Your Financial Journey: Financial Topics Couples Should Discuss

Marriage, home ownership, children, retirement - no matter what milestone you
and your partner may be approaching, the discussion always seems to involve
money. And because preparing for the future is easier when you and your partner
are on the same page, Doug DeGroot and Brian Granato identify important financial
matters couples should discuss throughout their lives together. 

With You Every Step of the Way
With over seven decades of collective experience, Providence Wealth Advisors has the expertise necessary to understand your financial goals and identify the best strategy to achieve them.

Thank you for listening. Connect with Providence Wealth Advisors on Facebook, LinkedIn or Twitter.

Transcript

0:00

- [Narrator] What can you expect from an experienced financial advisor? Are all advisors alike? And will the right advisor really make a positive difference?"Your Financial Journey" is a podcast brought to you by Providence Wealth Advisors, LLC, a wholly-owned affiliate of Providence Bank & Trust. In this series, members of the PWA team discuss the importance of planning, relevant developments, and investment strategies geared to help you achieve your wealth management goals, and to provide you with experience, guidance, and support every step of the way.- [Doug] Welcome, I am Doug DeGroot from Providence Wealth Advisors. We have had a number of podcasts over the last couple years on how to save for various expenses, what type of investments to use for different strategies on things you're saving for, et cetera. But on this podcast, we're gonna focus more on communication issues, and in turn, strategies for the communication process versus the actual implementation of strategies. So what do I mean by all that? We're gonna focus today on financial topics that every couple should discuss. So focusing on what I would say are the bigger issues within a relationship versus just a specific financial strategy. I have with me today, Brian Granato, who is also with Providence Wealth Advisors and the Providence Bank Trust Department. Welcome, Brian.- [Brian] Thanks for having me, Doug.- [Doug] So, Brian, financial topics you should be focusing on with your partner vary through the relationship and your respective ages. Financial issues you're focusing on when you're in your 20s are a little bit different than the issues you're gonna be focusing on when you're in your 60s. So we're gonna try to focus on some key issues as we work our way through the aging process. That's what I kind of envision for today. And Brian, as you and I have talked in the past, in my opinion, it's always about the money.- [Brian] I couldn't agree more, Doug. I couldn't agree more.- [Doug] Whether fortunately or unfortunately, money is permeated through everything we do. You know, whether you're buying something, saving for something, doing something, doing something for yourselves, your children, your parents, it's always about the money.- [Brian] Agreed.- [Doug] So, with that being our opinion, I guess, let's start off with a new relationship. What are some of the issues, Brian, that you see a young couple should kind of focus on and get on the same page with?- [Brian] So a great first point as we start out the journey together. So when you start a serious relationship, you know, you really need to come clean about everything financial, whether it be your credit history, your debt load, income, retirement plans. I think you discuss everything. I think it's vital that you exchange your views and values about money before you even exchange your vows.- [Doug] I would agree, Brian. And you know, again, having done this for a few years, like yourself, it would seem to me as I reflect back on my career, whether it happens in the 20s, 30s, or 40s, and there's problems in a relationship... Again, we joke about it being the money, but it ultimately comes back a lot of times to the money because the couple's not on the same page.- [Brian] Absolutely, absolutely. So, I'll tell you a quick story, if I could.- I'd love to hear it.- [Brian] So my wife and I, just over 30 years married, give or take. We got married in the fall and bought our first home, it was a starter home. Truly fixer upper, absolutely no doubt on that. So sat down right out of the gates and said,"Hey, here's a plan. We're gonna put some good sweat equity into this house, save where we can, and try to take the next step whenever that may be.- All right.- [Brian] Okay? Absolutely. She's on board. Couldn't agree more. Okay. So here we are. I, you know, I'm taking tools from my dad, handsaws, I'm taking a corded drill from my grandfather. You touched that thing in the wrong way, it sends a shock up your arm so I was really kind of cutting corners here with the tools.- Okay. (chuckles)- [Brian] And every day after work and on the weekends. You know the scene, Doug, you're a handyman, special kind of guy.- Yeah, I've been there. I know.