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Has it seemed like lately everyone you know is doing something new, or looking to “freshen” an area of their life that had gotten stagnant? Many of us are emerging from these last couple of years with a new perspective, fully embracing that “reset button” that it feels like we hit way too many times.
In this week’s episode we’re diving into how we can all hit reset on stress — specifically, the stress that we feel when tackling money matters with our partners. Unfortunately, 44% of couples admit to arguing about money, and 18% of us identify money as our greatest relationship challenge, according to new data from Fidelity Investments’ 2021 Couples & Money study.
And even when money fights are not involved, we’re just not as “on the same page” with our partners as we need to be. Nearly 4 out of 10 people can’t correctly identify how much their partner earns, and more than half of all non-retired couples disagree on how much savings will lead them to the retirement of their dreams, according to that same Fidelity study.
The truth is, we all need to be talking about our money more — a lot more — to get to a better, more empowered place in our relationships. Stacey Watson, head of Life Event Planning at Fidelity Investments, joins us for this week’s episode to share some of the insight she’s gained in her role — every day she helps people successfully navigate the most important financial moments in their lives, and we know you’ll love learning from her just as much as we did.
Listen in as Jean and Stacey discuss the most impactful takeaways from Fidelity’s Couples & Money study. One major one? Although this past year we’ve seen more women than ever getting engaged in longer-term financial planning and investing, 1 in 5 women (22%) still report having little or no involvement in retirement planning. Women also doubt their abilities when it comes to money management, and we dive into how we can work on changing that once and for all. Also, while 57% of people said that major financial goals and retirement decisions are jointly made with their partner, we want that number to be closer to 100%! We discuss how to get there.
We also get real about what this last year has done to our relationships and our finances — Did being at home together for the past year impact how couples deal with financial issues?
Speaking of being together, it’s very easy to wake up one day and realize how deeply your finances are intertwined with your significant other, which is why it’s so important for us to be intentional about it from the beginning. Stacey breaks down how to have conversations with your partner about money whether you’re just dating, cohabitating, or if you’re married. She offers us a step-by-step rundown on the types of conversations that people in different stages of a relationship should be having.
We also explain what a “financial date night” should look like, and how we can all successfully navigate the kinds of difficult money conversations that we might rather avoid — you know the kind. The kind around sensitive topics like debt, overspending, or something else that couples often disagree on. We take a look at the “guard rails” regarding those conversations, and how to broach discussions around will and estate planning. Stacey offers her best pieces of advice for every couple looking to get to a better place with their money, and their discussions around money.
In Mailbag, we advise a reader who is worried that it’s too late to start having money conversations after 35 years with her husband, and we discuss how to get on a “retirement budget” even if you’ve never had a budget before in your life. We also talk about negotiating the tricky topic of paying for private school with a spouse who doesn’t want to foot the bill for a private education. And in Thrive, why you already have a prenuptial agreement…even if you didn’t sign one.
For more information on the topic of couples and money, check out Fidelity’s Life Events Hub, which offers a wealth of material to help couples make sound financial decisions. There’s also a helpful checklist here to help make it easier for couples to start talking about money matters and planning.
This podcast is proudly supported by Edelman Financial Engines. Let our modern wealth management advice raise your financial potential. Get the full story at EdelmanFinancialEngines.com. Sponsored by Edelman Financial Engines – Modern wealth planning. All advisory services offered through Financial Engines Advisors L.L.C. (FEA), a federally registered investment advisor. Results are not guaranteed. AM1969416
Stacey Watson: (00:02)
Our big message is – It’s okay to delegate, but don’t abdicate. Because both partners being involved in financial decisions really helps build confidence about the financial future. And I think a big part of this issue with women is around building confidence, and feeling informed can increase that confidence.
Jean Chatzky: (00:29)
HerMoney is supported by Fidelity Investments. You work too hard for your money to let it sit on the sidelines. Fidelity helps you learn how to demand more from your money every day. Visit Fidelity.com/HerMoney to learn more. Hey everybody, thanks so much for joining me today on HerMoney, has it seemed like everyone you know is doing something new or looking to freshen up an area of their life that has gotten a little bit stagnant. It has absolutely felt that way to me. And when I look around, I see a lot of friends, changing jobs, taking steps to get that long debated certification, moving to a new state – which I did by the way – and overall seeking to have less stress in their lives than they did perhaps before the pandemic. And I have to say, I love seeing all of this change. I feel like so many of us are really trying to emerge from these last couple of years with a new perspective, fully embracing that reset button.
