Posts Tagged ‘Money’

Financial Trust – Adam Factor 12

Saturday, October 27th, 2012

“Money and women are the two most sought after and least known about of any two things we have.” Will Rogers

The results are in… two heads are better than one and, when it comes to finances, one of those heads ought to be female if positive results are desired! It turns out men are nearly as clueless about money as they are about women. The quote above, while near a century old, shows just how little things have changed.

In the global economy today, the sex of the person who has the correct answer or the most talent is becoming irrelevant. Aside from a few obvious examples of how not to run a country or society (Iran, Saudi Arabia, Russia, Sudan, Zimbabwe…), the majority of the world’s population has come to understand~ results are better when both genders take an active role in affairs.

Unfortunately, this idea has not been fully implemented in relationships, as there still exists a substantial division of duties. Men, it appears, handle nearly all the investment and tax related matters, while women decide how to spend nearly 80% of all the household income. An obvious case of the left hand not knowing what the right hand is up to, and we wonder why relationships have financial problems!

Clearly men and women have some fundamental differences in how they approach money and investments, but when they combine their abilities they produce better results than by “going it alone.” On average, men have a tendency to be over confident and trade too much, while women tend to be hesitant and take fewer risks. Some experts have gone so far as to suggest that women are superior with financial issues- but that might be taking things too far if results are compared to a blended approach.

While there are differences in how men and women approach money matters, it’s also a matter in which both genders are willfully ignorant. From community college classes to online education, there is no excuse for not having a baseline level of financial knowledge. I have included numerous links to sites that offer additional educational in my older posts related to finances. If you and your partner aren’t working together, then it’s time to click on a few of them!

 

Four Reasons Why Couples Should Share Financial Responsibility

  1. Better communication. Couples that share equal roles in the relationship’s financial issues, have a better ability to communicate. As money matters are found in nearly all aspects of life, it should be of no surprise that couples who communicate about money matters will also inadvertently possess the ability to discuss other things as well.
  2. Sharing financial responsibility helps couples work toward common goals. For example, when both parties understand that the goal is to save for retirement or a child’s college education, it helps deter wasteful spending.
  3. Life comes with many unexpected events; divorce, death, illness, or unemployment. Any one of these events could put a partner who lacks financial knowledge at a real disadvantage. Care to guess what the odds are of encountering one of these events in your lifetime?
  4. Damage control. When both partners are actively engaged in a relationship’s financial affairs, destructive behaviors (gambling, substance additions, or impulsive shopping) can be identified before irreparable damage occurs.

 

Another pitch- there are two essential things that will come out of financial planning that people are fools not to address.

The first essential thing every relationship should have is a will. Unless you really think the government will handle your affairs in the manner you would prefer, it’s time to draft a will. It can be as simple or complicated as you want to make it, but it needs to happen. I’ve included a link below to a free “do it yourself” site, so no more excuses.

The second essential thing every relationship should have is life insurance. Unless you are so wealthy that the death of either you or your partner is of no financial concern, then obtaining some level of life insurance should be a priority. Life insurance is very cheap and aside from providing a couple with peace of mind now, it will make a very large difference in the lives of those left behind if anything unfortunate ever does happen. If you love and care about your partner, you will possess both of these items.

 

People who refuse to take responsibility for their present and future are pets. Yes, that’s right- PETS, (People Enjoying a Temporary Situation).  Are you taking responsibility for your future and working to ensure your relationship will prosper? Take the quiz below to see how you compare to others and comments as always are welcome.

 

For additional information check out the link below:

Do Your Own Will Online for Free  no more excuses

 

Sticker Shock – Adam Factor 11

Wednesday, October 17th, 2012

“All the beautiful people in the magazines have the normal people living beyond their means.” Jimmy Buffet – The City

Have you ever seen something you just couldn’t live without… until you read the price tag? Have you ever gone shopping in a store without price lists? The assumption is, if you are shopping there, then price is of no concern to you. The only time you see the numbers is when you are signing the credit card receipt (so I have heard, not that I would know from personal experience).  Surely this is not the kind of behavior you would ever engage in?