- [Brian] So go through the house occasionally, and I see, oh gosh, there's a bag from Marshall Fields, a purse, some shoe boxes. This is going on for months. I'm scratching my head, I said,"Hey, what's going on here?" So one day... So it's probably, I'll say, early June. Probably early summer. I reach out and I take her by the hand, and I said, "Let's go in the backyard." She said, "Oh, okay."(Doug chuckles) I said, "What do you see back here?" She said, "Oh, yeah, I see shrubs, I see flowers, I see grass." I said, "You know what? I see the same thing." I said, "See something missing?""I don't know. A pool? What about a pool?" I said, "No, that's not what I'm thinking." I said, "You know what I don't see? I don't see a money tree back here."- You didn't have one, huh?- We didn't have a money tree. I said, "You spend it like we have one." I said, "So, you're not living at home anymore, a roof over your head, meals paid for, bills paid for." I said, "So at the end of the day, we have to get on the same page here because we're in charge of our own destiny." So I think she saw the light a little bit. Still worked on her a number of years after that but it's difficult and you really gotta focus in on that picture together, Doug, just like you're saying.- Brian, I love the story and I think, again, when I talk to younger people, new couples, I think they have to figure out early on, what your story reflects, are you a spender or are you a saver? And typically both individuals aren't the same. If you're both savers, it works out fairly well. It makes it easy. If you're both spenders, you got a real problem and somebody has to grow up quick, or I can tell you it won't work. And ultimately it'll weigh on the relationship because you're just gonna drive yourself into financial ruin.- Absolutely. We hear it time and time again too.- [Doug] It's just the way it is. So I think you, you hit the key on the head. You, you gotta talk about it, you gotta discuss it and you really have to come clean with each other about what are you trying to do, where are you at, and so forth. One of the things that I've talked about on prior podcasts, and I am a big believer in this, you gotta have a budget. And I think to have both individuals involved in creating that budget is very important. And it gets kind of this buy-in phase. Without a plan, which the budget is, it just seems to me impossible to reach any kind of goals. And that goal isn't necessarily having zillions of dollars or whatever. That goal could be being able to buy a car or something simple, or your case, you know, home improvements or whatever it might be. So the other things, I think, you know... You make a great point on the house and the housing expenses, but I think as you start this process, again, this talking process, the budget is key. I think you can start talking about big purchases, just like you had with Nancy, the idea of, are we gonna buy a home? Is it a fixer upper? How are we gonna fix it up? You know, is it sweat equity? Is it borrowing? How does each person feel about saving and borrowing?- [Brian] Correct.- [Doug] And you and I always talk about we're... I know both of us are real big on retirement planning, trying to get started as soon as you can. And that's hard to tell a 22-year-old you gotta save for retirement.- It is. Yeah, it is.- As you know. But you can start talking about it.- [Brian] Yeah, you should start talking about it and you still have to start, even if you're putting a little bit away in your retirement, it's a start and they'll appreciate that at down the road.- [Doug] They will. You have time. So you're getting the time of that savings. So, I don't know, it seems to me, Brian, as we kind of move on from this early stage, that the real key at this age is communication.- Yes, most definitely.- And trying to make sure you're on the same page with some of these things. And certainly not go off on each other, buying whatever you wanna buy and doing what you... It will just lead to problems.- [Brian] Yeah, yeah. You really have to be looking through the same windshield and not one of the... You know, your spouse or whatever the case may be, looking out the side of the passenger window, and look at all the trees. Well, we gotta be looking at the road map here, so.- [Doug] You've gotta look at the map. So with that said, let's move on then. And again, kind of keeping this age theme going. Let's say we're working now and the couple's moving into their thirties and forties and just some of the things, again, that they should be thinking about and talking about to make sure they're on the same page at this stage. And again, you know, Brian, I'll throw it right back at you. What are your thoughts as you enter this new decade, I guess, as a couple?- Yeah, so, I think at this stage, really, it's like you're really thinking of savings as like cooking a big meal. You got a lot of pots that you're starting to cook with, right? You've got, whether it be a pot for your life-happens fund, another pot for emergency fund. You've got another one for a potential college fund. So you've got a lot of pots you kind of allocate for. So you're starting to, you know, have some earning power and you have to start allocating into those pots, right? So.