Natalie: David and I are getting married and so, um I'm really scared of the idea of, what's mine is yours, since there's a lot of discretionary personal purchases that we probably do, and if we had to make that decision together with our shared money, I think that could end up in a fight.
Jamie: Meet Natalie. She and her fiance David, are getting married in a few months and they realized they haven't yet decided how they'll manage their money together. David thought they would share everything like his parents did.
David: I grew up, kind of upper middle class. It was always very comfortable. My dad was the sole earner of the household. Money never really seemed like a problem. Like there was always enough of it. My dad was a very good, manager of money. And so we didn't, go on like extravagant vacations or anything like that, but I never really knew any money struggles either.
Jamie: but Natalie had a different experience for her. Money was the source of anxiety growing up.
Natalie: In retrospect, I think my family was very comfortably middle class. But it didn't feel that way, I felt really poor. Like, my parents drove, , 20 year old cars, and, I only had, like, fewer pants than there were days of the week, and they were all, hand me downs. So I always felt like there was never enough money.
Jamie: Money can be an extremely personal and emotional topic, and when Natalie talks about it, her emotions are very close to the surface.,
Natalie: my father lost his job when we were youngish and got into a lot of debt. He was really attracted by these get rich schemes and they never worked out of course. So my mom kind of acted as a single mom for a while and then they got divorced and then she took care of us.
Jamie: today, both Natalie and David make six figure salaries in tech and have individually put away a decent amount into savings. As modern professional adults with their own incomes and assets to bring to the table, they realize they can't look to their parents to model how to set up their finances as a married couple, especially Natalie, she has worries and wants to make sure what happened to her mom, never happens to her.
Natalie: I fear that one day I won't be able to work, or something will happen and I won't be able to find a job again. I saw both of my parents get laid off and then struggle to find jobs, I'm so afraid of that happening to me. And so I've been trying to accumulate as much money as possible.
Jamie: And Natalie has accumulated quite a lot, over a million and a half in investments and even some real estate.
Natalie: Every time I check my numbers, I feel like I'm, like, diving into this pile of gold coins and it feels so nice and, I don't know, I feel like Scrooge McDuck, it's something that every time I feel like really stressed, I think about that number and it makes me feel better.
Jamie: The pair started a joint account when they moved in together a few months ago, and they pay for some shared expenses using that money, but planning for marriage and maybe even kids, has them wondering what the next financial steps look like.
David: I think the family aspect is one that is a little scary, especially just the cost of raising kids and schools and daycares. And, trying to, to navigate that seems a little, , intimidating.
Natalie: we've been starting to combine finances and, I have no idea what I'm doing now that it's not just me.
Jamie: And that's where we'll start today. I'm Jamie Roô and welcome to What Should I Do With My Money? an original podcast from Morgan Stanley. We match real people asking real questions about their money with experienced financial advisors. Here at Morgan Stanley, we work with a range of clients. Some are experienced investors, others are new to working with a financial advisor. On this show, you get a front row seat to hear what these initial conversations are like and get answers to some of the questions you might have yourself.
Marriage. It's a big step for many reasons. Among them, all the decisions around, well, what you should do with your money. Like Natalie said, what's mine is yours can feel very scary and everyone shares their money differently. There's no one right way should each person contribute proportionately to the household based on their income or 50 50. And does getting a prenup start the marriage off on the wrong foot?
Joining us to answer Natalie and David's questions is Stacey from our Chicago office, a managing director and wealth advisor. Stacey's personal experience with her own family and finances has a lot in common with Natalie and David's situation.
Stacey: this was my husband and, myself 15 years ago, , we were navigating some of these same things. We come from similar backgrounds, , we have similar values. Our parents instilled really strong values in both of us, and when we met, we were in a similar situation that we were both working. We were both making a nice income. We didn't really track what we were spending and saving. We just kind of did what we needed to do. But as we started our lives together, we realized that we needed to really maintain, personal and financial balance, , and for me, that wasn't necessarily that we had to combine all of our finances, but it was important for me to think about them together.
