Halloween Night: A Personal Finance Story (Chap. 3)


Authors’ note:

Explaining personal finance can be pretty dull. That’s a problem, if you need to learn about personal finance.

On a plane from St. Louis to Seattle, I decided to try and fix the problem. What if I could wrap some personal finance concepts inside of a quirky (even funny) short story? My goal here is to present some information, and then add another step in the story. So, when you get to the end, you’ve been reminded of a personal finance concept- but you’ve received the information in a light-hearted way.

Anyway, that’s the goal here. The stories are written in chapter order, so that there is a logical flow for the reader. Enjoy!

Halloween weather is always tricky in St. Louis.

This year’s weather couldn’t be better. Greg chuckled to himself as he set up folding chairs in the driveway as darkness set in. Greg’s driveway was situated along a busy route for trick or treaters, so he set up folding chairs, lights, candy (and a cooler of beer) so he could hand out candy.

Tony showed up and added a 6-pack to the cooler. “Wow- what a great night for the kids! Karen headed a few blocks away with the kids. When she and Layla head back this way, you and I can take a turn.”

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Tony stopped the first group of kids coming down the street. Each Dad was holding a beer and a flashlight. “Hey- I got your text. So, you’ve created that personal budget and set aside some money in the savings account. Now, you need to make some decisions about investing?”

Greg grabbed a piece of candy out of the bowl. “I hope I can steal some Reeces candy from the kids….maybe they won’t notice. Yeah, I’ve accumulated $2,000 in savings, and I need some direction on how to invest it.”

Greg and Tony had their first group of kids and asked them “if they had a joke”. St. Louis has a tradition of asking kids for a joke before they get their candy- a big surprise to people who move in.

Tony set down the candy bowl and picked up his beer. “Ok, here’s something to think about. If the goal is to maximize the amount you can invest, you need to consider using your company’s 401(k) retirement plan.”

Car slowed to a stop and a woman rolled down the window. “Excuse me- do either of you have a cigarette?”

“Uh…no- sorry we don’t.” Tony answered her. “Oh, that’s OK.”, the woman smiled. “Thanks anyway!”. The woman drove off.

“I don’t think adults ask for cigarettes on Halloween!” Tony turned back around to Greg. “Think about it this way: Most 401(k) plans allow you to invest pretax dollars into a retirement plan that’s provided through work. Let’s say you want to invest $100. If you use your company’s 401(k) plan, the entire $100 is invested. The $100 investment – and all of the earnings – aren’t taxed until you take money out of the plan at retirement.”

Greg’s phone rang. He talked to Layla for a few minutes and hung up, laughing. “Some little kid ran into a house where they were trick or treating, jumped on the couch, and started changing channels with the remote- pretty funny.”

Click Here For Free Report: 10 Facts About Taxes On Your Mutual Fund

Greg turned back to Tony. “So, if I didn’t use the company plan, I’d pay taxes on the $100 first? So, not as much money would be invested?”

“Yeah, that’s it. Instead of investing $100, maybe you invest only $80. Over 20 to 30 years, that extra $20 investment can make a huge difference in your total return.” Tony noticed their kids coming down the street. “Here come our kids- maybe we can distract them and get the candy we want.”

As always, this information is for educational purposes only. Consult a CPA or a financial advisor for more information.

Action Steps To Consider

Carefully review each retirement plan offering from your employer. 

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) http://www.accountingaccidentally.com/

(you tube channel) kenboydstl


Image: Jeannette Jack O’Lantern (CC by 2.0)

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