Jean Chatzky: (01:35)
Today, though, it’s that less stress part that we’re going to dive into, particularly as it relates to women and money. And I wanted to do this show now because it’s just time because when we change jobs or shift our priorities, all the while spending more at home with our spouses or significant others, let me tell you, it’s absolutely time to talk about money with your partner. Unfortunately, 44% of couples admit to arguing about money and 18% identify money as their greatest relationship challenge. That is new data from Fidelity Investments, 2021 couples and money study. And even if we’re not fighting, frankly, we are just not sufficiently informed, nearly four out of 10 people can’t correctly identify how much their partner earns. And more than half of all retired couples disagree on how much savings will lead them to the retirement of their dreams. And I know there are probably some of you listening who are saying, I never fight with my partner about money and I know what his or her paycheck looks like.
Jean Chatzky: (02:52)
And that’s amazing. But even if that is you honestly, how often you talking about money and I’m not, by the way, talking about that quick discussion that you had, about how much you dropped at Costco on Sunday afternoon, I’m talking about the real discussions about life-changing money moves like buying houses and pursuing master’s degrees and having kids and retirement. The truth is we could all be talking about our money more and we need to be talking about it more and to help us dive into all of this and to get to a better place with money. And with our relationships is Stacey Watson. Stacey is head of Life Event Planning at Fidelity and in her role, she helps people navigate the moments that matter most in our lives. Before joining Fidelity, Stacey spent 20 years at Harley Davidson. We will absolutely be talking about that. She earned her MBA from the Kellogg school of management at Northwestern, and she is a registered yoga instructor. And this is amazing. She also does improv comedy on the side, Stacey welcome. I’m so glad you’re here.
Stacey Watson: (04:09)
Thanks for having me. I want
Jean Chatzky: (04:11)
To dive into this couples and money study, but first I want to hear a little bit about you. As you know, I have worked with Fidelity for a long time now. And when you were getting ready to join, I kept hearing about this amazing woman who was coming from Harley Davidson. Tell us a little bit about life and your job and your interest and what getting women to drive motorcycles taught you about getting women to engage more fully in our investments.
Stacey Watson: (04:40)
Well, Jean, you talked at the top about people trying something new and putting more pazazz into their lives and embracing that reset button. And all of that just really resonates with me. I’m always trying to pick up a new skill. And after 20 years at Harley Davidson, I took a year off to figure out what was next for me. And during that time, I tried my hand at all kinds of things like studying improv and learning to draw and other things that were really scary to me, but they also really re-energized me and gave me perspective and greater confidence about what I could do. And I knew that I wanted my next chapter to have a really strong sense of purpose. And I also reflected on my experience that my mom and I had when my dad was terminally ill. And I knew I just wanted to make it easier for people to navigate the moments that really matter in their lives. And as you mentioned, I talked to a lot of people at Fidelity before I started working there. And we really found that there were these similarities between getting women to fulfill their dreams of wanting to ride a Harley Davidson motorcycle and getting women to fulfill their dreams in life through finances. And those similarities are things like building confidence, learning your way, educating yourself. So there’s really a lot in common.
Jean Chatzky: (06:12)
What jumped out most about the couples and money study that Fidelity just feel that.
Stacey Watson: (06:18)
Yeah, well, first of all, I was really encouraged to see that the vast majority of couples. So they communicate very well about finances and that’s great. And yet the fact that nearly four in 10, completely missed the mark on how much their partner earns is a little bit troubling to say the least. And what’s worse, almost 10% of those who got it wrong were off by $25,000 or more and salaries. Aren’t the only topic that couples struggle with more than half of couples disagree on how much money they need for retirement. So I think the point is that no matter how well you think you work together, there’s always room to improve.
Jean Chatzky: (06:58)
What do you think is up with that salary number? I mean, why do you think it is that we don’t know what our spouse earns or we think we know, but we’re off by a really significant amount. Do you think that we’re just avoiding the question, do you think we feel like even though we’re married to this person, it’s not our business what’s going on?
Stacey Watson: (07:19)
Um, I think it’s all of that. I think having conversations about money can be uncomfortable. I think people lead busy lives and I also think people just get complacent and don’t take the time to have the conversation. And that’s how we get so far apart in knowing what reality is.