- [Doug] And I guess, Brian, you talk about those pots, I'm going to come back to the thing I thought that was so important in your twenties, I don't think it stops in your thirties or forties, is do you have a budget, and even a bigger point, are you following the budget? It's not just important to have it, but follow along with what you're trying to plan for. And that will help allocate funds to those pots you referenced.- Correct. Yeah. It's part of the budget, and if you don't have anything to follow, it's almost like a free for all. How do you function then without knowing how you're supposed to make payments on this or save for that, vacation fund, and then go into retirement? That retirement account should always be focused upon whether or not as much in your twenties, but it starts to grow as you get older.- [Doug] Now you gotta start looking closer at some of those things, like you said, and we'll talk about that in a minute. But, you know, again, back to this budget process, I've had a budget ever since I've been 18 and really been in the workforce. I revise my budget every year. I sit down with my spouse every year. We try to revise the figures. But it's that roadmap again, Brian. It's, you know, "Okay, what's going to charity, what's going to vacation, what's going to car expense, what's going to miscellaneous expenses," by the way, for the various couples out there, because I'm telling you, things are gonna break. You're gonna need a new roof for your house. Your car's gonna need a new battery. You may need a new transmission for your car. That's life.- Yeah. It never ends.- [Doug] So with that said, I think Brian, you talked about retirement plans. Those should be starting to be a little more, at this stage, than just kind of a little money here, a little money there. You should be allocating greater dollars, I think, to those funds.- Yeah. Yeah.- [Doug] And talking about it.- [Brian] Correct. Correct. And I think, what's the rule of thumb on that, Doug? I think you're supposed to have a year's worth of your salary in your fund, about, at that point.- You should. Yeah, you should. So kind of the goal, but again, these communication issues that we talked about without getting into the strategies of whether you should be aggressive growth or growth, I think this is the kind of the beginning age where the couple should be saying, "Okay, when do we think we might retire? Is it 50, is it 60, is it 70? Is it never?" You know, you just wanna start talking about it so you're on the same page. Maybe the wife's not working anymore, maybe the husband's not working anymore. What's the strategy for that? The other thing I think you'd wanna start kind of focusing in on, on these ages is, you know, your children, if you've got children, if you're a couple with kids, what's college gonna look like? Are you gonna help the kids? Are you not gonna help the kids? Is there debt involved?- [Brian] And that's across the board too, based on, you know, mom and dad, how they feel about that. Some are, you kind of are off on your own, do your thing, get your loans, figure it out. And some parents are more helpful. So again, part of how you need to strategize on how to allocate your money.- [Doug] Right. I think so. And then the other thing I think that you begin talking about in implementing at this age that I think is important, and Brian, again, it comes back to your and my background in the trust area. But you should start putting together an estate plan. Now, it may not need to be... For those of you that have some knowledge about estate planning, it doesn't have to be a full-blown trust and you know, all the various things that go with that. It might just be a simple will, but if you have children, you should talk about who's gonna be the guardian of the children.- [Brian] Right.- [Doug] You know, again, maybe begin the actual implementation process of what I'll call a small estate plan.- Yeah. It doesn't have to be complex, but put it down in writing. I mean, you know, 'cause if something did happen, the family's totally up in arms of what to do.- [Doug] Right.- [Brian] Who's gonna want take care of the kids? Who would they have wanted to take care of the kids? It's really, when you have kids, that's where that estate plan really is kind of crucial versus maybe potentially an unmarried or a couple without kids at that point. So estate plan, yes. Key as kids may enter the picture.- [Doug] Right. The reality is that you're probably not gonna need the plan, but nobody knows when they're gonna pass away. So again, coming back to this idea of being prepared and talking it through together as a couple. And I've been involved, Brian, you talk about stories, you know, unfortunately I've been involved in estates where someone has passed away and they didn't have a plan. And that's a plan where there was small children. And then what happens is, the state where you reside has laws as to how things are gonna be allocated and divided and handled. And it just seems that if you can make that choice your own decision instead of the state of Illinois in our example, that's probably a better alternative.- [Brian] As you should, as you should.