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Natalie Slagle  00:00

I'm like, talking this through, and I'm like, oh gosh, it really depends. It really depends. Because some like, I think it's easy as a financial planner, as a financial advisor, to be like, go and invest it. Invest it. And Dan, you and I, from a philosophy standpoint, we do like to make sure our clients are really balancing the living for today while protecting their future selves as well.

Natalie Slagle  00:27

Welcome to Money Dates, the podcast that makes money. Conversations with your partner feel a little less taboo. I'm Natalie Slagle, a certified financial planner, and I'm joined by my husband and business partner, Dan Slagle, also a Certified Financial Planner, say Hi, Dan, hello. In each episode, we'll share honest stories and practical tips to help you and your partner feel more connected and confident on your financial journey. So grab your drink, get comfortable and join us for our money. Days.

Dan Slagle  00:59

Hey, Dan, Hi Natalie, what's going on?

Natalie Slagle  01:02

I just reorganized some of the books on my shelf because I wanted some more color in my background. And now I have this nice ROY G BIV, is that the red, orange, yellow, green, blue, and it makes me happy.

Dan Slagle  01:19

No, okay, let's just let, yeah, I'm gonna stare at it real quick. So we have, I see the red book. I think that's the Intelligent Investor. We have the, oh, you're gonna try to name them. Okay, no, I'm no, that was the only one I can actually identify. The orange, yellow, green, blue, indigo, violet.

Natalie Slagle  01:38

Wait, there's a book that I have that, okay, had to go away swim with the sharks without being eaten alive. Wow.

Dan Slagle  01:49

I think, I think my Uncle David, I think my uncle gave it to you. That's awesome. I love that you still have it. Have you? We don't need well, he might listen to this podcast. So maybe I shouldn't ask if you've,

Natalie Slagle  02:00

if you've read it, Harvey McKay, the author or your uncle.

Dan Slagle  02:04

I don't know who Harvey McKay is. I honestly have no idea. He

Natalie Slagle  02:07

is the gentleman on this book. And this looks like a book you would be given by your uncle, yeah. And why did your was it Jim? Yeah. Was it your uncle? Jim? I'm trying to think why he would have given this to me. He must have seen my potential.

Dan Slagle  02:24

Oh yeah, for sure. Yeah. Because what is the title of that book?

Natalie Slagle  02:28

Swim with the sharks without being eaten a lot. Well,

Dan Slagle  02:32

at the time of this recording, I've started to see commercials for Shark Week, which, you know that's relevant. And then I feel like that book cover also goes with the saying that I think I just said randomly one day, I used to hear it from an old co worker that's like, blood in the water. Sharks swim. And I'm like, That is stupid.

Natalie Slagle  02:53

Why is there so much association with business and sharks?

Dan Slagle  02:57

I don't know why. Yeah,

Natalie Slagle  03:00

why isn't it lion den? You know, like lions are really fierce and or like, something with, like an alligator, like that animal has withstood the test of time. Like, shouldn't we try to Shouldn't that be what businesses try to do? I don't know how long sharks have been around, but as long as alligators,

Dan Slagle  03:24

wow, someone, someone needs to fact check you on that. I I assume you're right, but I have no backing of it. Can you

Natalie Slagle  03:30

tell we recently saw Jurassic Park, so now dinosaurs,

Dan Slagle  03:35

we did okay. Did speaking? Speaking of your shelf, I was going to just real quick. You are the plant lady, and I'm looking at your plant in the background, and it don't use it,

Natalie Slagle  03:45

and it says, but I was seeing this in a client meeting that I had yesterday, and I was like, maybe they think that's how the plant looks, but it's not. It. This isn't it's a lily, and so it should be up and perky and

Dan Slagle  04:00

no, I'll have like that. Well, I think today's conversation may lead into plant purchases potentially, right? So today we want to talk about, what do we want to talk about today now that I'm trying to remember, I think we wanted to focus on, like, having a large cash balance and, like, no plans, like, having no plans of what to do with

Natalie Slagle  04:26

it. Yes, it's feels weird to call it a problem, but just like a common obstacle that a lot of our clients have come to us with, yeah. And so we're, we're going to talk about that,