Jean Chatzky: (07:39)
I noticed that the study, as in years past continues to see women taking a backseat, doubting our abilities, lacking confidence in managing our money and investing. And about 22% of women say they have no involvement or little involvement in retirement planning. What can we do to change that? Because it is clearly a problem.
Stacey Watson: (08:03)
Well, we’ve been conducting this study since 2007. And historically we have seen that women can take a less active role, especially when it comes to longer term planning and investing. But the good news is that over the last year, and maybe this is due to all the pressures from the pandemic, we have seen women getting more and more engaged in their finances, both in the short term and in the longterm. And that’s really encouraging. And yet one in five women still report having little or no involvement in retirement planning. So our big messages it’s okay to delegate, but don’t abdicate because both partners being involved in financial decisions really helps build confidence about the financial future. And I think a big part of this issue with women is around building confidence and feeling informed can increase that confidence. And that’s why it Fidelity. We’ve created lots of tools and resources to help make you feel more informed so that you can make a good decision and feel confident.
Jean Chatzky: (09:11)
So if you were among the people who are not engaged or not engaged, as you’d like to be, or you should be, how do we help people get to a level where they’re more of a decision maker where they’re at least not abdicating? I mean, when we look at the numbers, we saw 57% of people say they are joint decision-makers, but that leaves 43% who are not joint decision makers. How do we reach that 4,300?
Stacey Watson: (09:41)
Well, I think part of the what’s really important is for people to begin the conversation and start talking about it and our big messages make money, a team sport. These my discussions are not always easy, but there are real advantages to having both partners be engaged. In fact, in our study couples who said they had open and regular discussions about finances, they feel more closely aligned. They feel more confident and they’re better prepared to take on the future. And one way to start for those who are listening might be take the next step tonight at dinner mention, Hey honey, did you know that 40% of American couples don’t know how much money their partner makes? And then you can kind of see where the conversation goes. The first step is probably the hardest, but just getting started and starting the conversation is where I would go. Did
Jean Chatzky: (10:37)
You, you see parallels here with your work at Harley Davidson? I mean, I think about getting on a motorcycle the last time I was on a motorcycle, it was on the back of Frank cause stanzas motorcycle and I was 16 and it was fun. And my parents didn’t know and they probably still don’t know unless my mother is listening to the show. However, if I was thinking about getting on a motorcycle today, I would be terrified, you know, that I would wreck or I would fly off. And so I would need some sort of guidance. Are there steps that you prescribed for women in that world that will work for women in this world?
Stacey Watson: (11:19)
Absolutely. It’s so interesting to hear you talk about it because you talked about both the lack of confidence that you have in your own abilities. And you also talked about how much you want to do it and the sort of motivation of actually fulfilling that dream. And I think both things are true here. When we think about finances, as well as it may seem like you don’t know enough, or you need to learn more, but being able to achieve your dreams who doesn’t want that. And so one of the things that we did when we were trying to teach women to ride is we started at the very beginning, get into a parking lot with a motorcycle, turned off and use your feet to walk yourself across the parking lot. That’s the first thing that you do. So the instructors are really holding your hand from the very beginning, and then you learn how to use the horn and how to turn the lights on it. I mean, it’s kind of step-by-step and the next thing you know, you’re riding around the parking lot. And then the next thing you know, you have your license on you, you’re riding on the street. And so I think this idea of building confidence from the beginning, learning the skill so that you know, what you’re doing really helps you to like get started. The next thing you know, you’re on the road.
Jean Chatzky: (12:34)
What I like about the analogy is that in both cases you’re being active, right? You’re not saying to watch a video about learning, how to ride a motorcycle, you’re saying, take the bike and walk it across the parking lot and be hands on. And I think particularly in the world of investing that is really important, getting in there and doing something, because if you already have a 401k or an IRA, you are an investor. You might not be a stock picker. You might not be picking individual stocks, but you are investing, you are doing it. And that should be a confidence boost in and of itself. You mentioned that many of us have been at home with our spouses and our partners in the last year, more than ever. How do you think that both helped and hurt the way that we deal with financial issues?
