Couples and Money

Women: Take Control of Your Financial Future

Take Control of Your Financial Future

Recently, Business and Tech asked me to participate in a panel of experts for an article called “Taking Control of Your Financial Future.” Below are some of the key points I shared during our discussion, which focus on the specific personal finance issues women often face.

I think all women can benefit from working with a trusted financial advisor if they need help managing their personal finances. A fiduciary financial partner can help you set financial goals, allocate and invest your money, and develop strategies to grow and preserve your wealth. However, there are certain things all women can do to take control of your financial future, whether you choose to work with an advisor or not.

#1: Take Ownership of Your Finances

My first piece of advice for women is to take ownership of your finances. Don’t depend on a relative, significant other, or spouse to make financial decisions on your behalf. 

If you’re married, consider taking a team approach to managing the household finances. Ultimately, being looped into these key financial decisions will give you peace of mind, especially if you lose your spouse.

#2: Seek Feedback from Other Women

Another way to take control of your financial future is to talk to other women about how they handle their money. Find trusted friends or create a money circle to talk about money issues and financial topics. Or there are money coaches that you can hire to work through your money issues.

#3: Be Your Own Advocate

Women need to be our own advocates. Despite the progress we’ve made, we still earn less than men, on average. In addition, we often must choose between being a caretaker and pursuing a career. These factors can significantly impact your ability to retire on your own terms, especially if you’re the primary earner in your household.

To ensure your compensation is fair, ask for more benefits or a pay raise when you feel you’ve earned it. Keep a record of your contributions and any metrics that demonstrate the value of your work.

And most importantly, don’t be afraid to negotiate your salary and benefits when accepting a new job. In many cases, negotiating your starting salary is your best opportunity to meaningfully increase your income.

#4: Find the Right Balance

If you have a family, juggling your home life and work life can feel like a never-ending challenge. To ensure your financial future doesn’t suffer as a result, you need to find a healthy balance.

First and foremost, seek out employers who have family-friendly employee benefits. Look for organizations that have good gender diversity among management and employees. These types of employers typically offer work-from-home, tele-commuting, family leave benefits, and even daycare. In some cases, they may even offer part-time work to support working parents.

In addition, talk to your spouse or partner about sharing childcare and household duties. Set up systems and schedules so each person knows their role to keep things working smoothly. If possible, ask local family members if they are willing to help.

It’s often helpful to set strict boundaries for your time at work and set expectations accordingly. Let your employers know it’s important for you to attend certain family events, which will keep you from working overtime. And be sure to stick to these boundaries yourself, even if you’d love to work just one more hour on that project.

#5: Invest in Your Future

Lastly, educate yourself about investing and be willing to invest to secure your financial future. Keeping cash in a bank will not beat inflation over the long run but buying stocks will. You don’t have to invest beyond your comfort level. However, it’s critical to find the right mix of investments to stay on track towards your financial goals.

For more personal finance tips, you can read the full Business and Tech article here.

Curtis Financial Planning specializes in the unique financial planning needs of independent women and women who take the lead in their household finances. If we can help you develop a plan to take control of your financial future, please schedule a call.

In the meantime, check out our personal finance resources, including The Happiness Spreadsheet, a fresh, inspiring approach to budgeting for women.

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Buying Your Own Home? Read This First

It seems nothing can stop Americans from wanting to buy their own homes. It’s almost as if the credit crisis didn’t happen, even though not too long ago we were bombarded daily with stories about crashing prices, underwater mortgages and home foreclosures. It was an American nightmare, not the American Dream.

xbuying_women.jpg.pagespeed.ic.L1kypEE21GBut if you think about the emotional and economic reasons people want to buy instead of rent, it’s not so hard to understand. As a financial advisor, I meet many potential first-time homebuyers who cite these reasons for wanting to buy:

  • “Why should I pay a landlord when I can put the money toward building equity in something myself?”
  • “Paying rent is like throwing money away.”
  • “I don’t trust the stock market. I’d rather put money in real estate.”
  • “Renting feels like a temporary situation. I want to put down roots and nest.”
  • “I want to be able to remodel my home in any way I want, with no restrictions from landlords.”

What I usually do at this point in the conversation is a back-of-the-envelope analysis of what it would look like for my client to buy a home. The key components of the analysis involve money saved and money earned. Continue Reading…


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Do You Need a Prenup?