Interestingly enough, the no price tag shopping experience is a very good example of how men approach women and relationships. There are countless jokes about men in relationships with  “high maintenance” women, however the reality is far from funny for those guys. Like a credit card user who ignores the full purchase price and maintenance cost of an item (only looking at the minimum monthly payment), the situation quickly becomes unsustainable.

Men are faced with often conflicting agendas. There are some very clear incentives for men to be productive members of society, Sugar Daddy Syndrome . Even though women today are better able to provide for themselves than ever before, men with means are no less attractive. Thus men today are caught between two seemingly unchangeable forces, diminishing traditional opportunities for men and a biological drive to provide.

The video below was controversial for some government bureaucrats, but was generally accepted by the people in the commercial’s home market of Brazil.  The politically correct crowd believes men are intellectually above this kind of influence, that they can be educated and avoid being swayed by women in this manner. I, for one, think that it’s better to recognize that women do have a strong influence on men and try to keep that in mind when making decisions.

 

Women, if you were unaware of this kind of tactic and its effect on men, then I suggest you do a little shopping and see for yourself. Men, you have already watched the video several times before reading this sentence, therefore proving the effectiveness of this approach. So what’s the solution? At the risk of becoming repetitive, Financial Planning.

A joint financial plan (created by both partners) can provide men with the means to, if not think on a higher plane, at least respond in a more intellectual manner. Neither gender benefits in the long term from decisions made by men who are “not thinking straight.” Financial planning can help counter short term thinking.

Unless you are one of the beautiful people, this issue is going to require your attention. Couples need to own up to what their financial means and expectations are in the relationship. While making the minimum payment approach may work for a little while, it will most likely leave the relationship dangerously exposed to unforeseeable events. Is your relationship financially sustainable, if not what actions do you need to take?

Financial Differences – Adam Factor 10

Wednesday, October 10th, 2012

“The only reason a great many American families don’t own an elephant is that they have never been offered an elephant for a dollar down and easy weekly payments.” Mad Magazine

The truth is most couples already have an elephant in their relationship, one that they ignore and don’t talk about~ financial matters. Letting financial issues become a problem in your relationship is the same as not seeing the link between smoking and lung cancer. Conflict over financial matters is one of the biggest reasons why relationships fail. Yet, as the divorce and smoking rates show, simply knowing something is harmful isn’t always enough to change an individual’s behavior.

If keeping your relationship from becoming another statistic is important to you, then it pays to plan. Financial planning is hopefully something you started before your relationship began and you are now just having to update periodically. Statistics, however, suggest that you are more than likely needing to start one right now.

One of the most important things that comes from financial planning is learning about how you and your partner feel about money. There are apt to be some substantial differences in how the two of you view money and think it should be handled. In most cases, the differences are not the problem, but rather the time and manner in which these differences present themselves that tend to create an issue, the video below makes that point very clearly…

 

There is no shortage of helpful articles and sources of professional advice on financial matters, yet for some reason nearly all of these resources are ignored. Even worse, a truly frightening number of people are continuing to live paycheck to paycheck or until disaster strikes. Given that financial problems and relationship conflict are so highly correlated, is it any wonder so many relationships are failing?

So while we still have your attention, let’s find out just how financially compatible you are with your partner.  ”One of the most overlooked yet important aspects of a relationship is how the two of you perceive and deal with money,” says Jeff Motske, founder and CEO of Trilogy Financial (with over 2 billion dollars under management). To see how your relationship measures up, take the  23 question quiz  Jeff created to help couples address this issue. Yes, this quiz requires your partner to participate.

No matter how you scored on the financial compatibility quiz, the Eve portion of Keeping Score has already covered most of this topic in considerable detail and is just as appropriate for men as it is for women. For single men, take a good look at Planning to Fail. For married men an appropriate read is Finding a Financial Fit.

Growing up, I had a neighbor who when asked about the worth of his dog would proudly reply, “Bingo’s an elephant dog.” Someone would always point out the fallacy of his statement, suggesting that there weren’t any elephants in Idaho and, thus, Bingo could not possibly be an elephant dog. My neighbor would then reply (with even greater pride) that the scarcity of elephants in the area could be attributed to the excellent unobserved work of Bingo the elephant dog.

