Family and Finances: How to Deal with Awkward Money Chats

Today we’re going to look at three common and awkward money chats families have around money  and how you can tackle them together! 

How to Come Together with Awkward Money Chats

Marriage and money isn't always easy. Chances are the two of you have different personalities and approaches to finances.

Those differences can be a wonderful thing as the two of you can lean on each other's strengths and shore up your weaknesses, but finding your financial footing as a couple isn't automatic. If you don't have some way to work on it these arguments can hurt your marriage and money.

One of the first things you need to realize about why couples fight and argue over money is how frequently it's actually not about the money.

Seriously.

From personal experience, writing and speaking about this for over a decade, the most common reasons couples fight about money is that they're not in sync with each other in either their:

  • expectations,
  • values, or
  • priorities

Usually it's a combo of them.

While the two of you, aren't always going to see eye to eye on everything –again, those differences can be fantastic -there are some ways you can work as a team to use those differences to your advantage.

Today, we're going to talk about how you can take that knowledge and untangle some awkward money conversations that can come up when you're married.

In this episode, we're going to get into situations like:

  • loaning money to your in-laws,
  • figuring out what counts as a big purchase so you don't sabotage your budget, and
  • coming clean about any secret debts that you carry.

We got a lot to cover today, so let's get started!

Resources to Build Up Your Family Finances Together

Thank You to Our Sponsor Coastal!

Support for this podcast comes from Coastal Credit Union! If you’re living in the Raleigh Durham area and looking to bank better, come check out Coastal today.

We’ve been Coastal members for a few years have been happy with their services.

Find out more about what Coastal offers here!

What Counts as a Big Purchase?

Let's start off with a conversation couples should have fairly early on as they're creating their family financial plan and budget.

How much money do either of you have to spend before you consider that a big purchase.? And, what kind of purchase counts as something you should run by one another?

These may seem like fairly basic questions. But they're important in establishing what you expect. Out of your spinning plan and what you want from it, as well as understanding your priorities and values.

This is not about micromanaging your budget. That does not work. Actually, this is the opposite where you're open and upfront about your expectations. You are understanding where you both feel comfortable spending money on and where you would prefer to have a conversation.

One source of tension with couples is that the conflict comes from purchases that the other wasn't expecting because they felt like they had already established different priorities.

or example, if the two of you have thought of buying a house down the line, but you haven't had that conversation of how soon.

One of you could be spending more money, eating out. Making some extra purchases while the other is thinking, no, we need to be more aggressive with our savings. Because we're going to be buying a house within this timeframe.

This is why I feel so strongly that when you do your money dates and you're having these conversations. Yes, you're going to be talking about the numbers with your monthly budgets. And what to expect in the near future, but you should also look at the big picture and be clear about certain priorities.

For example, going back to buying a house. Is that something you're thinking about in the next five years or less? Or is that something down the line?

Are you thinking of starting a family, starting a business, travel financial independence.

Talk about these goals and the timelines you were thinking of having them in.

You may discover that your spouse has a different timeframe or different goals. That's normal. This is about working together to create a plan that you're both happy with.

For many of the couples I've interviewed where they achieved their goals, a big part of this was being very clear about the timelines and the goals they wanted and what those particular goals look like for them .

Your idea of a retirement, the home you want to live in, how many kids you have can vary. So knowing that on both sides allows you to create a plan that makes sense to you.

If you haven't already have these conversations with one another, because these are the building blocks that will allow you to deal with much more complicated in sometimes awkward conversations.

Should We Loan Money to Family?

Lending money to family can be an especially tough situation. No matter how objective you think you are, or you want to be emotions can run high and that's normal.

I would say in our community. That most of us would want to help. If we sought that there was an immediate or dire need. And many of us probably had to step up with the financial fallout from COVID helping our loved ones.

Sometimes, though, things are a bit… messier

What if there's a situation where you want to help but you're just at the beginning of your financial journey? You're not in a great spot yourself.

What if you have a relative, a loved one, who just isn't good with their finances and emergencies keep popping up. And you feel like you're constantly bailing them out. What do you do there? You care for them?

And at the same time, things are not clicking on the financial side. These are the types of situations where we can really stress over and if we're not on the same page, get into arguments.

This awkward situation of when to step in and loan money to family with something that Jen Hemphill had to deal with. She's an accredited financial counselor author, and the host of her dinero matters.

She discovered early on in her marriage that her husband and her had different expectations when it came to helping family out with money.

So the first time I'm like, okay, then we didn't see the money. I'm like, they haven't paid back the money. He's like, oh, I wasn't expecting that. I'm like, wait, wait a minute, wait a minute.

So that was tough. And then it happened again and our emergency savings would be depleted. And so I was having issues with that because one, we were still trying to figure out, you know, our finances and it just wasn't working.

She's not alone for most couples. This is a conversation they don't have until a family member asks for money.

So, how do you prepare for that as a couple? Here's where I think it's important to have conversations about expectations and do it in a less stressful way.

One thing that's been helpful for quite a few couples in our community he is running through these. What if scenarios?

Discuss, what would you do if you had a loved one, ask for money. Maybe it was an emergency or maybe it's a situation where they're having some financial struggles that keep coming up. What would you do then? And then also talk, what are your expectations if you loan the money out? Do you think you'll be getting it back? Are you expecting it to come back?

Or do you think that once that money is gone, it's gone.

Having these conversations before this scenario comes up. Allows you to have a less stressful, less emotional conversation. And instead gives you a clearer idea of your expectations, values, and priorities.

You can then work out a system that makes the most sense for you and your family.

After some deep heart to hearts and Jen and her husband found a plan that they were both comfortable with and supportive of.

We decided, we can set money aside on a monthly basis. We separate in a separate account. I'm such a big proponent of separate accounts.

That's the pot of money that and when because it has happened there's a need, I don't feel bad this time is giving the money because it doesn't interfere with our bills or other expenses or what we want, we're trying to achieve.

Jen Hemphill, Her Dinero Matter Creator/Host

Your decisions and plans may look very different than Jen's and that's fine. The key is that the two of you are happy with the plan that you came up with together.

