Marek and Lori Fuchs have never fought in their 16 years of marriage—except over money. In this column, Mr. and Mrs. Fuchs, a real-life married couple with three kids (ages 11, 7 and 5), will articulate their very different approaches to personal finance. Last round, they clashed on who should pay the bills.
This round: She says, “We should both be saving 10% of our income.” He says, “Huh?”
Mrs. Fuchs says: Honey, this new column of ours has forced me to turn from my professional journals (OK, OK, novels) to financial planning books and guess what I learned? We’re supposed to be saving a specific amount each month! Why didn’t you ever tell me that? It’s pretty much rule number one. Instead of seeing that little bit of extra money each month as a restaurant meal or an excuse to hit the mall, we’re supposed to be saving it!
So put your listening ears on, Mister, because this is what we are going to do. We’ll look at our budget (you agreed to do that only last week) to figure out what we can comfortably afford to put aside each month. I’m thinking about 10% of our income. That sounds like a good, round, Biblical number. To make it even easier, I’ll set it up online and the money will be automatically transferred. Structure and routine will enter our financial lives and we’ll be sitting on a huge pile of money by the time you retire. (You were thinking of working 'til you are in your 80s, right?)
William Wright, the president of Guidance Financial Consultants in Wichita, Kan., and the chairman of the Financial Planning Association of Kansas, sees no room for flexibility in this, by the way. “Saving 10 % of your take home pay is a cardinal rule of financial planning,” he says. “You can’t break the rule; you can only break yourself against the rule.”
A man after my own heart.
Mr. Fuchs says: Impose mandated tithing? Now I’ve heard it all. Sweetie, we have three kids. Three kids, who, I don’t need to remind you, need constant diapers, braces, college educations—and new shoes when they outgrow the old ones, at what seems like the rate of once a week. Why do their feet grow like weeds anyway? And can we work that into a marketable skill that’ll pay for college?
Seriously, in addition to those inescapable expenses, we have all those surprise items (hello, new roof) you can’t even budget for. Save a predetermined, standard amount? Good Lord, we’d probably have a better chance catching a moonbeam in a jar.
Here’s a good metaphor that’ll shoot down your argument: Forcing ourselves onto a structured savings program is a little like promising to exercise every day of the week. You’re setting us up for failure. And setting a pattern of failure and disappointment is no good, whether you are talking finances or fitness.
As you say yourself, financial planning is as much about psychology as nickels and dimes. Toward that end, Dr. Lawrence Balter, professor of applied psychology at New York University and lecturer on all things family, is firmly in my corner.
“It’s a function of personalities and what you are most comfortable with,” he says. Hear that, sweetie? I hope your listening ears are on and facing forward. I’m just not comfortable with planning for what realistically can’t be done. Call me a defeatist, but I’d rather admit defeat at the outset, then try and end up losing big.
Mrs. Fuchs says: Wait a minute there, you word twister. Dr. Balter also says, “Financial planning within a marriage is akin to negotiating within any businesses. One side comes in high, one side low. But you reach a level both can live with.” That’s called compromise, sweetie. Want me to spell it for you? And listen to Richard Salmeron, a financial planner who runs Salmeron Financial Network in Dallas, Texas, who said that even in falling short of a savings goal, you can succeed. “It’s OK to shoot for the stars,” he says, paraphrasing the saying, “because if you don’t make it you can still land on the moon. You can make progress.”
So even though I’m more apt to give up my daily exercise for a good book, I say we follow their advice and set a monthly goal. If 10% gives you the heebie jeebies, let’s agree on a different monthly goal. Let’s not let the fear of failure keep us from financial security.
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