According to news reports, when Katie Holmes and Tom Cruise announced their divorce, there wasn’t much of a question of how the couple’s assets would be split. That’s because a detailed prenuptial agreement outlined exactly what would happen, financially speaking, if the couple split. It’s been said that Holmes walked away with only those assets that she brought into the marriage.
Do you need a prenup? | Curtis Financial Planning

Prenups aren’t unusual for celebrity types or the super wealthy, but they aren’t as common for the simply well-off folks who aren’t in the spotlight. This could be a mistake. There are social trends that make having a prenup a very smart idea. Instead of creating tension for a couple, a prenup can actually create peace of mind that financial matters will be settled fairly and quickly in case a marriage doesn’t work out.

You may see yourself or someone in these circumstances:

* Going into a marriage with significant assets or liabilities: People are getting married later in life (the average age for a first marriage is the highest it’s ever been, at 26.5 years for women and 28.7 for men, according to the Pew Research Center), time enough to accumulate wealth on one’s own.

* Inheriting a large sum of money or other assets: Baby Boomers and Gen Xers are often beneficiaries of their parents’ or grandparents’ estates, creating instant wealth for one or both partners.

* Divorcing after age 50, sometimes referred to as the “gray divorce”: A gray divorce typically involves an empty-nester couple who stayed together for the sake of the children. Or, since we are all living longer, a marriage that would have ended with the death of one spouse now ends in divorce. Whatever the exact cause, statistics show that the divorce rate has more than doubled in the past 10 years. Today, one-quarter of people who get divorced are over age 50, according to the National Center for Family and Marriage Research.

Prenup Basics

Prenuptial agreements are legal documents that specify how certain financial issues will be handled in the event a marriage ends (either in divorce or death). Prenups are especially popular when one partner has substantially more money than the other going into the marriage.

A prenup might be a good idea even if you don’t have movie star money. You should consider a prenuptial agreement if:

  • You own a business.
  • You expect to receive a significant inheritance.
  • You have assets such as retirement accounts, a home or stocks.
  • You have children from a previous relationship.
  • You don’t make a lot of money now, but you expect your future earnings to be significant (for example, you are currently in law school or medical school).
  • You have more unusual assets that you want to protect (for example, you are an author or musician who owns the copyright to your creative works, you have a collection of valuable art, etc.).
  • One half of a couple has significant debt.

A well-crafted prenuptial agreement will specify how these assets and liabilities will be handled if a marriage ends.

The Well-Crafted Prenup

Just having a signed agreement between two parties doesn’t necessarily mean that you have a valid prenup. For your agreement to be enforceable, you need to do certain things:

  • Sign the agreement well before the wedding. If a prenup was signed just days before a marriage, it may look like one party was coerced into the agreement.
  • Fully disclose all your financial information. If one person withholds information, it could make the prenup unenforceable.
  • Make sure your prenup is equitable. Courts may not look fondly on an agreement that leaves one party completely broke. For example, even if one person waives his or her right to alimony payments, a court could still decide to award those payments if it determines that’s the fairest option.
  • Keep it reasonable. Don’t include frivolous, non-financial demands in your prenup, such as clauses that require one spouse to not gain weight, specify where to spend holidays or dictate how children will be raised. Prenups that contain these types of clauses may be invalidated. You also can’t make decisions about child support or custody in a prenup, since those issues are decided separately by the courts.
  • Hire a lawyer. Informal agreements are far less likely to be enforceable. Each party should hire their own lawyer who looks out for their own interests and is familiar with marital laws in their state. The lawyers can then work together to hash out an agreement that works for both you and your fiancé.

Think About Finances Before You Say “I Do”

If you’re engaged or thinking about getting married, you should seriously consider sitting down with your partner and have a conversation about a prenup. This can be a sensitive topic, and it’s possible that your partner will react negatively when you raise the issue. If that’s the case, try explaining that a prenup is a way to minimize conflict and ensure that everyone is treated fairly in the unlikely event the marriage doesn’t work out, not a way of saying that a marriage is doomed to failure.

Even if you and your fiancé decide a prenup isn’t for you, having a conversation about it can allow you to talk about financial concerns—something that many couples fail to discuss before marriage. Bringing up issues of debt, assets and future earning potential now allows both of you to go into a marriage with eyes wide open, and can mean a smoother, happier partnership in the future.


