Our regular listeners know by now that on the HerMoney Podcast, we love to challenge preconceived notions, buck the status quo, and even break some barriers from time to time. But the truth is that we’re only able to do all that today because of the tireless work of women who came before us — countless generations of hard-working, hopeful, goal-driven women just like me and you paved our way. Their efforts were often ignored, or swept under the rug, and in many cases, the credit for their triumphs was handed to men. There’s a wonderful quote by Virginia Woolf that has always stuck with me: “For most of history, ‘anonymous’ was a woman.” But thankfully it is now 2020, and we are closer than we’ve ever been to pay parity and gender equity, and every day it seems the world is waking up a little bit more to celebrate the genius of women.
This week we were honored to sit down with bestselling author and journalist Janice Kaplan, whose new book, “The Genius Of Women: From Overlooked To Changing The World,” details how generations of women have broken down seemingly unshakeable barriers, and the powerful forces that have rigged the system against us for centuries. Many of you may know Janice from her previous bestseller, “The Gratitude Diaries,” and she also spent many years as the Editor-In-Chief of Parade Magazine.
In this episode, Jean and Janice talk about the traits that many female geniuses share. Janice talks about their common thread of positivity, and how they are able to “put blinders on to bias.” What is it about facing the world in a positive and upbeat way, rather than in a negative and fearful one, that has helped to set them apart?
Janice discusses what it means to find your passion, and how it’s okay if you don’t know what that is just yet. “We put a lot of pressure on people to know what they’re passionate about,” she says. “But finding your genius is about finding what you care about, and finding the place where you think you can make a difference, and that’s going to be different for everyone.”
Jean and Janice break down the concept of what it means to have a “negative radio” playing in your head, and how that endless loop of destructive self talk can stop us from pursuing our dreams. They dive into what it is about genius women that gives them the confidence to blow through the negativity, and do what they want to do. The pair also discuss how we can each find our own area of genius — our own “superpower”— and be as strong and as vibrant as we possibly can be.
In mailbag, Jean and Kathryn tackle a question on high yield online savings accounts, and whether these accounts are as secure as one from a traditional brick and mortar bank. They also answer a question from a listener who is looking to open a 529 savings account for her child, but is unsure if she should go with the New York State fund, or the independent fund. Lastly, we dive into a question from a listener wondering about the best place to save $100,000 over the next 5-6 years, while keeping most of the money liquid. In Thrive, Jean discusses personal loans and whether one might be right for you, particularly if you’re looking to pay down high interest rate debt.
Janice Kaplan: (00:03)
For women, being great at what you do is just the start. You have to speak up. You have to make sure you get noticed. Turn up the volume on what makes you special and what makes you different. Stop being afraid of who you are. Go ahead. Recognize who you are, what your passions are and pursue those.
Jean Chatzky: (00:28)
HerMoney is supported by Fidelity Investments. We want you to demand more from your money. Start by knowing what you own and what you owe. We’ll help you take the next step at Fidelity.com/demandmore. HerMoney comes to you through PRX.
Jean Chatzky: (00:44)
Hey everybody, it’s Jean Chatzky. Thank you so much for being with me today. I think our regular listeners probably know pretty well by now that one of the things that we love to do on this show is challenge your preconceived notions to buck the status quo, to break some barriers from time to time. And let me just say it’s an honor to be able to do that with all of you, because the truth is that we are able to do what we do here on an everyday basis because of the millions of women who came before us, because of the countless generations of hardworking, hopeful, goal-driven women like me, like you who paved our way. And yet many of their efforts are still unsung. They were ignored, they were swept under the rug, and in many cases the credit for their triumphs was handed to, yup, men. There is this wonderful quote by Virginia Wolf that has always stuck with me. She said, for most of history, anonymous was a woman. Well, no more. It is 2020. We are closer than we have ever been – we’ve still got a way to go – but we’re closer than we’ve ever been before to pay parity to gender equity. Everyday it seems like the world is just waking up a little bit more to celebrate the genius of women. And so I’m very, very happy to have with us today New York Times bestselling author, journalist Janice Kaplan. She’s got a new book, just came out called The Genius of Women: From Overlooked to Changing the World and it details how these generations of women have broken down these seemingly unshakable barriers and the powerful forces that have, yes, rigged system against us for so long. Many of you may know Janice from her previous bestselling book, The Gratitude Diaries, and she also spent many years as the editor in chief of Parade magazine. Welcome.
Janice Kaplan: (03:13)
It’s a pleasure to be here. Thank you.
Jean Chatzky: (03:15)
What was it like to write this book? Where did the idea come from?