Coming Clean About Secret Debts

We've discussed some pretty stressful and awkward conversations that have to be had.

Dealing with family and finances is important and you want to be on the same page for sure about that as well as your spending limits and when you need to check in with each other. With your shared goals, we want to make sure that you're reaching them together.

But there's one last situation that is very stressful and scary on both sides. It's when one of you is carrying a debt that the other doesn't know about.

It could be a debt you or they had before you got married. Or it could have started off as something small, but then snowballed into something much bigger.

Either way. It occurs more often than you think.

According to one survey by TD bank, over 40% of Americans are hiding some kind of credit card debt.

This is not only a significant problem financially, but also with your marriage. It might not seem this way. But it's a form of financial infidelity.

For the purpose of this episode, we're going to define financial infidelity as a situation where one spouse is keeping the other in the dark about finances.

Here's the tricky part. First of all, yes, there are people who are going behind their partner's backs, hiding money or sabotaging their family's finances for their own selfish purpose.

For those cases, I definitely recommend getting professional help with your situation.

You want someone with this experience to guide you through both the financial side of things? And the root of the problem, which may be something serious and significant, like a spending addiction.

However many in our community who have discovered financial infidelity in their marriage. Also find out that the root of it. Is it something malicious or sinister, but rather a breakdown of communication and their financial system.

Hopefully you seen that this beam has been playing out. We have to be clear. And transparent about our expectations, our priorities and values with one another.

I have written many times about couples and their different financial situations and how they handle their accounts. But the gist of it, I want to highlight for this episode is even if you do have a separate account, maybe it's your fun money spending account. Separate doesn't mean secret.

I believe that couples should have room in their budget so they each one of you can spend on the things that matter to you.

Talking about and acknowledging those different expenses helps your relationship and finances.

On your relationship side, you're getting a better understanding of what matters to your spouse. On the financial side, having a second pair of eyes to make sure that you're not overspending. Is also very helpful.

If you haven't already include these as a part of your money dates. Don't just talk about the family shared goals, but get to know each other better. What projects are you working on? What are some of your hobbies? This can be a great help with your marriage.

Many times, one of the biggest culprits where things get out of control is carrying credit card debt.

That's because you have this mix of ease of access for payments, separation if you have your own credit card, and the fact that they typically have higher interest rates. You put those together and it could be a recipe for a mess.

So what if you two are dealing with that situation? How can you, first of all, come clean with one another about the debts that you have? Then second, start rebuilding that trust and create a financial system together that you both feel comfortable with?

Years ago, right before they got married, Tai and Talaat from His and Her Money had to deal with this situation.

I spoke with him on an earlier episode and they were kind enough to share their story, but here's how they initially felt and reacted.

I was at the point where I was ashamed of. All of the debt that I had acquired. And here I am about to embark on a marriage, a new life, and I didn't want to bring these old bad decisions that I made into the marriage. So my thinking. Well, I just got to hustle up and try to figure out how to get rid of the debt.

And I can't tell her this because she'll look at me differently. She won't think I'm the guy that I built myself up to be. You know, when we were having these money talks, now that we're engaged, you know, I meant what I was saying. I was starting to understand money a little bit better, but the problem was I was still had to deal with my past mistakes.

They were still right there in front of me. There were still bills and bill collectors that I'm dealing with, that all that was there. Because of the decisions that I had made previously. So my thought, which was an incorrect thought was I can't tell her because she won't, she won't look at me and say, she might not marry me

Talaat McNeely

Just about three months prior to getting married, I discovered financial fidelity. I discovered that he wasn't as transparent as he should have been in, before we got married about his finances, because he was trying to handle it all.

He was trying to pay it off, pay down his entire debt before we got married.

I felt like my role came down, came crashing. You know, I felt like trust, like, oh wow. Can I trust him? Because here it is, he was not completely honest with me. I just had a lot of emotions going on.

Hey, there is debt. I didn't know about what else is going on.

Tai McNeely

Their reactions, definitely capture what a lot of couples go through when there's that realization of financial infidelity.

With Talaat, you can see that shame was a huge reason why he didn't want to come to Tai sooner and a lot of people experience that.

When we were first engaged and we shared the numbers with one another, I could see immediately that I had a lot more debt than my soon to be husband had and I did feel quite a bit of shame.

Now if you're the spouse who is just finding out about this secret debt, you may not relate, understand, or agree with what Talat is saying, but many times shame does hold us back from talking about openly our finances, especially when we feel like we could've done a better job.

So, what do you do if you're in this situation?

If you're the one that's carrying this debt and you still don't feel comfortable enough speaking with your spouse about it. Let me make a suggestion, have someone who is a neutral but respected third party joined in the conversation.

It could be a mentor that both of you respect. A financial planner who has experience working with married couples. Or now this is a new development in the financial planning field having a financial therapist who can navigate both the relationship side and the communication. As well as the numbers to help alleviate a bit of that tension and stress and give you a form for you to dispute to one another in a productive setting.

Please keep in mind if you're the one opening up about this debt is that you have to give your spouse the space and time to process this and that very well may include a period where they're angry or upset with you.

You can't skip over that part.

Going forward. It's important that you give each other that space so the two of you can work together and hopefully find a way to reconnect and reestablish that trust.

Here are a few things and choices that tie into lot made as a couple to improve their marriage and their money.

I realized, Hey, he's a good man. His money issues had nothing to do with how he treated me. He treated me like a queen like my father always taught me. So I knew that as long as we came together on one accord that, Hey, we can do this.

And if it wasn't for the fact that, as I mentioned, that I saw determination and my husband, I saw that he was willing to change. I saw habits and PAs changing. He was reading different financial books and stuff like that. It was very encouraging.

So we had a long talk and we had to lay all our cards out. We had to be completely honest with each other now, um, Some of the financial infidelity was uncovered. He had to tell me everything about his past financially sold and I had to do the same.

So once we maintain that, then we were able to work together and come up with a plan on how we can handle our finances.

I'm the one that goes through our bank accounts, whether it's daily or every other day and things like that but we both sit down and we both do the budget. We have meetings, financial meetings together. We talk about expenses that are coming up that need to get paid but far as the one that's going to the bank handling like the different transactions.