Financial planning often works in the same hidden manner. So long as you have a financial plan in place, you are unlikely to encounter financial problems. Yet without a financial plan, you will find yourself stumbling from one disaster to another. Start today on the path to crisis proofing your relationship by learning about the differences between you and your partner when it comes to money matters. The relationship quiz below is a good place to start learning about your elephant.

For additional information check out the link below:

Financial Compatibility  Another financial compatibility test, see how your first results compare with this one.

Finding a Financial Fit – Eve Factor 9, Married Women

Monday, July 30th, 2012

“Budget: a mathematical confirmation of your suspicions.” A.A. Latimer

Do you enjoy living paycheck to paycheck, get excited using one credit card to pay off another, or find fighting over financial matters with your partner something you look forward to? If you have answered, ”Yes,” to any of the above questions you can stop reading now- there’s no point in wasting your time with information you won’t use.

A good relationship and solid finances are nearly inseparable.  Seldom does one see a good working relationship that doesn’t have its financial affairs in order. By now you’ve been in a relationship long enough to know what kind of situation you’ve gotten yourself into, so the question becomes- what should you do about it? There are numerous, often unread and unused articles, on this very subject.  The approach below, though, is going to be different from what you’ve seen before.

The first step in getting your financial affairs in order is to determine what reality is. In more ways than one, fixing your finances is similar to finding a perfect fitting pair of jeans.  You know the ones that were made just for you, like a second skin. Your old favorites may not be working anymore. Just as having children can change your figure, it can also alter your budget. Depending on the changes in your life, you may need a better fitting financial plan. Neither financial matters or jeans are forgiving when the numbers are wrong. It becomes more important than ever to recognize things for what they are, so what are your current measurements, I mean, expenses?

The reason for learning what your expenses are is to see how much fat (expenses that can be cut) there is. If there’s no fat to lose, then you just need bigger jeans (more income). To determine what can or cannot be cut, there are some free on-line services that can help you organize your finances in order to see your expenses more easily, one that I prefer is Mint. It all starts with measuring things, as you cannot manage or change what you will not measure.

In the event you discover there is some room for improvement (physical or financial) the first step is to avoid making matters worse. Some people will try the all bread diet, similar to only paying your car payments. Other people will resort to diet pills or a special cellulite eating cream, nearly identical to responding to emails from exiled Nigerian princes or to bidding on the lucky number seven race horse!

An approach with more balance and a long term vision is the only real solution. This approach is called a lifestyle change. For your figure, it comes in the form of an active lifestyle and healthier eating habits. For your finances, it comes in the form of a balanced budget and financial planning. Despite the different subjects involved here, the tools and tactics used are almost identical. A budget, like a personal diet is created for a specific person, takes into account the current situation, what the goals are, and what resources are available.

Everything starts with planning, only once your current condition is evaluated, can you begin to set goals for the future and work for the lifestyle you desire. The video below provides a perfect example of what is at stake and the role that you will play in how things turn out.

Part of financial planning is learning about money and becoming comfortable with financial issues. Many women (and men) were never schooled on the basics of money. Unless your parents taught you or you took a course in finances (which is a great idea), it is up to you to learn on your own. My suggestion for the best financial book ever written is, “The Richest Man in Babylon,” and the best long term investments are Vanguard Index Funds, but you will have to find what works best for you.

Financial problems are one of the leading reasons cited for relationship failure. The good news is, of all the problems a relationship can have, financial matters are one of the easiest to find solutions for and fix. If staying married is one of your goals in life, then there is nothing more beneficial than financial planning. There’s no reason to become another statistic, what’s your excuse?

Please take the quiz below to see where your relationship fits and if you have suggestions or comments that opportunity is also provided.

For additional information check out the links below:

Older women without income

Educational money investing game

Financial planning for couples

Planning to Fail – Eve Factor 9, Single Women

Thursday, July 5th, 2012

“You don’t know what being screwed is until your ex’s attorney is the one doing it to you.” unknown

There’s a number of situations in life that most people would advise against ever putting oneself through. A long nasty divorce would have to rank right up there with coming into contact with a flesh eating bacteria. You’ll probably survive, but don’t count on emerging intact. While it is the intention of Keeping Score to help you avoid such an unpleasant personal experience, it still requires some action on your part. More specifically, if you value your relationship, your next intimate encounter should include financial planning for the future.