Janice Kaplan: (03:21)
Well, I’ve always been interested in stories about women and women’s success, but then a friend of mine who’s a pollster came to me with a survey he had recently done and he was stunned by it because it had this unbelievable number, which was that 90% of Americans said that they thought geniuses tended to be men. 90%. You can’t get 90% of people to agree that they like ice cream. And we started talking about that and another of the questions that he had was he asked people to name a female genius. And the only name virtually that anybody could come up with was…
Jean Chatzky: (03:55)
Janice Kaplan: (03:56)
Right, right. There you go.
Jean Chatzky: (03:57)
She was an answer on Jeopardy yesterday.
Janice Kaplan: (04:00)
There were a few Rosalind Franklins thrown in also. And so I started to wonder, what’s the story here? Have there really not been women geniuses or have we just not noticed them?
Jean Chatzky: (04:11)
Can I go back to that 90% for a second. 90% of everybody? 90% of women said that geniuses tended to be men?
Janice Kaplan: (04:18)
It’s amazing, right? The survey was completely balanced between men and women. And the only difference was it was practically statistically insignificant. It was about a 1% difference. And that’s very striking because we like to blame men for stuff. Right? It’s much easier to say that it’s all men’s fault. But the truth is that very often as women, we undermine ourselves. We don’t give ourselves the opportunities. We back off our success long before anybody pushes us over the edge.
Jean Chatzky: (04:48)
I have to say, I found a little bit of the same in writing Women with Money. When I looked at studies of competence, perceived competence with investing, perceived confidence with finance, perceived competence in and around money, people, men and women, pointed to men. And it’s so disheartening.
Janice Kaplan: (05:08)
Well it is and I think it’s particularly disheartening because we’re in an era now where we tell girls they can be anything, right? We can walk down the street and there are all these little girls wearing their “girl power” tee shirts and their “the future is female” tee shirts. But what does that mean if really deep in our heart of hearts, we think they can’t be geniuses or they can’t be good with money, or the messages that we’re sending are really very different.
Jean Chatzky: (05:34)
What does it mean to be a genius?
Janice Kaplan: (05:36)
You know, that’s a great question and it’s obviously where I started. And I think we tend to think of genius as a fixed state, right? You either are a genius or you aren’t a genius. It’s a natural condition. And early on in my research I met a Cambridge professor named Charlie Jones and as we were having lunch, I asked him the question, and I won’t try capture his wonderful English accent, but he sort of looked up and he said, genius, I guess that would be the place where extraordinary ability meets celebrity. And I thought it was a wonderful answer. He’s an old school academic. He did not mean celebrity in a Kardashians sense. He meant simply being noticed. And for so much of history, and frankly up to this very moment Jean, that you and I are talking, women have often had half the equation, which is they’ve had the extraordinary ability but they haven’t had the celebrity meaning they haven’t been noticed. Their work hasn’t been recognized.
Jean Chatzky: (06:32)
Do you think having gone through this research, and I know you did a ton of it because you are a reporter at heart and you talked with neuroscientists and psychologists and Nobel Prize winners, do you think a genius is all encompassing or do you think, can you be a genius in one area of your life? Could you be a fashion genius or a basketball genius or a communications genius? Or does it have to be all in?
Janice Kaplan: (07:01)
I think you definitely can be a genius in a particular area. And one of the things that I enjoyed in meeting the current women, who I decided to define as geniuses, were just how wide ranging and interesting they were. And so many of them were married, they had kids. We would come in and my expectations of what a genius would be, I think all of us picture a genius says Albert Einstein, right? You’ve got to have the crazy hair. You gotta have them not focused on anything. And one of the very first women that I interviewed was an astrophysicist at Princeton, a tenured professor named Joe Dunkley, who is barely 40 years old. And she opened the door for me to her office and she was this, forgive me for a stereotype here, she was this incredibly attractive, charming, lovely woman who invited me in and offered me tea. And I thought of that old Gloria Steinem expression. Remember when Gloria Steinem at her 40th birthday, she was told, you know you don’t look 40. And she said, this is what 40 looks like. We have been lying for so long. Who would know? I thought the same thing. I looked at her and I thought, this is what genius looks like. We’ve been picturing Albert Einstein for so long. Who would know?
Jean Chatzky: (08:13)
So how did you pick them? How did you decide who typifies genius these days and where to focus your time?
Janice Kaplan: (08:25)
It was very wide ranging. I interviewed all sorts of different people. Obviously there were people like Francis Arnold who won the Nobel prize in chemistry a year ago. I spoke to the first woman who was a professor of music at Oxford. I was struck that here we are now 2020, it was 2019 when I was doing the research, but here we are now and over and over again, the women I interviewed were the first in their field. And it seems like we should be well beyond that, but we’re not. And so it was interesting to find how many women were able to break barriers and had done so.
Jean Chatzky: (09:05)
What did they, these women in different fields, what did they share?