Jamie: Stacey's team of financial advisors is all women. All of the mothers, which led one of their clients to coin a nickname for the group.
Stacey: We have managed, , multiple generations of, of family wealth, , for this particular family. And one of them, , chimed in one time and said, well, they're the money moms because they take care of, Our money, like they take care of their children.
Jamie: and with that lens, Stacey dives in to understand Natalie and David's mindsets at this point in their relationship.
Stacey: can you tell me a little bit about, , what the two of you are currently doing together or how you're currently starting to think about merging your lives together?
David: We moved in together, a few months ago and that was kind of the first time in which we'd really like had to talk about, Like a shared resources, basically, um, shared money, most, most importantly, and, you know, I think we did kind of like the baby steps there where, you know, we, we opened like a joint bank account and we kind of figured out, you know, how much each of us were going to contribute to that shared account and we use that for things like rent and groceries and, and those kinds of shared expenses. But, you know, other than that, I think we've We have been keeping our, our financial lives pretty, pretty separate and, and pretty much kind of a status quo
Stacey: Excellent. And Natalie, do you feel a little bit uncomfortable merging things together or thinking about it together?
Natalie: I don't think it makes me uncomfortable. Either of us uncomfortable. I think it's, for me, what I really want the answer to, which I know is not answerable, is what's the right way to share finances?
Stacey: Yep. Um, every couple, in my experience, treats their joint finances a little bit differently. A couple basic things are coming to mind that I want to talk through today. The first is cash flow planning or budgeting. The second is then financial planning. And then the third, which I've also heard a little bit is contingency planning, planning for the what ifs, planning for, , when you have children, planning for the, God forbid we get divorced, , and making those kind of contingency plans. The budgeting thing to me is, is an easy place to start while it does feel daunting. One of the things that my husband and I did when we first got married was we started to really look at what each of us was spending because it, to me, it was daunting to think about. Two people combining their incomes and then all these different expenses, we have chosen to keep our accounts separate for no other reason than we both liked to have the freedom of having our own checking accounts. , but I do look at a budget every single month. So, Morgan Stanley has some wonderful planning tools. There's a lot of budgeting tools out there that are at a client's disposal. But really taking a look at what's coming in and what's going out helps you analyze what capacity then you have to save.
David: That's a really interesting framing. When I've thought about financial planning, I haven't really broken it up into those three categories, cash flow, financial contingency. can you maybe like, just go a tiny bit more into depth into like, cashflow versus financial planning. Like what is the distinction there? And, and what are you really like looking to, to get out of each of those?
Stacey: absolutely. That's a great question. , from a cashflow planning and budgeting standpoint, my kind of motto is you can't manage what you don't measure. And so it's really hard to understand and think about what you're going to save if you don't know what capacity you have in the beginning. So every month I really look at the income that's coming in, what we're spending money on. And if, if you track that over time, then you have, you have the Delta, you have the amount that's there that, that you can understand. Well, now, now I know that we can save a thousand dollars a month, 5, 000 a month, whatever that number is. And so instead of just letting your checking account grow. You know that that money can instead be set aside every month routinely.
Natalie: That makes sense.
David: Yeah. That's really helpful.
Stacey: And then the next step that helps with the financial planning. That helps you understand what your capacity is to save. , and for me, creating a financial plan, is is allowing somebody to start to think about their goals and put things into perspective so that you can live your life on your own terms and, and kind of maximize what that looks like and then we, we, we create essentially an ideal scenario. So when I'm doing a financial planning for a young couple, what ideally do you want to do? The beauty of starting planning when you are at such a young age is that you have a lot of levers to pull, so you can make different decisions versus if you start financial planning when you're 60 or 65, you don't have a lot of options anymore.
Natalie: I think when you talk about the financial planning like this, it seems very straightforward, maybe we do agree on what we want to plan to spend on. And then there's like the question of like, What about the money that comes in? It seems like when I read online, people tend to put in proportionally, which, even as the lower earner, feels kind of unfair. Like, what's, what's correct?