- [Doug] So, okay. So that's, I think, again, a good strategy. Gives you some ideas of what you might be focusing in on in the 30s and 40s. So let's kind of move on from there, Brian. Kinda keep this process going. Now the couple's in their, let's call it 50s and 60s. Things have changed right along the way, but a lot of the discussions... The discussion should continue, just probably on different topics, if you will. So I'm gonna lead off on this one, Brian,'cause I, again, I've talked about it enough, but I'm gonna come back to it. Do you have a budget? Even though you're now in your 50s and 60s, there's more money involved, you really should still maintain a budget so you can have this plan, if you will. And are you following it?- Correct.- [Doug] Again, the same idea, but how about you, Brian? Some thoughts at this age?- [Brian] Yeah, I couldn't agree more, Doug. That budget never seems to come outta the picture. I don't care where you're at in life, it's still... You may change things up a little bit, but it still has to be kind of a key focus. And again, communication with your spouse. Are you looking, you know, at 50? Are one of the spouses thinking, "You know what? Maybe I'm looking to do part-time or retire." How's that affect how you're allocating your dollars, retirement dollars? I think you have to always be in communication with your spouse what the plan is. I think at that stage you may be trying to do some catch-up work if you're... Maybe you're falling a little behind."Hey, we had to put more in when we were younger." Or maybe use some of that catch-up contributions that it's out there now that you could take advantage of. So certainly things you should be definitely taking advantage of that are out there and starting to capitalize on continuing to build that nest egg.- Right? And I agree with you completely. And I think, again, in these ages, if you will, that retirement-plan discussion is gonna be more prevalent because it's obviously closer to where you're at in life. And I think you're right, you know, maybe it's focusing on, again, simple things like a catch-up contribution so you can allocate more. You've determined, "Hey, we need a little bit more set aside," and that's this communication. You gotta talk about it because it's gonna mean probably a detriment to some other expense item if you're gonna allocate more to retirement dollars. But I think you're right, you start talking also as a couple, you know, what does retirement look like? When are you gonna consult? You know, that's becoming more normal now. There's a retirement and then one of the members of the couple consults part-time, kind of this transition, if you will, into retirement.- Correct.- [Doug] Are you gonna work part-time somewhere? Maybe your current employer or another employer wants you to work part-time. And then even beyond that, I think you gotta start looking at... And again, now I'm personally in that age group. So again, it's things that I've talked about. Where are you gonna live? You know? Things have transitioned a little bit from when I grew up and the family kind of stayed in one area. Now you've got kids kind of moving all over the place. Do you wanna be near your children? Do you wanna be near a certain grandchild? You know, how does that look? And that actually factors into the decision too, I think, Brian- Yeah, it does, as does the other half of that equation. At that stage, where do you sit with debt in life? Are you laden with it? Do you need to start whittling that down? But as you get in your 50s and 60s, you have to really retire that debt and try to become debt free if you could. With the big dollars. I'm not talking about a credit card, a couple thousand bucks on that, but you know, from a mortgage standpoint, something like that, you really have to have that done.- Brian, you read my mind. So as you know, we deal with a lot of people over the years, but, you know, some people, it doesn't bother 'em to go into retirement with a lot of debt. You know, a lot of mortgage debt or whatever. But the reality is, if you do that... And that's okay, we hear it all the time. People wanna stay in their home. That's a common theme. But if you stay in a bigger home with debt, it adds financial strain to the couple.- [Brian] Correct.- [Doug] Because there's a mortgage and there's gonna be more real estate taxes and the insurance bill's gonna be greater and the utility bills are gonna be greater. Versus, again, if the couple sits down and say, you know, whatever they may decide to do, but you know, they're gonna go to a much smaller home or a smaller home. It doesn't have to be a much smaller home, but a smaller home and with no debt. It just takes a lot of that financial strain off.- Yeah, it does. It does take that piece of pressure off.- [Doug] But that's a decision, again, the couple has to talk about. So the other thing, I think, again, we kind of closed with in our last segment, you know, about this estate plan, but you know, certainly in the 50s and 60s, again, as I age myself, I can say this, we all have a finite time on this earth. And the reality is we're all gonna pass away at some point and you need to start focusing more and be more specific, I think, on an estate plan.