I do. One of the most important things that we did was we decided that we were in this together.

This was for sure, not an overnight process. It took seeking outside help, having regular conversations, Talaatcompletely opening up about his financial state and having a system that was transparent to both of them and they had to change their mindset and work as a team.

I want to mention that tie into law are now completely debt-free including their mortgage and they're happily running a business together.

I'll include a link in the show notes to that original interview where we go into more detail. With their process of sinking up their values and their finances.

If you haven't already please add their podcast, his and her money to your playlist, they have fantastic stories. Of their marriage, but other families as well who are building up their finances together.

Investing in your marriage definitely takes time but it is well worth it and will pay off in dividends

Support the Podcast!

Thank you so much for listening to the podcast! If you enjoyed this episode and found it helpful, here are some ways to support it.

  • Spread the word! If you enjoyed this episode and think it can help a buddy get on the path to dumping debt and become financially free, please share.
  • Leave a review. Honest feedback and reviews make a big difference and gets the word out about the podcast. Leave your rating and review on Apple Podcasts.
  • Grab a copy of Jumpstart Your Marriage and Your MoneyMy book is designed for a busy couple to set up their finances in 4 weeks. Get tips and tools that have worked for other couples on their journey of building their marriage and wealth together!

Photo by Diva Plavalaguna from Pexels

Bank Better: How to Switch Your Checking and Savings Accounts

How happy are you with your current banking situation? Are you getting real value out of your checking and savings accounts? Or do you feel like you’re getting nickeled and dimed? 

Today we’ll go over how to find a better banking option and how to seamlessly move your money! 

Why It Matters Where You Bank

These are all important to your financial health and making progress on your goals, however we left the biggest piece of the puzzle last – your day to day bank accounts. 

Your check and savings accounts are the backbone to your family’s financial system, but for most of us, it's almost like an afterthought.

Much of this goes back to how we chose our accounts in the first place.

For my husband and I, with our first accounts, it was based on who we were already banking with. And at the time we had bank accounts with two of the major banks, we had opened student checking accounts.

When I say they were basic accounts, that's exactly what they were.

Honestly, we just settled with it for way too long. After getting frustrated with the horrible customer service, ridiculous fees and not seeing any real progress with our financial goals. We decided it was time to change.

We moved our money to an online bank and credit union and i have to say we are so much happier for it.

We feel that our banking partners are actually partners that they're helping us reach our financial goals faster and make our lives easier with managing our money.

So if you feel that way about your bank or credit union, fantastic.

However, there are plenty of families that feel like their banking options are hurting them rather than helping.

According to a recent Magnify Money survey, 68% of consumers are frustrated and feel like their savings isn’t growing. When you consider that 18% of those said they get less than .05% APY, it’s understandable.

What makes it worse are those minimum balances and fees added on their accounts. 

Bankrate reported that the average maintenance fee on a checking account that earns interest totaled $196.20/year

So if you’re feeling squeezed, you probably are. That doesn’t have to be the case though. 

With 2021 winding down, now is a great time to set the pieces up for you to have an incredible year in 2022.

In this episode, we’ll go over: 

  • What to look for in your next bank or credit union
  • How to move your money and switch accounts (and deal with a reluctant spouse)
  • How to set up your new accounts for your best year ever

Are you ready? 

Let’s get started! 

Resources to Easily Manage Your Money

Thank You to Our Sponsor Coastal!

Support for this podcast comes from Coastal Credit Union! If you’re living in the Raleigh Durham area and looking to bank better, come check out Coastal today.

We’ve been Coastal members for a few years have been happy with their services.

Find out more about what Coastal offers here!

How to Find a New Bank or Credit Union

Before you start comparing options, it's important to focus some time on defining what you need out of your bank accounts, your current situation and your goals.

If you're not sure where to start, let's cover some essential services you need to have.

Secure and Reliable Access

The first is secure and reliable service. You need to have access to your money when you need it.

First off, only look at banks or credit unions that are either FDIC or NCUA insured. Your money needs to be covered and protected.

Second with so many of us banking online, especially these last 18 months or so. Make sure that wherever you bank has an easy to use mobile app and site.

For example, for some of my clients where I do freelance work, I may get paid by check. In those cases, I need to have mobile deposit setup with my credit unions app.

Fantastic Customer Service

Second key area is making sure that you were bank or credit union is customer or member focus.

I know, currently the low interest rates on savings accounts aren't really helping you grow that financial cushion. However, I still noticed there is a difference with what you can get if you're willing to shop around.

Considering that we're living during these times of low interest on savings and checking accounts, it's especially annoying to hear from people in the community, getting hit with needless fees or having their banks have high minimum balances. You're not really getting much value from your accounts.

Since no one is perfect mistakes will happen. It's key to get that cleared away with great customer service.

This is an area where both of our old banks failed. We had problems with money coming out of the wrong accounts and even had a problem where someone else's credit card account was showing up when we logged in.

We immediately called in to report that so he could get fixed, but instead of working with us or explaining that they were having some technical difficulties, they denied that there was a problem.

I don't know if it was something they couldn't see on their side, whatever. Not only did that frustrate us, but it worried us about the security and privacy of our accounts.

(But it looks like we skipped some of the worst problems.)

Now you know why we left.

Keep in mind we've also had a unique opportunity with this pandemic to see what our current banker credit union is doing for their customers and members.

As members of Coastal Credit Union, we saw how they gave back to the community, to the organizations that were serving those that were hit especially hard with the pandemic.

They also made arrangements to modify loans, pause payments on credit cards, Basically work with members to keep them financially whole during this difficult time.

Competitive Rates

Finally, we want our banking partner to be competitive with rates.

We want our savings put to work by earning more. On the other side, when we got our mortgage for our current house, we wanted to get a great deal.

So there you have it. That's our list and how we rank them, but you may have a slightly different order. In different priorities and that's fine.

Remember, these bank accounts should be serving you and your family's financial goals.

Alternative Options to the Big Banks

Now that you've created your list and you know exactly what you're looking for, it becomes much easier to start comparing your options.

Many of us are familiar with the big banks. But there are three alternatives. I think you should consider when your bank hunting.

