How to Set Up a Winning Multi-Generational Family Financial Plan

The Net/Max Financial Plan for Married Couples (With or Without Children)

“20% of Americans don’t save any of their annual income. Over 40% of Americans have less than $10,000 saved for retirement. 

Two-thirds of Americans would struggle to scrounge up $1,000 in an emergency. About 77 million Americans have debt in collections, according to the Urban Institute. While the average American owes over $171,000 on their home, and the average monthly mortgage payment is more than $1,000.” 21 Eye-Popping Personal Finance Statistic About Saving Money & Debt, Invested Wallet

With these stats, it is about time that I drafted a Net/Max Financial Plan for Couples (with/out Children). For those brand new to this thread, here’s a fast track on reading material that you will need to LEVEL UP; Net/Max Financial Plan For Singles/Single Parents, The Magic Number for Million dollar Millennials, and When You are Your Parent’s Retirement Plan.

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So what does a FAMILY-FRIENDLY NET/MAX FINANCIAL PLAN looks like?

Certified Financial planners stress to either Pay down all your debts, Leverage everything for investments, Buy-buy-buy Real Estate, and Flip, Be an entrepreneur, and etc. After 7+ years of research, I can clearly say that there is no clear path, just a healthy mix of all of the above. “Research shows money is the #1 reason couples cite when filing for divorce in America, with Overspending being the most common problem cited by respondents.”

“What do you know, Lawrence? You aren’t even married!“

Agreed. Still read through this; if you can’t use it, no harm is done. However, if you can use any of it; your family benefits. I’m 100% sure that this article is worth printing it out and discussing it over wine. I also have back up co-authors Christina Michaud, Nerdy Mom and Project Manager, and Gary Simms, Jr., Super Dad and Financial Services Professional. Do this in order from #1-#20. When you encounter a setback restart as needed. This is NOT A QUICK FIX. This is a lifetime of purposeful effort.

1. Talk about your GOALS and lifelong ASPIRATIONS.

Many people have this misconception that once they get married, they will live happily ever after. The reality is that marriage requires work, compromises, and lasting effort. Love brought you together, but the conscious effort can make or break your union’s success. Marriage goals create companionship which helps during the most trying times. And you heard it all your life, COMMUNICATION IS KEY.

Just because you got married doesn’t mean you are now psychic.

S.M.A.R.T marriage goals should include all aspects of your marriage: Spiritual, Financial, Physical, Intellectual, and even Social. These goals need to be honest and not ridiculed.

“It’s not just about you anymore… And that’s a good thing.”

When you discuss your personal goals and aspirations (with your significant other), they need to be FREE and OPEN for long conversations, often requiring a lifetime of updates and tweaks as we age. Since you aren’t going to agree on everything; establish baselines for communication, know when you are becoming toxic, focus, watch when your partner is closing up, and use an insane amount of empathy.

For example, I didn’t know my girlfriend loved Christmas so much. I was fine with no decorations and no nonstop “All I want for Christmas“. However, while she slept; I forked over cash at Walmart and redecorated. The lights were ON for days. The music was on the Christmas mix on repeat. We never ever argued again. Compromise and Empathy 101. She missed her family and she loved the Christmas spirit. It didn’t hurt me one bit.

Having clear and honest communication with your partner about your goals and the expectations you have for each other will only deepen your relationship. Our greatest frustrations are often the result of unmet and un-communicated expectations. G.Simms

2. Establish your NEEDS, and Stratify your Wants.

You’re a saver, but you married a spender. Let the carnage begin.

When you are married; there is no winning side. You are two sides of ONE coin; any damage inflicted on one will impact the other eventually. Establish the Needs and just live with some of the Wants; that’s the compromise. She might really want the Sconces. I’m still not sure what that is either. You might really want the sports basement den. However, consider the big picture of how often are you going to use these things vs. the want to “Travel and Explore” the world. Somethings are not non-negotiable, it’s just stuff you want at the moment to look like its HGTV.

Know the difference. 

Live in Reality, it’s way more interesting. #NeedsvsWants

So… DO TALK about your money baggage. Often Spenders are merely suffering from childhood PTSD or FOMO; if you can reach the essence of their need and make the provisions for them. Turns out Savers; also have PTSD having seen family and/or friends go broke. They might have experienced that first hand, so their entire mindset changes about money and spending. Seek to understand each other and the journey. You will be better off in the long run. You might even learn something about yourself.

