Smart Money Podcast: Remote Work Burnout and Saving for College

Liz Weston: Welcome to the NerdWallet Smart Money Podcast, where we answer your personal finance questions and help you feel a little smarter about what you do with your money. I'm Liz Weston.

Sean Pyles: And I'm Sean Pyles. You know you have questions about how to manage your money, so let us help you answer them. To send us your questions, call or text us on the Nerd hotline at 901-730-6373, that's 901-730-NERD. Or email us at [email protected]. The more detailed your question is, the better we'll be able to answer it. Plus, I'm nosy and just want to know your business.

Liz: So true. So true. All right. And hit that subscribe button to get new episodes delivered to your devices every Monday. If you like what you hear, please leave us a review. Now, we've got one more last plug before we get into this episode. We want to know, what has the pandemic taught you about money? How has the way you handle your money changed in 2020? We're working on a special episode about all the money lessons we learned this year, but to make this happen, we need to hear from you.

Sean: Yes. Please hit us up on the Nerd hotline to share your stories. You can always write us over email or text message, but I'd really love to include as many of your actual voices in this as possible. So please leave us a voicemail or email us a voice memo so we can really bring this thing to life.

Liz: We can't wait to hear from you. OK, let's get onto this episode. This week, we're diving into college savings plans with the help of Kim Palmer. But first, in our This Week in Your Money segment, we're talking about how to avoid burnout while working from home.

Sean: Yeah. As we work through month 1 million or 2 million, whatever this is, of the pandemic working from home, many people are realizing that they're going to be working from home indefinitely. So we thought it would be good to talk about our experiences with burnout and how you can work through it. And this is not just so you can keep plugging away at work, but it's really so you can actually enjoy the life that you have right now.

Liz: Yeah. And some of us have been doing this for a while, so we've come across this in other contexts. And actually, it's going to help me right now because I just hit that point last week. It's like, will this week ever end? And I love my job. It's so strange for that to happen. It just feels weird.

Sean: Right. Well, I feel like I have experienced this phenomenon that I call Blursday, where there is no Monday or Wednesday or Saturday. It's all just a blur of different days. And when I experience that, it's a sign for me that I need to evaluate where I am in my life and what I can do to make myself enjoy more of the present moment. Because, like you, I love my job and I'm happy to do it, and I feel passionately about it. And when I'm not feeling that passion or that motivation, it means that something is a little bit off-balance here. And that's a good sign that burnout is kind of building up inside of me.

I thought it would be also helpful to define what burnout is. We all know when we're feeling exhausted, but I think having some concrete terms might make it seem easier to address and get past. So burnout, really, as defined by the Mayo Clinic and a few other places, is a state of severe work-related stress that can lead to physical, emotional and mental exhaustion. And these feelings are often connected to work, but they can also be caused by external factors like a deadly pandemic or an upcoming election, right?

And that can manifest in so many different ways, which is what can make it hard to address, because it's not just, "Oh, I'm procrastinating more than usual." It's like, "OK, now I have a feeling of malaise, and I don't really want to make any meals, and I'm just snacking on cake and trail mix all week long," which is what I did last week.

Liz: Yes.

Sean: It can be really hard to do. So how do you typically address burnout when you're feeling it creep up?

Liz: Well, you said something interesting when you talked about not having anything to look forward to. And I think that's a defining feature of the pandemic. For those of us who love travel, we can't travel right now. We may not be able to get together with family members for the holidays. So it's really ... It takes some effort to come up with things that you can look forward to.

And my little hobby of miniatures is part of that, knowing that on the weekend I can work with those is really cool. But also, I'm starting to make plans for 2021. I'm starting to make travel plans. And it's like screw it, if I have to cancel it, I have to cancel it. But there's a lot of pleasure in just thinking about where we're going to go and how we're going to do it.

Sean: Yep.

Liz: We're just getting started in that. I call it a routine. It's not routine at all. It's really fun. So that's one of the things I do. How about you, Sean?

Sean: A bit of the same. I'm also making some travel plans for 2021. My best friends from college who live across the East Coast and I are planning on meeting up somewhere in the middle of the country, between Portland and New York City.