When I was conducting the field research, as part of testing the Keeping Score model, I saw a wide variety of ways in which couples prepared for their future. All couples thought financial planning was important, but only a few had bothered to take steps towards getting their financial affairs in order. Planning was something most couples said they intend to do…when…as soon as…after…at some point in time in the future. Is it really any wonder financial issues are a leading source of conflict in relationships?

The first step in preparing your finances for a joint future is to determine whether or not a prenuptial is needed. When it comes to prenuptial agreements, there’s a surplus of extreme reactions and simple thinking. Regardless of what your views on premarital agreements might be, the subject is worthy of an open and honest discussion.

Even if your relationship is made of the stuff that makes a prenuptial unnecessary, consider this~ is your relationship at the level where you can discuss the issues a premarital agreement would address? Long term relationships require more than just physical intimacy, getting naked financially brings new meaning to the term “fully exposed.” Below is a self checklist to see if your relationship should consider a prenuptial agreement.

Six Premarital Agreement Triggers      

  1. If you or your partner have a substantial debt load. Not all debt is the same, credit card debt vs student loans. In many cases once married those debts are shared. 
  2. If you or your partner have any children from a previous relationship. In cases where the children are still under 18 this subject becomes very serious. In the event of a death many states will automatically assign 1/3-1/2 of the estate to the surviving spouse if prior arrangements haven’t been made.
  3. If you or your partner are supporting the other while additional education or training is being received or someone is giving up their career for the relationship. Relationships require sacrifices, make sure these actions are recognized.
  4. If you or your partner dislike the idea of the government getting to make the personal decisions in your life if your relationship were to fail. People in the midst of a separation can be less than rational and it may take outside intervention to settle matters.
  5. If you or your partner happen to be part of a family business or other privately held business partnership. If your relationship were to fail it could have devastating impacts on other innocent parties. Mixing your personal affairs with the financial interests of others outside the relationship is bad for everyone involved.
  6. If you or your partner have specialized skills, accumulated significant financial assets, or anticipate a much higher future level of earnings. Examples might include holding copyrights or patents with commercial potential, inheritances, existing investments or retirement accounts, housing, or having an exceptionally lucrative career.

 

Not every relationship will have conditions where a prenuptial agreement should be considered, nor will all couples decide to have a premarital agreement drafted. There are, however, no exemptions for not engaging in financial planning prior to marriage. Financial issues touch all corners of life and relationships that cannot address financial matters will have difficulty in other areas as well.

Financial planning starts with you and your partner being open and honest about everything financial in your lives. This means getting completely naked, showing all the assets, sharing credit scores, and a full disclosure of liabilities. Call this game “Playing Banker,” but the rules are different than the similar sounding childhood game you might of played- this time it’s “You will show me yours and I will show you mine.” The video below is also a useful reminder of why blind trust (when it comes to money matters and your partner) can be a mistake.

It really does pay to have your financial affairs in order right from the start. Money matters are a leading source of relationship conflict and are a primary reason for relationships failure. That’s a complete waste, as couples can easily prevent most financial conflicts if they will make financial planning a priority. The tools needed to deal with premarital finances are readily available and even free in most cases. Some good places to start are Mint , WIFE, and  Women’s Finance. All of these sites are free and the services offered are completely professional, what’s your next excuse for not getting started going to be?

While this post has brought the issue to your attention, it’s up to you to do something about it! Playing “banker” before your relationship starts is one of most effective ways to keep you and your partner playing “doctor” for the rest of your lives. While no one ever intends for their relationship to fail, not planning for your financial future together should be considered planning to fail. You and your partner can do better, start by taking the sample quiz below and any comments you have on this subject are welcome.

For additional information check out the links below:

Prenuptial Agreements   A book to help couples draft a premarital agreement that best works for them

The Seven Pearls of Financial Wisdom   A book focused on the unique financial issues women face

Good Example of Planning   The type of guy every father wants his daughters to bring home

 Before You Do  Financial matters to consider prior to marriage