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The Urban Institute has issued a report stating the Millennial generation will have the lowest rates of marriage by age 40 than any previous generation. The report contemplates a variety of reasons for this shift, including a reduced role of marriage in a family household and the effects of the latest recession. But what does this mean for the financial future of today’s young mostly-singles?

Marriage certainly affects a couple’s finances. In many states in this country, certain effects are unavoidable by law. Nine states have community property laws, and in those states any money earned by either spouse or any property purchased bought by either spouse from money earned, if that money was earned while married, is owned equally by both spouses. But as a whole, this law doesn’t change the financial situation of the couple. If between two people cohabiting, the combined annual income is $150,000, that’s the case whether they’re married or not, whether they combine their bank accounts or not.

There may be some subtle differences. A non-married couple may need to buy separate health insurance, despite the fact that more frequently, employers consider non-married couples “domestic partnerships” and cover a domestic partner, regardless of the sex of the partner. Yet, if a partner is not covered automatically, health insurance for the family could be more expensive.

That, in itself, does not seem a strong enough reason for a researcher to make this argument, as she does in a news article about the Urban Institute’s report:

“The evidence shows that getting married increases wealth and income,” said Pamela Smock, a sociology professor at the University of Michigan.

Why would the act of getting married cause an increase of wealth and income? It may be true that wealthier people and those with higher incomes are more likely to get married in the first place, but that’s not what this researcher is saying. She is saying that marriage, independent of all other variables, not only correlates to higher wealth and income, but is a direct cause. I looked at the researcher’s list of recent publications, and did not see any articles or books focusing on wealth and income, those she has researched cohabitation extensively.

Marriage has a detrimental effect on an individual’s long-term wealth, and here are some of the more obvious reasons.

Couples who get married are more likely to have weddings. Weddings can be, but aren’t always, expensive events. Even otherwise frugal people are driven to spend more money than they could to make a memory for themselves and their families that matches the dreams they’ve had. Even with the best do-it-yourself wedding efforts, couples find weddings to be significant expenses that take resources away from other priorities, and in the worst case, pile onto already unmanageable debt.

A couple that decides not to get married can certainly opt to hold a ceremony to celebrate their togetherness, bringing friends and family together for a joyous occasion, but many do not. And if a lack of financial resources is one of the reasons to indefinitely delay a wedding, it wouldn’t make sense to hold a similar celebration for cohabitation.

I see nothing wrong with weddings, but I’d just like to encourage people to continue to think about their future financial security while planning them.

Couples who get married are more likely to have children. More and more, I’m seeing friends and family and their spouses opt to skip having children, and this reflects a national trend. And it must be related to what I’ve already mentioned in this article — as fewer Millennials get married before age 40, fewer choose to have children, even though there has been an increase of children born to couples who are not married.

Children are wonderful, and that’s what you’ll discover if you have children or if you ask any parent (who’s not dealing with a temper tantrum at that particular moment). But that doesn’t change the fact that children are expensive. The cost to raise a child to the age of eighteen can be $200,000 or more — and for most middle-class Americans, that’s going to be a gross understatement. Add any kind of prevalent developmental disability, like autism, and that total will skyrocket. And double your estimate if you plan to have two children.

Is it our duty to populate the world? Well, according to some beliefs, it is. But the choice to have children has a direct, measurable effect on the financial situation of a couple over the long-term, and it’s not positive. That’s not to say it’s a bad decision to have children; not all decisions in life rely on the financial outcome. In fact, the same people who propose the value of an education should be based solely on the return on investment seem to forget their dedication to that approach when you ask them whether their children have provided them with a good ROI.

Couples who get married are more likely to get divorced. This, and the other points above, should be obvious. No marriage means no possibility for divorce, and divorces are notoriously devastating for a couple’s finances, particularly when a couple has gotten into the habit of having only one adult bringing in an income. Add a child (or two or seven) to the mix, and a divorce can drive individuals to bankruptcy.

Unmarried households may be more transient, less permanent, but that doesn’t hold true for every couple. But overall, without marriage and an intertwining of finances, unraveling a relationship doesn’t have to mean there are any devastating financial consequences. There are fewer arguments over property, because all has always been owned by one partner or the other.

Where is the evidence that marriage increases wealth and income?

One potential reason a marriage might increase wealth and income is because of its status as a rite of passage. Despite changing society, many people feel that marriage is a necessary marker along life’s path, one that indicates a move towards an important stage of adulthood. And marriage, as well as having children, forces people to grow up. Maturing as an adult also means taking a more considered approach towards family finances. The stakes in a marriage are higher. You have more people to take care of, officially, and thus you are inclined to work harder at providing for your family.

