Everyone has a different opinion about these questions and a lot of times people tell us that there aren’t any “right” answers. Larissa’s Grandpa Bill has a pretty liberal outlook on kids and we always chuckle when we remember what he told us early in our marriage when we said we weren’t ready to have kids yet. Grandpa responded so matter-of-factly in his Oklahoma accent, “Whatcha waiting for? Nothing’s gonna change!”

Even though it is difficult to argue with Grandpa’s statement, we keep going back to conservatively approaching planning when we think about the statistics we’ve read on the cost of having kids. For instance, the USDA Center for Nutrition Policy and Promotion reports that a middle-income family with a child born in the year 2000 will spend about $165,630 to raise that child for seventeen years. And that figure is for just one child! When we start doubling and tripling it, it gives us a headache and has served as effective birth control for quite a few years.

What we soon came to realize is that whether you’re having your first child or your third, being pregnant for nine months affords more than simply giving your baby enough time to fully develop its hands, toes, head, organs and the karate-chop kick it likes to execute on the inside of its mother’s belly during the third trimester. Nine months of being pregnant also gives couples time to mentally, physically, and financially prepare for one of the biggest and most life-changing elements of their relationship and their lives. So whether you only have the nine months before the baby is delivered to prepare or if you find yourself with more time to plan for your baby, it is important to take the following five factors into consideration.

Think Beyond the Baby Shower

We’ve all heard parents-to-be naively say they don’t have to worry about buying clothes or furniture for their babies because they are going to get ev­erything they need at their baby shower, as well as multiple gifts from grand­parents and other close family and friends. Even though it’s true that family and friends are good resources for parents-to-be, couples have to think beyond the fantasy period of having a child (three days for some, three months for others—it just depends on how much sleep the parents are able to get) and plan for at least the first full eighteen years.

Parents we have talked to estimate that monthly, they spend about $100 on diapers and $100 on formula when their kids are babies. After the kids are potty-trained and past the formula stage, though, these costs do not just disap­pear. Instead, they transferred over to other expenses that arose as kids grow, such as baby food, videos, books, and more. Based on our experience and the experience of other parents we’ve talked to, just as you have to plan for the initial start-up costs associated with having a baby, you also must consider the ongoing costs that might shift, but don’t decrease.

Save Like You’ve Never Saved Before

There isn’t a universal rule for how much is enough to save to be fully pre­pared for the birth of a child. Even with all of our pre-planning, we didn’t know ho much we needed to save, so we just saved as much as we could. As soon as we became pregnant (truthfully, as soon as we started discussing the possibility—about a year prior to conceiving—because we are savings freaks), we went into major savings mode. Any extra money remaining after we’d paid the bills and set aside a moderate amount for other spending went right into our savings ac­count. We deemed it, “Project Baby Savings!”

The importance for growing your savings is so great when you are plan­ning on having a baby, not only because your regular living expenses are going to dramatically increase, but also because you never know what huge expenses will pop up along the way. From emergency room trips when your toddler bumps his head on a coffee table to mishaps during extracurricular activities, kids are expensive little boogers. Similarly, it’s more important than ever to have a savings cushion so you’ll have something to fall back on in the unfortunate event that something happens to your job. Layoffs and closures are a fact of life, so it’s good to be prepared. With a child in the picture, you not only have to take care of yourself, but you are responsible for the consis­tent well being of your child.

To that end, our rule of thumb is to aim for accruing three months worth of paychecks in savings by the time you have your baby. At first, three months’ worth of savings may seem like a long shot, but when you break it down into smaller pieces, you’ll see it is attainable. Let’s say that you bring home $2,500 a month as disposable income. To have three months’ worth of savings, you would need $7,500 in the bank by the time you have your child to meet our rule of thumb savings goal. If you take $7,500 and divide it by the nine months you will be pregnant, that equates to saving $834 per month, or $417 a pay­check. This, of course, assumes that you don’t have any money in savings to start out with. If you do have even a little bit of money set aside for a rainy day, then you won’t need to save as much each month. If you aren’t able to make the three-month cushion by the time your bubbly, happy newborn enters the world, don’t fret. Just try to get as close as possible to the three-month cushion as you can. Even if you don’t make the overall goal, the exercise is a good start for conditioning you to begin and continue saving for all of your children’s lifelong experiences.

Stay tuned for the next blog where we will continue the conversation on financially preparing for our bundles of joy by talking about the dreaded cost of day care, health insurance and education – fun stuff!

Happy Saving!

