was reading Mr. Money Mustache and Mad Fientist and these other guys that were the founders of that space, and they all have very extreme takes on the best way to achieve this goal. But from there, once I got more comfortable and once I started to understand more—reading a lot of books, and this stuff started to feel like repeat information, then I got more comfortable branching out, seeing what else was out there, and having a little bit more fun with it. But I was pretty hard-core in the beginning for sure.

Ptak: I think we want to talk more about FIRE a little bit later in our conversation. But I’m curious, had you always been interested in matters of money and investing? Were those topics you and your family discussed at home, for instance?

Tassin: Yes and no. My parents were always very open about money with me. They were supersavers. We lived in the same house my whole life. We took a total of two vacations over my 18 years at home that were not to see my grandma. My mom tracked every receipt in a spreadsheet that they had for 20 years. I think you could still probably go back and find what they spent on restaurants in February 2002. It was intense. So, they retired in their early 50s, and they just set this world-class example financially.

However, money burned a hole in my pocket. I did not inherit the saver gene. So, I really had to cultivate that intentionally because I was a natural spender and I had to unlearn a lot of my patterns around how to behave with money and really reframe the power of wealth, really, and the power of compounding. Because in the beginning, I just figured, hey, it’s a dollar I’m going to spend today or it’s a dollar I’m going to spend five years from now. What difference does it make? But that was the fundamental flaw I didn’t realize that, no, a dollar today is actually worth quite a bit more than a dollar 5, 10, 15 years from now because you can invest a dollar today and turn it into something else. So, that was the key switch that had to flip for me.

Benz: The Money with Katie podcast is often one of the best-performing financial podcasts. Do you have a sense of the types of folks who are listening and consuming your podcast but also consuming your other content?

Tassin: Weirdly enough, on the podcast front, I really don’t. I’m not sure if it’s because we just don’t have access to the right type of data. But our podcast audience is one group that in the whole ecosystem we actually know the least about them. Though I would say, judging from the reviews, I think it’s safe to say they’re typically more educated and more critical than our audience elsewhere. They expect more from the show. They have a higher standard. But it really runs the gamut. I do think that the general audience, particularly on social media and our newsletter following, they are primarily female, probably 70% female, 30% male, and majority of them are in that 25 to 34 range.

Ptak: What do you view as your key differentiators in what is a pretty crowded space of personal finance education? We started the conversation, and you quite helpfully explained your origin story that you wanted to split the difference between that real rigorous and dry content and the other content that you just weren’t responding to for various reasons. Maybe it was being patronizing. So, that’s clearly a differentiator. But what else have you found has really helped you to breakthrough?

Tassin: Our old tagline was a “personal finance blog that you actually want to read.” So, I think it comes down to making something genuinely entertaining, but like we said, not sacrificing on the substance. I think about it like a combination of depth and personality. If I’m awake, I am thinking about this stuff. I’m pretty obsessed. So, I try to bring that level of curiosity and intensity to everything that we make. And I think it’s worked well, because—and I hear this from other young women, so, I’m hopeful that this is still accurate—but what I found that I was hearing a lot, especially in the early days, was like, “I don’t care about Roth IRAs, but you get so excited about it that it makes me excited about it.” So, I think there’s some genuine enthusiasm that comes through that you can’t really fake. You either feel that way or you don’t. And I think that’s partially why some of the topics that we cover are so all over the place because I really try to only do these deep dives and cover topics that I feel genuinely excited about, because when I feel excited about it, then it’s entertaining and exciting for the audience too. So, that’s been our guiding principle. And sometimes if there’s something that we think might work and then we get into it and it’s like, “You know what, I don’t think there’s something here. I actually don’t really feel very good about this anymore.” We’ll scrap it, and we’ll do something different. But I do think that that has been a big thing for us.

Benz: Can you talk about what your business model is for the Money with Katie empire, let’s call it? Your firm was acquired by Business Insider’s Morning Brew last year. So, are you still in charge of all the content? Can you talk about that?

Tassin: I love that you called it an empire. You know how to make a gal feel special. Yes. So, I am still with Morning Brew. I was actually out there in New York with them just last week. So, that was really fun. But, yes, I still decide what we cover. I write everything, record everything.

Everything that you’re seeing on Money with Katie is still coming from me. But it’s nice now that there is a deeper well of resources that I can pull from and video editors and audio engineers and editors for the content itself. So, that’s been really, really helpful.

