A New Reality for Emerging Families
By: Liberty Publishing, Inc.
The financial challenges facing younger couples are quite different than those of yesteryear. Let’s take a look at John and Becky Stewart. John and Becky are in their late twenties and have been married for five years. John is a sales representative for a computer software company and Becky works in the mortgage department of a local bank. During the early years of their marriage, they enjoyed a lifestyle supported by two incomes. Without children, they were able to be somewhat carefree about their spending.
Now, however, they are contemplating having children and are raising questions about the financial implications of enlarging their family. Although their jobs seem relatively secure, they have friends who work for downsized companies and who are less certain of their financial future. Moreover, some of their friends have lost their jobs and are going through difficult transitions.
Discussions with family and friends have led them to the conclusion that uncertainty may be the defining characteristic of their generation. Emerging families like John and Becky Stewart are facing a new reality, one with much more uncertainty about the future than that faced by previous generations. Some of this uncertainty is tied to rapid technological changes and some is the result of the realization that they personally may be responsible for providing for themselves much of what was previously provided by others (e.g., pensions by employers; social programs by government).
Here are some of the issues that now concern them as they look to the future:
• Will corporate downsizing eventually catch up to them? Even if Becky intends to return to work full-time after having a baby, how would they cope if one of them should lose their job?
• What about the world of work in general? Will they go through several career transitions over the course of their working lives due to an economy that might be changing constantly? Is there a way to protect themselves financially?
• With their college days not too far behind them, they know that their parents made sacrifices to send them to good schools. How difficult will it be for them to save for a child’s education? What about saving for more than one child?
• They both participate in 401(k) plans at work, but will they be able to save enough for a comfortable retirement? What about Social Security? Will the system change significantly?
• Will they be protected should they become sick or disabled?
By discussing the various alternative solutions to the difficult questions above, John and Becky will be able to arrive at a realistic assessment of what they should and should not do financially, what they can and cannot afford, and what sacrifices they might need to make to assure financial security for both today and tomorrow. They know that their spending choices will have to be made carefully, and that preparing for a bright financial future will require setting goals now.
As Becky and John look to expand their family, they can be optimistic about their future because their financial planning today will make them less likely to be caught off guard by sudden economic or personal events tomorrow.
In the last 4 months, we’ve really broken through a lot of the social taboos. When I was growing up, I was taught never to talk about sex, politics or religion in social gatherings. Those walls have been broken through if not trampled upon. But there is one conversation that people are very hesitant to talk about. Marriage and money. As a financial planner looking for a group that really needed my services, engaged couples seemed to keep fitting the bill. If you ask any married couple about conversations around money, they will tell you it’s a top 3 if not #1 source of disagreement. If money management is such an issue, why don’t engaged couples regularly seek out third parties to help them through these difficult conversations?
- Conversations around money cause anxiety.
- We don’t want to find out we are not doing well.
- We assume that income equates to financial wellness.
- There is a gender bias in our industry that does not cater to women.
- Specifically in the Puget Sound area, the economy, jobs, and real estate are doing pretty well right now so at the end the day, many people tell themselves, “Finances don’t matter, everything is going to continue to do well and I’m going to be okay.”
But if we really are interested in preserving relationships and fostering a solid foundation based in communication and trust, then there has to be a conversation about the financial aspects of the marriage. Part of the reason why I started the Marriage and Money: Planning Your Forever After WorkshopTM is to go beyond the numbers of budget and retirement. Why are we silent about money? If we (those of us who are married) don’t talk about it, then who’s going to tell engaged couples that it takes more than a joint checking account, funded 401k, and good FICA scores to have a good financial plan?
Some workshops highlight the challenges of marriage and money. However, I find them very much what you should do with little direction on how. For example, a well-known checklist item is to create a budget. However, with today’s couples coming together both parties owning established careers, 401ks, real estate, and sometimes owning businesses, the budget conversation can be highly complex. In our Marriage and Money workshop, we distinguish cash flow analysis from a budget and dig deep into other topics that need more attention to execute successfully.