By several accounts, nearly 1 in 3 people does not participate in their company’s 401(k) or similar retirement plan. If you are that one person, look to your left and to your right (if you are in a cube, then ‘prairie dog it’ and sneak a peek over your cube wall.) Assuming they are in the same job, and assuming that you all have the same salary, the people around you at work are making more money than you do. Why? Because they participate in their 401(k).

Maybe you’ve been putting it off, thinking it is too complicated. Maybe you think you can’t afford to contribute to your retirement right now. Whatever the excuse, here are some things to consider that should encourage you to participate in your company’s plan today:

-          You are giving yourself a raise. Most companies offer some kind of matching program to the funds you put in your account. The most common matching program gives employees 50% of whatever they contribute on the first 6% of their salary. For example, if you earn $50,000 and contribute 6% of your salary ($3,000), the company will contribute another $1,500 on top of that into your account. In most cases you get to keep the company’s portion after so many years of service. But what many people perhaps need to remember is that the $3,000 that you put into the 401(k) is always YOUR money, no matter what. Only the matched portion is lost if you leave before you become ‘vested,’ meaning the money then becomes yours.

-          If you don’t pay yourself, you pay the IRS. One of the great things about a 401(k) is that your contributions are automatically tax deductible. That is, you don’t have to pay income tax, Medicare, Social Security or other payroll taxes on the money you contribute. To follow the same example from above, if you are not contributing to the 401(k), then you would have reported $50,000 in salary income to the IRS and paid tax on it. Had you contributed to the 401(k), your taxable salary is only $47,000. Assuming that you are in a 15% tax bracket, you saved $450 in taxes by reducing your taxable income. So not only are you saving for retirement, and not only is your employer chipping in, but the IRS is even helping. Your $3,000 contribution to retirement really only cost you $2,550 out of pocket.

-          It’s easy. You don’t have to be a stock market wizard to participate in your 401(k). There are a variety of mutual funds called ‘lifestyle funds’ that do most of the work for you. Simply answer a few questions about your age and how risky you want your investments to be, and there is a fund for you. The best part of these funds is that they automatically adjust their investments as you get closer to retirement, moving from more risky to less risky investments. In theory, you would only need to buy one fund from your first job to your last day at the office.

So whether you are just starting a new job or have been at your job for a while, but haven’t participated in your 401(k) plan, get into the (retirement) game! We know money is tight for many right now, but putting away a little bit right now has the potential to reap big rewards in the future. Don’t miss out on this essential retirement planning opportunity.

Please note, that these are just few quick guidelines for participating in a 401(k) plan. There are so many elements associated with planning for retirement  and determining how much money you are going to need when you decide to hang up your hat, that we have dedicated two complete chaptersabout in our book, The Financial Love Triangle: Yours, Mine & Ours, to the topic of retirement. So, if you want more information about 401(k) retirement plans and/or making sure that the goals of you and your spouse are in line when it comes to planning for retirement, we encourage you to check out Chapter 20: Planning for the Golden Years and Chapter 21: Computing Your Retirement Needs. There also is a retirement planning calculator on our Web site as well to help you manage the retirement planning game.

Good Luck and Happy Saving!

Larissa and Dan Kusel

Authors of The Financial Love Triangle

www.financiallovetriangle.com

There are certainly gains to be made by investing in the stock market. However it is important to understand if your plan is to invest in the stock market, or speculate in the stock market. Investing involves true research of each stock you intend to buy, as well as the discipline to stay with investments in the long run. Speculating on the stock market involves more short term investments which rely less on research and more on hunches and momentum.

 Before you start investing, here are a few words of wisdom to remember:

1. There are people that know more about stocks than you do. No matter how much research you intend to do, unless you are a Wall Street stock analyst, somebody out there is doing a lot more homework than you are. They are calling company management, asking questions and spending a lot of time following the stock you are. It’s possible you will both come to the same conclusion on a stock, but it also raises the question of how you can expect to earn bigger returns than the experts. For this reason, picking individual stocks might be fun, but isn’t always the best way to earn consistent returns.
2. You do not know something that no one else does. Similar to the first point, it’s common with eager first time or novice investors to think they have learned something that nobody else knows, either through research, through a ‘tip’ or something else. The reality is that if you know it, so does everyone else. And if somehow no one else knows something, and it’s important, it is illegal to buy stock based on it. That is the definition of insider trading, just ask Martha Stewart.
3. It doesn’t always pay to diversify. While it is true that buying various stocks reduces your exposure to any one stock, over diversifying can lead novice investors to throw away profits fast. For example, let’s say you have $1,000 to invest, and you decide to buy 10 stocks with a $100 investment in each stock. Even if you are using a low cost broker, it is probably going to cost you $16 to buy and sell each company. With a $100 investment in each stock, you need to earn a return of 16% on each investment … just to break even! Even if you are a longer term investor, 16% is a lot for a stock to gain before you simply recover your costs.
4. Consider more than just stocks. If you are looking to invest your money, keep in mind that stocks are not the only investment. In fact, the stock market as a whole is relatively small compared to other markets. For example, the bond market is several times larger than the stock market in terms of value. There are also other investments including commodities such as grain, beef, oil, etc. Each has its own merits. If you are looking to be a serious investor, and if it is appropriate, investments other than stocks can also make sense.  