Liz: OK.

Sean: So that might be Colorado if we're feeling a little funky, or we might go out to New Mexico and stay somewhere in the desert. But we're trying to make some sort of plan so that we can have, as you said, something to look forward to and to mix up our routine.

But one thing that also helps me is really redefining my boundaries with work. I tend to get sucked into my work because I do really enjoy it. But one thing that stood out to me when I was digging into some reporting for this segment is that there's a paper in July from the National Bureau of Economic Research that found that in the weeks after the work-from-home orders came down, the average workday increased by almost an hour. It was around 48 minutes of the day.

Liz: Wow.

Sean: And the number of meetings increased by 13%. So even though we're at home, you think that you can be a little bit more flexible and go in and out of what you're doing with work, work increased. And so I found that that happened with me and with my partner too. He was having a lot of meetings that were previously only phone calls that were turned into Zoom meetings. And that leads to Zoom fatigue, which I think we're all experiencing a little of right now.

Setting a boundary of, OK, do I need to be working this late or this early? The answer is probably not. Do I need to be on this Zoom call right now or can it be a phone call? It can probably be a phone call or, better yet, maybe even an email or a Slack.

Liz: Yes.

Sean: Finding ways to make it so that you have more control over when you're working and how you're working makes it so that I have more free time to go walk my dog or pick weeds in my garden or do whatever I need to do to feel like I'm a person and not just a worker bee.

Liz: Yeah. And I think part of the issue was that a lot of people were working from home for the first time, including a lot of managers. And I think some of them freaked out a little bit and it was like they added to their load. I don't feel like that happened so much with NerdWallet because the content team is mostly remote, so ...

Sean: Right. We have been for so long.

Liz: Yeah. But I noticed that with some of my friends, with my husband, that all of a sudden all this stuff was happening that maybe didn't need to. So I think that's a great idea, Sean, of looking through your meetings and what you're doing and asking, "Could this be a phone call? Does this have to be a meeting?" Because I can get to the point where we have a family Zoom call every Saturday, and I can get to the point where I don't want to do it. I love my family. I want to talk to them, but it's just like, "Oh my God. One more Zoom call."

Sean: I know. There's this video app called Houseparty that I was using a lot with my friends. And we were doing it weekly, at least once a week, maybe even twice a week, in the beginning of the pandemic. And then I think we all got a little bit tired of feeling like we had something to do. It wasn't just convening online. It was, OK, here's another obligation. Even though we love each other dearly, it becomes another thing to have to factor in when sometimes all you want to do is just sit on your couch and stare at House Hunters, which is what I do a lot of the time.

But on the work side of it, one of the best ways that I found to break the burnout feeling is just literally to walk away and to take time off, which is what I'm doing this Friday. I'm taking the day off because it's my partner's birthday, and we're going out to a little beach town.

Liz: Happy birthday, Garrett!

Sean: Yeah. I know. I'm very excited for him. So it should be a good time. But the most important thing is that we're able to step away and not look at our phones, not look at anything but the beautiful Washington ocean and be in that moment and enjoy our time together, because that's what it's really about.

Liz: I've added a hard "out" time. So I don't just walk away from my desk, I shut everything down. I clean up my desk. That little ritual is amazing for cutting the day off. It's like, OK, now I'm done. I'm moving on. And that does, it helps me anyway to just say, "OK, this is enough for the day."

Sean: Yeah. Well, I think that a really smart move is having a routine and little rituals that can get you in and out of work. I really like doing that. And I also like mixing up my routine because that can help me avoid that Blursday phenomenon, where sometimes I really will just fall into sweatpants mode. Like right now, I'm admittedly wearing my black velvet tracksuit because it's cold here and I need to be cozy, and we're recording this early in the week and I'm a little tired.

But some days I like to mix it up. Maybe I will even take a shower in the morning. How novel. But find ways to make it so that I'm not just doing the same thing day after day, but that I do have something that's kind of keeping my days mixed up. I have something that's getting me into the work mode, but it's maybe not the same thing every single day. That might just be my ADHD side coming out, where I need something different happening to keep me engaged, but you have to find what works for you.