And other people see this. It’s reflected in the attitude that one displays, consciously or not. Married men are more likely to get raises, promotions, and job offers, but married women are less likely to be awarded the same. Although society is changing, in married couples, men are more likely to have a job than women. These statistics play out in such a way that being married is good for a family’s economy.

This doesn’t necessarily mean that marriage automatically makes a man be more employable or have a higher earning potential; it could be that some men are both more likely to get married and more likely to be more employable, with some other variable having the biggest influence. But studies have shown that all other things being equal, if a supervisor infers that a man is married, he is more likely to be chosen for a positive career decision than if there is no inference.

In order to claim that getting married increases wealth and income, this employment bias would need to override the financial detriments listed above. Here’s how survivorship bias plays into this study, and will help make it seem like marriage is in fact better for a family’s wealth and income: couples who are divorced and remain so, and are therefore no longer married, disappear from the statistics. In other words, all the financial devastation brought on by divorce is missing from the data. This filter allows an interpretation that could be far from the truth. Even though most people getting divorced do in fact remarry, that marriage might occur after divorce-related financial problems, making that second marriage appear to be a good financial move.

Like any other research pertaining to families and finances, we all want vindication that we’ve made good choices. So it’s somewhat natural for married people to seek out data that validates the idea that marriage is a good financial move. College graduates want to believe that attending college (and attending their specific type of college, whether it’s Ivy League or a community college) was a good idea. We all seek out confirmation that the choices we make are good.

The path not traveled will always remain a hypothetical, though. Let’s all feel good about our choices, because there’s always the possibility that life and finances would have been much worse had the decision been different.

If you are or were married, has your marriage definitely resulted in more wealth and income? Whether or not you’re married, has the prospect for a better financial life influenced your decision?

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I grew up in competition. It was a part of my life, all over the place. And sometimes competition moved me to push my self far, motivating me to be excellent, and in other cases, competition broke down my will to excel. An individual reacts to competition different depending on the psychological factors, the situation, and how past competitions have played out. Because competition is everywhere in the world, particularly in a career or a quest for financial independence — not to mention just meeting personal goals one might set for oneself — look for ways to make competition work towards a positive outcome.

I wrote recently about one particular competitive experience. When I first began learning to play a musical instrument in school, we were seated by our perceived abilities. I was last in the row, worst clarinetist in the class. And I didn’t enjoy playing music for school, even though I had been musical at home. The following year, my family moved to a new location and a new school, and at this new school, I had a head start because my classmates were just beginning to pick up their instruments. Suddenly I was at the head of the class. And just as suddenly, I loved playing music again.

Year after year through high school, I continued playing, and continued working hard to stay the best. I was the “first chair,” and constantly faced challenges from friends who wanted to take my seat. To keep my position, I had to practice hard and stay focused on being the best. I eventually decided to study music education in college. Had I stayed in my first elementary school, it’s unlikely I’d ever pursue music as a career.

Competition was a main theme for me in high school. Another example happens to be related to music as well; our marching band competed with other similar marching bands from other schools throughout the northeast. Not every teacher agrees that competition of this type is useful in an educational setting. But competition exists in the real world, and learning how to deal with competition as a teenager might be a good way to prepare. We compete for jobs, we compete for money, we compete for recognition, and as is coming more clear to me with social media like Facebook, we compete to have admirable lives among our friends.

In the marching band world, competition was tightly controlled. One group competed against another only if they were similar in terms of size. Today, there are even more guidelines for appropriate competition — not only is size a factor, but so is funding, so a hundred-member band with twenty staff members available to focus on separate aspects of the performance doesn’t compete directly with a hundred-member band making do with only two teachers who have to do everything on their own.

Competition presents some challenges, in work and in life.

But when we compare ourselves to other people, we are often unaware of advantages, whether they are our own or of others. I can’t think of a time when I competed directly with a coworker for a promotion, but this happens all the time. And when faced with competition like this, some people shut down and give up, others rise to the occasion. If you tend to get motivated by competition in work situations, are you also using competition in social situations to motivate you?