Please note, that these are just four quick pointers when it comes to investing. There are so many questions about how to invest and what to invest in (and maybe even some confusion), that we have dedicated an entire section in our book, The Financial Love Triangle: Yours, Mine & Ours, to the topic of investing. So, if you want more information about personally investing and/or making sure that the goals of you and your spouse are in order when it comes to investing in your future, we encourage you to check out Section Four of our book. The chapters in this section include:

Chapter Eleven: Making Your Money Work for You

Chapter Twelve: Investing Basics: What’s What in the Investment World

 Chapter Thirteen: Alternative Investments to Round Out Your Portfolio

 Chapter Fourteen: Emotions of Investing: Keeping Your Financial Cool

G00d Luck and Happy Investing!

Dan and Larissa Kusel

Authors of The Financial Love Triangle: Yours, Mine & Ours

www.financiallovetriangle.com

On the flip side, with the start of college football season happening this past weekend and the pros ready to hit the field, consider staying in for the big game by inviting your friends over to your place. Rather than dropping a couple $50 bills at the local pub to watch the your college teams big rivalry game (ouch, CU vs. CSU game last weekend) , invite your friends over to your house for a potluck or BBQ and watch the big game in the comfort of your own home. By having everyone bring one food item and one drink item, the event is cheap for both the host and the guests. Plus, lounging on your comfortable couch or recliner is a lot more cozy than sitting on a rough plastic bar stool that sticks to the back of your legs each time you get up to use the restroom or order another $5 beer at the bar. Stay in, have fun, drink responsibly and save money. Sounds like a good plan to us!

Happy Saving!

Larissa and Dan Kusel, CFA

Authors of The Financial Love Triangle

www.financiallovetriangle.com

Throughout the year, museums, galleries and other government sponsored entities also typically offer free or reduced rate days where they wave or dramatically reduce the admission fee. You could easily fill your days full with free or reduced priced events if you wanted to. You just have to keep an eye out for the local deals. Most of the time, these deals are listed in your local newspapers or local Web sites. Most cities even print local events calendars and mail them to the residents within their communities. If you are like one of my friends who is always on the free local events hunt, you may even need to keep a spreadsheet of local events in your area to keep them all organized. Now that is dedication! So keep a look out for those free local events and enjoy summertime with your family without breaking your budget.

This money savings tip is compliments of the newly released book, The Financial Love Triangle, by Larissa and Daniel Kusel. For more information on how to have a better relationship with your money and your significant other, purchase a copy at www.financiallovetriangle.com.

Larissa will be the first to admit that sometimes going to a theater has a more enjoyable aura (even if it is the sticky-floored cheap theater or dust bowl drive-in) than renting one. If you agree with this opinion and can’t bring yourself to combing the new release aisles at your local movie rental store, there are still some ways you can save money on your movie ticket. Many national grocers and employers sell reduced price movie tickets you can use two weeks after a movie is released in the theaters. Many times the reduced movie tickets can save up to fifty percent. And even though they can be few and far between, drive-in movie theaters and budget theaters can provide a fun, adventurous movie-going experience for a fraction of the cost.

Happy Saving!

Dan and Larissa Kusel

Author of The Financial Love Triangle

www.financiallovetriangle.com

It is important to note that you don’t have to wait until a financial conflict surfaces in your relationship to start discussing money and finances. Most of the time, you can avoid financial conflicts if you talk openly about money in the first place. Whether you consider the communication between you and your spouse as consistent, non-existent, or overbearing, setting up a little bit of communication structure can help out any couple’s financial relationship. To jump-start the financial communication between you and your spouse or to hone your financial communication skills, we recommend that you set up a specific time each month for an hour specifically reserved for an open discus­sion about finances. This means putting it on your calendar and committing to spending an uninterrupted hour talking with your spouse about your fam­ily’s past financial activity, future financial activity, and to touch base with each other about what each is feeling about the family’s financial situation. This might seem daunting since there tends to be so much baggage associated with talking about finances. The last thing any of us wants is to schedule a time to talk about finances, if the time ends up causing spousal fighting.