But as far as our business model goes, we basically have two big primary sources of income. One is advertising, so through brand sponsorships and then some affiliate stuff here and there, and then direct revenue from our flagship product, primarily the Wealth Planner. The Wealth Planner is definitely our highest-grossing product. It’s a digital tool that you can use to keep track of all of your financial life in one place. But we do have merchandise, and we have a course. So, we’re trying to beef up those other areas. But I’d say, that’s the bread and butter of the direct-revenue side. So, it’s probably 60% to 70% advertising and then 30% to 40% direct revenue from direct sales.

Ptak: I think you recently did a webcast about what you call the monetization of self, basically, building and profiting from your own personal brand. How do you decide which parts of your life and story to share with the world and which to keep private?

Tassin: Well, part of the inspiration for that episode was that someone asked me a while ago, “I get Money with Katie, but what’s Katie? What’s the difference between you and this online persona?” And I realized that there really isn’t one. I didn’t approach the divide between my online self and my actual self with any degree of intentionality because it didn’t occur to me to do so until it felt like it was almost too late. And so, in some ways, that openness has been a bit of a secret sauce because it feels like you’re learning from a real person. But on the flip side, and part of what I covered in that episode was, there’s something vaguely dystopian about having to monetize your personality and feeling like you have to put everything out there.

So, to give a specific example, my husband is a very private person. Can’t relate. But I don’t share him because he does not want to be on the internet, and that has been a good boundary area for me of we’ll talk about how much we’re spending, but people for a while thought that he was fake. It became a joke that Katie’s husband isn’t real because you never saw him. And I used to share our financial progress really openly. So, net worth updates and things like that. But I’ve pulled back on that as I’ve gotten further along and the platform has grown because my very private husband is an attorney and he was like, yeah, don’t do that anymore. Don’t put that on the internet. So, there have been things where I started out very open and then as things grew, it was maybe time to revisit this.

Benz: Can you talk about or maybe bucket the major subjects that you address on the podcast and newsletter and on your website? Can you group the type of content into some specific categories or themes?

Tassin: I would say that, broadly speaking, we tend to focus on two key areas. So, it’s either everything would fall into the tactical side, so things that you will read this, or you will listen to this, and you will walk away and there will be some action item that you can take with you. Or it’s philosophical, so there’s no takeaway. There’s nothing that you’re going to learn in this episode that came out of the tax code, but it’s going to make you think about money differently. So, within those two columns on the tactical side, we’ll talk about investing and diversification, we’ll talk about advanced tax strategies and how to pay no income taxes in retirement; how to structure a drawdown perfectly optimally for a married couple, things like that. We’ll talk about budgeting and the brass tacks of how to set up a spending plan that’s actually going to work and calculate your goals.

So, we do cover those things because they’re all very important, but we also really like to focus on the philosophical side into things that impact young people on a daily basis. So, things like the economy and student debt and the housing market and what does it mean if the Fed is trying to force a recession, what does that mean for you and how has the world changed in the last 20 years, how is your life going to be different than your parents maybe, and how is your wealth-building journey going to look different? So, like I said, if something feels really interesting to me, I feel like nothing is off limits. As long as it’s financially adjacent, I will find a way to shoehorn it into our content road map, because if I want to talk about it, I’ll find a way to talk about it. But I would say, generally speaking, it falls into one of those two broad categories.

Ptak: You often write about investing matters. How would you describe yourself as an investor and how has that changed through the years?

Tassin: When I started investing in 2018, which is an interesting time considering what came after 2018. I’m like, “Investing is easy. You get 20% returns every year. Anyone can do this.” I didn’t know anything. And I’m really thankful for people like JL Collins, who I think you all have had on before, who popularized really simple investing strategies that made me feel comfortable enough to start because it gave me the confidence that, like, “This is easy. Anyone can do this. This isn’t hard.” And in a raging bull market, everyone feels like a genius. But in a way, it was a blessing.

So, the biggest shift for me over the last couple of years has really been recognizing my own recency bias around favoring large-cap growth and then diversifying beyond it, so adding in small-cap value, emerging markets, global stocks ex-U.S. As I learned more about historical returns and the power of diversification through different economies and monetary policy regimes, I felt more comfortable branching out, and that has definitely served me well. I would say, lastly, I realized that a year or two ago, I would say that the most valuable thing that I could do was focus on increasing my income faster than I was increasing spending and prioritize shoveling as much money as possible into the compounding machine as opposed to trying to optimize for an extra 50 basis points here or there. It felt like a larger lever that I could pull was trying to increase my income and just keep that trajectory climbing and that has served me really well.