Dan Slagle  04:40

yeah, yeah. And like, specifically, we're talking about bank account balances, right? We're talking about, like, liquid cash. We're not talking about, like, having a brokerage account. And you could essentially tie the two together, but I think for today's conversation, we're going to focus primarily on having a large cash balance. And, like. So some of the hurdles that we run into, or we've seen, and what we've run into personally on like, utilizing that cash balance, and I think there's this like, whole psychological effect of, like, I built up my cash balance to X amount, and if I make a larger purchase, or I start tapping into that money, like, sometimes it doesn't feel good,

Natalie Slagle  05:19

right, right? And we keep saying, like, a large cash balance. Now, if I was a listener in this, I would my first thought would be, well, what amount equates to large? Like, maybe I just have a normal cash amount. Maybe I have a small cash amount. And what's difficult in talking about this is it is truly dependent on your financial situation, because someone could have $100,000 in cash, and that is way too little for their situation. Someone could have $100,000 in cash, and that's way too much for their situation. So that's kind of what we help our clients with is determine, well, what is a healthy appropriate amount of cash. And again, we're specifically honing in on on this concept of folks coming to us with too much cash, because it's like, okay, we picked a number. This is how much cash we think is appropriate. You know, we have to have conversations about the comfort of that number. Hey, Dan, how do you feel about this? Natalie, how do you feel about this? Because a lot of times couples have different thoughts, and then once we agree on the number, and there's more cash than that agreed upon number, it's like now what?

Dan Slagle  06:32

What do we do? Yeah, and just to back up a little bit, I think we should give some insight into, like, the framework that we help clients decide how much cash they should have in their bank savings accounts at all times. And obviously disclaimer like it is dependent on every partnership, every individual's own situation. Typically, the framework for us is having making sure that clients have somewhere between three months and six months of living expenses in a savings account. That is what we your marker call their emergency fund. So we tend to and again, every situation is different, but we tend to lean towards that three month figure. If there's two income sources in a household, and if there's only one income source in a household, then we tend to go up to that six month figure. Obviously, like before any of this, we need to understand cash flow. So we need to understand, like, what are monthly expenses for for you? And then that makes it easier to solve for what's three times that number, six times that number, now that that's like the framework and and, you know, we get that from our textbooks, like that is the educated answer to that. However, what is not accounted for is like the psychological like, what is your sleep at night factor? So for some clients, they're like, it may need to be higher than that six month figure. Right? For some clients, they might, and I feel like in, mostly in recent conversations I've had with clients where I say, we go through the expenses that we break it out, we give them the parameters of like, Hey, here's a three month figure, here's a six month figure. There's always one partner I feel that's like, I would be way more comfortable with the three month figure, and then the other partner is like, I would be closer to that six month figure. And a lot of times what we end up doing is like, yeah, they need to talk about it and come up with a solution. You know, we've presented the the numbers to them, and they need to make the final decision for their household at the end of the day. So I think a lot of times, like, couples that we work with will just kind of split the difference. Do you find that as well?

Natalie Slagle  08:34

Yeah, that's certainly what I've seen. Because I we want in our position, we're helping guide and we're supposed to say, like, this is a red flag, you should not be doing this. And but besides the red flags, we're like, you could do this, and if you do this, these are the options. And or you could do this, and if you do it, that was so that's kind of our role in this, is to help facilitate those conversations and just make sure people don't make the absolute wrong decision here. And so I really like, kind of almost being the mediator in all of these financial discussions of, here's the boundaries. You really shouldn't have more than x. You really shouldn't have less than y. Where's the comfort like you two should talk about this. This is like, a good conversation to have, and then get back to us. Sometimes people will talk about it just in the meeting with us, maybe they feel a little bit more of protection from a relationship standpoint, that we're there. But yeah, it, it feels like three months will be a little uncomfortable for someone in six months is perfect for the other person, or whatever it may be. So it, it's interesting to see where it lands.

Dan Slagle  09:39

Yeah, if, typically in a relationship, like, if we establish those parameters, like, let's say the clients come and they say our target is a three month figure. In that case, if we can look at like, where their current bank account, their savings account, specifically, is landing, then we have the conversation of, if we're not at that target, here's what we need. To do, or adjustments we need to make in order to get to that target, such as like automating savings on a monthly basis or bi weekly basis. A lot of times for our clients, the the outcome is on the opposite end, where it's they have too much in cash, so they already have that three to six month buffer built up whatever their goal is, and then the question is, well, what do we do with it now? And I think that's that is the point of today's conversation, thinking about, like, what do we do with cash balances? Yeah,

Natalie Slagle  10:31

yeah. So can we transition to talking about some of the things we've recommended?