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Simple Truth #4: Inflation and Taxes are Money’s Enemies (Saving and Investing are Money’s Friends)

Inflation and taxes

Inflation and taxes

Inflation and taxes can wreak havoc on the best-laid financial plans unless you arm yourself with the knowledge and tactics to prevent the most damage.

Today we’ll focus on inflation, which is one powerful enemy. Why? You can’t see it, there are are no laws protecting you from it and it’s not selective. Every single dollar is subject to its eroding influence.

What is inflation?  – Get to know your enemy.

Inflation refers to the increase in the Consumer Price Index (CPI), which tracks the prices of goods and services that most of us buy. Inflation has averaged 3% a year from 1926 to 2009.

When prices rise, each of your dollars buys fewer goods and services – eroding your purchasing power. Just think about the price increases on everyday items such as milk, bread and eggs over the last few years. Or, consider the rise in your medical insurance premium or the tuition for your children’s education.

It’s not hard to see that if your income doesn’t rise with the rate of inflation, your lifestyle can be dramatically affected. Not all goods and services rise at the same rate, however. If you buy more items that are rapidly costing more money (education, medical costs) you’ll be more adversely affected.

How can you fight inflation?

There are a few ways to fight inflation and fortunately you don’t have to take on this fight all-alone. One of the Federal Reserve’s (the Fed) key duties is to keep inflation under control or in Fed speak: to maintain stable prices. They do this by manipulating monetary policy – usually by raising short-term interest rates but they have other tools as well.

But since inflation is a persistent foe, all the Fed can do is control the rate of inflation, not stop it altogether (which could lead to deflation, but that’s a whole other story).

Five Inflation Beating Tactics

Fortunately, there are some actions you can take with your money to hold off or minimize the erosion of your purchasing power:

1. Invest your cash reserves wisely. Financial institutions are more than happy to take your cash and pay you a low interest rate. Then it’s invested for a higher return elsewhere! Keep up with current savings and money market rates and move your money to where you can get a competitive rate on your cash. Note: money market fund rates tend to move up quickly when interest rates rise.

2. Get the raise that you deserve. When it comes time for your performance review, let your boss know what a good employee you’ve been and ask for a raise when appropriate. A stagnant salary combined with rising prices is a formula for a less abundant lifestyle or the accumulation of debt.

3.If you’re self-employed, price your product or service competitively and take price increases when you can.

4. Monitor your investments based on your time horizon (when you will need the money) and risk tolerance (can you sleep at night?). Being overly fearful of the stock market and holding too much cash will not bring you abundance in your golden years.

5. Certain assets rise with inflation. Treasury Inflation-Protected Securities, gold, commodities, and real estate are examples of assets that typically rise with inflation. If you own a home, this is probably enough real estate.  One of the easiest ways to invest in commodities and gold is through exchange-traded funds.  Careful though, these assets can be volatile and you would only want a small percentage of a balanced portfolio invested in them. Educate yourself or get help before dipping your toe in!

Here are a few resources to get you started on inflation fighting.

From the Get Rich Slowly Blog: Best High-Yield Savings Accounts

From Morningstar:  Exchange Traded Funds

From the SEC website: Asset Allocation, Diversification and Rebalancing

Next Up:  Money’s Enemy #2:  Taxes  (To be posted soon).

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Financial Planner’s Reading List: You Are What You Read

This past Sunday morning I (and, I suspect, millions of others) read an article in the New York Times Magazine by Elizabeth Weil.

So many books, so little time.

Married (happily) With Issues takes the reader along on a fascinating and personal journey in search of a more perfect union. Elizabeth Weil manages to convince her good sport of a husband, that even though their marriage is “good” they might benefit by attempting to make their good marriage better through various counseling and therapy strategies.

In the story, Weil discussed some of her peccadilloes (she doesn’t like French kissing) and his (he’s overly obsessed with cooking gourmet meals every day) that chipped away at their otherwise good marriage.  After I read the article, I remembered that my husband had “suggested” an idea that he thought might lead to a more perfect union between us. I might want to “review my magazine collection” he said, in the hope that some of them could be recycled, “before they took over the house.”