Benz: You referenced JL Collins, Katie, and we have had him on the podcast. His philosophy is to keep it super-duper simple. I think he is not even a fan of international stocks for most investors. But he is also a big index fund enthusiast. Is that your mindset, too?

Tassin: Yeah, for sure, I would definitely consider myself an index fund girlie.

Benz: Did the experience of last year change your views on anything—the way that the market behaved, and specifically that stocks and bonds declined simultaneously?

Tassin: Not really, but only because I feel like 2022 was such a genuine outlier given what preceded it. I think it would have been weirder if things didn’t totally fall apart after a global pandemic shut down the world and all of its supply chains for months. I don’t think about what happened in 2022 as invalidating of my core beliefs about how to structure a portfolio. But I do think that 2023 so far has reinforced for me just how strong our bull market recency bias was. I think it was, if anything, a very good wake-up call that 50-year-olds should not be in 100% S&P 500 portfolios, which is something that sounds crazy after what happened last year but is something that actually I think felt quite safe up until recently. I didn’t really raise an eyebrow at that. I met people in their 50s whose money managers had them in 100% S&P 500 and they were retiring in a couple of years. I think it’s exciting to me that we are entering an era that is actually historically more common, wherein bonds are back and you don’t have to take on excess risk to chase yield.

Ptak: What do you think of target-date funds? Do you think they’re a good hands-off option for people, especially those who are just starting out?

Tassin: To me, the data around target-date funds’ performance really speaks for itself. I know Vanguard has released data in the past that their investors in target-date funds pretty substantially and consistently overperform the investors who are trying to do it themselves. That said, my only criticism is that I find they tend to be too conservative. Or rather they tend to get too conservative too early. So, my personal approach has been buying target-date funds within my 401(k), where that’s the primary option, that are farther out than my actual retirement date. So, I may plan to retire in 2050, but I’ll buy a 2065. I also like the Paul Merriman 90/10 portfolio where I believe they suggest putting 90% into a target-date fund and then putting the other 10% into something like small-cap value so you can make it a little bit more aggressive. But I think generally they’re a great invention.

Benz: You referenced the period earlier on in the pandemic where we saw a lot of newer investors dabbling in pretty speculative assets. You probably encountered this with some of your peers, or perhaps some of your listeners where people were trafficking in meme stocks and crypto certainly. What were you thinking and maybe saying to your audience during that time?

Tassin: Well, honestly, I was like these people are nuts. I don’t know if I am just not imaginative enough, but I tried, really, really tried to understand the underlying value of things like bitcoin and NFTs and I just couldn’t do it. I could not square the supposed value with the price, so I just stayed away. And by the way, my husband invests in cryptocurrency. So, I say “nuts” endearingly. I’m like, OK, well, whatever, keep it to your 3% allocation or whatever it is. But I think my fear of losing money was greater than my fear of missing out, and fortunately, at least from where we’re sitting right now, in January 2023, it saved me from a very expensive mistake. I don’t know what will happen in the future, but I think it’s important to have an investor philosophy, and mine is really contingent upon do I understand why this thing has value and how it makes money? And if the answer is no, then I’d stay away. So, I stayed away.

Ptak: Many people start out in investing by buying individual stocks as you know. Do you think that’s a good way to get started in your view, experimenting, even if it maybe isn’t the most optimal way to approach investing?

Tassin: I think whatever helps you get skin in the game is a good way to start, even if you end up losing money. Ideally, of course, you would jump straight to the boring stuff and be like, yeah, I’m going to index fund and chill, but sow your wild individual stock oats if you need to. I think if that’s what’s going to get you in the game and get you comfortable with investing, then fair. And you might get lucky. I was just with my grandparents over Christmas and my grandma, she invested $1,000 in Toro stock in the 1980s and now the $1,000 is worth like $250,000. So, I was plugging it in and trying to see—it was a CAGR of like 15%, just an absolute monster. So, we were joking with her that, “Oh my gosh, Grandma Jean, you should have invested $100,000. We could have all been retired by now. We would have been able to tell people we’re old lawn mower money.” But it doesn’t work out that way most of the time. So, I think if it’s how you want to get started, there’s nothing wrong with it. But I do think the data pretty clearly points you in the direction of index funds, and I think most people eventually find their way there.