To keep the financial discussions from becoming heated discussions, it is important for couples to set predetermined goals and parameters prior to the discussion to keep the time productive and enjoyable for both parties involved. (A bottle of wine doesn’t hurt the situation either.) The following is a set of goals and parameters that can be helpful for establishing a framework for monthly financial discussions.

Discussion Goals:

·         To review the previous month’s spending and savings patterns to see if you are spending too much money in one area and not saving enough in another area.

·         To discuss upcoming large purchases that you foresee during the next month. (i.e.: repairs (house, car, etc.), medical bills, entertainment purchases, traveling expenses, etc.)

·         To check in with each person’s feelings on the family’s financial landscape. (This includes identifying the financial stresses that each person is feeling, as well as the financial successes that each person may have accomplished over the past month.)

·         To set spending and savings goals for the next month. (By setting these goals to­gether, you are creating a benchmark for both of you to reach. This benchmark helps to subconsciously keep you in check when you may be thinking about going on a shoe shopping spree or a golf playing marathon. It also provides a concrete number for you to focus on accomplishing, rather than vaguely saying, “Let’s save more money this month.” If you set your goals too vaguely, then you are shooting in the dark and you don’t have any accountability to yourself or your spouse.)

Discussion Parameters (Rules):

·         Don’t play the blame game. One of the easiest traps to fall into when discuss­ing finances is to start pointing fingers and trying to pawn off responsibilities on each other. This approach creates a recipe for disaster because it will turn a discussion into a confrontational mess. To eliminate the rise of ineffective con­flict during your monthly financial discussion, it is important for each person to take responsibility for his or her actions and focus on how these actions are positively or negatively effecting the couple’s financial situation. By keeping your focus on your own actions and not comparing them to your spouse’s ac­tions, it becomes a lot easier to be more open and honest.

·         Give each person a fair share of time to discuss thoughts and feelings. In most relationships, one person tends to be more outspoken than the other. Even so, it is imperative that each person has an adequate amount of time to speak his or her thoughts and feelings for an effective financial discussion to take place. Whether you and your spouse are very outspoken or more introverted, you may need to bring a stop watch or timer to the discussion so each person is guaranteed the appropriate amount of time to say what is on his or her mind without running the risk of being interrupted or talked over by the other spouse. You can structure the discussion to include five minute introductions or financial overviews by each person, a fifteen minute “what’s working and what’s not” for each person, and then a twenty minute open discussion about ways to keep what’s working on track, as well as to suggest possible resolutions for what’s not working. This approach may seem pretty rigid, but a structured environment in the beginning will help establish the groundwork for effective financial discussions in the future.

·         Play like a team. Throughout our relationship, we have always joked around by calling ourselves “Team Kusel,” but that’s the type of outlook that you need to tackle your finances and come up with a strategy to ensure a win. Just like when you’re playing sports or working on a big project with your co-workers, you have to work cohesively to realize results. It is essential that you make sure that every move you make is in the best interest of the team, not the result of some self-serving motive.

·         No outside distractions permitted. Everywhere you look or go, there is some­thing to offer a distraction. When you sit down to have your monthly financial discussion, try to eliminate as many distractions as possible so you can focus all of your attention on communicating effectively. This means turning off the TV, phones, and your PDA. If you have kids, then it may be most effective to schedule your monthly discussion after the little ones are in bed or when they are out visiting friends or family.

·         Meet in a neutral location. To make your financial discussions effective, it is important to level the playing field by making sure each of you is comfortable with the environment. This could be a common area in the house like the kitchen table or patio. What it probably shouldn’t include is an area where one person may be seen has having more authority than the other, such as a home office or study.

Open and consistent communication is the cornerstone of a healthy and prosperous financial relationship. Accept your natural reactions and perspec­tives toward money, accept your spouse’s natural reactions and perspectives toward money, and establish open communication about the similarities and differences on a regular basis. If you take this approach to discussing finances, you may be surprised to find how non-threatening and non-confrontational talking about money can be. If you are financial nuts like we are, you may even find your discussions about finances fun. However, we don’t want to stretch it here, so it’s completely okay if you don’t get a kick out of talking about your money and what you should do with it. Whatever your feelings are on the subject, you should strive to maintain an open perspective and commit to communicating openly with each other on a regular basis.

Good Luck!