Janice Kaplan: (09:10)
Genius by its definition means that you’re an individual and you’re unique. But it’s a good question because there were many things that emerged and one of the things was that they were incredibly positive. And of course they had faced problems and barriers and difficulties, but often they just put on blinders to bias. They didn’t even see the problems that they had confronted. That positivity, I mentioned Francis Arnold who won the Nobel Prize, said to me that if she could say one thing to young women, it would be to face the world in a positive and upbeat way rather than a negative and fearful one. And I heard that over and over again. This group of women who had overcome so much often were probably the least complaining of any women I had ever met. And I think you have to do that. I think you have to just go ahead, forge ahead. When you get to the position where you can try to change things and where you can try to change the structural problems that we certainly have, go ahead and do it, but until then just plow ahead.
Jean Chatzky: (10:18)
I want to talk about what those of us who are not geniuses can learn besides this desire to be resilient, which is I think what you’re describing, to be able to forge ahead from these current and former geniuses that you studied. But before we get there, let me just make an important note reminding everyone that HerMoney is proudly sponsored by Fidelity Investments. What if you could demand more from your money? What if you could make your savings work as hard as you do? And what if that helped you reach your financial goals faster? It all starts with a financial checkup and an understanding of what you own and what you owe. And from there we’ll work with you to evaluate your investment options and different ways to grow your savings. And you can get started at Fidelity.com/demandmore. I’m talking with Janice Kaplan, New York Times bestselling journalist and author of the new book, The Genius of Women. So you were saying that you found that in every generation these women had managed to overcome obstacles, to get where they are, to try to continue to go where they want to go. Besides being able to plow through the noise and the barriers, how else did they accomplish this?
Janice Kaplan: (11:42)
I started off thinking that I was writing about genius women and I realized that I was writing about all women. So yes, it’s a great question because I do think that there’s a lot that we can learn. Let me give you an example. I spoke to one woman, this is a financial show. I spoke to one woman in finance who had been a managing director at Goldman Sachs and that was in private equity and she grew up in a small town outside Milan where almost none of the women even went to college, let alone work. They just went off and got married and she said she just knew from a very young age that she wanted to have a big life. And she figured out the steps of what it was going to take for her to have that big life. And she did it and she was wonderfully joyous. She’s also married, she has three kids, and I think that’s probably the first step. Knowing what you’re passionate about, knowing what you care about, knowing what’s important to you, and that’s going to be different for everybody. She also talked about the fact that for women, being great at what you do is just the start. And I think all of us know that, but her idea again was that you have to speak up. You have to make sure you get noticed. Turn up the volume on what makes you special and what makes you different. I teased her because she was wearing this big beautiful scarf when we met and I commented on it and she said, well, I’m Italian, I get to do that. But then as we talked further, there was actually a seriousness about that and she said she used to try to hide that side of herself, that she’s very feminine and flamboyant and then she realized that’s who I am. That’s what makes me special. Why not play up what makes me special and focus on that. And I think that’s a lovely lesson that we can all take. Stop being afraid of who you are. Go ahead. Recognize who you are, what your passions are and pursue those.
Jean Chatzky: (13:30)
That is really hard to do. I’m thinking about the fact that, I’ve heard from a number of our listeners, but also some of the guests on this show, this commonality of having a negative radio playing in your head. That as a woman it is really, really common to have this endless loop saying you can’t or you shouldn’t, or well if you do go down that road, people are going to look at you not in a nice way. And those things tend to stop us. What is it or was it about these genius women that gave them the confidence to blow through that radio?
Janice Kaplan: (14:14)
I can’t say where that came from in each of them. I think for a lot of them, a lot of them talked about their families and having grown up with positive role models and having grown up, often it’s just that one person in your life who believes in you. Sometimes it was a professor, sometimes it was a parent, but the whole world is not going to support you no matter who you are. And particularly if you’re a woman. So I guess there’s a little bit of get over it and realize that, but it does really help if there is that one person who is telling you that you can go ahead and make it. I spoke to Anne Wojcicki who is the CEO who started 23 and Me. She talked about growing up on the Stanford campus with what she described as a bunch of misfit professors who didn’t care about fitting in and she also talked about how important that was that she never cared about that. And also something very interesting was that she said that the boys and girls in her class were always treated the same. That her study group in high school was half boys and half girls. And I think that people who are raised with the girls aren’t something different. Girls don’t have to stay away from the boys, see themselves as part of the world rather than outsiders, have a much better ability as they get older because it’s pretty shocking that we consider half the population, women, to be outsiders. And I think that idea of integrating early on is a really important one.