Credit Unions

Credit unions offer many of the same services as banks. You have your checking and savings accounts. You can apply for loans and mortgages and in a few cases, some credit unions offer small business accounts.

So what's the big difference between this big banks and credit unions? The main thing is how they're structured.

With a bank, they serve their shareholders and investors. When you join a credit union though, you're not only a member, but part owner.

How that translates for you is that while the bank gives their bonuses to the investors, credit unions return their surplus income to their members.

That can show up in a few different ways:

  • lower interest rates on loans.
  • lower or minimal fees with your accounts
  • higher interest rates with your savings.

We've experienced this firsthand. As you heard at the top of the show, Coastal Credit Union sponsors this podcast. However, we've been members with them for years before that happened and we have our mortgage through them.

For us, when I looked at the numbers, we're coming out ahead compared to the old banks we used. (We also had a mortgage with one of them.)

One feature we immediately noticed and appreciated was the annual member bonus. It's based on the accounts we use.

It's a nice deposit every year. It feels good to be rewarded for maintaining good financial habits.

If you're in the Raleigh Durham area, I definitely recommend checking Coastal out but even if you live outside this area, a credit union could be the right fit for you.

Community Banks

If you prefer personal service where you can go inside of a branch, community banks might be the best choice for you.

I know some families it's really a chore to deal with those automated phone systems. So having a local spot you can visit is crucial.

Instead of feeling like just an account number with some of the bigger banks, a community bank can give you that personal attention that you may prefer.

Online Banks

Years ago, there was a lot of hesitation for people to go with online, only banks. That seemed to have cleared up, especially in the past year or so.

Because online banks don't have brick and mortar branches, many of them can offer more competitive rates and benefits like low or no minimum balances on their accounts.

So if you are hunting for a better banking option, please consider those alternatives, run the numbers and find a partner that makes sense for your goals and your values.

How to Seamlessly Switch Banks or Credit Unions

While the process of switching banks or credit eons, isn't really complicated. For many families it's stressful. Again, these are our day to day accounts and much of our financial system is based on them. We want to make sure that the bills are taken out correctly, the transfers are made. As needed and payments get out on time.

With your new accounts open, let's start with outlining the steps.

The first one is map out your current system. Which accounts need to be paid and when? How much goes into savings, your retirement accounts, other investments and financial goals?

You also want to make arrangements with HR to move your paychecks so that they deposit into the new accounts. Third step is spend an evening or maybe a weekend. I don't know how many accounts you have between the two of you. And start switching over and scheduling the bills, transfers and payments with the new accounts.

And then after things are running smoothly, you made sure that everything transferred correctly. You can go ahead and close the old accounts. So that's the general overview.

Let's jump into each step and see how we can make this transition easier. The first is map out your current system. And this is something that is handy to have whether or not you're switching your bank accounts.

Having a big picture of you, of how your money is flowing gives you an idea of where you can improve and optimize.

This may be an area where having a money app. Can be incredibly helpful. Because everything is already laid out. You can dig in and drill to the transaction level to make sure that you know exactly what payment is going out and when and from which account.

The second is working with HR to make sure you have the right forms. So you can make that transition so that your payments go into the new accounts.

If you get paid every two weeks, one way you can smooth out this transition. Is waiting for a month where you get three paychecks.

They'll use that extra paycheck to open the account, put the money in. And then they start switching the deposits over. You can also time it if you're anticipating a bonus or perhaps a tax refund.

The third TIF can be a bit tedious because now you're going to be switching over, scheduling the bills, transfers and payments to the new accounts. So set aside in eating, or if you want to do it bit by bed over a weekend. Go ahead. But make this a low key evening or weekend. Order in if you have to, so you can be as relaxed as possible while you make the switch.

The last step is closing the bank accounts. And you might be wondering how long should we keep our old counts open. It really matters on how complicated your financial system is and how many accounts we're talking about. But you would want to wait at least a month to make sure everything is taken out correctly before closing. Typically, what happens if you miss a bill or two, they will contact you for the updated information.

You can also review things weekly to make sure you haven't missed anything as well.

Like I said, it's not complicated, but sometimes the process of moving things over just seems overwhelming. So breaking it up step by step makes it a lot easier.

Another snag that you can have with the switch is your spouse. If they're reluctant with making what they feel is a drastic move with your money.

One suggestion that I usually give is moving over your savings account at first. Let them see that things aren't as complicated as maybe they imagine.

You can then wait to one of those opportune times, like I mentioned, getting three paychecks a particular month or some extra income to then make the transaction with the checking account. Best wishes on this new change!

Support the Podcast!

Thank you so much for listening to the podcast! If you enjoyed this episode and found it helpful, here are some ways to support it.

  • Spread the word! If you enjoyed this episode and think it can help a buddy get on the path to dumping debt and become financially free, please share.
  • Leave a review. Honest feedback and reviews make a big difference and gets the word out about the podcast. Leave your rating and review on Apple Podcasts.
  • Grab a copy of Jumpstart Your Marriage and Your MoneyMy book is designed for a busy couple to set up their finances in 4 weeks. Get tips and tools that have worked for other couples on their journey of building their marriage and wealth together!

Photo by Adrien Olichon from Pexels

Our Financial System That Help Us Hit CoastFI

Are you a busy family looking to make managing your money much easier?

See how we handle our money system and accounts so that we're working towards our goals even if we're bus with work or family!

Easy Way to Manage Your Money

A financial system that requires you to constantly check and worry about your money isn’t going to cut it for most families. It doesn't for us. 

With two kids, work, hobbies, and friends, we have a full life and we love it. Quite simply we see money as a tool, not the goal. It’s to help us to care for our kids and other loved ones.

So while I respect those highly detailed spreadsheets with line by line breakdowns of every cent, I save that for quarterly reviews. (If that…)

We want a 👏🏼simple 👏🏼and 👏🏼effective 👏🏼financial system.

Instead, budget monthly and do weekly checks on Fridays that usually are five minutes just to make sure everything is running smoothly. 

It took some time, but we’re grateful to have a financial system that allows us to focus on the big stuff. We love even more considering these past 18 months. 