Stacey Watson: (13:29)
Couples have been under this intense pressure over the last year, whether it’s due to financial setbacks or just the stress of being stuck at home together around the clock. But I think this extra time together has actually helped couples to communicate more about both the day-to-day finances and the longer term plans like saving for retirement. In fact, a third of the couples in our study said that the pandemic caused them to talk more about their money and to talk together. And I think perhaps what’s happening here is that this pandemic has made us all reflect on what really matters to us and, uh, to share those feelings with each other. So I think it’s actually kind of kicked the door open to having these conversations more often and in a more meaningful way, which is really a silver lining.
Jean Chatzky: (14:22)
Yeah. I think that’s right. You kind of can’t avoid each other. And so even if you have a partner who was really good at hiding the stresses that they were feeling, and you were also really good at hiding the stresses that you feel it’s tougher, you really can’t do that when you’re in the same place all the time. All right. Let’s take a step back and talk about our finances and our relationships in a sort of Uber way. I, our finances and relationships get intertwined. Even if we don’t start out thinking about them from the time we’re dating, they pick up and move into a higher gear when we’re co-habiting or when we get married, it’s easy. I think to wake up one day and realize your financial life has become inextricably linked with that of another person. What do you do now? If you feel like you didn’t do the work going in, if you feel like you didn’t set up the foundation to have this healthier financial relationship or personal relationship, how do you get back on track?
Stacey Watson: (15:32)
Well, there’s no time like the present to start having the conversation. I think learning to communicate about money. It’s something that you should start working on early in the relationship. Maybe not on a first date, that might be a little strange, but definitely when you know, it’s getting serious. And if you delay money discussions, the downside might be that there are things you just don’t know about your partner’s financial situation. Things that might be helpful before you say I do, or even I’ll move in with you. Like where does their money go? Or how much student debt do they have, for example, because once you tie the knot, you’re also saying I do to their debt and it can be really easy to put off these conversations or simply to grow complacent because people do get busy, but that then can land you in a really uncomfortable place down the line or worse. You could end up unsure of how to take over the finances if you haven’t been involved and then something unexpected happens. So again, my advice would be, if you didn’t take the time to have those conversations early on, there’s no time like the present to begin.
Jean Chatzky: (16:45)
You mentioned student debt. I think that’s a very good example, but can you get a little more specific with me about which conversations we should be having at which points in our relationship? So let’s just take it from the beginning. If we’re dating, what do I need to know about
Stacey Watson: (17:03)
You? I think you first want to know, like, what does the person have in terms of debt? What does the person have in terms of their income? Are there any side hustles that the person has, but I think ultimately what you want to get into is what are their goals? What are their goals for the kind of shorter term, like the three to five year timeframe and one of their goals for the longer term, you want to know whether the person wants to buy a home or whether they have kids and whether it’s saving for college. And then you want to kind of marry that up with what your hopes and dreams are. And then together, ideally you want to have an eye towards the long-term if the really becomes serious, because when you can create a shared sense of purpose, that’s when you can really rally behind together what your financial future is going to look like.
Jean Chatzky: (18:03)
Is there a certain depth to the data that you need once you think about things? I mean, my personal benchmark is that if I’m going to be your emergency contact, I need the passwords, right? I need the tools so that if I am in an emergency situation where something happens to you because we live together or we don’t live together yet. But if I’m your person, you have to equip me with the information that I need to get things done. If something happens,
Stacey Watson: (18:36)
That’s a big responsibility. And I think the more you kind of dive in together, the more you want to know about the other person, the more transparent that you want to be so that they can help you. And so that you’re in this together, that it is a team sport, that it is a partnership.
Jean Chatzky: (18:52)
I know that the study revealed some interesting things about same-sex couples. And I want to get to that, but before we do, I want to remind everyone that HerMoney is proudly sponsored by Fidelity Investments, because it is no secret that women are on a different financial journey than men. So it’s important to plan for those differences. When we think about retirement and social security and investing and more Fidelity can help, they’re taking steps to help women demand more from their money because you have worked way too hard to get where you are to keep your money on the sidelines. You can get the skills and the investment advice that you need to put your money to work for you. Visit Fidelity.com/HerMoney to learn more. I am talking with Stacey Watson, head of life planning at Fidelity. We are diving into all things, couples and money. So same sex couples. What did the study find there?