Stacey: Again, I don't think there's one right way. , we looked at it the way we have tackled it. We've looked at it as what are we trying to save as a couple? So when we ran our financial plan together, we looked at when we wanted to retire, how much we wanted to spend during retirement, what vacations would look like you know, kids education, we built all of that stuff in and then that helped us understand what we need to save each month. And we didn't really care where it came from. Because we were working together on a combined goal as a couple.
Natalie: What you're saying makes sense to me, that what we have is ours as long as we're married. But what happens in the case that you're not married anymore? How do you figure that out?
Stacey: Yeah, so this gets down to the contingency plan. And there are a lot of things that are involved in a contingencies plan. , one of them might be insurance planning, , basic estate planning, getting a trust and will in place, , and also a prenuptial agreement. , I know this can be a polarizing topic, , because some people look at it and think we're doomed. If we're talking about getting divorced already, something might, must be wrong.
Natalie: Yeah, yeah.
Stacey: , I look at it very differently. , I, I look at it as an insurance policy for both of you that you're creating at a time when you both have cool and level heads.
Jamie: At this point, Stacey offers her personal experience to speak to this issue.
Stacey: I did inherit a small amount from my grandparents. And before we had children, I had it written into our trusts that that amount would go back to my sister should something happen to me.
Because I felt a responsibility that that was not earned by me, that was part of our family money, and that that should go back to her.
Once we had children, we changed that because then the focus became them. And recognizing that that was still part of our family's lineage.
So in your case Natalie, my understanding is that, , you have saved quite a bit, and there are ways for you to keep that in a separate account, use a prenuptial agreement to keep that separate, but should you want to use that for marital , expenses, you can do that, but just knowing that then if something were to happen to the marriage that you can keep that separate.
Natalie: So David, I'm thinking like one way we could approach this, for example, is by default without a prenup. I think all marital assets are split 50-50.
David: Yeah.
Natalie: But we could just say personal assets are personal assets and then marital assets are marital assets and that way as We accumulate money. We are like consciously making the decision to put stuff in the pot
Stacey: Yes. And one thing to be careful of is co-mingling. That's a big thing that a lot of people don't understand is if you have an account that was yours prior to marriage and you both save into that same account or you buy a house out of that account, you've co-mingled those assets. So you want to make sure that if you're truly trying to keep them separate outside of a prenup and there's no prenuptial agreement, , that you want to make sure that you're very diligent about keeping those actually separate.
Jamie: Before this discussion with Stacy, Natalie, and David's friends and families all reacted badly to the idea of a prenup suggesting, it must mean there's something wrong with their relationship. But now Natalie is looking at a prenup from a different perspective.
Natalie: Even though everyone in my life says it's a bad idea, including my own mom, which doesn't make sense. Um, I really do appreciate how now we're thinking deeply, like, even, even if it doesn't end in a divorce, it's forcing a conversation about how we want to plan for our lives.
Jamie: Another concern Natalie had going into this talk was, what happens financially speaking, should children enter the picture?
Natalie: I'm worried about how kids might impact our, either of our earning potential, maybe mine more just because I'm female. And that seems to be how the world works. I mean, like, at least maternity leave at a minimum is going to stop promotions realistically. So how do people, how have you seen people deal with this?
Stacey: I think my first comment is: not necessarily. Both of you have already expressed a desire to not necessarily do things the way everybody used to do them, and I think one of the big empowering things now is that it's not the same as it used to be. I'm a prime example of that. I did not take a step back. I took maternity leave. , but my career kept growing, , after my twins were born and then after my third child was born, , and so has my husband's., but we figured out a balance that made sense for us,
Natalie: When do you start thinking about that? Like daycare is the obvious one, but there's got to be more than that.
Stacey: Yeah, you think about daycare is easy in the beginning because that's a, that's a fixed cost, but it's insurance and clothing and food budget changes, activities change, travel changes, all of those things. I have to tell you, flying as a family of five is much more expensive than flying as a couple. thinking about how each of you think about how to spend on your children and what to spend on your children. I think that's an important part. Some couples, I have clients who look at their money and they say, I am saving as much as I can so I can pass on as much as I can to my children.