If you’re looking to make managing your money much easier, while still hitting your family’s financial goals, this is your episode. 

Today, we’re discussing:

  • Quick overview of how our financial goals and system shifted to fit the season of life we’re in
  • What principles give the framework to our financial system so we can hit our goals
  • How to keep lifestyle inflation in check while still enjoying some fun

Are you ready? Let’s get started! 

Resources to Easily Manage Your Money

Thank You to Our Sponsor Coastal!

Support for this podcast comes from Coastal Credit Union! If you’re living in the Raleigh Durham area and looking to bank better, come check out Coastal today.

We’ve been Coastal members for a few years have been happy with their services.

Did you know that Coastal offers a Health Savings Account? If you have a high deductible health plan, you need to take advantage of an HSA.

Find out more about what Coastal offers here!

Building Our Financial System

Before we get into the process, I think it's crucial to talk about three key principles we do our best to follow when it comes to handling our finances.

  • Live on one income, have fun with a second.
  • Automate our transfers to achieve our goals.
  • Keep our budget flexible.

Let's break them down one by one.

Live on One Income, Have Fun with Second

If I had to nail down that one thing that has been a game changer for us with our family's financial goals. It's basing our necessary spending on one income.

Actually that was a tagline on Couple Money for a few years – Live on one income, have fun with the second.

I'd love to say that when we began our marriage, it was with this fantastic plan to hit financial independence. Honestly, we didn't even think about or know about financial independence until years later.

The whole idea of keeping our essential expenses under one income was simple. It was a necessity.

See, we met in college and when we got married, Rob had his first post-graduation job and I just started an internship. Considering the area, was actually pretty good pay, but we didn't know if it was going to last, beyond that semester so we made a decision.

We were going to base our bills on just his income. The money that I was bringing in would be used for goals like paying down debt, putting aside some into savings and yes, having some fun.

We did have some friends kind of give us a hard time for being so conservative with our money but it was the right decision for us and it did set the tone for our finances together.

Using this mindset help us grow that gap between what we were earning and what we were spending. It also gave us more options.

For example, as I was approaching graduation, I was offered a job opportunity in Raleigh. That meant of move.

Rob would have to find some new work, but because we had simplified things, we did have the savings to make the move. It took some time, but Rob found a job that he enjoys and pays well.

We didn't realize it at the time, but the timing of our move was fantastic as Raleigh had began to explode in growth and job opportunities. If we had lived close to the edge with our budget, I'm not sure we would have taken that job and we may have missed out on a great opportunity.

We were able to start off our marriage with his foundation of living on one income. But I realize for most families, it's not something that can be done overnight.

To hopefully make things easier for you. I do have an entire episode where I break down the process of how you can shift into this system.

Automate to Achieve Our Goals

The second key principle for us. As our take on a personal finance classic, pay yourself first.

Here's how it translates for us. What we do is we set our goals for the year and long-term. Then we work backwards and see how much we need to set aside each month. And then we go ahead and automate those transfers.

We take this seriously, this idea, when we say pay ourselves first. Once the direct deposit comes in the next day, the transfers start happening. When we were working on our debt, those were payments that automatically went out. We were saving an emergency fund house down payment. Vacations, whatever the goal was, the idea is as soon as that money came in, We put it to work.

Not only has that helped us pretty much stick with their schedule? Yes. There were times we need to adjust or pause our payments. But it also gave us peace of mind.

We were working towards our family's financial goals while giving attention to the people and projects that mattered the most to us.

When we were starting out, these transfers and payments were smaller. But year by year, we increased it. So now we can make a substantial dent. With paying down our mortgage. And build up our investments.

Keep Our Budget Flexible

Finally the last key principle when it comes to our financial system is keeping our budget flexible.

This is where the money dates can be really helpful because it gives us a consistent and regular time to check in with our finances. For us, we find that the monthly rhythm is best.

Initially, when you do a money date, it will feel a little bit formal because you're getting used to your system. Honestly, now they're very casual conversations where we quickly review. What happened with the finances and the accounts? And then we talk about what's upcoming through this year or maybe beyond.

If we know we have a family getaway or a trip coming up, we're going to adjust things in the month before so that we can have some extra spending cash when we're out of town.

We find that doing these monthly checkups and adjusting our budget this way makes the most sense for our family. It keeps it flexible for upcoming expenses that happen throughout the year.

It could be taking those family trips or those semi-annual life insurance payments or getting the girls ready for back to school shopping.

All these things happen throughout the year. So we need a budget that can adjust to it quickly and easily.

Setting up the system doesn't take a lot of work, but it does take time, especially if you have several accounts between the two of you.

Depending on your bank, you may find that it's not as hard as you imagine. For us, we had to make a switch to find a better banking option.

It was well worth it because now we can easily set up savings accounts for specific goals and transfers are handled very quickly.

So there you have it. Those are the three key principles that we have in place with our financial system. That's allowed us to hit coast by while still having fun. And enjoying our time as a family.

Keeping Lifestyle Inflation in Check

One of the big challenges with families is making sure that you keep it lifestyle inflation in check and we're no different with that.

Looking at your budget, you can see that it shows up in different ways. As you're earning more money, you may see that you:

  • upgrade your car or your home
  • your vacations become much fancier the destinations, much further.
  • buy more tech

It doesn't necessarily mean that getting these upgrades to your lifestyle itself is bad or is going to destroy your financial goals.

The problem happens when you're spending the money without checking in and taking a moment to ask yourself,

  • Is this aligned with the priorities?
  • Are we sacrificing more important goals for this?
  • What value are we getting out of this spending?

One example I remember of where lifestyle inflation can really harm you is when I chatted with Kevin from Financial Panther.

We were talking about how he was able to pay off $87,000 of student loan debt in less than three years.

He mentioned that he had to resist that urge as a new attorney to not upgrade his lifestyle. 'cause he wanted to get rid of the debt first. And so that's what he did.

He kept living like a college student and he took on some side hustles to increase his income to the point that he was able to knock out all that debt.

On the other hand, let's look an example of where we personally feel that spending a little extra gives us a better value.