Dan Slagle  10:35

Yeah, absolutely.

Natalie Slagle  10:36

We

Dan Slagle  10:37

wait, wait, wait, wait, wait, wait, I need, like, a one of those, like, hockey goal. You know, in the hockey I'm sorry I don't watch hockey when, like the, like a hockey team scores and they have, like, the big flashing red light, yeah, yeah, that's, that's what I need right now. I Sorry

Natalie Slagle  10:53

before the big red book,

Dan Slagle  10:56

okay, oh yes, swim with the sharks. Nice. Yeah, it. I'm glad we could finally put it to use, all right, before we get to like things that we've helped people do, and even for us personally, I pulled out some stats, and I think right now is a good time for the stick.

Natalie Slagle  11:13

That's why we need a sound our Podcast Producer. Is that like, what we call him, that feels too fancy. I shouldn't say too fancy, because he's incredible. But if you're listening to this, maybe you should add the we need a stats. We need a stats, buzzer stats coming your way,

11:32

and now, ladies and gentlemen,

Natalie Slagle  11:35

stats. Okay, let's hear it. Dan,

Dan Slagle  11:38

I think it's relevant to our listeners, and I'm gathering this because a lot of times when we meet with clients and we, like, pull up their balance sheet as a household, a lot of times, the reaction is like, I don't really know what to compare this to. And the goal of this is not to be is not to compare. But I wanted to share some data across the board, within the United States, based on savings account balances. I think that's always helpful from like a benchmarking perspective, for clients, it

Natalie Slagle  12:07

is listeners, potentially, without even looking at this, I would imagine it's a lot lower than the numbers were. Well, I don't know. I don't know. Let's

Dan Slagle  12:16

see. Let's see. Okay, so I pulled some numbers from a bank rate article that took data from the Federal Reserve reserve survey of consumer finance. Okay, pretty credible. So what we're looking at credible enough. So I wanted to better understand what is the median savings account balance. So if you go back to middle school math, I will say median is the middle value in a set of numbers. Yeah, and I actually had to write that down, because I sometimes forget the difference between median mode and all that fun stuff. So the median savings account balance from that survey is $8,000 the average savings account balance. So average of all the data, $62,410

Natalie Slagle  13:02

and which makes sense, because that means there are so many accounts that have, like, $0 in it, sure. Which is why that median is so low, because I think about we have an auto loan, and we had to have a savings account open to have the auto loan there, and we don't use that savings account. So I'm like, why is that data so crazy? I would think it's because there's a lot of unused, open savings account that also means there's a lot of cash in accounts. That's making the average quite a bit bigger.

Dan Slagle  13:37

Yeah, absolutely. And then what I really like from this survey is it actually broke it median and average bank account balance out by household type. So specifically, couples with one or more children. That's us. We fall in that category, median bank account balance, $12,500 average bank account balance, $73,980

Natalie Slagle  14:00

the 12,000 was the median Correct? An average was 73 Yeah, well, I just don't believe that. Can I just nope,

Dan Slagle  14:12

throw Should I just stop? Should I just stop reading the stats?

Natalie Slagle  14:14

Okay, the reason why it's hard for me to believe that is because I don't have the data in front of me. But like, the average household income of four you know, two adults, two kids, is around $70,000 so you're telling me those the average household that makes 70,000 also has $70,000 in a bank account.

Dan Slagle  14:37

Well, with averages, I mean it. Well, I'm not the one who conducted the survey. I think you're focusing just on the lower end, like people having minimal money in their savings account. But we also need to think about the higher end of scale as well, which is going to even things out, not even things out, but it's if you have very large numbers or outliers on. Sides, it's still gonna affect the average,

Natalie Slagle  15:02

right? I guess I'm trying to make sense of it in my brain, because it seems like all of these stats on the average American makes it sound like things aren't so good for people, you know. Like, I think Fidelity has fidelity an investment custodian has a something out there that their average retirement balance is around. It's like $20,000 or something like that. So I'm like that other data that I've heard. I'm trying to make sense of it with bank accounts, or maybe people have too much money. I mean, this kind of goes to the topic of today, they're having too much money in their bank accounts that should be getting to investment accounts, purchasing a home, purchasing a second, I don't know, but like again, maybe in general, not just our clients, but Americans, need to consider what other avenues they could be using that cash for.