Facebook recently conducted a social experiment on its users (without their knowledge but with the consent that comes in the form of agreeing to a contract when you sign up for an account). The news feed showed mostly positive status updates to some users and mostly negative updates to some users, and saw that users’ own moods (as measured by additional status updates) were affected by the tone of the updates they saw. On top of this, Facebook is a chance for people to market themselves to their friends and to feel good about themselves. Thus, people tend to share personal good news more often than bad news. People are more likely to use Facebook to tell the world “I got the promotion!” or “I got engaged!” when appropriate, but when a situation would call for announcing “She turned me down for a date!” or “I failed the bar!” chances are you won’t see it.

All of this makes it difficult to live up to the implied social competition. Even without Facebook, it looks like everyone’s life is better than yours. That’s only because you primarily about the good things that happens in someone’s life, while you still experience bad things even if you don’t share them with your extended group of friends.

Make competition work for you in your career.

You compete for a new job, you compete for recognition with your work, and you compete when you own a business. Without good experiences with competition in the past, there is a good chance that taking the easy way out is safer emotionally.

Steal a technique from video games. When you play a video game that’s based on progressing through a series of levels, you start out easy. You’re able to overcome initial obstacles, and as your abilities improve, you are able to face tougher challenges. The game takes you through a series of levels, training as you go to handle difficulties. You don’t get thrown to the wolves on your initial attempt.

In real life, you may not be able to choose your competition. But you can set your expectations so they match your abilities. I wouldn’t think I’d be able to compete for a first-chair position at the New York Philharmonic without first being the best clarinetist at my university (and I wasn’t). I wouldn’t think I’d be able to compete for a job in charge of a non-profit with someone who has been leading non-profits for thirty years — but I could take a different approach and start my own.

It also helps to keep a larger goal — or a mission — in mind. You may not always be recognized for your hard work, whether the recognition comes in the form of a promotion, a salary increase, an award, or even just getting a job. But if you’re doing what you need to be doing, you’re improving yourself whether other people see it or not. It can be demotivating when you constantly perform competitively and others seem to refuse to recognize how well you are doing. There are many reasons why people are rewarded for their actions, and sometimes it has nothing to do with your particular performance.

Don’t take other people’s achievements personally.

The competition to have the best life is one you can never win. If you’re feeling pressure from other people’s successes you read about on Facebook, and it’s affecting your emotions negatively, either stop reading Facebook or keep in mind that everyone who shares anything personal is automatically biased. Everyone wants to project a favorable appearance.

Not everything has to be a competition. You don’t have to be the first person among your friends to reach an important life milestone. You don’t have to show off everything that you’re happy about. People live their lives at different speeds and have different goals. You shouldn’t live your life based on anyone else’s personal achievements.

Stop comparing yourself and your life to others, and I guarantee you’ll be happier and better able to focus on achieving your own goals, whether in your career or in your life. If you’re focusing more on yourself, you’ll be able to see competition for what it is: something healthy that can spur you to move forward.

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This little tidbit of advice gets passed around frequently, whether by employers who feel justified in their poor treatment of employees or by motivational speakers who want to see the masses take control over their professional lives: If you don’t like your job, get another one.

Many people spend years of their lives — perhaps decades — working in unpleasant jobs. I have always believed that every individual owes it to his or herself to be treated well in any employment situation, even if it has taken me more time than I would have liked, in retrospect, to move away from toxic situations myself. In general, if you are in a bad situation, change the situation. It’s good advice, but unfortunately, the advice is often given by people who are unfamiliar with any particular individual’s specific situation. And reality can be a dark cloud hanging over the world of advice full of optimistic aphorisms and motivational quotes.

Why can’t someone with a horrible boss quit? Why can’t low-wage workers simply find better-paying jobs instead of advocating for a living wage? Why don’t women who are being verbally or physically abused by their husbands (or vice versa) simply pack their bags and leave? To those of us who have benefited from some privilege, the inertia might not make any sense.

I have a friend who has been a teacher for fifteen years or so. She didn’t go to school to be a teacher, but when she graduated she realized that education would be a better, more lucrative, and more successful career path than her chosen area of study. Now, she is no longer passionate about teaching; that is to say, she still loves actually teaching and affecting children in a way that will allow them to become competent, intelligent, and questioning adults, but thanks to systemic changes, she doesn’t really get to do that.

But she’s still teaching for now. She has the talent and fortitude to be successful at any endeavor. We’ve talked about opening a private school where she could have a positive effect under a different type of system. We’ve talked about other projects. But, from a perspective based in reality, she thinks she could be much more successful as a shop owner in a burgeoning middle-class community (that was formerly rural).

