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To Dr. Margaret CurtisWCI Columnist
My husband and I recently celebrated our 20th wedding anniversary (but in retrospect, we didn’t see the occasion with anything more than ‘good job, baby.’ Twenty years, two medical careers, three children, six dogs, and many subsequent conversations about money, we not only shared financial goals, but I learned how to think about money in the same way.
While I agree with the standard advice that you should discuss the economy early in a relationship, this doesn’t necessarily set you up for success later. You may not know what questions to ask because you never know how life will curve. I had no idea how much money she was going to throw at her husband. backyard hockey rink, when his answer was “how much is a zamboni?” No zamboni. There is a hot water hose, one of these.
You can see the red flags early in a relationship. For example, a comfortable person. with credit card debt— but the biggest intangibles are difficult to identify. Her husband and I ticked just about every box about financial compatibility when we met. Neither of us had any credit card debt and drained our retirement accounts every year. A big red flag for me).we were alike Cheapskate/New England Hippie LifestyleBut I still had a lot to learn about money, as I’ll explain later.
Here are some of the misconceptions we’ve had about money and how our thinking has evolved. We don’t have to agree with how we think about money or what our spouse thinks. A healthy relationship leaves room for different approaches. Looking at your attitude towards money may shed light on other conflicts you and your partner have. You can see.
Marriage is a collaborative effort, not a competition, and I want to keep it going for another 20 years, so I’m not going to identify who brought these false notions into marriage. We all have room to learn.
Save on the small things so you can spend on the big ones
This is also called “pennywise, pound fool”. Some people swear by saving on the little things of everyday life while at the same time spending on big wastes.
- It doesn’t work.Yes, a small amount is added, but the scale is doctor’s salary, not so much. You can’t save money on cable bills just to send your kids to college. Be careful with big things.
- The definition of “large” and “small” varies from person to person. It’s easy to justify your own spending and criticize others’ spending.
- A good way to fool everyone around you. I know a man whose mother told the kids that they couldn’t afford ice cream on the way home from the beach house. problem.
I still save (some) small things. But our financial plans focus on the big picture.
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Saving is a matter of discipline
I admit this was me. My husband has always believed in the importance of putting money into accounts that you cannot easily see or access. retirement accountI thought I was too smart to do that. Then I went to her Sarah Catherine Guttierez talk, her CFP who is brilliant. WCICON22 About the “tax-saving waterfall,” she said there are actual studies that show most people can’t stand spending the money left over in their checking accounts. is the reason to go WCICON23, and I hope you will too. It will be fun and you will learn. )
I am a convert now. I keep enough money in my checking account to cover my daily expenses, but the excess is quickly transferred to my brokerage account and I don’t check it very often.
Tax refunds are great and tax credits are free money
many people know overpaying their taxes Because I want my money back. Refunds feel like windfall, but it’s actually your own money that you lent to the government interest-free for 16 months. We are currently aiming for the most accurate deductions possible with the goal of a small refund.
Tax credits reduce taxes, but they don’t actually put money in your pocket. If he spent $100,000 to start a business at a 30% tax rate, he would have $30,000 less in taxes, but he would still have spent $70,000. The same is true for charitable donations, mortgage interest, and anything else that is tax deductible. These are not free, they are only discounted. We take all the tax credits we’re entitled to, but don’t get too excited about them.
The only big exception I know of is real estate depreciation. real estate expert (manager). It’s a “paper deduction” that reduces your taxable income without actually spending any money, and is one reason why real estate investing is so popular among high-income professionals.
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You need to allocate the money to another “bucket”
Some financial experts recommend thinking of your savings as “buckets” or actually putting your money in separate envelopes and assigning each one a separate task (rent, groceries, gas, etc.). I’m here.because we
- You have to be really diligent to remember which dollar bill serves which role. And if you actually keep money in multiple accounts, it keeps too many records.
- you are not very flexible. You have to shuffle your money to meet your needs.
We now treat money as fungible. All flow in and out of her one big pot.
you need a “money guy”
We used to have a few different money guys. One worked for commission (nice guy, but we stopped using him pretty early on). One was a banker at a well-known institution with a very nice office. That nice office gave him a real sense of security, so it was hard for him to give up.
However, as I learned more about personal finance, I realized that I was spending a lot of money just to keep my money safe (the second person focused on preserving capital rather than age-appropriate growth). was). I also realized that I was in control of my investment. We are doing it now.
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Is it worth it?
We used to look at purchases in terms of whether they were worth the purchase, like, “The plane ticket was expensive, but it’s worth it!” The problem with this idea is that really expensive things are usually really nice. flying first class, Luxury Cars, Luxury Resorts: These are all nice and make you feel like you get what you pay for, but they don’t fit most budgets. It’s easy to justify all kinds of big spending as “it’s worth it”.
Now, when considering a big purchase, the first questions to ask are: Is that part of your plan? Does it fit our priorities? Only if the answer to these is yes will we ask if the price matches the value for us.
We still don’t quite agree on our attitudes towards money. One of us is still really excited to return the deposit bottle and get a refund.
One of the most important lessons is that not all spending needs to be utilitarian or virtuous. Some of the things I’m glad I splurge on in the last 20 years:
- 6 dogs each.
- Overnight summer camp for children. Luxury indeed, but I would pay more than once for such a glorious, trust-building experience.
- It’s an old VW camper. Hours of adventure and hours of tinkering.
Speaking of which, if anyone hears of cheap Zamboni being sold, please let me know.
What do you think? Did you and your significant other ever have very different financial concepts? Did you fight over it? How did you solve the problem? Comment below!