I know my magazine habit is a pet peeve of his…and the article triggered my unconscious and motivated me into action. It’s hard for me to discard my beloved magazines: The New Yorker, More, Gourmet, Sunset, Good, California Home & Design, and Cook’s Illustrated all hold for me hours of pleasurable entertainment.  But, because I knew it would be good for my marriage, I threw out everything but the 2009 issues.

Would I have agreed to purge my magazine collection if I hadn’t read about one couple trying to build a better marriage? Probably not. Could Elizabeth Weil have become a writer or a well-informed, always-trying-to-improve-spouse without reading? Probably not.

Reading is so important. One of the most powerful advantages to being an avid reader – you not only learn so many new and interesting things, (“Hey, let’s try and make our already good marriage better!”) reading has the power to change your behavior in positive ways. Reading can even help you think about, manage and handle money better!

My Personal Finance Reading list
This brings me to my list of favorite personal finance books –  guaranteed to change one or two of your money behaviors the first time you read them and more if you read again and again.  Just give some of these books a try and see if you start gaining money smarts!

1.   I Will Teach You To Be Rich, Ramit Sethi.  Meant for a 20-30’s audience this book is full of tips about how to live within your means but enjoy the things you love, and how to automate your finances so that saving and investing are on auto-pilot.

2.  Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence: Revised and Updated for the 21st Century by Vicki Robin, Joe Dominguez, and Monique Tilford.  Do you ever feel like you are spending money on things you don’t even really care about but buy anyway?  This book really makes you think about the value of your time and money and helps you to align your values with your spending.

3.  Get Financially Naked: How to Talk Money with Your Honey by Manisha Thakor and Sharon Kedar.  An inspiring, practical guide that will help you to talk about money with your partner and create a successful financial life together.

4. Your Complete Retirement Planning Road Map: The Leave-Nothing-to-Chance, Worry-Free, All-Systems-Go Guide, Ed Slott.   Ed Slott is the guru of retirement planning and his books will teach you everything you need to know about 401k’s, IRA’s pensions, etc.

5. Making the Most of Your Money Now – The Classic Bestseller Completely Revised for the New Economy,  Jane Bryant Quinn.  A very comprehensive book covering all stages of your financial life. Discusses the pros and cons of major financial decisions.  (Buy the 2010 version, will be available soon).

Happy Reading!

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Fee Only Financial Planner Dishes on House Buying in the Bay Area

House Buying in the Bay Area | Jim and Annette’s Financially Sound, Thoughtfully Executed, Excellent Adventure

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Jim and Annette in front of their new home

“I really admire the conscientious way you bought your first house,” said I. “That’s because we’re really cheap!” said they, almost in unison. Meet Jim and Annette. They’re in their late 30’s and lucky. They both watch their pennies. If only all my clients would…well, never mind.

While many of Jim’s and Annette’s friends bought houses in the last few years, they held back. The market was too frothy and unaffordable, they thought. At the time, life was a cramped one bedroom apartment in North Berkeley. But of course things change. Soon enough real estate prices crashed, and taking the leap made more sense. They started out on their own, found some neighborhoods they liked and found some houses in their price range: no more than $525,000.

Know Thy Numbers
In the meantime, Jim and I worked on their cash flow adding in housing costs (they’ve been clients since 2007).  Both were adamant that they know the numbers and not get in over their heads.  Jim has an inviolable goal, “I want a six month buffer of living expenses at all times.”  As a self-employed graphic designer,  he has a about a thousand good reasons for doing this. And while Annette currently works for Williams-Sonoma – layoffs have begun there.  I recommended they get pre-qualified for a mortgage, which they did.

Here’s a few things they learned along the way.

Know your must-haves
Jim and Annette knew what they had to have:

1.  A good location so they could walk to shops and services, and have an easy commute.
2.  A live-in ready house: some work would be okay, but they wanted no delays or additional costs.
3.  They wanted to live near their friends.

What you can live with?
No house is perfect, especially a house in the Bay Area in the $500,000 price range. Here’s what Jim and Annette had to contend with:

Close proximity to Bart meant noise, so new windows are planned.
They lack storage space, typical of older homes (1926).
They have $18,000 worth of work  to do – plumbing upgrades, electrical work, window replacement, foundation repair and some unexpected termite damage. Closing cost credits (due to the fine work of their realtor Carol Parkinson) and first time home buyer credits ($8,000 on their 2010 taxes) will help pay for all this.