A friend of mine loves to dabble in the hustle. I could tell it was concerning to the saver wife; my advice “create room in the budget for his flights of fancy”. $2.5k – $5k a year is nothing compared to the union. She compromised on the value of that $5k and he feels more secure to take those chances without feeling guilty or putting undue stress on her. He doesn’t have to hide his dreams or feel guilty with her. If he saves the $5k for three years, he would have more to invest in the venture that he wants. 

Learn to #Stratify your Wants. 

*** Questions that you need to ask: What’s your household habits? Dishes in the morning or at night. Chores might seem trivial right now but I’m sure it’s a ticking time bomb for one of the spouses. Do you have health goals? How much money are we gifting to friends and relatives? Which charities do you think is critical to give to? How many vacations? When is date night? What’s the expectation of working toward retirement? Does anyone want to go back to school? What happens if we lose the job or the house? How will we cope and bounce back?

3. Know your Net Worth.

Assess the fortress aka the home. Take note of any problem areas, community resources, work benefits, and even friends. Be forgiving of what’s revealed as it relates to debt, credit cards, and income. Be open to considering alternative paths to success.

The goal is to KNOW WHERE YOU ARE so you can know WHERE YOU ARE GOING. Check out Free Financial Apps like MINT, and/or PERSONAL CAPITAL.

4. Develop a Family Budget.

Family money management isn’t too different from managing a budget as a single person until you realize that you and/or your spouse have expensive taste. Additionally, it’s a myth; men are not always better with money than women.

Find out which one of you will be the primary financial person and keep up with the data.

DO NOT LEAVE the other spouse on family financial autopilot; it’s unfair and they end up being the Warden of the home. The other one will start feeling like a prisoner and will likely start hiding things.

Know the Cost

For example, average costs to raise each child into adulthood range from about $10,000-$15,000 annually. USDA as of 2015 child from birth to 17 is $233,610 – $372,210.

It is not cheap. If you did the math and invested that amount for 20 years, you would be a millionaire.

So what are your current expenses?

Do you need to rethink your spending strategy? Throwing money at issues every week isn’t the path to peace and nirvana. After all, between your two cars, insurances, medical emergencies, the smallest dog in the world, food for said dog, and your Amazon Prime deliveries; it’s getting expensive. 

You need a family budget to ensure you can maintain financial stability during the good and bad times. #PayOff Your Debts.

5. Have a Will

Death is scary, but not being prepared for death can leave your loved ones battling grief and anxiety. Death will come it is better to have a plan and be prepared for it. Additionally having a will can prevent family squabbles in addition to expediting the dissemination of your assets. 

Famed movie director, John Singleton‘s will was drafted in 1993… and now his 7 children are all embroiled in conflict over their father’s estate. The children have lawyered up over John’s estate, which is reportedly worth around $35 million. Avoid these issues, get a will, and revise it at every major transition.

6. Tame the Week

Out of control home typically leads to an out of control family. It will drive you crazy eventually. If you find her watching The First 48, be on red alert forever.

A regimented time management scheme opens more time for productivity and family. Try Laundry Day(s) for no more than 2 times a week, Meal Prep(s) for breakfast and lunch while dinner can be a variety of Sunday leftovers or light simple 3-4 ingredient dishes. Taking a cue from the Marines, create one MEGA Cleaning Day where everyone gets involved. Family Day on Friday or Saturday. And keep it mellow, Sunday for Learning, Meditation, or Spiritual Day. Try not to go overboard.

“Our most valuable asset is our time. Creating a time management schedule and being intentional with your time will pay off big.” G.Simms

Setting a schedule and a routine for everything is as important as balancing your checkbook (or meal prepping) and can create positive financial habits. And it also creates a structure for your family that keeps you from straying to unexpected expenses like meals out, buying items you don’t need, and paying for clothes, toys, and technology.

**It’s just as important as a parent that you make time to engage with your child. 

You should also make time for yourself. In your budget include an allocation towards activities or small indulgences. Planning for the expense in your budget makes it so you are not restricting yourself, but not overspending either.