Jean Chatzky: (15:40)
I always think back, I had a second grade teacher who told my mother I had abysmal handwriting. I’m a lefty. I never sort of grasped the pencil correctly. I don’t know what it was, but my handwriting was never legible. And this second grade teacher told my mother that I would have a secretary and my mother told me that I would have a secretary or an assistant or whatever it was. But that one little push that it would all be okay, I think made a big difference in my life even though I was only eight years old. And so I hear what you’re saying about it being one person. It can be a single individual who just believes in you enough to give you that confidence in yourself. And I think maybe we all need to look for that person no matter what age or what stage we’re at.
Janice Kaplan: (16:29)
I love that story, also because it was something that gave you a new view of yourself. Right? And I certainly learned this in writing The Gratitude Diaries, that it’s never events that make us happy or not, but what the attitude is, how we perceive them, what the perspective is we have on them. Your mom could’ve come back and told you you have to improve your handwriting or you will never succeed, but instead it was this doesn’t matter. You’re so good at other things, Jean and somebody is going to help you with this. This is irrelevant. What a wonderful gift that is to be able to do that. So yes, I think that if we can find those positives and find those positives in ourselves. You talked about the track that’s running in women’s heads. Stop it. Sometimes I find myself physically stopping myself on the street and looking around and thinking, turn whatever negative is happening right now into something positive. And we can do that. I don’t think we have to get caught in saying, oh, women have these negative ideas. Of course we do. So we can change them.
Jean Chatzky: (17:30)
How do we find our own areas of genius, our superpowers? And then how do we make them as powerful as they can possibly be?
Janice Kaplan: (17:41)
I met a lot of people who knew from the time they were very young, exactly what they wanted to do, but most of them didn’t. Most people fumbled along, tried different things, went in different directions and that’s okay. Again, I think it’s that idea of the natural genius – we don’t all have a natural genius. We can find something that we care about that we’re excited about, that we love. There’s one woman I met named Cynthia Brazil, who is at the MIT media lab. She created the first social robot. Her robot is actually in the museum at MIT now. She started out thinking she wanted to be a professional tennis player and she was a great tennis player in college. And then she decided, no, maybe I’ll try this. And she then really wanted to be an astronaut. So she went to training to be an astronaut and then somehow she got interested in robots because she liked Star Wars. So I don’t think there’s ever a direct path. I think it’s being curious. It’s being excited. It’s seeing the world around you. And again, it’s being willing to stand up a little bit and say, I want to look at things differently. Cynthia was at a time when nobody was thinking about robots interacting with people and her PhD advisor wasn’t too supportive when she decided she wanted to throw out everything she was doing and go in that direction. And I have such admiration for a young woman who can say, yep, you guys are probably right, but maybe you’re wrong. And I want to try this because what’s the worst that could happen? And I heard that over and over again. I heard it from a woman named Fei-Fei Li, who’s a professor at Stanford and one of the world’s great experts in artificial intelligence. And she had the same experience. She went in a completely different direction, in teaching computers how to see, than everybody expected. And when I asked her how she had the courage to do that, she looked at me and she said, well, I’m a scientist. It’s not like people were holding guns to my head. I could try different things. That’s okay. And I think that’s a great attitude that we can all have. I can try different things until I find the thing that I really care about.
Jean Chatzky: (19:47)
Is finding your genius really just finding your passion or is it more than that?
Janice Kaplan: (19:54)
I think it’s a little dangerous to talk about finding your passion because it always makes me feel like there’s some one answer out there that we’re supposed to find. And I think that we put a lot of pressure, particularly on young people when they’re in college, that they’re supposed to do what they’re passionate about. You don’t always know what you’re passionate about when you’re 18 years old or even when you’re 35 or well beyond. So I think finding your genius is finding what you care about. Finding the place where you think you can make a difference. One person I spoke to talked about the fact that if other people can do what you do, you’re never going to be a genius in that field. So sometimes it’s finding the one thing that you might be able to do that’s a little bit different. I spoke to an engineer named Daphne Koller, who had been a professor at Stanford. She went off, left Stanford and started Coursera, which is the big online education company. Once that was going, she left again and started a biochemistry company. She didn’t know anything about education or biochemistry when she went off and did those things, but she saw them as slices of things that nobody was approaching and where she thought she could see something and do something a little bit different. So looking for where you can be different, how you can be special, can also make for an interesting life even if it doesn’t make you a genius.
Jean Chatzky: (21:17)
You mentioned that some of the women you spoke to were married, some had kids. What effect did having children have on their genius?