Dan Slagle  15:58

Yeah, yeah. The last stat I'll read is off of the couples with one or more children. Let's talk about couples without children. That used to be us. Median bank account balance, 16,000 average bank account balance, $103,140

Natalie Slagle  16:13

this is no kids. Did you say

Dan Slagle  16:16

correct? This is the dinks, the dinks of the world, where we use we used to live in that space,

Natalie Slagle  16:22

dual income, no kids, yeah, we'd probably have many, many dollars bank account without our baby. She's worth every penny. But you know,

Dan Slagle  16:32

so I just wanted to highlight there, there's a difference there between bank account balances. But to your last point, like average bank account balance figures are relatively high. And I think that that that goes back to the point of this conversation like, how much should you have in your bank account, which we've already laid out, right the framework for establishing that. And now the the real point of the conversation is like, what do we do with the extra money?

Natalie Slagle  16:55

Yes, I wanted to add this when we were talking about, like, how much cash should you have? And for people who just want to, like, a quick answer, if you don't know your expenses, just look at the total net take home pay that you have between you and your partner. Total Net take home pay in a month, times that by three or six and then bam, that that can be your threshold for now, I think sometimes not all that money is spent. So that shouldn't be a part of your savings, you know, blah, blah, blah. But if you're looking for a quick way to calculate how much use your net pay, not your gross pay, gross pay can inflate things, total net pay in a month, three to six months of that. Okay, so what are we going to do with the surplus? Go ahead, Dan, you want me to go? Okay, I can go, but I didn't know if you had more stats. No,

Dan Slagle  17:45

I'm doing. I'm done with my stats. I you know, you didn't love my stats today. So we're gonna have a few episode pause on stats.

Natalie Slagle  17:51

I really like the stats. I like when you bring the stats. And I was just, you know, stats can be misleading, and they misled me say, that's okay. Maybe that's a good thing. That's why stats are important. Is because we think we know something about how the world is operating, then you see statistics and you're like, oh, actually, that's different. So

Dan Slagle  18:10

I said sharks in the water, or blood in the water. Sharks swim my last dad. Dad ism today is numbers never lie. Numbers never lie.

Natalie Slagle  18:21

Okay? Dad, Danny. Dad, what do we do with the surplus cash? So it really depends on where a couple is at financially, because if you have surplus cash and you are maybe based on our calculations, on our conversations that we have with our clients, and we feel you're behind from an investment perspective, because we want you to get to that financial independence, retirement, whatever you want to call it, then it's, it's kind of this, like, of course, like we should be building up your investment bucket. We should talk about, how do we get these funds into your investment portfolio, whether it's a brokerage account, retirement account, there's kind of different ways of going about that. The clients that tend to work with us are at a pretty decent place from an investment perspective. Maybe they have a ton of money in the retirement side, but they don't have a lot in the brokerage or taxable investments, meaning an investment bucket that you can tap into prior to retirement. So I'm like, talking this through, and I'm like, oh gosh, it really depends. It really depends. Because some like, I think it's easy as a financial planner, as a financial advisor, to be like, go and invest it. Invest it. And Dan, you and I, from a philosophy standpoint, we do like to make sure our clients are really balancing the living for today while protecting their future selves as well. But if you've done already a really good job of like, setting your future self up, and maybe there's like, pause to say, hey, could we be spending this money in a way that reflects your values, in a way that's important to your family? Like, the answer doesn't. Have to be. Let's keep saving it. It can be, and maybe that's a value of yours. But like, I feel like sometimes we're, we're kind of actually, like, pushing our clients, like, hey, you know you could just spend some of this.