Stacey Watson: (19:53)
Well, first of all, I think it’s important to note that the communication disconnects between couples are strikingly similar, but we did notice that with LGBTQ plus couples, they’re less likely to work together to achieve their financial goals. For example, 40% of those with same-sex partners reported having only one primary retirement decision-maker compared to 27% of those with an opposite sex partner. And there’s a greater likelihood that one partner will go it alone or will take the leave when it comes to working with an advisor. And this may be why we also observed that 25% of those in a same sex relationship, identify money as their greatest relationship challenge as compared with 17% of opposite sex couples. But what I want to stress is that no matter financial or logistical hurdles life brings you, it’s important for both partners in all relationships to become active decision makers when it comes to their money. And again, it’s okay to delegate, but don’t abdicate having both partners involved really helps build that confidence in the financial future.
Jean Chatzky: (21:08)
Did you get clarity on the breakdown of those same sex couples I’m interested in knowing whether there was a bigger divide in terms of the person taking responsibility? I’m wondering if they were men or if they were women, if they were more likely to be gay couples or lesbian couples, did you get any insight there? Because I just think that’s fascinating.
Stacey Watson: (21:29)
You know, we find it really fascinating too. And we weren’t able to ask the question to get behind the motivations of why this is what it is. We just don’t have the information to kind of go that deep. But I will tell you, we’ve had a lot of conversations about it and want to learn more and see if we can get some more insights and be helpful there.
Jean Chatzky: (21:49)
Okay. When you learn more, you let me know. And if our listeners have any thoughts on this and why this is the case, please let me know because I’m also wondering if when people find partners has an impact on how much we delegate versus how much we take an active role. So maybe in the next study, we can dig into those things. I know that one of the strategies for getting on the same page with your partner is having a financial date night. I have my own feelings about financial date nights. I think we have to just find a time and a place to have these conversations. And for me, I tend to have them during the afternoon with my husband. Sometimes we’ll have a list of things that we have to talk about and we’ll do it. Sometimes we schedule it, but whether you’re doing it on a date night, whether you’re doing it in a car where you’re driving someplace and you can’t escape. And by the way, I know about me being in a car where I can escape is a good thing, because sometimes I would run if I could, but what should this date look like?
Stacey Watson: (23:00)
Well, I think you’re right. I think a financial date night can really be anything that you want it to be. The concept is what’s important. The way I see it is it’s an evening that you set aside probably once a month, where you can enjoy a nice meal together and review where you stand on important money topics, which could be anything from day-to-day budgeting or planning for long-term goals, like buying a home or retirement, or even making investment decisions about how you’re going to achieve those goals. But I would say the biggest tip I have is don’t try to add too many financial topics to the one date and try to keep it fun and not too heavy. Like you would on a good date, but really use the time to reconnect on your finances, focusing on one or two things that are really going to improve your financial wellbeing as a couple.
Jean Chatzky: (23:56)
I think that’s particularly true. If we’re going to tackle things that we already know are going to be difficult, right? And the survey showed that the hardest discussions to initiate include managing debt, wills, estate planning, and careers. So why do you think these things are more challenging for us? I mean, debt, I kind of get, if you’ve accumulated debt owning up to the fact that you have this debt, especially if you feel like you should be getting rid of it faster, there’s a lot of guilt and there’s some shame that is tied up with that. But what do you think it is with wills that we can’t get ourselves to talk about it? I mean, so many people, so many people do not have wills.
Stacey Watson: (24:37)
Well, I mean, conversations about managing debt are uncomfortable because they involve changing spending habits and changing behavior can be hard until you get into a rhythm at least. But I think willingness state planning are more difficult topics because by definition, they involve our own mortality and they make us think about our legacy. So now you’re adding not only do we have to talk about money, but now we have to talk about mortality that makes the conversation really heavy. And I think again, sometimes people just avoid having that conversation and she’s to do something that in the short term seems more pleasurable.
Jean Chatzky: (25:20)
Just add a 22nd public service announcement. Because as a parent, if you do not have a will, it is an unconscionable, a will is the only document that allows you to name guardians for your children. And so if you don’t have one and you’ve got a child and something happens to you, the court is going to decide what happens to that child. And you have just given away 100% of your power. And so I know it’s hard. It is hard. You’re right. Stacey, it’s hard for all the reasons that you’re saying that it’s hard, but even if you pick up a piece of software and just knock out a basic will, it will do the trick. So please, in the next couple of days, if you haven’t done it yet, just do it. Okay. PSA over, moving on. Why do you think careers are so hard to talk about?