When we are going on family trips, we do try to shop around for some good deals. With accommodations. But something we've been spending a little bit more money on. Is using Airbnbs. And when you're renting the entire place, it is not the cheapest option. Most times, but that's okay because they fill a need for us.

And give us value when we are exploring a town and we come back and the kids still have energy. They have a space where they can run around while we still relax. In the end, the vacation is about relaxing for all of us and having an Airbnb Gives us that option.

Even though we're doing extra spending in this area overall, It hasn't budged our budget that much, but we feel like we're getting a great value out of it.

So when you're looking at lifestyle inflation, Don't just look at the numbers. Look at the numbers and the value that you're getting out of that.

I am a big believer again, of having the money dates. Or budget parties, whatever you want to call it. Because these check-ins are crucial.

They help you to reflect. Yoko through different seasons of life and in those different seasons, your priorities will shift and change. Your budget should reflect that.

That's why it's so important to have a way to reflect and get a sense of where your money is moving and why. If you're happy with it, that's great. But if you need to make a change, Then it's much easier to do.

With these reflections, you may find that you have enough to take care of your needs. Have some fun. And now can put more money towards those long-term goals. That will make a big difference with your family.

It could be that you could use that money instead of upgrading your devices, that money goes into college savings. Or seed money to launch a business. Or buy a rental property, whatever your long-term goals are. Some families want to cut back on their main job. So they have more time with the kids.

You can move towards these goals much faster as you gain more control and awareness over your money.

So while I don't think all lifestyle inflation is a bad thing. If you let it get out of the control because you're not reviewing it periodically. It can damage your family's financial goals.

Again, I want you to hit that balance of enjoying your money now but making sure that you're taking care of the people. And projects that matter most to you.

Support the Podcast!

Thank you so much for listening to the podcast! If you enjoyed this episode and found it helpful, here are some ways to support it.

  • Spread the word! If you enjoyed this episode and think it can help a buddy get on the path to dumping debt and become financially free, please share.
  • Leave a review. Honest feedback and reviews make a big difference and gets the word out about the podcast. Leave your rating and review on Apple Podcasts.
  • Grab a copy of Jumpstart Your Marriage and Your MoneyMy book is designed for a busy couple to set up their finances in 4 weeks. Get tips and tools that have worked for other couples on their journey of building their marriage and wealth together!

How to Optimize Your 401(k)

Today, we're going over the big questions that many families have when it comes to their 401ks. I want to show you how to maximize your contributions and your investments without a lot of hassle!

Making the Most Out of Your 401(k)

When we started our open enrollment series last week, we began by talking about this idea of big wins. We're if you focus your attention on a few key expenses. You can financially put yourselves ahead.

We really dove into answering questions about insurance, specifically health insurance since so many families see this as one of those huge expenses out of their budget. The challenge with taking care of your health insurance is making sure that you get the coverage you need at an affordable price.

From our experience in talking with others in the community. I've seen that, getting these pieces into place now can set you up for some incredible wins later. Now, usually during this time of year, I pull in experts like certified financial planners, where we dive into the nitty gritty details of the different benefits and options that may be available.

I'm very grateful for those experts who took the time to share some of their knowledge. And I will have those episodes on the homepage for the next few weeks. So that you can listen to them because much of what they said is still incredibly helpful.

Our focus last week was on insurance, but this week it's on 401ks and investments.

While you can make adjustments with your investments and contributions throughout the year. Many families choose to do it now around the same time as open enrollment, because they are sitting down together and looking at the numbers.

With that in mind, I'm going to do what we did last week which is go over these questions that I see from my side, either through discussions in the newsletter, our Facebook group, thriving families, or through those Google searches that I see when people first discover the site.

In this episode, we're going to be getting into:

the biggest mistakes couples make with their 401ks and how to avoid that.

Figuring out how much to contribute. And whether you should contribute at all when you're dealing with debt.

And what to do with your 401k when you have the limited investment options.

Are you ready? Let's get started!

Resources for Smarter Investing

Thank You to Our Sponsor Coastal!

Support for this podcast comes from Coastal Credit Union! If you’re living in the Raleigh Durham area and looking to bank better, come check out Coastal today.

We’ve been Coastal members for a few years have been happy with their services.

Did you know that Coastal offers a Health Savings Account? If you have a high deductible health plan, you need to take advantage of an HSA.

Find out more about what Coastal offers here!

Support the Podcast!

Thank you so much for listening to the podcast! If you enjoyed this episode and found it helpful, here are some ways to support it.

  • Spread the word! If you enjoyed this episode and think it can help a buddy get on the path to dumping debt and become financially free, please share.
  • Leave a review. Honest feedback and reviews make a big difference and gets the word out about the podcast. Leave your rating and review on Apple Podcasts.
  • Grab a copy of Jumpstart Your Marriage and Your MoneyMy book is designed for a busy couple to set up their finances in 4 weeks. Get tips and tools that have worked for other couples on their journey of building their marriage and wealth together!

Open Enrollment: Keeping Your Health Insurance Affordable and More

It's that time again… open enrollment season and with it, a lot of decisions to make for the upcoming year.

Today, we're going to go over how you can maximize your benefits, especially when it comes to health, dental, and disability insurance!

Choosing Your Health Insurance, Dental, and Disability

If there's one area of finances where families have a hard time -either they're not maximizing or they misunderstand it- it's open enrollment season. It's that time of year where HR sends you a packet of information about your benefits.

One of the big things that I want families to focus on- especially busy ones- is going for the big wins.

Yes. It is beneficial to get better financial habits and cutting those unnecessary expenses, maybe five or $10 here and using that money towards more impactful family and financial goals.

But going for the big wins means that for a little bit of time and effort, you can have reoccurring winds or see a significant drop in your expenses or increase your savings. This is where open enrollment fits in.

For this limited window that you get this information, you're going to be making some significant financial decisions for the upcoming year. The biggest one for most families, health insurance. What makes us extra challenging is we're doing this in the midst of still dealing with COVID.

All this week and next, I want to make things easier for you so that you can focus on the key discussions you need to have so you can make the best choices for your family's particular needs.

I'll be releasing on the site previous episodes where I've talked with certified financial planners about the ins and outs and details about your options.

