By Alaina Trivax, WCI Columnist

Just a few weeks after my husband, Brandon, and I were married in 2018, we met with a financial advisor who was recommended by several of the attendings in his PM&R residency program. For this meeting, we shared the details of our income, assets, and debts, and the financial advisor then prepared a written plan for us. At the time, Brandon was coming to the end of his PGY-3 year; I had spent a few years working at a boutique consulting firm, and I was about to return to my first career as a middle school teacher.

According to the plan we received, we could retire at age 65 if we saved 10% of our income for the next 30 years. If we stuck with this, the plan predicted we could likely maintain our lifestyle for the rest of our lives and would have a 95% chance of dying with money still in our accounts. At the time, we thought, “Great! We can hit that savings goal, and we’ll be left with plenty of money to live our lives on. Awesome.”

New to the world of financial management, we really didn’t even know what questions to ask. We assumed the plan was accurate and that it would allow us to achieve our goals—this guy was an expert in financial management, after all.

Looking back, though, it’s clear there was a lot we were missing.

 

Educating Ourselves on Personal Finance

Over the next few years, we began a journey of financial education, reading books, listening to podcasts, and, of course, reviewing articles from The White Coat Investor blog. Early in this process, we began to question some elements of the financial plan that had been provided to us. In particular, we were concerned that this plan still left us with a small chance of dying completely broke—despite the significant earnings we would accrue over our lifetime.

We also began to understand the implications of the fees charged by this financial advisor; the 1% per year we were paying him would add up quickly and those funds could have been directly contributing to the growth of our own net worth. The financial advisor did recommend paying off a few of our smaller student loan accounts, but the plan he provided did not prioritize paying off Brandon’s medical school loans in any sort of aggressive fashion. These loans were quickly accruing interest, and we soon began to understand that the faster we could pay them off, the less they would cost us.

Despite these realizations, the idea of firing our financial advisor and going at it alone was a little overwhelming. What if we got it wrong and DID end up broke? Brandon was a bit ahead of me in his financial education, though we both understood that managing our finances independently would be a lot to take on. He was still in residency and had a year of fellowship ahead of him, but it was pretty clear that he would ultimately be the primary earner in our family. Given this likely division in earnings, I know he was feeling a lot of pressure to get this right.

I was feeling pretty nervous, too. By returning to teaching, I was walking away from a good deal of future earnings. It’s no secret that teaching is not a lucrative career. It was the right choice for our family—the hours are much more manageable and the guarantee that I’ll always be on the same vacation schedule as our kids is incredibly convenient. And, most importantly, I love what I get to do every day. Knowing that my financial security would rely largely on my husband’s income and his management of our finances, though, motivated me to start learning more.

As we stepped into the world of independent financial management, we chose to divide the responsibilities between the two of us. By each taking ownership of a few distinct areas, managing all aspects of our finances became a little more attainable. We both felt more confident, and we could spend some time becoming more knowledgeable about our specific responsibilities.

 

Division of Financial Responsibilities

We began by dividing our financial planning responsibilities into long-term and short-term components. This approach allowed each of us to leverage our particular financial expertise. I’ve always been very budget-conscious and, largely by the nature of a medical marriage, managed most of our day-to-day expenses. This isn’t to say that Brandon was a spender—rather, he was frugal to the point of deprivation. Prior to meeting me, he spent $30 a week on groceries and lived on salads made from canned kidney beans and romaine lettuce. I’m certainly not a spender either, but I do find value in spending money on the things that keep me happy and healthy. We’ve found a balance and I’ve gotten him to embrace a few quality-of-life improvements (like a kale salad with grilled chicken!).

Because I do most of the household management, though, he’s completely oblivious to the cost of our lifestyle. Does a tube of toothpaste cost $3 or $10? Don’t ask him.

Since I’m the one spending the money to keep our home running, it made the most sense for me to be responsible for monitoring our monthly income and managing our short-term expenses. Brandon already had his eye on the long-term financial security of our family, anyway. He was (and is) troubled by the financial burden his medical school loans place on our family. Coming out of school, his loans totaled more than $300,000, and paying them off has always been one of his top financial priorities. He’d already immersed himself in learning about student loan refinancing, and he was beginning to dive into the study of long-term financial management. We needed to embrace each of our strengths here: he couldn’t make our monthly budget work on his own, and I didn’t have the knowledge to take over our investment accounts.

dividing financial responsibilities

Currently, Brandon is responsible for most aspects of our family’s long-term financial planning. He manages our multiple retirement and investment accounts, monitoring and rebalancing them according to our asset allocation plan. He is also responsible for managing risk in these accounts and, as needed, for buying and selling for tax-loss/tax-gain harvesting. Additionally, he coordinates the logistics of our insurances, including his own-occupation disability insurance, his individual life insurance, and our umbrella policy.

At the same time, I am responsible for many aspects of our short-term finances. Most importantly, I create and oversee a budget that enables us to meet the debt payoff and investment goals outlined in our financial plan. In managing our family’s day-to-day finances, I am responsible for monitoring most of the household expenses and our ongoing student loan repayment. I have also recently taken over management of some of our employer-provided benefits, including submitting reimbursements to our Health Savings Account and Dependent Care Flexible Spending Account.

