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Transforming Matt & Mary's Big Goals into Actionable Steps

Transforming Matt & Mary's Big Goals into Actionable Steps

| June 14, 2021

For many Americans, the immediate financial concerns of today outweigh the distant needs of tomorrow. And few things could be truer for the 30-something, New Jersey married couple — Matt and Mary. Let's take a closer look at how an Advisor at RMR Wealth Builders helped transform the duo's big goals into actionable steps they can take today.

Meet Matt & Mary

Working in advertising and the pharmaceutical industry (respectively), Matt and Mary each earn north of $100,000 a year and have two small children — aged two and four. Although they are both higher earners and have stable employment, Matt and Mary have no savings.

Instead, they are like the 44.7 million Americans saddled with student loan debt —$25,000 for Matt and $20,000 for Mary. They have no plan for a sudden loss of income and regularly turn to credit cards when their salaries fall short. Simply put, Matt and Mary are living from paycheck to paycheck — with no strategy to achieve their financial goals.

Because of this, the CERTIFIED FINANCIAL PLANNER® (CFP) Professionalsat RMR Wealth Builders Inc. worked toward helping Mary and Matt organize their finances on their journey to financial wellness. And the first step was for Matt and Mary to identify their financial goal goals, which included:

  • Becoming more financially fit and feeling better about their financial situation
  • Saving for children's education
  • Ensuring family was secure in the event of job loss, death, or disability
  • Creating a retirement plan

Being & Feeling More Financially Confident

The process began by taking a snapshot of where they were, which meant budgeting.


After reviewing their spending habits and budget, we suggested they take the following steps to get on track:

  • Avoid holiday travels; vacation at home instead of traveling out of state
  • Cut back on meals eaten out and eat at home more often
  • Cut back on all unnecessary purchases for the next two years. These include expensive, brand-name clothing and accessories, new electronic gadgets, and new vehicles.
  • Consolidate student loans to lower the interest rate.

Short-Term Savings Solutions

Through budget analysis, we discovered ways to cut costs and channel the savings into much-needed savings accounts, such as:

  • A general savings account for short-term or long-term goals, such as a down payment on a home. We suggested these funds be invested in a low-risk mutual fund to earn interest.
  • An emergency savings fund to cover emergencies and can prevent the couple from using high-interest rate credit cards, which would push them into debt. Agreeing on the necessity, Matt and Mary immediately began putting $1,000 a month into a fully liquid account.

Health Savings Account

Considering most financial emergencies are health-related, we discussed the utilization of health savings accounts (HSAs) offered by their employer. Often viewed as the sidecar to high deductible healthcare plans (HDHP), health savings accounts allow employees to save for medical expenses and can be used to reduce their taxable income, which is an integral tax planning strategy.

Dependent Care Flexible Spending Account

A sizable portion of Mary's and Matt's income is dedicated to high-quality childcare for their little ones. We suggested they contribute to a dependent care flexible spending account (DC FSA) offered by their employer. This pre-tax benefit account can be used to cover qualifying dependent care services —such as daycare— which can effectively reduce the cost of child care and reduce taxable income.

Saving for Future Education Expenses

Fortunately, Matt and Mary are starting to consider their children's education at a young age. As such, they have the greatest asset on their side: time. To help them capitalize on this asset, we suggested they start a 529 plan, which is a flexible, tax-efficient way to save for each child's education. As owners of the account, Matt and Mary can:

  • Keep control of the money,
  • Work with their CFP professional to make investment decisions, and
  • Change the beneficiary if plans change.

Best of all, 529 plans make it easy for grandparents and family members to contribute. We discussed suggesting future family birthday and holiday gifts for the children be made in the form of contributions to the account.

Creating a Risk Management Plan

Much of Matt and Mary's financial stability depends on their ability to continue earning their salary. But what happens if Matt becomes injured and unable to work or if one of the two suffers a fatal injury? All too often, these types of scenarios can completely derail a family's finances, which is why it's critical to have a Risk Management Plan.

Matt and Mary worked with an RMR Advisor to create a strategy to mitigate the impact of these unfavorable scenarios. Specifically, we discussed disability insurance and term life insurance to ensure the family would be financially stable if an unfavorable event were to occur. Their RMR Advisor helped them choose suitable coverage based on:

  • Current liabilities
  • Future liabilities
  • Goals
  • Lifestyle

Planning and Saving for Tomorrow

Although Matt and Mary are both employed by organizations that offer 401(k) plans and employer-match contributions, neither participate. We strongly suggested that Matt and Mary take full advantage of the “free money” offered by their employers' 401(K) matches. By contributing $6,000 per year to a 401(K) account, Matt and Mary would each receive an additional $6,000 from their employer—for a total contribution amount of $24,000 per year. We calculated that saving $24,000 a year for the next 30 years would provide the couple with $720,000 if they decide to retire around age 62-63—assuming no growth in their investments.

Roth IRA

We also discussed the possibility of Matt and Mary starting Roth IRAs outside their employer's plan. The Roth allows tax-free withdrawals of contributions (not earnings) at any time. And under certain conditions, the Roth allows for them to make tax-free withdrawals of their earnings (earnings are taxable in a traditional IRA) after a five-year holding period if:

  • One of them become disabled,
  • They reach the age of 59.5, or
  • Use the funds as first-time homebuyers

Rethinking Health Savings Accounts

Considering the rising cost of health care, we discussed the emerging strategy of saving and investing HSA funds to cover their healthcare expenses in retirement. And when Matt and Mary reached the qualifying age, they could withdraw the contributions, interest, and earnings tax-free as long as they were used on eligible medical expenses.

Home Ownership

As the largest purchase most people make in their lifetimes, purchasing a home is big deal. It's also one of the most important ways to prepare for retirement, as a home builds equity that will help a couple save money long-term. Currently, however, Matt and Mary are renters. We discussed the benefits of homeownership and how it can help them achieve the future they envision. 

Key Takeaways

  • Becoming more financially fit and feeling better starts with budgeting
  • Creating an emergency savings account and long-term savings account are both important
  • You can use tax-friendly tools like HSAs and DC FSAs to improve your financial picture
  • 529 savings plans are flexible ways to save for a child's education
  • Every family should plan for the unexpected and have a Risk Management Plan
  • Make sure you don't leave money on the table by failing to take advantage of employer-sponsored 401(k) matches
  • Leveraging Roth IRAs, HSAs for retirement healthcare, and homeownership can help amplify the retirement strategy

Contact RMR to See a Clearer Vision of Your Future

Today, Matt and Mary are financially better off and significantly more confident because they have a plan backed by the steps they must take to get there. And the Advisors at RMR can help you achieve the same level of financial confidence. At RMR, we specialize in creating customized financial plans to help you achieve your short and long-term financial goals. We utilize an array of financial tools and services to help our clients find the best balance between living for today and saving for tomorrow.

Contact an experienced Financial Advisor at RMR today to bring your vision into clearer focus.