Today we're going to focus more on a Q and A style approach. Based on your feedback, along with what I'm seeing on my side with Google search in the community chat, I'm going to go over those questions that families often have as they're sorting through the paperwork.

Our focus today will be on:

  • weighing the pros and cons of health insurance plans
  • why disability insurance doesn't get the credit it deserves
  • how tax advantage accounts like HSAs and FSAs can help you save a significant amount of money

Are you ready?

Let's get started!

Handy Tools to Manage Your Money More Easily

Thank You to Our Sponsor Coastal!

Support for this podcast comes from Coastal Credit Union! If you’re living in the Raleigh Durham area and looking to bank better, come check out Coastal today.

We’ve been Coastal members for a few years have been happy with their services.

Did you know that Coastal offers a Health Savings Account? If you have a high deductible health plan, you need to take advantage of an HSA.

Find out more about what Coastal offers here!

Prioritizing Your Time with Open Enrollment

Along that theme of going for the big wins, if you have the time, please sit down and review all your benefits.

The one that's going to have a significant financial impact is your insurance, particularly your health insurance.

What are the big decisions we should be focusing on with open enrollment?

Even if everyone in your family is relatively healthy, healthcare can take a huge bite out of your family budget. Ideally you want to get a health plan that fits your family's need while still being at an affordable rate.

After you decide what health insurance plan you're going to go with, then you may have additional considerations.

If you're going for a qualifying high deductible health plan. Then you're going to be examining the health savings account and how much you want to put in. If you're going with a traditional health insurance plan, Then you might want to consider going with a flexible spending account.

With those in place, then the two of you can discuss, are there any other accounts you can take advantage of? If you're parents then the dependent care flexible spending account could be a huge one for you.

Might not sound exciting, but disability insurance is something important to consider.

Like most insurance, it's not really something that you consider important until you need it.

I know a few people that have had to use it and they were relieved that they had that protection.

Finally you have dental and vision insurance. Which is something that we'll get into a little bit more. You want to make sure that you're actually using the benefit and that the numbers make sense.

Now you may have noticed, I didn't mention 401k's. I do believe that if you are going to review all your benefits, you might as well check your account, make sure everything is aligned the way that you want it. But unlike the other decisions,

401k's are much easier to check throughout the year. So if you had to prioritize your time and attention, I would suggest starting with your insurance and then working your way down from there.

Don't worry next week, we're going to get into your 401ks so that you can make sure your investments are aligned with your risk tolerance and your financial goals!

What are the biggest mistakes we need to avoid when it comes to choosing healthcare plans?

I think by far the root of a lot of mistakes is getting overwhelmed. I've seen families rush into a decision. Either they keep that same plant. Not necessarily because they're happy with it. But it's something that they're familiar with and it's easy.

On the other hand, I've also seen families. Just go with the cheapest option. Because they're sick and tired of paying these premiums and they feel like they're not getting the value out of it. But they're not really running the numbers themselves.

Neither one of these is a good approach. At best you could be leaving money on the table or worse. Not getting the coverage you need. So you want to take the time and make this investment of examining your options.

I'll give you a heads up, You're going to be hearing this a lot, which is run the numbers yourself.

Your insurance decisions, especially with health insurance will have a significant financial impact for better or worse. This is something you should slow down and make sure you weigh the pros and cons.

I believe that will put you in a better position to make the best choice for you and your family.

The premiums with the high deductible health plan are much cheaper than we have now. Should we switch?

First off, I can't answer that question because there's so many different factors to consider besides the cost of your premiums.

I can however, relate to looking at the numbers and not feeling like you're getting the value out of your health insurance plan.

That was the situation for us a few years back. We have two kids relatively healthy and basically I use the health insurance at that point. Just for well visits. So even though we had the basic family plan, if still felt like a lot of money was coming out, every paycheck to cover that. And we hardly used it.

Then my husband's job offered a high deductible health plan paired with a health savings account. Just looking at the out-of-pocket premiums we knew there could be significant savings.

However we did not sign up for that plan the first year. Instead we watched for that whole year. What our actual costs were and we ran the numbers ourselves. We ended up switching the year after. But we wanted to make sure that we can handle it because with a high deductible health plan, A lot of the burden is shifted towards you.

Besides the deductible, you have to look at your out-of-pocket maximums and your co-insurance. Would you be able to financially handle this added burden?

A huge help with the high deductible plan. Is going with a health savings account. And for us, what we did is we took the difference that we were saving from the premiums of the traditional plan and moving that to an HSA.

Not only is that an account that has many tax advantages, pretax dollars, it grows tax free and you can use it for qualifying medical expenses tax-free. That money that's not used, can roll over and grow unlike a flexible spending account.

Contribution limits for a family plan in 2022 is $7,300 and depending on your employer, you might get a bonus. For example, my husband's employer will kick in an extra $1,200 a year.

So, yes, I do get the appeal of going with a high deductible health plan but please run the numbers yourself to make sure that it makes financial sense for your family.

Is dental insurance worth it?

The honest answer is it depends. Like everything with personal finance, that's what it is. It's personal.

I feel like I should make a t-shirt out of this phrase, run the numbers, but it's true. For our family, we did kind of a hybrid system. So my husband is on his employer's plan, but for us, we talked with our dentists and they had a plan that is actually cheaper for us to prepay them for the year directly and then that takes care of the rest of us.

And really That's what it comes down to is not just saving money to save money, but making sure you're getting the best value out of that.

What is the best way to figure out the math with accounts like an HSA, FSA, or Dependent Care FSA?

I think at first it does seem intimidating to run the numbers yourself, but a simple and effective solution is using a money management app.

I know we've discussed several and I'll include a few options in the show notes, but these can really make it easier to pull the numbers for the past year or two and make sure that you're getting a clear idea of what you're actually spending.

With the regular FSA and the dependent care. You're trying to find that balancing line where you're setting aside enough money. Again, this is going to be pre-tax money, which is great. For those expenses that you're going to use because you're not going to be able to roll them over.

For the most part that's what we did when we were making that decision to go with the high deductible plan or not. We looked at the numbers, not just doctors visits, but also prescriptions.