We track our ongoing financial progress together, via YNAB and Personal Capital, as we are both equally responsible and accountable for the growth of our family’s net worth.

 

Talking Through Our Progress

As we began to manage our family’s finances on our own, it became especially important for us to hold regular financial meetings. We have goals for our family’s future, and we’ve put a good deal of time and intention into developing a financial plan that will enable us to achieve them. Communicating with each other is a key part of ensuring that we meet the targets set in our financial plan.

We started with a monthly conversation during which we each review the items under our management and discuss any short-term changes. Every six months, we also sit down for a more thorough review of our finances—evaluating our overall progress and ensuring alignment to our financial plan.

On a month-to-month basis, Brandon doesn’t usually have much to report. As manager of our long-term finances, his responsibilities require regular monitoring but fairly infrequent decision-making. Still, he reviews our retirement and investment accounts in advance of our monthly meeting and comes prepared to discuss any changes that need to be made. At the more comprehensive semi-annual meeting, he presents a thorough evaluation of investments and growth, asset allocation, and insurances. Regular asset rebalancing is included in our financial plan, so he usually ties the reporting and rebalancing together. If it’s time to consider a different investment allocation ratio, he’ll bring proposals for us to discuss. Before our most recent meeting, he researched a few life insurance options for us to review as we’d like to increase his coverage soon.

As manager of our short-term finances, I typically have more to discuss each month. I provide an overview of our overall income and expenses, including anything unexpected or atypical. With my schedule as a middle school teacher, I could stay home with our 1-year-old son this past summer—saving us two months' worth of daycare expenses. Before the summer started, I presented a few options of what we could do with those extra funds. After reviewing our short- and long-term financial needs, we ended up allocating the money toward a few future expenses, including saving for holidays and travel plans. Each month, I also report on our progress toward our student loan payoff and emergency fund saving goals. At the semi-annual meeting, I review trends and lead a discussion of any expected or necessary changes in our family’s day-to-day spending. We’re approaching the end of the lease term for one of our vehicles, so discussions around what car next fits our family and finances have fallen here.

A word of advice: take these meetings seriously. If you have kids, consider meeting in the home office after their bedtime. Or, if it’s just you and your partner, maybe take your laptop to a local coffee shop on a Saturday morning. We just held, or tried to hold, our semi-annual comprehensive review last week—all while our toddler was fighting bedtime. It was less than productive and we’re going to have to revisit those conversations.

 

Keeping the Goal in Mind

We bring a copy of our financial plan to these meetings and keep our goals in mind as we evaluate our progress. Sometimes, we take notes to help identify trends and areas of concern. At the semi-annual meetings, we take some time to read through our financial plan and ensure that we’re still adhering to our targets and objectives. We do have a clause in our financial plan requiring a three-month waiting period before making any significant changes, but we always talk through our priorities to ensure the plan still makes sense.

We’ve had a few changes to our finances during recent months and needed to decide how to reallocate some of our funds. So, at our most recent semi-annual review, I presented two options: 1) send $5,500 to student loans each month, including an additional $1,350 beyond the required minimum payment, or 2) send $5,000 to student loans each month, including an additional payment of $850, and use the remaining $500 to save for 403(b) contributions during my maternity leave next spring. We want these student loans gone, so our gut reaction was to go for the first option. We justified this by thinking that we could figure out the retirement contributions when the time came; maybe Brandon could take on an extra weekend or two to cover these contributions.

We referred to our financial plan, though, and it prioritizes saving for retirement over student loan repayment. That brought our long-term goals back into the front of our minds and made us feel more confident selecting option number 2.

 

It’s an Ongoing Process

As we’ve each become more confident in managing our part of the family’s finances, we’re trying to also take time to educate each other. We’ve considered if certain duties would be better assigned to the other partner and, if so, we've made that switch. By dividing the responsibilities of financial management, we feel more confident in executing our financial plan, and we hope that this collaborative approach will ultimately enable us to achieve our family’s goals.

Just a few years ago, when speaking with that financial advisor, we didn’t know how much we didn’t know (we no longer use him, by the way). But since then, we’ve made some big changes to how we approach and manage our finances. If we’d stuck with that financial plan, we’d have spent thousands more on student loan interest and would be losing a significant chunk of our money to financial management fees each year. And most alarmingly, we’d be saving 10% of our income toward retirement—all while knowing there’s a small, but very real, chance that we could run out of money someday.

Instead, we are aggressively paying down those student loans and minimizing our interest expenses. By managing our investments and retirement accounts on our own, we’re paying only 0.05% annually toward fees. And, by sticking to a clear budget and financial plan, we can save 20% for retirement and feel confident that we will meet our financial needs for the rest of our lives.

Does your family divide financial responsibilities? Is it better to have both partners taking on separate parts of the plan? Or is it easier for one person to do all of it? Or are you better off with a financial advisor? Comment below!