Janice Kaplan: (21:28)
Interestingly, I think for most of the women, having children, having a multifaceted life was an absolute positive. Now look, let me back up a moment to say that I know it’s very difficult for a lot of women in America. America does not do a whole lot to support women, families, children. And that’s a shame and that’s a structural issue that really has to change. But when you’re talking about these specific women who have been able to put things together, I love the story that a psychologist, researcher ,and actually the president of Barnard College named Sian Beilock told me, and she said that there are days, she has I think about an eight or nine year old daughter, and she said there are days that she misses the school play or has forgotten to pack lunch and she thinks she’s just the worst mom in the world. But then she realizes that actually she’s kind of setting a great example for her daughter. She’s the president of Barnard College. She’s a researcher. And, you know, I think for so many women, some days you’re the mom who forgets to pack lunch, and some days you’re making a world-class breakthrough. And that richness in life, that ability to move from one thing to another is so important to so many of these women. It does add that richness and it also gives you a little buffer because if you mess up in something one day, it’s okay. You get to go home to your kids and somehow what happened in the lab doesn’t seem quite so bad.
Jean Chatzky: (22:56)
What I hear you saying is that it’s less about being able to do it all and more about being able to give yourself a break when you can’t.
Janice Kaplan: (23:06)
Right. And I think having those many different identities is really a wonderful thing and it makes you think of yourself in a different way. I will say that again, it’s only the women I spoke to, though I think it probably holds for a lot of successful women, most of them talked about the fact that they had partners, husbands, whoever, who were very much co-parents, who completely supported them where everything was 50/50. And I think that’s probably crucial for most women who are trying to do so many different things.
Jean Chatzky: (23:39)
Absolutely. If you had to choose after doing all of this research, one trait that is most likely to help a woman to become successful, what would it be?
Janice Kaplan: (23:50)
I think it would be that sense of positivity, that belief in yourself, that confidence that you’re just going to try something and the world is not going to stop you. I think it’s a story that we have to tell ourselves and I found myself so much more confident after I wrote this book because I had met all of these women and when I went to meet some of them, I was so nervous at the beginning. I thought she won the Nobel Prize or she’s a tenured professor in astrophysics, I don’t know anything about this. And then I met them and they were women. They were lovely. Most of the time I ended up hugging them at the end and feeling like they were my good friends. And if only we lived next door to each other, we’d go out for coffee. And I think we forget that. I think we always think that there’s somebody who knows so much more than we do and has the world figured out in such a better way than we do. And to discover that really, everybody’s figuring it out, but the people who are in my book, the people who I considered geniuses and who deserve to be in The Genius of Women, are those who in some portion of their life took it that extra step and did something special and said, I’m going to just not worry about the barriers. I’m not going to worry about what people tell me and I’m going to take that extra step.
Jean Chatzky: (25:07)
Well, I think we’ll all feel a lot more confident after reading it. The book is The Genius of Women. Janice Kaplan. Thank you so much.
Janice Kaplan: (25:17)
Thank you. Great to talk to you.
Jean Chatzky: (25:18)
Jean Chatzky: (25:29)
HerMoney’s Kathryn Tuggle has joined me in the studio. Hi Kathryn.
Kathryn Tuggle: (25:34)
Jean Chatzky: (25:34)
Nice to see you.
Kathryn Tuggle: (25:35)
You as well.
Jean Chatzky: (25:36)
Thanks for pulling Janice. I’ve known Janice for a long time. I was reminding her, we had a years ago lunch, I was writing a column actually for USA Weekend, which was the competitor to Parade and she was mulling whether to try to steal me away. So we had this long ago lunch at the Four Seasons where she was clearly a regular and that is like, over the years I had lunch when it existed there, I don’t know, maybe three or four times. It was always the most intimidating place for me to go.
Kathryn Tuggle: (26:10)
More than Michael’s.
Jean Chatzky: (26:11)
Oh yeah. Much more than Michael’s, like Michael’s, for those of you who are not in New York and, and who are not working actively in the media. Michaels is a restaurant in Midtown that is a media haunt. It’s where people who want to be seen go to have lunch. And I think that the Four Seasons was very much that too, but kind of more financial circles than media circles.
Kathryn Tuggle: (26:36)
Jean Chatzky: (26:36)
Media circles I can be comfortable in. I tend to know a lot of people. The financial circles, interestingly enough, not as many. And it was always a very suit and tie kind of a crowd.
Kathryn Tuggle: (26:51)
Jean Chatzky: (26:51)
So yeah, I mean I always wanted to be, I guess Anna Wintour, right, used to go to the Four Seasons every day and have a baked potato for lunch. That was the lore.
Kathryn Tuggle: (26:59)
That’s amazing. Well, coming from Alabama, I had only ever heard of the Four Seasons in the context of the hotel chain. So, you know, coming here and learning that it was a restaurant that preceded the existence of the hotel chain was really interesting.
Jean Chatzky: (27:14)
Yeah. I mean, the food was good, but I don’t remember really much except that I was probably really, really intimidated.
Kathryn Tuggle: (27:21)
We should go to Michael’s one day.
Jean Chatzky: (27:22)
We can go to Michael’s.