- [Brian] You do. You really do. I think, you know... I think with that estate plan, too, you really shouldn't be settling your grievances there. I think you really have to have a thoughtful plan. Think it out. Your estate plan when you're in your 30s with young kids that your executor may have changed now. Now that they're older, are one of the kids gonna take the reins on that now or is it a corporate trustee, like a bank to step in'cause you don't wanna burden the family with something like that? So that estate plan always seems to be fine tuned.- [Doug] Yeah, as you age, it should be ratcheted up a notch, I guess, if you will.- Yes.- [Doug] And you need to be talking about it. Both of the couple have to be on the same page. I think the other thing I would say, and again, this is what my wife and I have tried to do, is we have, in today's day and age, numerous passwords to a variety of accounts. And we have a master sheet, if you will, of all these passwords that we have hidden, but we each know where it is because there are things that she does or I do that we don't know the passwords. And unfortunately you have to know that to access a lot of these different accounts or credit card bills or whatever it may be. It could be as simple as medical records or something. It's the way it is today. You gotta have all this information.- You do.- So I like to tell people, let someone know, let your spouse know where that's at. And I take it a step further, let one of the kids know where that's at in case something happens to both of you.- You should. You should.- [Doug] It'll just save a lot of hassle.- [Brian] I gotcha. I yell at my wife. I try to log in on something, she said,"The password's in a book in the desk." I look in the desk, there's six books. And the six books have 50 pages. I said, "Could you help me out here a little bit?" So you're right to kind of consolidate that one sheet and keep it known, make it known. Make it known.- Make it easy, yeah. Just again, this communication of where that's at. It's important.- It is.- [Doug] So the other thing, I guess to me, that I thought I would mention again, we're kind of thinking of a traditional couple here that have been married the whole time, but at this age, you know, there are things as a second marriage, whether it's death or divorce, it happens and it's fairly common. I think one of the things, to me, having worked with clients that have gone through that process throughout the years, you have to be even more open with the communication process, Brian. What are your thoughts?- I think I'm much more open with that.- [Doug] There's usually each couples coming into the relationship or each person from the couple's coming into the relationship with different assets, different issues, different children. And again, this idea of trying to be open with each other and you know, how do you want things handled in the event something happens to one of you and one of you doesn't necessarily even have to be dead. It can be going into a nursing home or a retirement home. How does that look? What does it look like? And, again, I think this idea of being open and maybe even open taking it a step further, with the children, to alleviate stress.- I think that's even more important. Absolutely. I think the kids' pieces could be even more important than just the spouse because they're the ones that are gonna be affected really directly. You know, "Hey, what happens to me, mom and dad, when something hits?"- That's exactly right. And you know, again, you and I have some tenure in this industry and we both lived it where people have said,"Don't worry, everything will be fine. The kids get along and-"- Sure,- [Doug] It doesn't always work that way.- [Brian] It really doesn't.- [Doug] So, again, unfortunately, it comes back to my first point. Ultimately it comes back to the money in many of these issues. And if somebody isn't sure how that's supposed to go, human nature is, that's my money. So if you're open and forthright with everyone, then they can kind of follow the plan as to how that money should be handled.- [Brian] Correct.- [Doug] So let's move on from there, Brian. Now we kind of move on to the 70s or 80s, you know. You're aging, there are different issues, again, that are important during this time of your life. I'll let you open this segment. What do you think?- [Brian] Yeah, I think at this stage, Doug, you're trying to stay active, you know, trying to have some purpose in life. You know, again, what's your spouse? Is it in your interest? Your better half's interest? What are they looking to do? You know, is your current home now being too much for you to handle? Are you entertaining a retirement community? What does that look like? Does that fit what you really wanna do or not? And then even extend further the cost of a facility that you may have to enter because you need the care. So there's some conversations, do we have the funds for that? Do we not? Is someone supposed to come to the house then, you know, a care giver come to the home? And not that that's cheap either. So just a lot of, as you begin to age to that level, seventies, eighties, you know, those are some serious questions you really have to ask yourself.