Dan Slagle  20:12

Yeah, I think it's about goes back to a lot of the previous conversations we've had in in past episodes, or, like, even to that first episode of talking about upbringing, around money and, like, understanding what's important to you. Like, how does it impact you? You know, we go deeper into some discovery questions, like hypothetical scenarios to and, and we have a few clients that stand out to me, like, right off the bat, where we're, like, having that conversation, it was like, I want more freedom. I would love to be my own business owner. Work, part time. Work, part time. Travel. More. Travel, more. Buy a new vehicle, a boat. Speaking of boat, I drove a pontoon for the first time over the weekend. That was fun. But yeah, you are Yeah. So there's a lot of options at play with what to do with extra cash. And yeah, to your point, like, invest, like, the idea of the large cash balance, if there's not a debt, we're huge advocates for, like, understanding for every single account that you have, bank account, investment account, like, what is the purpose of the account, because that allows us to identify what we can do with Those dollars. Or, like, how things should be potentially invested or remain in cash, right? So if you sit down with your partner and there's a large goal within, like, maybe a 12 month period, a one year time period, it's probably not, it might not be the best idea to invest that money, right? Right? Because then it's susceptible to stock market risk. So maintaining it in a liquid option, like your savings account, allows you to better understand, hey, this is the amount that we have allotted for this big purchase. You know, it's, it's, it's liquid and not susceptible to any market risk. So it, to me, it allows you to spend that more freely. However, for us, let's just relate this to us when you have that large savings account balance, but there's a large purchase looming, like, potentially a new home. Like, it's still hard to spend that money. It's still really hard.

Natalie Slagle  22:12

Yes, I agree. Do you mind if I throw some numbers about our situation? Sure. So based on our spending right now we should probably have like if we do three months on the personal side, because we have cash on the business side as well. So if we just focus on our personal situation three months, we spend about $12,000 a month. I think 12 or 13 like, we should have somewhere between 35 $40,000 in cash, right we have over 50 right now. And a part of that is because we're we want to be prepared to buy a home when and if we want to buy a home. Okay, sometimes Dan will do the whole like, let's pull up Zillow and we'll calculate, okay, we have quite a bit more on me. Did you just say I am the one who pulls up Zillow? No, let me finish. Okay, sorry. I just thought that was funny. It was fine. I know. Okay. I'm the one who pulls up Zillow or something, and you're like, Oh, we could do this, like, we've got our money in our brokerage account so we can liquidate that, and then we could pull from our savings account. But now that I see that our savings account is like, over 50 or whatever. I don't ever want to see it go below 50 again. So this goes to what you were saying before on, like the psychological aspect. So if Dan and Natalie, or have used financial planning, could run us through a client experience, and someone asked us as a couple, what's your comfort figure for cash? My comfort figure has now grown, and we've talked about like, oh, and buying a home is always just kind of the easiest thing to go to because it's maybe the one big financial thing we potentially could see ourselves doing. And I think for you, you would be comfortable depleting some of our cash, and I think I'd be okay to it, but I don't love it again. This just comes into the mentality around your money. Because on paper, we would be just fine if we went into a home purchase and then afterwards we had our three month emergency fund, which is below the $50,000 we would be fine. That makes sense. Like financial analysis, financial planners would tell us, Natalie, you'll be just fine. But I've seen that number now for a long time, and I'm I like it.

Dan Slagle  24:28

Yeah, I like it. So why is it so hard? Why do you think like the number keeps growing, like you have a set target, like you need us in your life? For like, the professional side, maybe

Natalie Slagle  24:40

where's my own Dan and Natalie financial planners? I need, I need us. Yes, I don't know. I think you know our financial situation, our business situation, our family situation, it keeps getting more complex. So I feel like that Warren's having more cash, but we have. We're taking care of ourselves from an investment perspective. We are. Adding money appropriately to our retirement accounts. We're adding money to the brokerage account. Our brokerage account is higher than our savings account, so it's like all of that is making sense. If we would have maintained our cash, this is the trade off, right? This, the comfort trade off is that, at least over the past few years, if we would have put that cash in the market, in our brokerage account, we would have more money than we have right now. That's the thing. That's the thing that we talk about with our clients, is like, Hey, you could have $700,000 in cash. What's the trade off of that? It is likely you will make more money having that invested than the average one to 3% rate of return in your cash, and if your balance of cash is enough to warrant a reduced rate of return, then it's fine. But for most people that we need the rate of return, we need our investments to grow above and beyond inflation and above and beyond the rates that we get in cash. And so if we like to have higher cash balances, that means that we need to create that higher cash balance and then find a way to get to a point where we're adding more to the investment portfolio. Again, like it just again, it's so situational, yeah, so, yeah.