Benz: What’s your take on ESG investing—environmental, social, and governance-oriented investing?

Tassin: Conceptually, totally aligned. In practice, I fear it is mostly marketing. Beyond that, there is something about it that doesn’t quite make sense to me about fund flows. And keep in mind, dear listener, I’m just a gal with a podcast and a blog. I’m not a wealth manager. I’ve no licenses. But in order for me to divest from, let’s say, an objectionable company or industry, I am selling those shares to someone else, which means it doesn’t actually really materially affect the company. I am no longer invested, but in order for me to sell, I’m selling to another person that now owns them. So, I think until it happens at scale, I don’t know that the net effect is actually helping, but I don’t know. I would say jury is still out for me on ESG.

Ptak: When do you think it makes sense for someone to hire a financial advisor and what should they be looking for in seeking an advisor?

Tassin: I think, in 2023, most, I’ll say regular people, probably don’t need one unless your situation is relatively complex. And so, by relatively complex I would say a couple of things fall into that category: you’re a business owner, especially a business owner with employees; if you own real estate or multiple rental properties; if you have a seven-figure net worth; if you have complex insurance needs. In those cases, I would say, you should probably look at a fee-only CFP or a full-service AUM model with a very, very low fee, like 50 basis points or fewer so that they can holistically plan for you and ensure that you are not missing anything.

I don’t have an advisor, but I do pay a CPA every year to look over things for me. I am pretty dang intimate with and involved in my own financial life. I feel pretty confident in my ability to manage things myself, but it is always nice to get that gut-check from someone that has the license and has the letters after their name. I just worry about the model wherein you have the two calls per year and you’re paying 1.5% of your net worth and they’re investing you in mutual funds with high expense ratios and front-load fees. I think that era is on its way out because I think financial technology has disrupted the use case for doing something like that. But I do think fee-only CFP or full-service AUM model where it’s a relatively reasonable fee, I think there’s still definitely a place for that. It just depends on your situation.

Benz: What do you think the financial and investment industries should be doing in order to better serve younger clients? And then, maybe you can put in even finer point on it and talk about what they should be doing to serve younger female clients.

Tassin: Oh, I like that. Everything pink. I’m just kidding.

Benz: And maybe there’s no difference.

Tassin: I’ll start with the age thing. I think young investors have something older investors didn’t when they were young, and that’s widespread access to the internet and this type of information. I think they know what the opportunity cost is of paying 1% per year for fancy mutual funds that are probably not going to outperform the broader stock market over time. Because they follow someone on TikTok that showed them the math. So, it makes it a pretty easy cost-benefit analysis for a young person, and I think younger people are very aware of the compounding effects of fees.

There’s also a lot of bad information out there, and I think there are a lot of insurance salesman on TikTok that are out: “Don’t use a 401(k); don’t use a Roth IRA; you don’t want to invest in the stock market, you want universal life insurance policy.” So, I think there’s plenty of noise out there too, but between the access to information and companies like Betterment and One Finance, Wealthfront, you name it, that can really take the guesswork out of investing. I think the conclusion that I have reached is, in order for real people or real humans who want to serve young people in this space, I think it takes a few things. It’s low fees. It’s a holistic, full-service approach so that maybe you as a client do need insurance, but you probably don’t need a whole life policy if you’re 23 and have no dependents. But you may need an umbrella policy if you are worth a million bucks because you just got a bunch of ISOs from your early days at Facebook.

I think there are other things that young people still need help with that require a professional, and I think that holistic model still makes a lot of sense. And as far as targeting young women specifically, I think whether it’s earned or not, I think there is a view among young women that, well, this field is not for me. Well, there are no advisors who actually want to work with me who aren’t going to talk down to me. But young women are graduating from college at a rate of 2 to 1 to young men and they are slowly overtaking the workforce. So, when you think about who’s up-and-coming affluent, who’s high-earner-not-rich-yet, it’s a lot of young women. And so, I think it’s a huge market that you have to take seriously. And in order to serve them in a way that they’re going to be willing to pay for, I think you have to bring more to the table than just investment advice, because they in many ways rightfully feel as though they can get a diversified portfolio elsewhere for free or almost free.

Ptak: And so, what are those other things that somebody should bring to the table in order to convince younger women that they should entrust themselves to the advice that they’d be receiving, or otherwise receive services from them? What else do you think those things are?