That said, it would take a leap of faith and a lot of energy to make this change. Her current job and other responsibilities inside and outside of her family require so much time, money, physical energy, and mental energy that she has little left of herself to give to planning out her future.

And that’s exactly where most people are when they stay in jobs they don’t like. You can’t tell, for example, a single mother who works multiple shifts at two different jobs seven days a week to use her free time to look for new jobs or to gain additional education. She can’t quit one of her jobs because she needs the money today. Living paycheck to paycheck, or even going into debt to afford basic shelter and food, there is no wiggle room.

Survival mode poisons the brain.

Motivational speakers, endlessly positive, want to instill hope. Well, other people have risen from these bad circumstances to thrive. And by admitting it’s difficult, we may not be reaching the one in one hundred who will hear the motivational advice and find a way to take the actions necessary to put themselves in a better position for the long-term. And maybe this is even possible for an additional five in one hundred people who are dissatisfied with their situation, and wouldn’t have done anything unless they felt inspired by a motivational story. Or perhaps this five do have the capability to make these changes and won’t regardless of what they hear.

I’m confident that we’re left with ninety-five out of one hundred people who really hate their jobs (or other life situations) — and this just isn’t because their boss is unfriendly, but because their quality of life is deplorable and they’re unable to think about their future because they’re focused on their urgent needs and the urgency tasks with their roles as employees — who will never be able to put into action the latest motivational author’s twelve-step plan for improving their lives.

If you are in survival mode, upper-middle-class ideals like self-actualization, self-improvement, and planning for the future are impossible. And it’s not a matter of how people work, it involves how people think. Survival mode prevents the brain from operating at the higher levels necessary to guide the actions of a self towards a better future. In general, survival mode hinders cognitive abilities.

This is why, as a society, we have organizations including the government that help people. If an external force can get the most vulnerable people out of survival mode, with the right cognitive training, they can begin to consider more than just meeting the immediate needs of their families. But survival mode is more than just something that happens to people who aren’t meeting their basic needs as one might see on the base of the pyramid that represents Maslow’s Hierarchy of Needs. If even the threat of loss of life, shelter, or food exists, the brain is still in survival mode.

Work isn’t supposed to be fun.

Not everyone who is stuck is in survival mode. Even people who are relatively secure — or at least, not living paycheck to paycheck — are liable to sit around in a situation that’s bad. In my example about the teacher above, there’s no reason to think she’s in survival mode. Yes, she’s overworked and has little time to consider her alternatives, but her family isn’t starving. Her husband owns a business (and as successful business owners know — you can hardly have a life for yourself if you want your business to be competitive, and an equitable work/life balance is a myth) and provides well for the family, even if income is scattered throughout the year.

Your average corporate employee who has an annoying boss and feels he could be doing something much more fulfilling with his life has something in common with this example: awareness. While they see their situation as unfortunate, they are aware that they don’t have it nearly as bad as the impoverished. People throughout the world seem to be satisfied — or at least not outwardly complaining — with much, much less. This awareness leads to guilt, and this guilt is powerful. When people realize that most of the world has it a lot worse, they feel bad about their petty complaints.

Competitive inertia prevents action.

It can be unhelpful for anyone’s long-term success to compare one’s life or success to another, whether the comparison is favorable (“I’m doing much better than the jobless mom who goes in and out of the homeless shelter!”) or unfavorable (“Some bloggers get all the attention from the mainstream media while I go unnoticed!”). Living life as a comparison for the most part prevents people from taking actions that can improve the situation.

While some people thrive under this type of competition, it’s certainly not the majority of people. Competition causes stress, and stress, especially when it is placed on top of layers upon layers of other stress, pushes people back towards survival mode. I’m familiar with competition because it’s always been a part of my life. Employees deal with competition all the time in their workplace, but like many people, I’ve always participated in activities that rely on interpersonal competitiveness.

I started learning to play the clarinet in third grade. It was a horrible experience, and I was terrible. The teacher made sure I knew I was terrible because he had all the clarinetists sit in a row of chairs, from best to worst. I was the worst and was made to sit in the last chair. (Of course, this is for the most part how musicians are seated in orchestras as adults as well; the “best” performer gets the first chair. The teacher was simply reflecting real life for the third-graders.)

Did that make me want to try harder? No way. I hated it. But I continued, and the next year I moved to a state where the fourth-graders were learning their instruments for the first time. I had a half-year of experience. Suddenly I was the expert — and I stayed “first chair” for the rest of my time through high school (except as a freshman) and pursued music education in college because I loved it so much and thought it teaching would be a great career for me.