I have other clients who say, I am saving as much as I can so that I can put them through school and educate them. But then the rest is for me for my life. , and if there's something left over, great. And I think getting on the same page as a couple is really important in thinking that through because that's, those are two very different things.
David: What is the right, like, what is the right time to start writing these things into a prenup, right?
Stacey: I think it makes sense to think about it now, but recognizing that your thoughts about it might evolve. There are a lot of people who have their first child thinking that they're both going to go back to work and Life will continue on as normal and that really changes once that happens. And there are others who think they're going to stay home and realize that they're not meant for them and decide to enter back into the workforce. And so I think like any document or any financial plan, you have to approach it based on what you know now. And you can set a timeframe, for, you know, life, major life events, those that's oftentimes when people revisit and review things. So again, a death, a divorce, you know, children coming into the picture, a job change. Those are all great times to review your financial plan. to see when you're making a major life decision. Well, how does that affect my financial plan? Um, when you have a major life event. Do I need to update my estate plan accordingly? Do we need to revisit that prenup and maybe make some changes to it now that our lives have evolved? So I think it's just that ongoing process. But starting now and having those really sometimes challenging discussions and open discussions really sets the stage for the future.
David: Right. That makes sense.
Jamie: Stacey gave Natalie and David a lot to think about. The first thing is budgeting to give them a sense of how much they can save each month. The second is financial planning to align on what their goals are and set up a plan to save and invest to work toward those goals. And then the third is contingency planning, whether insurance and estate plan. Or even a prenup to document their preferences while they have cool and level heads. And while it seems like a lot, they can take comfort in knowing that they can and should revisit these plans as their circumstances demand.
Stacey: Oftentimes I just, there, there are people who put their head in the sand and they don't want to deal with it. They don't want to think about these difficult things. Um, down the road, they just don't have the same financial freedom, or perhaps they get down the road and recognize that their goals are not aligned. So I, I commend the two of you for even thinking about this in the beginning because you're starting to get your goals aligned. And to me, that's what leads to a happy marriage.
Jamie: if that's not a great wrap up, I don't know what is. Thank you so much for joining us today, Stacy.
Stacey: Well, thank you, Natalie and David. I appreciate your time. It was wonderful getting to know you.
Jamie: Now let's see what David and Natalie thought of today's session with Stacey.
So how did you feel after hearing what Stacy had to say?
David: I think the biggest surprise to me was just how many questions there are to think about. I think I'd gone in with, maybe a somewhat naive view of, okay, you save together, you work towards shared goals, but really getting specific into, what are the potential futures is a lot.
Jamie: How do you feel about the partnership and having a good teammate on this, next phase in your life?
Natalie: I feel more reassured. I've heard it before, but somehow when she said it, it felt different. There was a moment where she talked about saving together and everything is, , yours together. I guess, like, you guys are on the same team. And I realized, like, I do have a really good teammate.
David: I think maybe the idea is that while you're married. The funds are the teams, but you can still plan for the contingencies of if that is not true in the future, it's really helpful framing. I think there's a lot to process now
Natalie: We definitely need to figure out some of these scenarios but yeah. What do you think?
David: Yeah. We've got a long car ride today, so I'm sure we'll have a lot to reflect on.
Jamie: Natalie and David, this was such a great discussion. Thank you so much for joining us today, sharing your story. being so vulnerable and honest about what is on your minds. I wish you the best of luck together in your marriage and in whatever comes next.
Natalie: Thank you.
David: This was so helpful and I'm really excited.
Jamie: If you'd like a deeper dive on what was discussed today, like our spending and budgeting tools, or if you're interested in finding an advisor to help you with your own financial plan, come see us@morganstanley.com slash my money. I'm Jamie Rowe. Talk to you soon.
Natalie: I'm crying again.
Jamie: Oh no. Good. Happy tears.
Natalie: Yes. Yes. Yes.
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