Kathryn Tuggle: (27:23)
The last time I was there, I saw in one room Shepard Smith, Blake Lively and Barbara Walters.
Jean Chatzky: (27:30)
Kathryn Tuggle: (27:30)
And I was like, what is happening?
Jean Chatzky: (27:32)
I had a wonderful lunch at Michael’s with Joni Evans, who was the founder of PureWow, and Leslie Stahl. That was a good one. And Liz Smith, the late wonderful, wonderful Liz Smith.
Kathryn Tuggle: (27:45)
Jean Chatzky: (27:46)
Amazing. Yeah. So yes, we can go. We can go to Michael’s. We’ll go for your birthday.
Kathryn Tuggle: (27:50)
It’s a date. Okay.
Jean Chatzky: (27:51)
Okay. Deal. What do we have from today’s mailbag?
Kathryn Tuggle: (27:54)
Our first note comes to us from one of our male listeners, Hunter. He writes, my name is Hunter and I got turned onto your podcast by my dance partner and I love it.
Jean Chatzky: (28:02)
Can we just pause for one second?
Kathryn Tuggle: (28:04)
Jean Chatzky: (28:04)
Hunter, I’m just envious that you have a dance partner like I would like to learn to dance. My father was a fabulous, fabulous dancer and my husband, who will not be offended by this at all, is not a fabulous, fabulous dancer. And my first husband was not a fabulous dancer. He actually hated to dance, so dragging him onto the dance floor was never a lot of fun. I would like to learn how to dance.
Kathryn Tuggle: (28:31)
That would be amazing.
Jean Chatzky: (28:31)
I’m just saying.
Kathryn Tuggle: (28:32)
I mean we pass a dance studio on the way over here.
Jean Chatzky: (28:36)
We do don’t we.
Kathryn Tuggle: (28:37)
The ballroom dance studio.
Jean Chatzky: (28:38)
Yeah, I would like to. Alright, we’ll put it on the list.
Kathryn Tuggle: (28:42)
We’re going to go to Michael’s for lunch. Then we’re going to go dancing.
Jean Chatzky: (28:44)
We’re going to learn how to dance. I want to learn how dance like my parents danced, you know, I want to learn how to Fox Trot and, and I don’t even know the names of those dances. Even though I watch dancing with the stars, I would like to learn how to do that.
Kathryn Tuggle: (28:58)
It’s so elegant. It’s so of a bygone era.
Jean Chatzky: (29:00)
Yeah, so Hunter, good on you. Alright. Let’s answer your question.
Kathryn Tuggle: (29:05)
Yes. He says, I have an emergency fund with $6,000 in it and I’m trying to have that money earn as much interest as it can while still being in a fully accessible account that can protect me in the event of an emergency. I’ve heard about online savings accounts which give a much better interest rate than a normal savings account, but are they really safe? Just the fact that they are online makes it sound like they might be less secure than an actual savings account like the one I currently have at TD Bank. What are your thoughts and recommendations?
Jean Chatzky: (29:33)
Hunter, they are safe. They have the same FDIC protection as brick and mortar banks, which means that you have insurance on the first $250,000 in an account per deposit or so if it’s a joint account, you’ve got $500,000 worth of protection. They are able to offer you higher interest rates because that brick and mortar presence is expensive and because they’re not necessarily paying for that, they can put more money toward paying people to leave their money in the bank. I’ve got several of these online savings accounts. I have one at Citizens Bank, I’ve got one at Capital One. My Capital One used to be an ING account, the one with the orange dancing ball, and the rates on these accounts right now are about one and a half percent, which is substantially better than the fraction of 1%, one 10th of 1% that you’re going to earn with a lot of the big banks. We’ve got to list at HerMoney of the best paying savings accounts at this point. So I would just point you to HerMoney.com/rates. You can open one online, takes about 15 minutes and you’re good to go. But yeah, I don’t see any reason. Other than leaving some money in an account that you want to be able to access quickly with an ATM card cause not all of these accounts come with an ATM card, that you wouldn’t leave savings that you’re not touching for awhile in an online savings account.
Kathryn Tuggle: (31:22)
Great feedback. Our next note comes to us from Emily in upstate New York. She writes, hello, my husband and I are expecting our first child in the spring. Yay. We’re in our early thirties and we have zero debt, no student loans, car loans or mortgage as we own our home outright. If he wants to know the secret to our success. We lived tiny for five years together in a home that my husband designed and built himself. We’re now working with our financial planner to max out our tax deductions through retirement accounts this year and feel very comfortable with our emergency savings account. We’re looking to open a 529 for our child. New York state offers a tax deduction for working with their selected funds, but there’s also an option to go with an independent fund. Do the returns from an independent fund outweigh the potential tax benefits of the New York state fund? What do you advise?