Larissa and Dan Kusel, CFA

Authors of The Financial Love Triangle

www.financiallovetriangle.com

Much Financial Luck!

Dan and Larissa Kusel

Authors of The Financial Love Triangle

www.financiallovetriangle.com

This money savings tip is compliments of the newly released book, Financial Love Triangle, by Larissa and Daniel Kusel. For more information on how to have a better relationship with your money and your significant other, purchase a copy at www.financiallovetriangle.com. 

$50 Dates

• It’s rarely easy to go out to dinner for two people at a restaurant and stay within a $50 budget, but it can be done! Cities across the country have special restaurant weeks where participating restaurants will offer set menus for a set price. One example is in Denver (The Mile High City) during the month of February every year high-end restaurants feature a special “5280 Menu” which at least includes appetizer for two, dinner entree and sides for two and two deserts for the total cost of $52.80 per couple. By keeping an eye out for special events like this, couples can enjoy trying new and different food at a reasonable price!
• Go to Broadway shows or musicals during matinee and non-peak times. If you are a Broadway junkie or would like to expose someone you love to the arts, you don’t have to spend next month’s pay check. Although ticket prices can get pricey if you let them, you can get reduced priced tickets if you attend the shows during matinees or non-peak show times. Most of the time, these tickets can be up to twenty-five percent cheaper than tickets during peak times, and you also can usually save money on the other costs of attending a show, such as parking. It can be financially beneficial to keep your eye out for shows that are playing in smaller, less prominent venues. Often, you can get less expensive tickets at these venues, as well as the chance to experience the arts in a more intimate setting.

$20 Dates

• Relax at a local coffee shop. In our society of Triple, No-Whip, Sugar Free, Skinny, Mocha Java Lattes, the coffee shop has become a staple for many Americans as they are driving to work and need a pick-me-up. But, local coffee shops can provide a setting for a relaxing, intimate date for you and your honey. Order your favorite coffee drink, share a pastry and sit in comfy leather chairs by the fireplace together enjoying each others company.
• Hit Happy Hours. Let’s face it: sometimes you just want to go out to eat and it doesn’t even have to be a special occasion. You may be sick of eating the same old food every week or you may simply need to get out of the house for a meal. In any case, you can save a substantial amount of money if you go out during a bar’s or restaurant’s happy hour times. At most restaurants, happy hours will have both food and drink specials that typically include half-off specials or two for one drinks and/or appetizers.

$5-$10 Dates

• Rent a movie, rather than going to the theater. Going to the movies is an American pastime, but the price for a movie theater experience today can leave you with the taste of burnt popcorn in your mouth. During a recent spring break vacation, we took our niece and nephew to a matinee movie, bought one popcorn to share, and a few sodas. At the end of our afternoon movie rendezvous, we ended up spending almost $50 for two hours of entertainment. We don’t know about you, but when we look back on this expenditure, there are a lot more fun and entertaining things we could have done with that $50. The next night, we chose to stay in and rent a movie. For $5, we still got to watch a great movie, and we were more comfortable on the couch in our pajamas.
• Invite friends over for the big game. Rather than dropping a couple $50 bills at the local pub to watch the NBA Finals or Stanley Cup game, invite your friends over to your house for a potluck. By having everyone bring one food item and one drink item, the event is cheap for both the host and the guests. Plus, lounging on your comfortable couch or recliner is a lot more cozy than sitting on a rough plastic bar stool that sticks to the back of your legs when you get up to use the restroom or order another $5 beer at the bar.

Free Dates! (The Best Ones!)

• Check out the local events calendar. A common question as people budget is how to reduce the entertainment fund. Americans like to be entertained and we are willing to pay a pretty penny for a good laugh and a good time. But you don’t always need to fork over the dough to have fun. In the summer, many shopping districts and city parks offer free summer concert series. Throughout the year, museums, galleries, and other government-sponsored entities offer free or reduced rate days where they waive or dramatically reduce the admission fee. You could easily fill your days full with free or reduced priced events if you wanted to. You just have to keep an eye out for the local deals. Most of the time, these deals are listed in your local newspapers or local web sites.
• Get outdoors. Whether you live in the mountains, on the beach, or in the city, enjoying the fresh open air is a free and healthy activity that anyone can do. Go for a hike on your local hiking path, bring a towel and a good book for a day at the beach, or pack a sandwich and some snacks for a day at the park; all are fun and relaxing activities that don’t have to cost a dime.

Good luck!

Dan and Larissa Kusel

Authors of The Financial Love Triangle

www.financiallovetriangle.com