Tassin: I think it comes down to thinking about the parts of their financial life that they probably would not want to spend the time digging into in order to get the right answers. So, for me, that’s taxes, that’s insurance, that’s estate planning, that’s some of the tax implications that can come along with real estate. I think things like that would really set someone apart. And I’m sure that that is pretty par for the course for some the firms that are already offering everything. But I think, to me, that is a bundle of services that would be worth paying for. Even to me, someone that feels like I know a lot of this stuff already, I feel well-versed and confident in a lot of this stuff. But I do think there’s something to be said for the audience that maybe they’re making good money, they’re highly competent, they’re very interested in building wealth, but they’re also very busy, and so they are willing to offload some of that responsibility and time to somebody else. I think that’s the target demo. But I don’t know. At the same time, I also stand by the fact that no one is going to care more about your money than you do. Even the best advisor in the world, or the best CFP in the world, ultimately, it’s still your money and you still need to be highly aware of what is going on.

Benz: You referenced earlier on in the conversation, Katie, your introduction to this space really was focused on the FIRE movement, the financial independence, retire early movement. And you’ve said that you want to be at the work-optional or financially independent stage by the time you’re 30. So, I’m wondering why or how you set that goal and how will you know if you’ve achieved it? How will you know whether you have enough?

Tassin: Well, it’s funny, because the finish line just keeps moving. Every time I reach it, I’m like, well, we should push it out just a little bit more. I think it’s a goal for me mostly because of fear, if I’m being honest. I want to feel by the time I’m 30 years old I can take my life in any direction without being concerned about how much that direction is going to generate an income. I would rather grind it out in my 20s, set myself up for life, and then spend the next 20 years maybe having a family, starting another venture, taking time off, doing all three, I don’t know, whatever it is. I never want to feel trapped. And I think the fear of feeling trapped in a situation that I don’t want to be in is a big, big motivator for me. So, right now, I think I have a number in mind that I think is realistic to hit by 30 if I stay on my current trajectory. I’m 28 now. So, it would be end of next year or early 2025. But I don’t know. So far, I had a number before and the goal post moved. I think that’s going to be another challenge to contend with once I get there.

Ptak: You’ve talked about how you and your husband have managed to save a really high percentage of your salaries. How have you managed to do that?

Tassin: Also fear. Things have been going really, really well for me in the last couple of years. But I realized that that will not last forever. Just because I’m a high-earner now doesn’t mean that I will be next year or the year after that. And so, living close to the edge never really felt worth it to me. We could live in a fancier house. We could drive fancier cars. We could wear fancier clothes. But I think the price that I would be paying for those things would be my piece of mind. And right now, our save rate hovers around 60% or 70%, and that feels really good to me because I know that I have a lot of margin. And we’re still able to live a really great lifestyle, but I think having that margin is important to me.

Benz: You recently got married. You mentioned that you and your husband aren’t on the same page with respect to disclosing personal information. But are you on the same page with respect to money matters and especially the goal of saving so aggressively?

Tassin: He’s actually probably more aggressive than I am in his frugality. I’m the one that’s more apt to be like, “Oh, let’s splurge, we can afford it.” And he’s the one who would be like “But who cares, we don’t need it; why would we?” So, I think we balance each other out. He’s also more aggressive in investing. Like I said, he does invest in crypto. He’s been investing in bitcoin since 2012 or 2013. So, he has been bought in for a long time on that asset class where I was like, nope, not interested. But it’s funny because when I found the FIRE world, we had just started dating. And I really got him into it, too. He really loved the gamification of how cheaply can you live, and so he really liked it. And then, when we started earning more money, I was like, “All right, I’m ready to start going on trips and going out to eat.” And he was like, “Wait, but no, we have all these goals.” So, I think that was an interesting shift in the dynamic of, no, we’re still going to be relatively extreme, but we’re going to do it in a more comfortable and sustainable way because now we can. And so, it’s been good that he does see things the same way. I think it would be much more difficult if we were on totally different pages.

Ptak: For people who might be listening, how would you suggest they balance the things that they might like to do when they’re young, like travel, alongside the quest to save more for their future?