Jean Chatzky: (32:09)
So first of all, Emily, congratulations. That’s really, really exciting. And congratulations on the success of putting your financial life in such wonderful order. I can see and hear that you made some sacrifices in order to do that and it’s terrific that you’ve put yourself in such a great position as you bring a child into this world. I personally used the New York state fund, New York Saves, it’s called, to build the 529 account balances for my two kids. It is run by Vanguard. The funds are low cost. They are good performers. As you though weigh whether the tax benefits are worth giving up, perhaps slightly better performance in other 529s, here’s the thing to keep in mind. You just have to look at the numbers and the real differences in performance over time versus the benefit that you would get from the fact that you can deduct $5,000 in contributions on your state tax return in 529 contributions per year in New York. And other states, by the way, have other benefits. The way to compare all of these things is to go to one of two sites. You can go to Morningstar. Morningstar ranks 529 plans. Or you can go to savingforcollege.com. They also rank 529 plans. And just keep in mind, you are able to move money from one state’s funds to another once a year. So if you decide that you want to go with the New York state fund, and as you look at the performance of these various 529s as the years progress, you decide Utah is better or Delaware is better, and by the way, I’m just picking these out of a hat, and you can move the money. You are not locked in, but you can only do it once a year. And just for the record, for people who are not familiar with 529 college savings accounts, these are accounts where you contribute money that is earmarked to be used for qualified education expenses. Once the money is in the account, it grows tax free and when you pull it out and you use it for educational expenses, you don’t pay taxes on it. So there are a lot of benefits to putting money in 529s and unlike other education savings accounts, you can put more money into 529s. So great idea to open them. Also a great idea to let friends and family know that you’ve opened them so that when your parents want to give your kids a gift, they can make a 529 contribution as well.
Kathryn Tuggle: (35:03)
Absolutely. We just contributed to a 529 for a one year old’s birthday party.
Jean Chatzky: (35:09)
And I think, as a parent, that is an amazing, amazing gift. Did they ask you to do that or was that your idea?
Kathryn Tuggle: (35:15)
It was my idea. But also I think that’s a good age because it’s got so much time to grow and the one year olds have no concept of what they’re getting for their birthday anyway, right?
Jean Chatzky: (35:26)
Yeah. But I think it’s good at every age. I mean, I really think you can soft pedal the stuff, give them a little something that you know they’re going to love if you want to give them a thing. But a 529 contribution is amazing.
Kathryn Tuggle: (35:41)
Our last question is from an anonymous listener who describes herself as blessed and grateful.
Jean Chatzky: (35:45)
Kathryn Tuggle: (35:45)
She says hi Jean and Kathryn, I discovered your podcast about six months ago and love, love, love it. One podcast equals one morning commute, and listening to you is such a great start to my day. After many years of struggling to make ends meet, in 2020 I will finally earn more money than I need. Yay. I’m a single mother of a 12 year old in my mid thirties. I annually fund my HSA to the max and save about 20% of my salary in my 401k. I have $5,000 in savings. I rent my home and I have zero debt. My monthly expenses are about $3,000 total, and this year I have about $1,500 in take home pay left over each month. After my daughter graduates high school, I’m planning to shake up my life in every way starting with a move to a different part of the country. I would like to have $100,000 available when that time comes. With zero return, this is feasible for me to build up in a savings account. $1,500 times 66 months equals $100,000 but I know my money can do more. So my question for you is, as I build up my savings over the next five to six years, how much should I keep liquid and what should I do with the rest?
Jean Chatzky: (36:54)
So my question back to you is, and first of all, this sounds so exciting and it sounds like you are doing all the right things in terms of setting yourself up to make a major change. What are you going to do with that hundred thousand dollars that you have available when the time comes? Because when I look at my window for the difference between money that I am putting away for the short term and money that I’m putting away for the long term, five years is kind of the cutoff. If I know that I am saving money for the down payment on a home that I want to make in three to five years, I’m not going to put that money at risk. I’m going to put that money into this sort of high interest rate savings account that we were talking about before and I am not going to put it into the markets. So if that $100,000 is just a hundred thousand dollars that you want to have because you’ll feel better knowing that you have it and you’re not going to use it for anything in particular, then I would say you could keep half of it or probably three years worth of it, 60,000, liquid and invest the other 40. But if it’s money that is for a down payment on the next place to live or some other expense that you think you’re going to incur when you make that major life change, I wouldn’t put it at risk. I’d just put it in a savings account where you’re going to earn a decent rate of return. You could also look at CDs and compare the rates of return on three to five year CDs and see if you can get a better return there and just in case you need that address again, it’s HerMoney.com/rates is where you’ll find the information about the best paying savings accounts. But can I just give you one other piece of advice. You didn’t ask for it, but I’m going to give it to you anyway. You said that when your daughter graduates high school, that you’re planning to shake up your life in every way. Please telegraph this to your daughter. Please let her know that when she graduates high school that you’re planning to do this. Because I had a flash of my daughter when I was reading this and hearing this and I just thought if I moved when my daughter was in college and she didn’t know I was gonna move when she was in college, I think she would have been kind of angry with me about not being there so that she could come home and see her friends, which may be totally fine with your daughter and she may be perfectly comfortable with this. I just, if it was my kid, I would want to make sure that this wasn’t a surprise and I hope that that is not overstepping.