7. Save $3k-$5k in an Emergency Savings Fund (Adjust As Needed).

Ally Bank has 2.20%, Chase Premier Checking is currently offering a bonus of $300 as of 3.2019.

The huge benefit of having an emergency account? Not putting your random emergency expense on a credit card!

The plan is to get OUT of debt, not into more of it.

You will enjoy peace of mind, and as a bonus, you can have your money make MORE money!

8. Every App, Every Reward.

Apps like Acorn, Stash, Robinhood are a great way to automate your active spending into residual savings. Be sure to not run your account too close if you’re using round-up apps; they can easily overdraft you if you don’t plan in a buffer.

“In terms of the investment platforms and the companies you use, you must always do your homework,” says Rachel Rabinovich, director of financial planning at Society of Grownups, which offers Advising services and courses for young investors.

*Nabbing the Chase Travel credit card right after buying a home, helped me purchase home furnishing with no interest while earning points. On top of that after spending $5k, I earned 100,000pts. Lesson: when big purchases are coming up, strategize your way to a FREE family vacation.

9. Mix in your Healthy Hobbies.

Foster better 1. Mental, 2. Spiritual, 3. Physical, 4. Social Health, and 5. Family Cohesion.

Remember that even taking 10 minutes a day to meditate, sharing a single meal, taking the stairs, or praying before bed can have a significant impact on your life. Struggling to find time for yourself? Can’t afford a sitter? Join a parents’ group or a married couple’s group and share babysitting duties. That’s a great (FREE) way to get out, and the kids get a playdate as a bonus.

“Dates don’t have to be extravagant ordeals. My wife and I like to do active and inexpensive dates. It’s about connecting together. Also, be willing to give your partner space to have alone time.” G. Simms 

10. Autopay toward Success.

Focus on paying down Debt naturally and become Solvent. Credit Cards (CC) tend to range avg. 17%+ Interest Rate. *CC Strategy ⇢ Pay off 3 months. Don’t do the hard inquiries. Request Credit limit Increases (Periodically) and/or Lower variable interest rates.

Use CreditKarma.com. Payoff student loans normally. Avg. low-interest rate of 6% or less. Research repayment programs like the Public Service Loan Forgiveness. Pay up to $5k in Student Loan interest fee (annually) for the Tax Credit.

Be sure to plan for variable expenses like heat, or bills which may not be a set amount. Keep a buffer in your budget and don’t look at it as extra funds. You could also automate your recurring payments to be more in control of your money. An additional advantage you can gain by making timely payments is an improved credit score.

Bonus Resource: 50 Personal Finance Habits Everyone Should Follow.

11. Match 401K, 457B, 403B savings rate at work, if possible.

You can save up to $39k/year ($19.5k each for 2020 and 2021). It lowers your taxable income so you get more money back. Use that money to pay down debt (1st). It provides comfortable growth and emotional security. And it also sets you up long term for retirement down the road.

A contribution plan by Fidelity shows that there are about 157,000 people with over $1 million in their 401(k)s. It can be done. The first thing you need to know about becoming a 401k millionaire is that it isn’t going to happen overnight. It will take work, discipline, financial savvy, and years of investing. See the average stats on those 401k millionaires (above).

***If you aren’t matching your employer(s) contribution than you are doing it all wrong. Always match. On average employers match around 4.7%. Avg. employee leaves about $3,000 (per person) on the table annually. Why?

12. Buy a Condo/Starter Home.

Think of it as a temporary spot, it doesn’t have to be the dream home. No more than 30% of your take-home should go to housing expenses and 1% for annual maintenance fees. It can be a 2/1 whatever fits your budget. The rest is fluff. Home is where the heart is and where the commute ends. *For a family of 3+, Buy 3/2 – room for Grandparents/Guests (if possible, great for babysitting).

Upgrade later and Try not to sell within the first 9-years. You are merely resetting the interest clock.

Bonus resource: 

Great for starter homes. First-time homebuyers program. Go to a family mortgage specialist. They are usually aware of the first time home buyer program in your local area. Urban League is also helpful which is a national organization. County and city offer grants as well. Go to their website for information.