Tassin: To me, this is one of those things where it’s a balance that you’ll probably never feel like you’ve achieved it perfectly, but it’s always something that’s worth fighting for. There are certain things that you will be able to do when you are 23, like hostile hop around Europe and stay in terrible accommodations and stay up all night and take red-eye flights and whatever that you’re just not going to want to do when you’re 43. So, I think take advantage of those experiences while you can. They are pretty cheap after all, and you have the energy, the time, the back for it. The types of things where if you don’t do them when you’re 22, you’re probably never going to do them, but balance that with realizing that you are probably also going to want to go to Paris when you’re 43, not 23, and that time you’re probably going to want to stay somewhere really nice with the tempurpedic mattresses, and you’re going to want to eat at great restaurants, and that costs money. And if you start saving and investing at 23, you will have the money to do that. So, I think it’s kind of a false choice that we’re presented with where it’s like should I yolo it up and blow it all now when I’m 24 on bottle service and clubs or should I never leave my house and retire a multi-, multimillionaire at 50? It’s like you can do both, you can’t try to take the metaphoric 43-year-old trip when you’re 23, because that probably would break the bank. So, I think it’s about honoring the life stage you’re in and giving your future self a shot at honoring that stage too.

Benz: Social media contributes to our culture of getting and spending. What advice do you have for people to avoid falling into the trap of overspending and feeling that need to flaunt the trappings of material wealth?

Tassin: It’s a hard one because it’s so endemic to our culture. But the best thing that I’ve done for myself as a material girl, a reformed material girl, as I like to say, is to contextualize how much money these tastemakers have. So, for example, Kylie Jenner, she’s a very famous Gen Z icon and she has this bracelet stack that she wears at any given time by the jewelry designer, Cartier. She probably has six to eight of these things on at once, and these are, mind you, $7,000 to $10,000 apiece. But she turned them into almost this casual designer item, which is ridiculous because it’s like wearing a Honda Accord on your wrist. But Kylie Jenner is worth a billion dollars. So, I did some quick proportionality math one day when I was like, “Oh, should I get me one of those bracelets? It’s a pretty cute bracelet.” And I realized that her buying a Cartier bracelet as a percentage of her net worth is like me buying something that costs $4. $4. My Starbucks order is a larger percentage of my net worth than Kylie’s $10,000 Cartier bracelet, and that really put things into perspective quickly for me.

And I’d also argue it’s probably a good use case for why we should tax people like Kylie Jenner more aggressively. But I digress. I think it’s really important, though, to examine who you are admiring and maybe trying to emulate. And then, sometimes you just got to put yourself in check and be like, that’s not where I am though; I’m not on her level. I can’t flex like that on people. I need to focus on getting the Starbucks order in line, not how I’m going to get the Cartier bracelet.

Ptak: One subject of debate among personal finance people is whether it’s important to have a budget or whether people should reverse budget—set a savings target and then make sure their spending conforms to that target. How do you think people should do it?

Tassin: I’m hesitant to say should anything, but my general perspective is that what gets measured gets managed. And I would consider myself an extremely financially fluent person and I overspend when I stop tracking. I think humans are just not innately very good at eyeballing this kind of stuff. So, I do think that there is an extent to which you can dial up or down how granular you’re getting for your personality and for your preferences. But I definitely think the “Oh, you don’t need a budget.” I think it’s a slippery slope for 99% of people. That said, I do think it’s a psychological game that you have to play with yourself. Anytime you feel really restricted, you are going to lash out and overcorrect. It’s just human nature.

So, it can be valuable to have certain categories where you are going to give yourself free rein and categories where it’s practically impossible to overspend to a large degree just by nature of the type of purchase. So, a popular example is coffee. Even if you buy an expensive coffee every single day, you’re probably never going to spend more than, I don’t know, $200 a month on coffee. That can be a relatively inexpensive psychological win that will help you stay on track in areas that are a little bit bigger or trickier. But I tend to skew more to the side of when in doubt, you should probably be tracking it. Do I think Jeff Bezos needs to monitor his grocery spend? No, he owns Whole Foods. He’s probably fine. But for the majority of us, we’re going to be well-served by knowing where the money is going every month.

Benz: Many people are emerging from college with staggering amounts of student loan debt. How would you suggest that people balance the loan pay down with investing for the long haul?