Liz: Mm-hmm. Absolutely. Because we are on Zoom all day, it really does help to look halfway decent. So I was thinking of that because sometimes I put on dresses, which I almost never wore dresses before the pandemic, but now I kind of want to dress up a little bit.

Sean: Which is so funny that you're wearing dresses, because we're only seeing you from like the torso up.

Liz: Yeah.

Sean: So we don't know that you're wearing a dress. You're just wearing something that looks nice. But it's about getting yourself mentally in that place where like, "Okay, I'm working now. I'm in this professional mode. And I feel like I'm enjoying what I'm doing because I'm looking nice."

Liz: Yeah. And what else did you buy in terms of equipment?

Sean: Almost nothing, honestly. Because I was pretty well set up, but my partner just got his task chair from his office. However many months we are into this now, they just allowed people to come back in and get some office equipment. And that made a huge difference for him, because he tends to work more formally at a desk. And I'm kind of a work all over on my laptop kind of person. I'm often sitting in a chair or at our kitchen table or out on our patio. Again, I like to mix it up. So I'm not very traditional in what my equipment is, so I didn't do much. But that task chair helped my partner tremendously, just feeling comfortable where he's working.

Liz: Does he have a standing desk as well?

Sean: Yes. It is actually mine, and I let him use it, very graciously, of course. Because again, I don't use it all that often. And he doesn't actually use the standing component that much, but he's 6'4". He's 7 inches taller than I am. So he needs that adjustment. So he feels physically comfortable at the desk, whereas I'm always shrinking it back down to my level whenever I use it. So he likes that a lot, but not for the reason that you might expect.

Liz: Yeah. OK. That makes a lot of sense. Some of our coworkers have things like under-desk cycles or one of them even works with a treadmill.

Sean: Right.

Liz: Just to get that exercise. That's something else I noticed is even those of us who are working from home, we're moving less, because we weren't getting out as often. Even walking to the car and driving to the mall and walking out to the mall, that's some movement. And you can finish a day and hardly have gone anywhere, so getting that exercise is super important too.

Sean: That makes a tremendous difference for me. I think I mentioned this when we first talked about working from home habits, where, when I first went remote at NerdWallet, there were two months where I almost never left the house because I was new to working from home. I felt like I had to be working all the time. I didn't really know how to break it up.

And then I got a dog. So that helped a lot, just being able to go out, being forced to go out a couple of times a day and get a walk. Now my dog is a couple years older. She's not as active as she used to be. So it's now on me to have that initiative to get a workout in, do a couple pushups, do some weightlifting, whatever it may be just to get my blood flowing so that I can actually think more clearly. Get out some of that pent-up energy and the stress that I have from just everything going on and be able to focus on what I need to for work.

Liz: Yeah. When we first got our dog, I called him my personal trainer because he really did get us out the door and get us working and moving.

Sean: The fuzziest, cutest personal trainer.

Liz: I wanted to circle back to that idea of taking time off, because we're talking about our vacations next year and what we're planning to do. But it's important to take time off now. And actually, our managers have been great at NerdWallet about reminding us to take time off, take time off.

Sean: Yes.

Liz: It felt initially like I should not waste my time off if I can't travel, but that's kind of short-sighted thinking.

Sean: Yeah, it is, because part of what can help you avoid burnout, as we said before, is just getting away from your work and just having time to be your own person. And so I took a few days off over the summer just to sit in my house and read and prune roses in my garden and be a person and sit in grass and not be tied to some sort of screen, even if it's just my phone.

Liz: Yeah. You actually were pretty instrumental in inspiring me to take some time off too, because you had such a good week. So thank you for that.

Sean: Yeah. It was one of those things where I am so susceptible to falling into the social media holes of my phone, of Twitter, of whatever it may be. And having the self-control to step away from that can be really hard for me sometimes. And making it a rule makes it a lot easier to follow because I'm OK at following my own rules most of the time.