That's where I see the real benefits of having a money app, track the numbers for you. You can go in and filter out expenses so you can have a report and see for yourself. Here's what we're spending each year on medical related expenses.

Knowing your numbers can really empower you and make you feel more confident. As you make the decision that's best for your family and your situation.

Is it okay to skip disability insurance?

Is it okay to skip disability insurance?

Something that I recently started appreciating is just how important disability insurance can be. So I'm going to switch things just a little bit.

I'm going to play a snippet of a conversation I had with Matt Miner last year. That explains the role that disability insurance can have and giving you some financial peace of mind.

Elle: I do want to talk to you about disability insurance, because I've had two friends within the last seven years, use it relatively healthy and something happened. They didn't realize it was needed until, you know, thankfully they had that benefit.

So could we go over how disability insurance works?

Matt: Yeah. And I guess I'm going to go off script a little bit here and talk about both employer provided and private disability insurance, with the disclaimer that I don't sell the latter, but I do recommend it for anyone who still thinks that getting a paycheck is quite important. So that's basically anybody who's, not yet financially independent.

So when you think about employer provided disability insurance, you're typically going to see this offered as short term and long-term disability insurance.

It depends on the kind of company that you work for. Some employers just automatically cover a certain portion of short term disability. So you want to read about that.

Others want you to sign up for something and so taking the short term disability one first. In general, if there's a premium associated with that, unless it's just incredibly low, like almost insignificant in your paycheck, you're going to want to handle any short term disability needs that you have through your emergency fund.

So your emergency fund should be three to six months of expenses at least. If you're extremely highly compensated or have a really high budget, you might even push that towards 12 months.

But in any case, you've got, say three to 12 months of expenses in cash. That's going to let you handle any short term disability or get through any elimination period on your long-term disability policy.

Now, when it comes to a long-term disability policy, again, my opinion is that everybody needs this and most people probably need at least some that is separate from their employer.

So you look at what the employer offers. It's typically going to be in the neighborhood of 60%. Of your gross pay. And then you need to recall that when it comes to employer provided disability insurance, that's going to be fully taxable to you as income.

So not only, is it of course less than your gross pay, but it is also going to get taxed before you get the money. When you buy disability insurance privately, you're going to pay with after tax dollars. And so you're going to receive after tax dollars, from that policy.

So that's, that's how I think about, about both short term and long-term disability insurance, and how I think about whether it's coming from the company or whether it's something that you buy on your own.

As I mentioned, that's just a snippet from the conversation I had with Matt. I have the episode back on the site. So if you want to listen to the entire interview where we dive into insurance, please do so I think it's a great investment of your time.

The episode itself is about 25 minutes. So it's not going to take up a lot of your time, but it can give you a lot of information. So you can weigh the pros and cons of your options.

Support the Podcast!

Thank you so much for listening to the podcast! If you enjoyed this episode and found it helpful, here are some ways to support it.

  • Spread the word! If you enjoyed this episode and think it can help a buddy get on the path to dumping debt and become financially free, please share.
  • Leave a review. Honest feedback and reviews make a big difference and gets the word out about the podcast. Leave your rating and review on Apple Podcasts.
  • Grab a copy of Jumpstart Your Marriage and Your MoneyMy book is designed for a busy couple to set up their finances in 4 weeks. Get tips and tools that have worked for other couples on their journey of building their marriage and wealth together!

How to Easily Create a Flexible Financial System

How are you feeling about your progress this year with your financial goals? Are you frustrated because you're not hitting them as fast as you had hoped? Do you feel like managing money is a chore? Believe it or not, these problems are connected.

Today, I'm going to break down and show you how to build a flexible financial system that will get you to your goals faster!

Keeping Your Budget Flexible and Fun

Recently I had a chat with rich Jones for the  Paychecks and Balances Podcast.

The theme of our discussion was managing finances when undergoing a life transition, but it quickly widen out and scope. After my chat with Rich, our discussion stuck with me.

Having written about personal finance for 12 years and podcasting, a little over half that time, I noticed a certain rhythm with people in their interests and finances.

Beginning of the year, it's all about setting up these big goals, paying off X amount of debt, saving up for a huge house down payment. And for some, it truly is the beginning of an awesome year. They get these new habits set up. They have their systems in place.

But others though, they're already having a hard time keeping up those habits, part of it is life shifts.

Between January and to about April when I look on my side of things with site traffic, And Google searches, that's when people are most interested in their finances.

Further into the year, no matter what camp you're in the seasons change and life rolls on.

With September zooming by and the last quarter coming up. I find it's another point in the year where we reflect. We have this many awareness that the year's wrapping up. We're reviewing how much we've accomplished.

Now on top of the regular seasonal changes in the year. We still have the COVID pandemic that we're dealing with.

Rather than fight the seasonal shifts or craft these perfect on paper budgets, but they fall apart during real life pivots, we have to address a fundamental issue -building a sustainable and flexible system for handling your finances so that you can live your life. And if something happens adjust as needed.

Instead of chasing money as the target or the goal really should be using it as a tool.

In this episode, we're going to break that down so that you can create a financial system that is easy to maintain and adjust and have a sustainable budget that's flexible and fun.

Are you ready? Let's get started!

Handy Tools to Build Your Financial System Quickly and Easily

Thank You to Our Sponsor Coastal!

Support for this podcast comes from Coastal Credit Union! If you’re living in the Raleigh Durham area and looking to bank better, come check out Coastal today.

We’ve been Coastal members for a few years have been happy with their services.

They have wonderful customer service along with competitive rates to make saving easier!

Support the Podcast!

Thank you so much for listening to the podcast! If you enjoyed this episode and found it helpful, here are some ways to support it.

  • Spread the word! If you enjoyed this episode and think it can help a buddy get on the path to dumping debt and become financially free, please share.
  • Leave a review. Honest feedback and reviews make a big difference and gets the word out about the podcast. Leave your rating and review on Apple Podcasts.
  • Grab a copy of Jumpstart Your Marriage and Your MoneyMy book is designed for a busy couple to set up their finances in 4 weeks. Get tips and tools that have worked for other couples on their journey of building their marriage and wealth together!

Minimalism & Financial Independence for Families

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