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The Family CFO: The Couple's Business Plan For Love And Money
by Mary Claire Allvine, C.F.P., and Christine Larson
Mary Claire Allvine and Christine Larson wrote The Family CFO: The Couple's Business Plan For Love And Money to help couples get their finances in order.
Allvine and Larson write: "Managing your money wisely means having a clear vision of 1) what you want to do—go back to school, have a family, start a rock band—and then 2) what you need to get there—money for tuition, financial security, an electric guitar. Most couples get this backward; they focus on financial assets (what they have) to the exclusion of their real goals (what they want to do), which makes it impossible to make wise financial decisions. Only by thinking about your life goals can you really make your money work for you."
We learn that money conflicts are the biggest source of fights between engaged people and newlyweds. The authors point out that money arguments between couples usually are about priorities. For example, the husband wants to start a rock band, while the wife wants to build savings.
To help couples resolve conflicting priorities, Allvine and Larson suggest couples take an annual retreat (OK, it could be at home), write down and share their dreams, and agree on a time frame for achieving their plans. The authors say couples must decide upon both an investment manager (someone to handle investments and insurance) and a cash manager (who budgets family expenses and pays the bills).
The Family CFO discusses seven key financial decisions couples face, including:
1) Managing debt, including student loans and credit cards. The advantages and disadvantages of pooling money are covered. Suitors learn to tell each other just how much student debt they have, to see if either the bride or groom will bolt for the door, when they hear "the number."
2) Deciding whether or not to buy a home and the process of purchasing one. This section includes solid information about choosing the right mortgage and a home-buying worksheet to help couples evaluate the costs of home ownership.
3) Changing jobs. This section includes the financial planning that may be necessary during a career change. As with each section, couples struggling with the decisions are featured and their reasoning evaluated.
4) Having children and can the couple afford them? The authors write: "If you had a baby in 2001, you will spend between $170,000 and $338,000 on the child over the next seventeen years…"
The cost of raising children is evaluated in detail. The authors break down typical expenses by day care, clothing, food, etc. A detailed "Kids Cost Worksheet" is provided. And, they address the question: "Is it really worth it to have both parents working, given the costs of day care?"
5) Planning for retirement. Allvine and Larson tell couples that retirement doesn't just happen, couples must make it happen. Building retirement wealth is covered.
Especially for couples without high earnings, Allvine and Larson suggest couples start saving early. They write: "What you lack in money you can make up for in time. The earlier you start saving, the less money you'll need to save every year to meet your goal—compounding interest will make that money grow exponentially over time."
6) Building emergency savings and getting insurance. A detailed worksheet is provided that evaluates things such as the stability of the couple's jobs to help them decide just how much money should be set aside for an emergency.
7) Crisis management during times such as job loss.
Overall, The Family CFO: The Couple's Business Plan For Love And Money provides good information for couples who want to learn more about managing their money together.