And that was a rule I had for that week. I wasn't going to be on social media at all. I deleted all the apps. I blocked the website, even on my phone. I didn't let myself do it, just because it becomes a muscle memory, where next thing you know, you're checking the time on your phone and suddenly you're in an Instagram hole or wherever it is. And getting out of that can be so refreshing. I find that I think more clearly, I don't have that constant level of stress or at least not as big of one and I can relax. I can exhale and stop clenching my jaw or whatever I'm doing that's a sign of my constant stress. You know?

Liz: Yeah, because those apps are built to be addictive. That's what they're about. So it's wonderful to turn them off for a while.

Sean: For folks who are dealing with their own burnout out there, I would love to hear how you're coping with that. What has worked for you? What are your signs that you're having a little bit of a rough week and that you need to step away, and how you've conquered that? So please let us know. Hit us up on the Nerd hotline and share your experiences too.

Liz: OK. Cool. Well, let's move on to our money question.

Sean: Sounds good.

Liz: This week's money question comes from Rob in San Francisco. He writes, "Hello, Nerd hotline. I just recently had my first child and had a question I don't think you guys have covered yet. When and how should I start saving for his college fund? What are the options available for me to start putting money aside to be able to afford his future college tuition? 529 plans, custodial accounts, etc. Thanks."

Sean: What a lovely and thoughtful question that I'm sure Rob's kids are going to thank him for asking years in the future when they are reaping the benefits of this. And it's a question I bet many, many people, myself included, wish their parents had asked when they were younger.

Liz: And it really is something you need to address as soon as a child is born, if possible. I mean, it would be great to address it even before you had kids, but definitely once they're on the scene and they have Social Security numbers, it's time to get started saving.

Sean: Right. To help answer Rob's question on this episode of the podcast, we're talking with Kim Palmer, a Nerd who has plenty of firsthand experience with exactly this topic.

Liz: All right. Let's get to it.

Sean: Hey, Kim. Welcome back.

Kim Palmer: Hi. Thanks so much for having me.

Sean: Yeah. We're really happy to have you, because I know that you have 529 plans for your kids. And so you have a lot of experience with this. I want to hear from you first why you chose that route to save for your kids' college as opposed to another option.

Kim: Yes, definitely. Well, basically I think it's, first of all, so great that he's already thinking about this. For me, when my daughter was born 10 years ago, I really didn't know where to start or what to do. So it took me about five years to start her account. And now that I'm a pro with my third child, I set up his account right away, and now I have all three accounts going. So it took me some time to get warmed up.

I'm so glad to hear that Rob is already at that point, because personally, I don't think you can start too early. I think it's a great idea to get it started as soon as you have that Social Security number of your child, because basically 529 accounts give you certain tax benefits. And I'm sure we'll talk more about that in a minute.

Sean: Well maybe it would be helpful if you actually just give a clear explanation of what exactly these accounts are and why they are so appealing.

Kim: I think that 529 accounts are so appealing and popular to people because basically they give you certain tax advantages. You do contribute your after-tax dollars into the account. And then, the money actually grows. The earnings grow on a tax-deferred basis. And then as long as you're taking money out — you're making those qualified distributions for things like tuition for college — then those earnings aren't taxed. And actually some states also give you a tax credit or deduction. So there are all sorts of benefits, and I think that's why they've gotten so popular.

Liz: We probably should explain a little bit about how they work because it's not just putting the money in. You have to get it invested. Right?

Kim: Yes. So basically how 529 accounts work is that you put money into the account. And you have a lot of options in terms of which 529 to choose. A lot of people choose the one from their state, but you don't have to. And then the money is invested. And you do have control over how it's invested. You can pick, just like with a retirement account, you can pick which funds you want the money invested in.

Personally, I find it really easy to use something like a target-date fund, where the money actually gets more conservatively invested as you approach the year that your child is going to college. But that's all up to you.

Liz: Now, some states have prepaid plans too. Those are a little bit different, right?

Kim: So prepaid tuition plans are another option. Basically, you're locking in the price of tuition at today's prices. And then you pay that now and it's locked in. And so even if the price of tuition goes up and skyrockets, you're locking in those prices. So that's one very appealing option to parents, especially if you're worried about how expensive college is getting and you think it's going to get even more expensive.