Stacey Watson: (26:16)
I mean, that one really surprised me at first careers being the hardest thing to talk about. Some people talk about work all the time, but when you think about it, it makes sense because what you do for a living and how much you earn really is the foundation of your household income. And if you’re unhappy with your job or you’re looking to make a change, it really can be a difficult decision because it can impact your household. Plus I think career is really tied up in our happiness, our sense of self-worth our fulfillment. And so many people are thinking about this right now, as we move out of the pandemic. Um, and so all too often, because these aren’t easy conversations, couples tend to avoid them altogether, even though they’re really important conversations to have. So my advice here is, um, on any of these topics, really, whether it’s careers or wills or managing debt is don’t try to tackle it all at once. Take it bit by bit and start to work out a plan to get there within a certain timeframe. I think that makes a lot more achievable.
Jean Chatzky: (27:25)
That is really good advice all around. I know that you are going to stick around and help me answer our Mailbag questions in just a moment. But as we wrap up here, can you lay out for me your top three pieces of advice for all couples looking to get to a better place with their money?
Stacey Watson: (27:44)
Well, there’s a rush of weddings this summer for a couples that get engaged during the pandemic, or finally tying the knot after postponed wedding last year. And so in our study, we actually asked couples what advice they would give to newlyweds. And the top pieces of advice were these three things. Number one, don’t take on more debt than you can comfortably repay number two, start saving as early as possible for your retirement. And then number three, make sure you have an emergency fund.
Jean Chatzky: (28:20)
And we know from Fidelity research that once that emergency fund is enough to get you through six months of hard times, your stress level goes down precipitously. So that is really great to hear that the people who took the survey are drinking the Fidelity Kool-Aid Stacey, stay with me. We’ll be right back with your Mailbag
Jean Chatzky: (28:48)
And we’re back with your Mailbag questions and Stacey Watson head of Life Event Planning at Fidelity is here, Stacey, thanks for sticking around.
Stacey Watson: (28:56)
Thanks for having me.
Jean Chatzky: (28:58)
Our first question comes to us from Ellen and she writes, “I’ve been married for 35 years, but believe it or not, I’ve had shockingly few financial conversations with my husband over the years, we were both fortunate enough to have jobs that let us save for retirement. And we each set aside between 10% and 20% of our incomes over the course of our working lives, there was always just this silent acknowledgement that our retirement saving was happening somewhere in the background. Now, my husband has retired, but I’m not planning to retire for another six or seven years. I’ve come to the realization that although we always trusted each other to save, we never once discussed how we would spend in retirement. And honestly, I’m worried my husband has taken to golfing often at a very expensive course. He’s donated to every cause he sees a friend post about on Facebook.
Jean Chatzky: (29:59)
He’s invested probably $4,000 in fly fishing equipment. And that’s just what I know about. I really, really want to be generous here. He only retired a year ago and he’s spreading his retirement wings, which is why I haven’t said anything. Here are my questions. Is it too late to start having money conversations after 35 years together? Is there a way to approach this with my husband that won’t sound like I’m being overly critical of him enjoying the retirement he’s worked so hard for? Is it weird to get on a retirement budget when we’ve never really had one before? Thank you.” Well, first just let me say, I love that you are teeing this up now, Ellen. I do not believe it’s too late at all. I feel like you’ve done the hard work because you’ve saved, but now we need to make sure that your money lasts Stacey. What do you think?
Stacey Watson: (30:55)
I agree. It’s never too late to communicate and it’s never too late to make a plan. Or in this case, a retirement budget. I love that term she uses. I think it’s really important for both people to talk about their goals and their dreams for both the short term and the longer term. And I think you could open up the conversation by sharing that, watching him enjoy his well-deserved retirement is actually prompting her to think about her own retirement plans. I think this is a perfect situation where you could set up a financial date night, start with heart and begin the conversation by laying out what’s important to each of you. And then again, this idea, having a plan to achieve what they want is going to build confidence in the future and ultimately a happier life together. And I also think this is a place where a financial advisor could come in really handy because as a neutral third party, they do this all day every day and can help build the plan together.