13. Pay up to $7.2k annually in a Health Savings Account (HSA)

“When you retire, healthcare expenses will likely take a major chunk out of your hard-earned retirement income. In fact, a recent study by Fidelity estimated that a 65-year-old couple can expect to spend an average of $260,000 on healthcare expenses. So you’re going to want to prepare for that.” Smart Asset

Other benefits: lowers taxes per pay period so you get more money back. Great for Medical/Dental expenses. Great in your 20s. Useful in your late 30s. Also a great back up for your child’s random unplanned emergency room visit. But be sure to use it in the right time frame.

*Families who frequent the doctor’s office may find that an HSA is not the best choice. 

…But for those in relatively good health who are financially able to pay out of pocket for the few times, they visit the doctor — thereby letting their HSA balance grow — an HSA can be a no-brainer. You might want to look into Flexible Spending Accounts as well.

14. Work towards 3-6 Months of Expenses in High-Interest Savings (Adjust gradually).

Bankrate seems to be the one-stop-shop to seeing which rates are best. Having the backup plan to your Back up plan. Think of this as your opportunity fund or when all else fails fund ie. AC repair or the roof.

15. Buy Quality over Quantity as you go.

Great quality, classic items hold their value and lessens wear and tear. Great longevity. There’s a reason for the big minimalism movement.

Capsule wardrobes lessen your expenses and also help your house stay neater and provide less work.

Conspicuous consumption (the desire to buy and have new things because our friends/coworkers/acquaintances do) has done nothing but sink generations into debt- that you don’t need.

Buy quality when you can and keep it as long as you can.

Bonus Resources: HOW-TO BUILD A CAPSULE WARDROBE: tips from a stylist

16. Save for your Children’s college education using tax-favored plans.

Better yet, buy investment property near their ideal college town as they age.

Short/Long term income. Look into options in your state for matching grants for contributions.

Ask for payments to college funds instead of stuff for special occasions. It will hold value longer term.

17. Put up to $12k in Traditional/ROTH IRA (As Needed).

You can throw up to $12k annually in either or even have a combo but you can’t cross $12k. Pay tax on it now or later. For low to mid-tier families, I’d recommend sticking to the traditional IRA. You will be taxed later but you need all the tax breaks you can get today to reinvest into the family. When the kids finally leave, Go full-throttle on ROTH.

18. Invest in Stocks.

*Diversify the Portfolio, Buy in bulk. Stable and Steady.

A well-balanced portfolio contains diverse investments. As you get closer to needing the money, you should adjust your portfolio to reduce your risk. For example, if you have a child in college and you have money set aside for them in stocks, then you want to start moving that money into cash or safer bonds, as they get closer to graduation. If not, then there could be a huge downswing in the market that would result in the loss of or reduction of your investment and you won’t have the time to make up the money. 

19. Build Wealth – write a blog, do a vlog, do public speaking, write a book, Podcast.

Have fun and leave a Legacy. Enjoy the process. You will be able to travel, see concerts and etc…

And have multiple streams of income doing it. What better way to make money, than when you’re either doing what you love or doing nothing but sitting back to watch it grow?

Support others by sharing your journey and encouraging them on the path to success.

“Leave your story behind so that your grandkids can know who you really are and how far you’ve traveled for them.” L.Gonzalez

20. Financial Freedom and Legacy Building.

Financial freedom generally means having enough savings, investments, and cash on hand to afford the lifestyle we want for ourselves and our families and a growing nest egg that will allow us to retire or pursue the career we want without being driven by earning a certain amount each year. Going through these steps is not a guarantee that life with be easy; it’s a headstart of making every hard transition easier. Your money will make you more money. Your healthy family choices will improve your physical outlook in retirement. Most importantly, you will avoid “21 Eye-Popping Personal Finance Statistic About Saving Money & Debt“.

For Parents and Future parents remember this:

“Building wealth as a parent becomes less about what you can do for you and more about what you can leave for them. While it may seem like giving your children everything they want and desire while they’re young is important it may not be the best move in the long run. They may appreciate the consoles/clothes/gifts but at what cost.

This plan is intended to set your family up for the future so that your children can take advantage of your hard work and set their kids up.” G.Simms 

Written by Lawrence Gonzalez with co-authors Christina Michaud, Nerdy Mom and Project Manager, and Gary Simms, Jr., Super Dad and Financial Services Professional

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