Liz: But that requires the child to stay in the state, rather than with a regular 529 or a college savings plan, they can go anywhere. Right?

Kim: I think that one reason why 529s are so appealing is because you have that flexibility. You can use that money at any college, any state. And if you're using the prepaid plan, you are restricted in that way.

Sean: As someone who went all the way across the country for college, I can say that the more standard 529 college savings plan might be more appealing for children so they're not locked into the state. I mean, part of the appeal of college for me was to go somewhere new and see something different and get out of Illinois. So I have another question around funding 529s. How much do you typically put in monthly? And what's that process like?

Kim: I think that that question of how much to put in monthly depends a lot on the state of your own finances. It's really important to make sure you're taking care of your own finances first before you start saving for your child's future college education. So, first of all, in terms of prioritizing, you want to make sure you have things like your emergency fund squared away. You want to make sure you're saving for your own retirement. And so after you have that sorted out, then you can figure out how much can I really afford to now put into my child's college savings account.

It differs for everybody. There are so many useful calculators online to help you figure out your target amount. And so that can be a useful way of picking a number. I also think then, once you have that number, it's useful to set up automatic transfers. And so you're not even thinking about it. Every month, a certain amount is taken out and put right into your savings account for college. And that way you're constantly building it.

Liz: George Hurley, who is a 529 expert, basically recommends parents just set up an automatic $15 or $25 a month transfer when the child is born, just to have that habit built in, because most people can afford at least that. And then that you've got the account in hand, and then you can go to your parents and your partner's parents and say, "Hey, instead of buying them a lot of plastic crap and yet another stuffed toy, would you make a little donation to your 529 plan?"

Sean: That seems a lot more possible for a lot of parents, because I hear of college savings accounts, something, again, I didn't have growing up, and I think this is something for rich people. But if you're only putting in $25, $50 a month, that makes it a lot more attainable. And I don't think a lot of people know that you can put that little in monthly, and it will grow because you have such a long time horizon.

Kim: So in some cases when you're starting your account, there might be a minimum to get started. But then as you're setting up your monthly contributions going forward, it's usually very flexible and you can just pick what amount works for you.

Sean: So Liz, this seems like something that you would have done for your daughter, maybe even before she was born. I just have a feeling that you did this though. Is that the case? And if so, how did you approach this?

Liz: I did try to establish one for her before she was born, and you can't do that. You actually have to have a human being. The interesting thing, though, is that you can change beneficiaries. So if you were in a situation where, for example, one child didn't want to go to college, you could transfer the money to the other children.

So I briefly thought about starting one for her cousin and then switching the beneficiary. But anyway. I did wait and I did, we started with her right away. We signed up. I can't even remember what the minimum was at the time. I think we started with 25 bucks, but we had very generous grandparents. And so we just funneled money in that way. And the nice thing is, is she won't face a lot of debt when it comes to going to college. And to me, that's the biggest reason to save. I don't think parents are going to be able to save 100% of the cost of a college education. I don't think that's realistic for most parents, but I think shooting to save 30% or 50% is definitely a goal. And it's something that every dollar you put aside, you are minimizing the debt your kid will have to take on.

Sean: Or that you would have to take on.

Liz: Yeah, exactly.

Sean: But I want to talk about other options, as well, because 529s aren't the only thing that people can look into here. There are also custodial brokerage accounts and Coverdell education savings accounts. I'd like to hear why you maybe didn't choose those and how do you think they play into this?

Liz: We did have a Coverdell fund for our daughter, and we wound up rolling it into her 529, just because a 529's more flexible. I think that was one of the issues.

Sean: Right.

Liz: And in terms of custodial accounts, those are really bad for financial aid. And that's a question that comes up a lot is people worry that saving for their child will reduce financial aid. If you save the right ways, the impact will be minimal. If you save the wrong ways, like custodial accounts, you'll wind up really taking it in the teeth with financial aid.

Sean: Why do you think people choose those over a 529? Is it just a mathematical mistake that they're making, or is there some benefit that maybe they're aware of?