Jean Chatzky: (32:04)
Yeah, that’s exactly what I was going to say. Ellen, you need a financial advisor to do some modeling for you. I’ve been going through this. I’m in a very similar situation to you right now. I’m not going to retire for a good number of years, but my husband is already retiring. He and I are on our second marriage. As you know, if you’ve listened to this show and we saved independently, our whole lives for retirement, but now he’s at the point where he’s thinking about starting to pull some money out of his accounts. And the modeling that we with our financial planner shows what happens with the computer when he pulls out X number of dollars versus Y number of dollars, and we get a reasonable rate of growth on the money that’s still invested. It allows us to in a much easier way, develop that retirement budget.
Jean Chatzky: (32:58)
You’re talking about because as you look at these projections, not necessarily over years, but over decades, you see what happens. If you continue to spend at X, Y, or Z level, you’ll see, there will be a very small chance that you’ll outlive your money. If you spend at one level and a much greater chance that you’ll outlive your money, if you spend at a different level and the advisor will also be able to factor in social security, which is really important. I do though, very, very much Stacey, like your suggestion, that she tee it up, starting with what she wants to do with her retirement and how she thinks she’s going to want to spend in her retirement, because that’s a non-judgemental kind of way to approach it. That’s a very accepting way to go into the conversation. Our next question comes to us from an anonymous listener.
Jean Chatzky: (33:59)
She writes, “Hi HerMoney ladies! I listened to your podcast every day after I take my oldest child to school and I take the baby for a stroll around the neighborhood. Your information is so valuable and I’m thankful to have found you. It just so happens. It’s these babies that I’m writing about now. My husband is a very, very high earner. He makes a half million dollars a year as a partner at a law firm, which is an income level I could only dream about as a child who grew up in poverty. We own our home outright. We have two modest cars that are almost paid off. I’m an excellent cook, if I do say so myself, who prefers to dine in rather than having meals out and overall we live frugally. But here in less, the problem, the school system in our neighborhood falls into the category of fine.
Jean Chatzky: (34:53)
In other words, it’s acceptable. If you want your kid to have decent teachers and possibly get into a decent state school. For the last two years, I’ve felt strongly, I would like our children to attend private school, which would cost $30,000 per year per child. Although I think we might get a two child discount when our youngest is old enough, making the total expense $50,000. Given our lifestyle, this is something we could easily afford. My husband disagrees. And the last time we spoke about it, we got into a screaming match. He feels that the public schools are just fine and has come up with every excuse in the book to avoid private school, including the fact that he would rather save and invest the money for our retirement, that he would rather save the money for the girls college education, and that he quote unquote, just doesn’t want to.
Jean Chatzky: (35:48)
As a stay at home mom, I feel that there are a lot of household things. I have a say in, but spending 50 to $60,000 a year without my husband’s endorsement feels wrong. If not simply impossible, unless I get his buy-in, my girls are going to be stuck in public school forever. Should I go get a job and try to pay for it myself? Should I keep fighting with my husband? Should I make him a PowerPoint of why this is totally affordable and necessary? Since all my talking doesn’t do any good. It starting to feel very demoralizing. Like my husband controls the finances and thus controls me, which is something I never felt before, and I hate it. Please help.” This is a big one, Stacey, and I have some thoughts, but let me ask you for yours before I jump in.
Stacey Watson: (36:39)
Yeah. I have some thoughts too. It’s always difficult to have a conversation when both sides are already locked in to the solution that they think is right. And so I would say, start with heart and assume good intent from your partner and understand what’s really important to you. Is it private school or is it the children having a bright future? And try to find that common ground, try to bring it up a level to that shared sense of higher purpose, maybe in this case, it’s the future success of their children and how do they make that dream come true? And then I would also say to share your story, you can state your facts, but it’s important to stay open to the other person’s view. If you want to have a conversation and then try to get on the same page. I don’t think you want to make a major financial decision without including your partner. And again, if you need help a third party, like a financial advisor, can help step into that broader financial conversation that we’ve been talking about and help create a longer term plan. That’s going to serve both partners.
Jean Chatzky: (37:52)
Yeah. I agree with everything that you just said, Stacey. I am a public school kid. I went to a series of public schools my whole life in different communities, some of which were just so-so, and some of which were really good. And right now I’m thinking about my mother, who every time we moved would make several different appointments. She’d make an appointment with the realtor. She’d make an appointment with the head of the school district, the superintendent. And she would make an appointment with the rabbi because she knew that we were going to need all of those things. She was going to need a temple. She was going to need a home and she was going to need a school for the kids. And she would go and talk to them. The superintendent, not just the principal of the local school, about what all the various schools in town offered and which had programs that were likely to be most suitable for her three kids.