Dan Slagle  26:15

So for me, it's, it's from the start, like understanding what's your emergency fund goal? What's that target? Getting to the target and then identifying what's next, like what is most important to you now and in the future. So if there's opportunity afterwards to save for your kids education, which we talked about some numbers in a previous episode, if it's important to maybe increase your employer or your your 401 employee retirement contribution to like your 401 K maxing, Max being able to max that out. And then if there is no true need for the money, typically, we have clients that automate a transfer, a monthly transfer, to their brokerage account. But again, it's your point. It is very situational, because if there is a larger purchase in, like, a shorter time horizon, like one to two years, then that money is likely better off just accumulating in savings staying liquid. You could potentially open up like another savings account and kind of ear market, right? We've helped clients do that, so it's like their emergency fund, or that that savings account isn't just like, growing and growing and growing. I mean, kind of to the point that you said, right? Because then you start to get pegged on like, Oh, this is my new target. This is where the account is today. Now that's the new emergency fund. However, if you can separate those out, put the excess into another savings account that's dedicated for, like, a down payment, a new vehicle, travel, whatever it may be, and then just label it. Banks are pretty good now where you can just name an account, you name it your travel account, you can name it your down payment account, and that allows you to separate them out the money. I think the other big thing to think about, if that is what you're doing, is making sure that you're taking advantage of, a, say, a yield or rate of return on that cash, right? So I still see clients to this day like keeping money in larger institutions that are paying, point zero 1% on that savings for Park being parked there, where there's reputable financial institutions offering three and a half percent right now and higher to put that money in a high yield savings account. So there's so many things you can do. And I think it just comes down to, like, sitting down with your partner and laying out like, what is most important to us now,

Natalie Slagle  28:32

right having the conversation, making sure in true fuse fashion, money dates, fashion, like, everyone's opinion matters. You know, you and your partner, both opinions matter. I don't want to say there's there's no right or wrong answer. Sometimes there is, but it's rare that it's black and white, and so I feel like there's a really great middle ground. I want to add this because this happened with our we talk a lot about having intention with your bank accounts, with your cash, with your savings, with your investment accounts, knowing what they're for. And I had a conversation with a client once, and they had plenty of cash, and we were talking about opening up an investment account, a brokerage account, taxable account, and I kind of asked, like, how do you anticipate using this money in the in the brokerage account, just to see if anything came up and and they were like, I don't know, I don't know. And I just said, like, why don't we just call it your flexibility bucket, like it's your flexible account, like we don't know, but it's there, and we don't think we really need it in the short term. But it's so nice to know we have flexibility in our finances, and this is where we're going to pull when you know the emergency fund is tapped out, or we want to purchase something. I This couple ended up using it, and they, they purchased a second home that, at the time we created it, we had no idea that would be what it's used for, and then it was, and it truly was this flexible thing and and so I really do love and appreciate that we're all about intent. Intention around finances, but sometimes the intention is pure flexibility, pure flexibility. And so I think that's that's important here as well. Yeah, thanks for adding that. Well, anything else you want to add on this topic? Dan,

Dan Slagle  30:14

no, no, I think this is a good conversation, and like most of our conversations, I feel like it makes me want to sit down with you and rethink some things.

Natalie Slagle  30:26

Okay, we'll have to let me put something on your calendar. Sounds good. All right, thanks. Haley, thanks. Dan, bye, bye.

Dan Slagle  30:36

Hey, if you've enjoyed this episode and are looking for personalized financial guidance, schedule a free complimentary consultation using the link in the description below. Natalie and Dan Slagle are the founding partners of fuse financial planning, a registered investment advisor. The information provided in this podcast is for informational purposes only and should not be considered investment advice or a recommendation to buy or sell any securities. Investing involves risk, including the potential loss of principal. Advisory services are offered to clients or prospective clients where fuse financial planning and its representatives are properly licensed or exempt from licensure. For more information, including our disclosures, please visit our website@www.fusefinancial.com applause.

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