Liz: I think in the past, those Uniform Gift to Minor accounts and Uniform Transfer to Minor accounts were more popular, and people are aware of them. So they think that's the route to go, but they really don't realize the downsides. The other big downside to those accounts is that the money becomes the child's at a certain point, when they're 18 or 21, typically. And you have no control over it at that point.

So to me, it's much better to have the 529, have the parent in control. If the kid does decide to not go to college for whatever reason or not use the post-secondary education, you still have control. And at the worst, you can take the money back and you're paying, I think a 10% penalty, but it's only on the earnings that have grown over that time. So it's not like the money's locked up.

Sean: Got it. Because that did seem like a potential downside of 529s is that people who don't want to go the college route can't really take advantage of them. So that's why I was wondering if maybe a custodial brokerage account might be a good option for people who don't want that traditional college course.

Liz: Yeah. I think 529s are pretty flexible in terms of how you can use the money. And I really think that post-secondary education's pretty much a necessary thing. You want kids to stay in the middle class. So they don't have to go to a four-year college, but they have to get some kind of education. I wanted to talk to Kim a little bit about using Roth IRAs for education. Did you think about that at all?

Kim: I did not think about that. Should I? Tell me why, Liz.

Liz: I'm just farther along in this process because my daughter's older. I hear a lot of people who really like it, just because of the things that Sean was saying, that you retain control and you can use the money for other things. My issue with using it for education is I have other plans for my Roths. It's sort of a tax-free way to get money to your kids after you're gone. It could be used for your own retirement. And to me, those uses are much more valuable.

But the good news with Roths is that they're not counted at all in the financial aid calculations. I mean, once you take the money out, it can be factored in, but they can be pretty flexible. So I'm kind of six of one, half a dozen of the other. Didn't work for us, but it could work.

Kim: Another option I like just for maximum flexibility is just considering saving your after-tax income. If you have the flexibility to have additional savings, have that in your savings and investment accounts. And you're not getting an extra tax benefit like with the 529 accounts, but it gives you total flexibility with how you're going to use that money.

And so if you are saving more, and some of it might be for college, you just want to make sure that you're putting it somewhere where it's earning a decent yield. If possible, put it in a high-yield savings account. The downside, of course, is that if, like Rob, college is still very far away, a savings account is unlikely to keep up with inflation.

Sean: What are the expected returns for a 529 versus a high-yield savings account?

Kim: Well, a 529 account is just the tool, just like a 401(k), for example. And then the returns depend on which investments, which funds you choose. And again, that's up to you. You have the choice of choosing a more conservative fund or a more aggressive one. If college is still many years away, you might be willing to take that risk. So of course, anytime you're expecting higher rewards, you're taking on more risk. So that's why it's really up to you as the investor to choose what kind of trade-off you want there.

Sean: All right, Kim. Well, do you have any final thoughts for Rob as he begins to save his kid's college fund?

Kim: My final thoughts for Rob are just that it's so great that he's already thinking about saving for his child. That means that he's already off to such a good start. And then, yeah, just make sure you do a check-in on your own finances and that you're taking care of your own future savings planning as well, because a lot of parents have that impulse to put their kids first. And so you just want to make sure you're also taking care of yourself.

Sean: All right. Well, thank you so much for joining us.

Kim: Thank you.

Liz: OK. Let's go to our takeaway tips. The first one, and the most important, start saving for college as soon as possible.

Sean: Second, consider using a 529 account for the tax benefits and flexibility it offers.

Liz: Finally, know your other options too, like savings and investment accounts. Those could be a better fit.

And that's all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373, that's 901-730-NERD. You can also email us at [email protected]. Also visit nerdwallet.com/podcasts for more information on this episode, and remember to subscribe, rate and review us wherever you're getting this podcast.

Sean: And here is our brief disclaimer thoughtfully crafted by NerdWallet's legal team. Your questions are answered by knowledgeable and talented finance writers, but we are not financial or investment advisors. This Nerdy info is provided for general educational and entertainment purposes, and may not apply to your specific circumstances.