I talked to a behavioral psychologist about the reasons why people don’t do what they know they should do when it comes to money and they brought up some interesting aspects. One of them said that the power of inertia is nearly unstoppable. In other words, if they haven’t talked about it until now, then nothing is going to cause me to break this code of communication other than an equal force – like a major problem. The second point suggested is that it usually takes a third party to facilitate these conversations. Third, by nature we are taught to put out fires and the only way we deal with these issues is when it causes enough anxiety to force us to act or address something when it goes wrong. However, even when we address these situations, we usually find a short-term solution and get on with our day. Talking about money is usually not a life-or-death situation for most people. But I will say it’s kind of like brushing your teeth, you know you should do it but the results don’t manifest in the short-term. Yet the consequences of not brushing tend to show over the long term.
It’s clear there’s a knowledge Gap when it comes to what pieces we need to address in our total financial picture even beyond Investments. My guess is that less than 10% of our population has a real financial plan beyond their retirement account.
The good news is that when talking to Millennials, I’m hearing more proactive conversations about how their financial picture looks together either before or shortly after marriage. I created a workshop to make this transition easier more pleasant and more impactful in the long run.
To make Marriage & Money: Planning Your Forever AfterTM workshop unique, I needed to add missing pieces. First, the workshop is more than an investment guy telling people to communicate and save. This workshop addresses the legal and behavior aspects by including an estate planning attorney and a couple’s therapist. People also have a major trust issue with financial firms. It’s like walking into a daycare with a hook for a hand and eye patch. You might have the best intentions but people are leery. So second, we pulled the plugs for RainierView Advisors. I mention RainierView Advisors 2-3 times for compliance purposes, but this workshop accepts the fact that some people just want an outline of what they need to know and they’ll pursue it on their own – DIY. Third, we will even give people the top 10 things they should ask of their financial advisor/planner. Fourth, no investment product or insurance sales pitch, just advice from professionals in their respective fields.
We want people to walk out with items they can use that night. Not a thick workbook that is put on the bookshelf never to see the light of day. Fifth, we also include a worksheet to go through different money values that couples may have and lastly, an outline of a complete financial plan.
The ultimate goal for the Marriage and Money workshop for engaged couples to become as fundamental as taking a prep course before taking the SAT. You can do without it, but most people would benefit from at least knowing the format.
We have a very challenging goal of exposing several aspects of financial planning that engaged couples don’t think about without discouraging them. We also want to highlight aspects where they are doing well. This is clearly not a doom and gloom presentation. But we make sure we end the session with a call to action. Do something, talk to a third party, talk about this workshop afterwards, draft up a joint cash flow and balance sheet. Just do something or this last taboo will stand in the way of your financial success.
About Roderick Givens and RainierView Advisors LLC
Roderick Givens, founder of RainierView Advisors, has nearly 20 years of experience in financial planning and asset management. A Certified Financial Planner® and Certified Investment Management Analyst®, he serves individuals and small businesses with an approach that focuses on understanding people and helping them comprehend, evolve and ultimately succeed in meeting their goals. Givens has held roles as an investment analyst, manager, business development director and investment sales director with some of the largest financial firms in the world. He recently was named “Best Financial Advisor” in the 2016 Best of South Seattle Awards.
RainierView Advisors LLC is a Seattle-based independent comprehensive financial planning firm specializing in serving the needs of Gen X & Y clients.
Planning for your finances doesn’t have to wait until after marriage. Marriage & Money: Planning Your Forever After workshop addresses the #1 stressor for married couples. Hear from a Financial Planner, Estate Planning Attorney, and couples psychologist to address what you need to know about the big picture when it comes to finances.
Countless surveys have shown that money is the primary source of stress in relationship, and it’s no wonder! Most couples receive little to no guidance around important financial questions before they tie the not!
- How does each spouse value money? How do they make decisions?
- How do their retirement goals and strategies compare and integrate?
- What are some of the estate-planning and legal considerations married couples face?
- How does marriage impact taxes and insurance?
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