Kathryn Tuggle: (39:38)
I think it would be important to keep your daughter in the loop because they clearly have a close relationship from her letter.
Jean Chatzky: (39:43)
Yeah, they do. And clearly my baggage is showing, but my parents moved when I was a sophomore in college and I actually had the experience of calling home and the phone was disconnected.
Kathryn Tuggle: (39:54)
So I they didn’t tell you?
Jean Chatzky: (39:58)
Oh yes, they told me. They just didn’t tell me exactly when. I mean they moved from West Virginia to Peoria, Illinois. So they moved! And I knew it was coming and I was not happy about it because I wanted to be able to go home and see my friends. In the end, it was totally fine, but I do remember laughing, but not in a very real way when I called home and got the message that this number had been disconnected.
Kathryn Tuggle: (40:23)
Those ties are so strong.
Jean Chatzky: (40:25)
Kathryn Tuggle: (40:25)
I still know all of my childhood friends’ phone numbers by heart.
Jean Chatzky: (40:28)
Kathryn Tuggle: (40:30)
Rebecca, 436-3254. Going to give you a call.
Jean Chatzky: (40:34)
Yeah, the Rosenbergs 242-5262.
Kathryn Tuggle: (40:35)
Jean Chatzky: (40:38)
There you go. They’re going to hate that I put their number out on the air. Sherry, I’m sorry. I hope they don’t get spammed. Alright, what else we got?
Kathryn Tuggle: (40:52)
That was it.
Jean Chatzky: (40:53)
Alright, Kathryn, thank you.
Kathryn Tuggle: (40:54)
Thank you so much.
Jean Chatzky: (40:55)
In today’s Thrive, before you apply for a personal loan to finance home repairs or consolidate debt, you should look to get answers to three important questions and I’m gonna very quickly break them down for you today. But before I do, let me just say, we’ve been hearing a lot about personal loans these days. Personal loans are out there for people in large part who have gotten a lot of credit card debt and want to consolidate that credit card debt at a lower interest rate or somebody who may not have a home against which to borrow in the form of home equity debt, cause personal loan debt tends to be a little bit expensive for that. But it can be a lot cheaper than paying off all of your debt at that high credit card interest rate. So here’s the first question. Can I get approved for a personal loan with my credit? Many personal loan lenders have minimum credit score requirements to get a loan. If your score is below 600 you want to consider holding off applying for that loan and working to increase your score. Second question, how do I compare loans online? Again, there are many loan comparison tools online. With them, you’ll typically fill out a single application instead of applying to five different lenders at once. You’ll instantly know what you’re approved for and which lenders denied you. Third question, is the lender pulling a soft or hard credit inquiry? This is important. If a lender pulls a soft inquiry, it won’t affect your credit score. On the other hand, a hard inquiry does hit your credit report can ding your score. Lenders typically do a soft pull to pre-approve you for a loan. Then a hard pull to finalize a loan and whenever you’re applying you want to ask what sort of inquiry to expect. Anytime you are thinking of taking out a personal loan, take a very close look at the interest rate, the length of the loan, also called the term, and any other fees that may be associated with it. Make sure you have a plan for how to best fit the loan payment into your monthly budget and whether you’ll be able to pay it back within a reasonable timeframe. And just one other word of caution. Around the time of the recession, we saw a lot of people using home equity in order to consolidate credit card debt that had gotten out of control. About 40% of those people went out and charged their credit cards right back up again. If you are thinking of taking out a personal loan, make sure that you know you will put the credit cards that you’ve consolidated in a drawer, in the freezer, not use them until this repayment of the personal loan is under control and well underway.
Jean Chatzky: (43:51)
Thanks so much for joining me today on HerMoney. Thank you to Janice Kaplan for sharing her genius with us today and giving us the confidence that we need to push forward and encourage future generations of women to keep fighting the good fight. If you like what you hear, I hope you’ll subscribe to our show at Apple Podcasts. Leave us a review. We love hearing what you think. We also want to thank our sponsor Fidelity. We record this podcast out of CDM Sound Studios. Our music is provided by Video Helper, and our show comes to you through PRX. Thanks so much for listening and we’ll talk soon.