The reality is that competition, awareness of the world, most often doesn’t inspire people to improve, it allows people to resign themselves to their situation. This is an attitude that can be overcome, unlike survival mode which happens at a subconscious level, but it isn’t something that’s going to happen just because someone says, “Get a new job, slacker.”

Let’s not forget about the economy.

I never want to be the economy to be an excuse for the choices I make. In fact, it’s hard to know what is really happening in the economy because the news is filtered and changed by the opinions of the people who write about it. But if government statistics are to be believed, the job economy hasn’t truly recovered from the recession that took hold of the world a few years ago. The unemployment rate soared, and the jobs that have returned have been lower-paying jobs.

Companies wanting to survive the recession, a disappearance in customers willing and able to pay for products and services, reduced expenses. And mostly, they reduced their expenses in human resources. Like humans, corporations entered “survival mode,” and employees got the worst of the effects. Employers found ways of surviving with fewer people, pushing for higher productivity from some employees while eliminating others.

This news permeated society, and certainly turned employment into a corporate-favorable buyers’ market. With this impression, people are most likely to “be thankful for the job they have.” They’re less inclined to improve the situation because they believe it’s somewhat futile to do so. This actually makes those who are able to make the sacrifices, leaving a job, stand out more, so it’s still a good idea to seek out better employment situations if you can. But like most things in life, the best opportunities go to those who can afford to take the risk. The survival-mode single mom working two jobs can’t afford the risk.

So if you hear someone say, “If you don’t like your job, get another one,” they’re either talking to someone who has a support system in place to make that risk possible, or they have little understanding of the realities that people who are truly stuck face.

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Through the end of the second quarter, the S&P 500 has climbed 6.22%. That’s a nice increase, and the stock market’s performance has provided me impressive gains on paper in my overall portfolio. The bulk of my investments are split between tax-efficient bonds and a stock market index in my non-retirement accounts, and despite losses on paper in January and March, between dividends and market gains, I am satisfied with my financial situation.

But I am at the point right now — between projects — where I may decide to start drawing upon the income from my investments for expenses occasionally. I’ve mentioned this before. My plan has been to leave my investments untouched as much as possible, and I’ve been able to do that so far except for taxes and a few other expenses related to selling my business. I’ve relied on other income from working — mostly writing, coaching, and to a lesser extent speaking — to meet my needs for living day-to-day. But this has brought upon the need to be a little more frugal than I had been while I was receiving income from my business.

While the bulk of my investments have been performing well, it’s a little harder to look at my investments in the “Grow Your Dough Throwdown” As readers know, at the beginning of 2014, I and a number of other financial writers and bloggers invested $1,000 to track our progress throughout the year. Each participant was able to choose where and how the money would be invested, and I chose ShareBuilder and the buy-what-you-use philosophy. I invested in five stocks (or their analogues) based on products I use every day: Microsoft, Canon, Honda, Samsung, and Google.

You can review my previous articles about the Grow Your Dough Throwdown: initial purchases; review at the end of February; first quarter review; and review at the end of May.

So because I chose ShareBuilder, and I purchased six different investments, I paid a transaction fee of $6.95 six times. That’s an automatic loss of $41.70 before even taking a losing January into account. And while the stock market has shows this great return through the first half of the year, my investments have still not broken even when considering the transaction fee a loss (which it should be).

Continue reading this article to see the investment results as of June 30.

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What Is the Best Savings Rate?

by Luke Landes
Piggy Bank via Flickr

People like rules of thumb and quick answers. When a complicated question can be answered by an authority with a simple response, the reaction is likely to be one of two possibilities: a feeling of well-being and satisfaction if the questioner is meeting the requirements, or motivation to improve if the ideal situation is not ... Continue reading this article…

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Self-Proclaimed Experts and Other Potential Bad Choices

by Luke Landes
Expert [via Flickr]

Who do you know that calls himself or herself an expert in order to gain customers? Should you avoid people who market themselves aggressively in this fashion?

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What I Learned on Father’s Day

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Father's Day

I met my dad for dinner on Father’s Day earlier this month, and we had a deep and somewhat difficult discussion.

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Naked With Cash: Laura and Leon, May 2014

by Luke Landes
Laura and Leon - Naked With Cash

Laura and Leon offer their latest financial update for Naked With Cash, a series on Consumerism Commentary where readers track their finances.

4 comments Read the full article →
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