Jean Chatzky: (38:46)
And so if I were you, I’d go on a fact finding mission. I’m wondering how you know that the schools are just fine. Are you looking at sat scores of the high school, which are so far away for your kids? Are you looking at the fourth grade test scores of the kids in elementary school? Are you hearing things from different people in the neighborhood? You can gather that sort of information so that you can then present it to your husband if you do come to the conclusion that the schools are not okay. And maybe you come to the point that you find your kids are in a good elementary school, but it’s the middle school that has problems. And the high school is a crap shoot because it’s so far away. And you make these decisions, not all at once, setting yourself up for 12 years of private school education, but maybe you make them in steps along the way.
Jean Chatzky: (39:43)
I also think that in addition to a financial planner, you may want a therapist. This is a values question, as much as it is a financial question. And if you can’t talk about it without screaming at your husband, who clearly you love and who clearly loves you, maybe you sit down with the therapist and you discuss it, the impetus to go out and get a job just to support this choice is indicative of how important this is to you. And that is something that your husband really needs to understand and respect no matter how you choose to solve this problem. But I do worry about this feeling of who controls the finances seeping into other areas and other aspects of your life. And I’d like to see you work toward having more financial autonomy than you feel you have right now. And so I do think maybe a financial therapist we’ve had some of those on the show could be helpful. There is a financial therapy association. You can find it on the internet and they have a zip code locator where you may be able to find someone in that group of professionals.
Stacey Watson: (41:00)
I love that idea of using the data to have the conversation. And I love your thought about bringing in some sort of a third party to help them, because ultimately this is about building the skills to be able to have a conversation about anything with your partner.
Jean Chatzky: (41:17)
A hundred percent. Stacey, thank you so much for being here. You are invited back anytime.
Stacey Watson: (41:23)
Thanks for having me.
Jean Chatzky: (41:25)
And in today’s Thrive: Why you already have a prenuptial agreement, even if you didn’t sign one. The question about prenups is not. If you should get one rather it’s, would you rather have an agreement that you and your fiance both carefully considered and agreed to, or one that gets decided for you? If you didn’t sign a prenup before getting married and you get divorced, the laws of your state will determine how your assets are divided. And there’s not much you can do about it. These days, 39% of all first marriages end in divorce. And that figure is substantially higher for second ones. Often one partner doesn’t want to bring up the idea of a prenup because they don’t want to be seen as either greedy, if they have assets they’d like to protect, or a gold digger, if they don’t have assets they want to protect. Or they just don’t want to have a conversation that they suspect might turn into an argument.
Jean Chatzky: (42:25)
But here’s the thing. Marriage is a contract. It’s not a scene in a romantic comedy. You wouldn’t enter into a business partnership without a mutually agreed upon legal contract with future possibilities addressed, right? So why should the most important partnership in your life, your marriage, be any different. Years ago, only celebrities and fabulously wealthy people were concerned about prenups, but times have changed. And the reasons for needing a prenup have changed with them. People are entering into their first marriages at later ages when they’re more likely to have at least some separate assets that would need protection, like 401k accounts, stock options, intellectual property, real estate. A recent survey by the American Academy of Matrimonial Lawyers showed that 62% of the attorneys are reporting an increase in the overall number of clients that are requesting prenups. The main reasons clients site for their desire to enter into these agreements are protection of separate property, protection of children from a prior relationship, business ownership and anticipated inheritances.
Jean Chatzky: (43:42)
The best time to talk about money and a prenup is when you’re happy and planning a future together. Having an honest and yes, even uncomfortable conversation with your intended life partner before you get married, ensures you’re both on the same page about finances and can give you a good idea of how handling money will go in your marriage. After signing an agreement, you can celebrate starting your marriage with honesty and confidence that you’re on the same page about money. And what’s not to love about that. Thank you so much for joining me today on HerMoney. Thanks to Stacey Watson, for discussing all things, couples and money, and giving us such important insight into how our finances and relationships are intertwined and how we can get to a better place by keeping those lines of communication open. If you like what you hear, please subscribe to our show at Apple Podcasts, leave us a review. We love hearing what you think. We’d also like to thank our sponsor Fidelity. We record this podcast out of CDMSoundStudios. Our music is provided by VideoHelper and our show comes to you through MegaPhone. Thanks so much for joining us. And we’ll talk soon.