Money Moves That Build Your Future: A Talk With Lester Baron

Key takeaways

• Automate your saving. Lester Baron says money set aside before you see it is money you will actually keep, even if you start with ten dollars.
• Build an emergency fund first. A fund in a no-fee, high yield savings account keeps emergencies off a credit card charging 30 percent or more.
• Know your number. Baron describes a financial independence number and shows how the monthly amount you need to save grows the longer you wait.
• Attack debt on a plan. Stop adding to it, list your debts from smallest to largest, and pay them off one at a time.
• Prepare so God can open doors. Pastor Adam Mesa says hoping for a financial miracle while doing nothing to prepare leaves a person unready when the answer comes.

A phone call from the bank

Lester Baron did not start out in finance. At UCLA he studied psychobiology and gerontology, planning to become a rheumatologist because his grandmother had rheumatoid arthritis and he wanted to help find a cure. He had already been accepted to medical school with a full scholarship.

Then his father died at 50, when Baron was 20. He withdrew from his classes and flew to the Caribbean, where he had three life changing conversations: with the funeral home, the hospital, and the banks. The banks gave him an ultimatum. He could pay $100,000 in cash on the spot toward his father's debts, or they would sell everything his parents had built in the last 20 years.

Baron describes himself at that moment as a "ninja," meaning no income, no job and no assets. He could not come up with the money, and the banks took everything from his mother and his family. When he visited the medical school afterward, nothing inside him said to keep going down that path. He took it as the Lord pointing him in a different direction, and that loss became the passion behind the work he does today.

What a pastor sees after the funeral

Mesa said his church hosts two to three funerals a week, so he sees what happens when families have no plan. Relatives fight over assets that were never protected. Someone arrives with a letter, a text message or a phone call from the person who died and tries to treat it as legally binding. He described one member whose aunt was trying to take her father's home, where the cost of court would be higher than the inheritance.

He also described funeral slideshows of a person on vacation in Dubai or standing in front of a classic car, while the family scrapes together money for the casket. Mesa said he took out insurance in his twenties through Baron, picturing himself gone at 31 and leaving his wife and two young sons a mortgage and car payments. For Mesa, grief and money show up together: too much and the family fights, too little and the family has to downgrade.

A system for every paycheck

Baron's advice starts with a system built on automatic programs that make you follow it. For an employee he suggested 10 percent for tithing, 10 percent for savings and living on the other 80. For an entrepreneur he suggested 10 percent each for tithing, savings and taxes, and living on 70.

Mesa told of a friend who owned barbershops and paid his barbers by check. One young barber did not realize the checks were tied to a bank account and held them for about two and a half years, then cashed roughly 40 in a single day to buy a car. The business had no savings to absorb it, and the owner settled by selling the young man one of the shops. Baron's takeaway was that both men lacked financial education, which he lists as the first of seven money milestones.

His first practical step is an emergency fund in a high yield savings account with no monthly fees, which he said pays about 3.5 percent or more. Credit cards, he noted, are averaging 30 percent or more in interest. Once the emergency fund exists, he says, you can have "play money" for stocks or crypto. He also suggests separate buckets for a house, travel or shopping. Baron told of a cousin with $30-something thousand in debt and nothing saved. He set aside ten dollars as debt came down, and four and a half years later the cousin has over $150,000 saved.

On starting small, Baron was plain: "start with 10 if that's all you can afford, put 10 dollars on automatic." He added that "forced savings is the best savings," and that you raise the amount each time you get a raise.

The retirement math by decade

Mesa asked Baron to walk through each decade of life. Baron's rough rule is that every million dollars saved produces about $5,000 a month in retirement, and he was careful not to call that guaranteed. He said California, New York and Illinois need about a million to retire comfortably.

For someone in their twenties, he said, about $150 a month in an S&P 500 fund averaging 9 to 10 percent could reach a million by retirement with no increases. In the thirties it rises to roughly $250 to $300 a month, and in the fifties to about $1,500. The longer you wait, the more you have to save, which is why he told listeners to start now, even with ten dollars.

He also warned against drawing down your principal until it runs out. He mentioned programs that pay lifetime income or a set percentage without depleting the savings, and a living trust so assets pass to children and grandchildren. Baron suggested finding a professional who does not charge for advice and can offer short, mid and long term accounts.

Ready when the dream house appears

Baron and his wife Kirsten save 10 percent of every paycheck automatically. They looked at more than 100 houses over several years in Rancho Cucamonga. Then Kirsten found five houses in a nearby city, and the fifth was the home they wanted, with room to entertain 75 people, a pool, fruit trees and paid-off solar. They did not have to wonder about the 20 percent down payment because the automatic savings had it ready. Baron said the Lord lined it up.

Mesa saw a principle in that. He told Baron, "You did everything you could do so God can do everything he wants to do." Many people hope for a financial miracle, he said, yet have done nothing to prepare for it.

Getting out of debt, one card at a time

For anyone buried in debt, Baron used the picture of a landfill turned into a neighborhood: "the first thing you've got to do is stop bringing in the trash." He and Kirsten shredded 10 or 11 credit cards, started an emergency fund and wrote every debt on a whiteboard from smallest to largest. They paid minimums on everything except the smallest, and celebrated each payoff with something like boba.

As each debt disappeared, they rolled its payment into the next one. They also looked for extra income, even a second job, to get free faster. He pointed listeners to investor.gov, a government site that shows how much you need to save for your age and income. Baron said that aiming for a million and landing at half a million or a quarter million still beats the average American, whom he put at between $125,000 and $150,000 saved for retirement.

What this means for you

Mesa closed by noting how much joy and anxiety money carries. He said, "There's almost nothing else that causes so much joy and so much anxiety." Because of that, he argued, it needs to be talked about more. He also said that material dreams are not sinful as long as they do not own you, and that the best investment is a generous life.

He told of people in their sixties and seventies on cruises who turned out to have been plumbers. They saved consistently and used their company's 401(k) match, and now they are comfortable. Others of the same age are still working and tired. Mesa's encouragement was that if you did not come from a wealthy family, a wealthy family can come from you.

You can act on this today. Choose one bucket, such as an emergency fund or the smallest debt, and set up an automatic transfer, even a small one. A common job and steady discipline can add up over time.