Know what you care about most
Jim and Annette are now proud and busy homeowners: they’re refinishing floors, knocking out walls and buying a few new furnishings. They splurged – on a $4,000.00 Thermador Range.   When I questioned the decision, Annette said something to me that I thought was very wise:  “It’s about knowing what you really care about” she said, “and putting resources and energy towards those things, and then making compromises on the rest.” Wise words.

My Take: Top 5 things to consider when buying a home in the Bay Area

1. Know what you can afford before you start looking for a home.  Get pre-qualified.
2. Identify the neighborhoods where you want to live. Get to know prices.
3. Make a list of your no-compromise must-haves.
4. Get referrals for real estate agents and mortgage brokers.  Make sure you’re comfortable and that there’s a level of trust between all parties.
5.  Know that the costs of home ownership don’t end with the purchase.  Endless amounts of money can be spent improving, furnishing and decorating a home. Carefully plan your expenditures based on your income and budget.  Most important: don’t rely on credit.

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Couples and Their Money – Yin and Yang

Here is my advice to couples who are facing financial challenges and don’t see eye to eye on the value of a financial planner: Work together and see if you can find consensus.They were in their late 30’s with three small children.  He was friendly and open, she was quiet and not terribly happy to be there. He’d orchestrated our meeting after finding my website and liking it so much he called me.

Like many Americans, they are caught in a financial “perfect storm.”  They got married 6 years ago and decided to have a family. After the first child was born 4 years ago, she left her job to be a full time mom. They now have a 2 year old and a newborn as well.

The American Dream

In 2006, they put 20% down on a million dollar home.  Back then (it seems like another age entirely), not having the income to support the mortgage payments on an $800,000 loan was no big deal. You just “stated your income” and secured an interest-only loan.  And voila! Home ownership was yours – the American Dream.

Fast forward three years. The ITI (Interest, Tax and Insurance) payments are killing their budget, vacations are out, they’re having a hard time finding the money they need for home improvements and funding college savings accounts.  To add insult to injury, the company she worked for went bankrupt, and all of her retirement savings was in company stock which is now worthless.

Stormy Weather

She tried freelancing,  but with three young children, concentration is difficult and the stress level is climbing. His employer has announced no more matching funds for the retirement account and no cost of living raises this year. Serious storm clouds are gathering on this couple’s financial horizon.

Love and Money

Given what is happening to this couple, I found myself surprised that only one of them – the husband – wanted to meet with me. It was rough sledding with his wife – she wasn’t convinced I could help and was quite firm in her convictions. But credit where credit is due, she did come to the meeting. Truth to tell, it’s usually the other way around. Such is married life, I suppose. You like camping, I like bed & breakfast’s, you  like parties, I like quiet nights at home, you want a financial planner, I want a vacation. Yin meet Yang.

Advice and Consent

Here is my advice to couples who are facing financial challenges and don’t see eye to eye on the value of a financial planner: Work together and see if you can find consensus.

Remember one of the rules of marketing: What’s In It For Me? Help your partner understand there are benefits.  Even though the process may be uncomfortable, and difficult to understand, the end results are what matter most.

It’s one thing to say, “We have to have a financial planner because we don’t know what we’re doing” vs “If we get a financial planner to help us, we increase the chances that we can put Peter and Julie through college and have a decent retirement. Without that kind of help, I’m not sure how we can do those things. Will you help me?” Stress the long term and short term benefits.

Or, you can take a different attitude all together… as  another reticent  spouse said to me at the end of a recent interview:  “Oh, you mean I can pay you to listen to him nag about our money… that sounds really good to me.”

Say Goodbye to Your Money Troubles

Which brings me to a very important reality:  Money troubles are a leading cause of strife in a marriage and often times can lead to divorce.

If an objective advisor can help you to communicate about money and develop a workable plan which in turn leads to a more harmonious relationship… wouldn’t it be worth it?

So what do you think? 

Does this couple need a comprehensive financial plan?  Will he persuade her? Will she come around? Would love to know your thoughts.

Do you want to manage your money (and life!) better?

The Happiness SpreadsheetIf you want to think differently about the relationship between your spending, your values and your happiness, then sign up to get your FREE copy of The Happiness Spreadsheet.

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