Tassin: This is a tough one, and I would add historically unprecedented. Young people starting out life with a mortgage-sized amount of debt over their heads with no asset to offset that—we’ve never really seen that play out before. So, I do have a lot of empathy for people that are in this position. I’d say, tactically, the first thing I would look at the interest rate, and I’d say, if you’re paying down a loan with an interest rate of 3% to 4%, you have relatively cheap debt; I wouldn’t rush it. I would make your minimum payments and then direct any excess investable income to a more productive path, like investing in the stock market, or even right now T bonds, or real estate, or whatever it is that you feel best fits your goals.

But beyond that, debt can be really, really psychologically burdensome to people. So, I think there’s an element of this that’s if you’re on this journey, it can be helpful to really celebrate and gamify the progress that you’re making. So, in the Wealth Planner, we have a debt-payoff section in the “net worth” tab where every month you’re supposed to go in and actually record the new balance and watching it get smaller as your net worth gets larger is super intoxicating. So, I would recommend determining what portion of your income every month is going to go to work for you making your net worth bigger, whether that is via investing, whether that’s paying down debt, whether it’s doing both at the same time, making sure that there’s a specific portion of your income that increases your net worth because you are deserving of financial progress and you should also benefit from your hard work, not just your employer or the companies from whom you are purchasing things. You should be directly benefiting from that labor as well, and this is a really direct way to make sure that that happens.

Ptak: Wanted to ask you about housing. I think you said that one of the biggest money myths is that buying a home is a good investment. Why are you unconvinced that’s the case?

Tassin: I feel like anyone over the age of 40 right now is like, “Oh, she doesn’t know anything.” But I think to me it’s really simple that your cost basis matters when you’re talking about what makes a good investment versus a bad one. And simply put, houses right now are no longer cheap. The stock market isn’t cheap either, by the way, but you can dollar-cost average into a stock market, and you cannot dollar-cost average into a house. So, you lock in the price that you pay. I think we tend to underestimate how much we’re going to spend as homeowners, how much it’s going to cost to maintain a property, and we overestimate how much joy it’s going to bring us.

So, on the latter point, there was a 2022 academic paper from the Journal of Happiness Studies—I can’t believe that’s a thing, but it is—that examined measures of subjective well-being in homeowners and in tenants, and they found that homeowners for whom the purchase of the home is the main reason that they moved, on average, systematically overestimated their long-term satisfaction gain of living in that house. So, it gets back to this idea of extrinsically oriented versus intrinsically oriented life goals and how we tend to have biased beliefs about what’s going to make us happy.

But on the former point, this one is a little bit easier to assess mathematically, and I believe that assessing it mathematically is crucial in something that a shockingly small percentage of Americans do before they dig down deep for the down payment because housing as a narrative is just gospel in the United States. But the median home in the U.S. today is around $450,000 per FRED data, and with mortgage rates hovering around 7%, affordability is pretty much at an all-time low. And we tend to assume that no matter what, no matter how much the house is cost, no matter what the interest rates are, it’s always going to be net cheaper than renting. But that’s just not the case. It is such a hyperlocal equation that sometimes renting and investing the cost difference between your price to buy and your price to rent is going to get you net further ahead than if you had purchased.

So, my rule of thumb and the way that I like to think about it and the way that we will approach the situation in the future is, I’m going to look at my price to rent ratio in my area as a gauge for whether or not the rental market or the housing market has been hotter in recent years, then compare my unrecoverable costs. So, right now, we live in a strange market. I can rent a $1 million home for $3,000 a month. But if I were to buy a similar house on my street—and I know because I looked into it and I tried—I would have had a monthly PITI of around $6,500, roughly $5,000 of which would have been interest, taxes, and insurance. So, in that case, my unrecoverable costs of owning are about $2,000 a month higher than my unrecoverable cost to rent. So, obviously, in that scenario, you can then flesh that out and say, well, the rental market is obviously going to keep going up, my fixed housing expense will stay the same. How many years would I have to live here for the rental market to eclipse my monthly payment? And in our case, we were going to be long gone by the time that would have happened.

So, it’s not to say that real estate is no longer a good investment. I think that’s a laughable statement. However, I do think young people are sold a bill of goods about what buying a house means that often falls short of expectations. And so, I’m always just very encouraging of running the numbers of really understanding what you’re getting yourself into and making sure that you are not lowballing the estimates for how much it’s going to cost, because when the HVAC goes out or when the washer dryer units go kaput, all of that is going to be on you, and I think a lot of new homeowners, it’s a jarring shift that you just want to make sure you are totally ready for, and you have the cash available to handle those things when they come your way.

