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CNN Saturday Morning News

Interview With David Bach

Aired March 23, 2002 - 08:42   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: You know you have less than a month to get your taxes filed with Uncle Sam and it's not too early to start your tax planning for next year. Financial adviser David Bach helps smart women finish rich in this book. This morning he's going to help us out with his tax and money tips. He joins us from New York.

Good to see you, David.

DAVID BACH, AUTHOR, "SMART WOMEN FINISH RICH": Good to see you, Kyra. How are you?

PHILLIPS: I've got to tell you, I really like the title of that book.

BACH: Thank you.

PHILLIPS: And I know you wrote "Smart Couples Finish Rich," also, right?

BACH: Right.

PHILLIPS: That was...

BACH: Both on the best seller lists right now.

PHILLIPS: Oh, of course. Yes. We see that kind of title we want to launch in and read it. Well, let's talk about the -- you talk a lot about women and money in America today and there's a lot of good news. Why don't you sort of give us a little bit of synopsis?

BACH: Well, there really is. The studies have just come out showing that women have outperformed men investors in nine out of the last 12 years. So we're seeing women really take charge of their finances right now and really perform very well. I mean the new investor in America, really North America, is today's woman. And that's because she's an entrepreneur. She's running her own business. And those women that are graduating from college right now are actually earning as much money as men and in 30 percent of American households, women are actually out earning the men.

PHILLIPS: Wow. Boy, that's neat news. What about the women, you say a lot of women are being wiped out financially and don't even realize it. What do you mean by that? BACH: Well, the biggest challenge women face financially right now in this country is that on average the government tells us that you take 11 years off from work while you have children. And what's happening is you're not putting money into Social Security, 401(k) plans or pension plans. As a result, the average woman right now in America has about 50 percent less than men saved for retirement, but you're going to live longer than the men do so you actually need to be putting more money away than the men are.

PHILLIPS: Well, are there things that women can write off that men can't?

BACH: No. The government doesn't have different tax write-off laws for men versus women. But the key thing right now is that all the tax laws have changed for 2002. But it's not too late to get, take advantage of tax write-offs for 2001. What we're recommending to people to do is that they go out and fund an IRA account right now. The interesting thing is that 80 percent of Americans still haven't funded their IRA accounts for 2001. So it's not too late. Go to a bank or a brokerage firm, open up a deductible IRA account if you didn't fund your 401(k) plan. You can still put $2,000 away for last year.

PHILLIPS: Oh, wow. Now what about looking into 2002? What can we be doing right now to get some benefits?

BACH: Well, the great thing about this year is that now you can put more money away. The government is really encouraging Americans to save more money. So where last year you could only put $2,000 away from retirement in an IRA account, this year you can put $3,000 away in an IRA account.

Now, what we're recommending people to do is actually go into a bank or a brokerage firm, set up what's called an automatic investment plan. That's where they'll take money out of your paycheck every two weeks and fund that retirement account.

The reason that's so important is if you just put a couple hundred dollars a month away, when you get to the end of the year, you've fully funded your retirement account. Most people don't do that. They wait till the end of the year to fund the account and then they don't have the money to do it.

PHILLIPS: Now, let's talk about this latte factor. Am I say that right?

BACH: You are saying it right. The latte factor. It is the simple idea that you don't need to be rich to be an investor. Literally, we're all going out every day and we're spending $3 to $5 on little things. Many people, millions, actually, are going to fancy coffee places and buying lattes. What I recommend in both of my books is that you find $5 to $10 a day and that you actually put that in your 401(k) plan or, again, a retirement account like a Roth IRA.

If you do that, in two to three decades you can literally have hundreds of thousands of dollars in savings by just cutting back on the little things and paying yourself first.

PHILLIPS: Wow. Now, folks who don't have your book, you give seminars, right? You travel across the country?

BACH: That's right. We actually have over, we have almost 5,000 instructors teaching my classes right now nationwide, both Smart Women Finish Rich and Smart Couples Finish Rich. And we just launched them up in Canada. So if you want to find a class, 90 percent of them are actually free. They're about two hours. You can go to my Web site, which is finishrich.com, and every two weeks we post where the classes are being taught. About a hundred classes a month are taught nationwide.

PHILLIPS: Excellent.

David Bach, "Smart Women Finish Rich," or, you can be a smart couple finishing rich. Check out that book, too.

David, thanks for the tips this morning.

BACH: Thank you. Great being on your show.

PHILLIPS: All right.

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