Below is my interview with author and certified financial planner, Mary Claire Allvine.
W&F: I'm curious, were you and Christine Larson friends or colleagues before you collaborated to write The Family CFO?
MCA: We were college roommates, which meant that we had shared everything throughout our adult lives. So it was natural that when Christine was getting married, she opened up to me about the confusion she and her fiance felt when it came to merging their finances. I was able to share my professional training with her, and the idea for "The Family CFO" was born!
W&F: How did you come upon the idea for this much-needed book?
MCA: In my financial planning practice, I work with wealthy families. Part of those families' success is their ability to understand that their families are small businesses, requiring that everyone know and live up to their specific jobs. When I shared that metaphor of family-as-business with Christine, she really seized on how clear and effective the idea was for all couples.
W&F: Do you think it is the lack of money or the lack of practical financial understanding that is the cause of so much friction when couples have to deal with money matters?
MCA: Money is a red herring. You often read that money is one of the major causes of divorce. In truth, of course, money is only a tool. A tool for funding a lifestyle, supporting a dream, making it through crises. But couples DO argue about money, and I think that's because they forget to argue about and work through the real issues -- the values they're actually striving for.
W&F: People will talk about their sex life before they will tell you their salary. Why do you think money and salaries are so personal?
MCA: I think money remains the last taboo in this society for two reasons: (1) it really is a window into our private values and priorities -- tell me how you spend your money and I'll tell you who you are (2) we don't feel confident that we know how to manage our money (or lack thereof), so we avoid revealing that inadequacy.
W&F: People are living longer and from all appearances working longer. Do you have any advice for couples who in their 20's and 30's who would like an early retirement as opposed to working until they are in the late 60's?
MCA: It's going to require real trade-offs. When people used to retire in their sixties, they could expect to live only a few years. Even now, 60-year-olds can expect to live another 25 years! It's hard to do the math to figure out how someone could work for 40 years and save enough money to live another 40 years after that. But it can be done -- if a couple is willing to sacrifice lots of other possible goals (new cars, second homes, sometimes even children) to get to an early retirement.
W&F: Do you find that generally couples will plan for their child's college fund but not their own retirement? What do you say to couples who think they are too young to start planning for retirement?
MCA: Retirement, college saving, second homes, job changes. These are the most common financial goals I hear couples articulate. It's crucial if they are to achieve any of them that they acknowledge they're unlikedly to achieve them all -- at least simultaneously. I spend a lot of time counseling couples on TRADE-OFFs. There's never enough money to have every goal at the same time. If you want your kids to go to private school, then you are likely to need to delay your retirement. That delay might not be palatable or perhaps even possible. In which case, the early a couple acknowleges that problem ,the healthier their finances -- and their relationship -- will be!
W&F: What about older couples who have not saved any money for retirement? Is 40 or 45 years old too late to save for a fair amount in comfort in later years?
MCA: If a 40 or 45-year-old decides to get aggressive about saving and is willing to make it a priority for the next 20 years, he or she can definitely achieve a retirement. It might not be one with two homes and a yearly European vacation, but many people don't want those kind of goals. If the would-be retiree seeks out a modest lifestyle in a region with relatively low cost of living, he/she can make it work. Again, it's about trade-offs.
W&F: The myth seems to be that math is a woman's weak point but I know of men who have a problem putting their financial house in order. What can we do to get past being afraid of household budgets and such? Is it a fear of failure or something else?
MCA: First, never say "budget"! I find if you use that word around anyone, they suddenly feel as though you're going to put them on a diet. We've all been on budgets that didn't hold, same as trying diets that work for a while then collapse in a basket of tortilla chips. Instead, returning to the family-as-business idea, I strongly recommend thinking about the "cash flow" of a family -- what comes in, what goes out, where it goes. Businesses have a strong grasp on the idea that money is tool for getting them to their goals: increasing market share, making payroll, designing a new product. Men or women *get it* when you lay out a cash flow process for them -- it's all just addition and subtraction!
W&F: Thank you Ms. Allvine. I appreciate that you have graciously shared your time, insight and financial expertise with us.
See my review of The Family CFO: The Couple's Business Plan for Love and Money is at your right in Related Links.
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The Family CFO: The Couple's Business Plan for Love and Money