Ptak: And so, it sounds like for you personally, you haven’t foreclosed the possibility of homeownership in the future, but your message is, be rigorous, exacting in the way you run the numbers and evaluate whether it’s a sensible investment or not, right?

Tassin: Absolutely. And I think for me, we will probably wait to buy until we know we’re settling in one area for at least 10 years and having kids. I think even if buying ended up being net more expensive, I still would probably be OK with it if we were going to have children. Because I think in that case, it’s a lifestyle that you’re purchasing and you’re trading flexibility for stability, and in that case, I think it makes a ton of sense. But I think for the two of us and how much we move around, and the fact that we don’t have any kids, renting fits our lifestyles well and it just so happens that we’ve only ever lived in areas where the house prices far exceed what the rental market has done in the last few years.

Ptak: I think you’ve said that you think your generation is especially anxious about money, that life is especially precarious from an economic standpoint. Why do you think that’s so?

Tassin: I do think so. So, I’m working on a piece right now about the vast differences in financial standing amongst the millennial generation specifically. It is a very, very weird cohort in that the top 1% to 5% of millennials are doing extraordinarily well, better than their parents by a long shot. But the vast majority are doing worse. There’s really no millennial middle class. And I think we can point to a few reasons for that. I think the obvious discount here is age—that to be middle class you have to earn a certain income or have a certain level of wealth. And if you’re in your late 20s, you may not be there yet. That’s fine. But the majority of millennials are in their late 30s. So, I think we can point to a few reasons for that.

Number one is student loan—that you have this huge cohort coming out of basically starting their careers with this vast amount of debt; the housing market being at all-time unaffordability; and then wage suppression over time. Median wages over time have not kept pace with the GDP growth and housing and education costs have dramatically outpaced it. So, it’s just a math problem at that point. Like I said, we’ve never seen an entire generation enter their careers with that type of liability on their balance sheets without the asset. So, especially now that we’re exiting the ZIRP years, I think for our generation the saving grace is going to be focusing on increasing income, marketable skills, and keeping the save rate high. That to me is the only way out and accepting that our generation is going to build wealth in a way that may not look like what it did for our parents. A home may genuinely be out of reach for you right now.

I was doing some data-digging for an episode of our show where we realized that the median home value even with an interest rate of 12% in 1985 when many of the boomers were of the age as your median millennial is now, it still was going to cost about twice as much to put 20% down today as it did back then, all else held equal. So, it stands to reason it’s going to take you about twice as long. And I think the saving grace is that to my earlier comments about financial technology, our parents didn’t have apps on the super computers in their pockets, or they could buy a broad-based ETF for free. We have way more access to the stock market, the greatest wealth-building machine of all time than ever before. But in order to really leverage that and take advantage of it, you have to have the discretionary income to do so. And so, I think finding ways to market yourself and earn more more quickly and to get skin in the game is to me the most viable option.

Ptak: Well, that’s sage advice, Katie. This has been a very enjoyable conversation. Thanks so much for sharing your insights with us.

Tassin: Thanks, Jeff. It was a pleasure.

Ptak: Thanks for joining us on The Long View. If you could, please take a minute to subscribe to and rate the podcast on Apple, Spotify, or wherever you get your podcasts.

You can follow us on Twitter @Syouth1, which is, S-Y-O-U-T-H and the number 1.

Benz: And @Christine_Benz.

Ptak: George Castady is our engineer for the podcast and Kari Greczek produces the show notes each week.

Finally, we’d love to get your feedback. If you have a comment or a guest idea, please email us at TheLongView@Morningstar.com. Until next time, thanks for joining us.

(Disclaimer: This recording is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of recording. Such opinions are subject to change. The views and opinions of guests on this program are not necessarily those of Morningstar, Inc. and its affiliates. While this guest may license or offer products and services of Morningstar and its affiliates, unless otherwise stated, he/she is not affiliated with Morningstar and its affiliates. Morningstar does not guarantee the accuracy, or the completeness of the data presented herein. Jeff Ptak is an employee of Morningstar Research Services LLC. Morningstar Research Services is a subsidiary of Morningstar, Inc. and is registered with the U.S. Securities and Exchange Commission. Morningstar Research Services shall not be responsible for any trading decisions, damages or other losses resulting from or related to the information, data analysis, or opinions, or their use. Past performance is not a guarantee of future results. All investments are subject to investment risk, including possible loss of principal. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position, investment objectives and risk profile before making any investment decision.)