- And I, again, couldn't agree with you more having lived this with numerous customers over my career. And I think part of that as well, Brian, is this talking-as-a-couple process, but also planning and, if you will, pre-planning, because you mentioned, okay, if you wanna go to a retirement community, do you have the funds? Some people may not have the financial wherewithal to go into a full type of retirement community or a nursing home if it's necessary. So what does that mean? You should be talking about that beforehand. And each of the people within the relationship should have kind of an idea of what the other might want or how to handle that. And what does that mean? What do I mean by that? Was one of the couple a veteran? Are there some VA benefits that might be available or is there a VA home? These are things you need to be talking about and you really need to talk about 'em before an event happens.- [Brian] Oh yeah. I'd even take, as an offshoot to that, what about, you know, your funeral plans? I mean, shouldn't you, you know... Some people, "Hey, should we take care of that all before the kids have to? We don't wanna put that on the kids." Or prepay it so we don't have to worry about the financial piece of that too. So again, no one wants to deal with the funeral arrangements or how you envision your funeral to be had when you pass away but I think that's something that definitely needs to be addressed too.- [Doug] Right? A great point. And then even tied with that, again, we talked about it at length, you know, when you're in your 50s and 60s, this idea of estate planning, but now it needs to really get refined and the the reality is, you're getting closer to the end of your life. It's not gonna hopefully happen tomorrow. You know, people are living into their 100s now, but the idea is you have to be ready and have a proper plan. And again, that's both you being on the same page. Depending on the wealth involved in the relationship, there may be some tax strategies you wanna be looking at as part of the process. May even be some particular states that you should be living in due to certain state's state-tax laws.- [Brian] Correct.- [Narrator] These are just things you wanna, again, talking about and thinking through. So with that said, Brian, kind of as we wrap this up, any final thoughts you might have just on some of these issues that you've lived from your own personal or business experiences over the years?- [Brian] I'd just say, just starting from my initial story, I think you always try to have a plan in life and you need to make revisions to those plans as you journey down life's uncertain path just to make sure you're on the right track. That's really what it boils down to.- [Doug] I follow that up with, Brian, I always tell my wife. Every year we try to sit down for... It doesn't have to be for hours and hours, but at the end of the year, and I've told this to clients over the years, at the end of the year, you should have 15, 30-minute, hour conversation. What's changed during the year? What do we think might change the next year? How should we plan for it? How should we budget for it?- Right. Yeah.- [Doug] It's healthy. And then you can plan properly and kind of make sure you're on the same page as you keep moving forward. So, very good. Thank you. Thank you for all your comments. So as we conclude, those are some thoughts on some of the key financial issues that we think you should be discussing with your partner throughout your relationship. In closing, be sure to subscribe to "Your Financial Journey" on either Apple Podcast or Spotify. Please call Brian or me or any of the Providence Wealth Advisors staff with any questions you might have. Thanks for listening.(light music)- [Narrator] Providence Wealth Advisors, LLC or PWA is a holding-owned affiliate of Providence Bank & Trust, or PB&T. The investment products and services offered by PWA are independent of the products and services offered by PB&T and are not FDIC Insured, may lose value, are not bank guaranteed and are not insured by any federal or state government agency. Investment products and services are offered by appropriately licensed investment advisor representatives, subject to the general oversight and authority of PWA. To the extent that any client or prospective client utilizes any economic calculator or similar interactive device contained within or linked to the firm website, the client and/or prospective client acknowledges and understands that the information resulting from the use of any such calculator or device is not and should not be construed in any manner whatsoever as the recipient of, or a substitute for, personalized individual advice from the firm or from any other investment Professional. PWA is an SEC-registered investment advisory company. To obtain a copy of their ADV, Part 2A and Form CRS, visit www.providencewealth.com. PWA is located throughout the Chicagoland area and Northwest Indiana. To contact PWA, call 888-927-7387, email askexperts@providencewealth.com or write to 20220 South Lagrange Road, Frankfort, Illinois 60423.