Moore for your Money
BYRON MOORE, CFP®
Question: My wife and I have been married four years and we are expecting our first child. We both work and are both committed to being financially responsible, but we are having a disagreement. I think we need significantly more life insurance on me in case something happens. She agrees we need some on me, just not as much as I think we do. She says we don’t need to spend money on that much insurance – that we should save it instead. What do you say?
Answer: I’m happy to see you both “arguing” over how much to love each other. That’s really what life insurance is – love, in tangible form.
Let’s start with something about which you and your wife agree – you both want to be financially responsible. The exact out-workings of what that might look like is the substance of your disagreement.
Financial responsibility is not a single event sport.
Most track and field events are single events: the 100 yard dash, the high jump or the shot put. These events call for very specific skills. If you lined up a sprinter, a high jumper or a shot putter, it would not be difficult to identify one from the other, even without a label. The 300 pound guy with a 52 inch chest is probably not the one that will run 100 meters in under 10 seconds.
But there are a few events that might be called “multi-event” sports. Most Americans have at least heard of the decathlon – ten track and field events performed over two days by a single athlete. The athlete must be able to run, jump and throw in a variety of ways. Europeans are familiar with the pentathlon, a five event sport requiring the disparate skills of fencing, shooting, swimming, riding and cross-country running.
I’m not sure you can limit to five events the “sport” of financial responsibility within marriage, but let me offer the following five as a good place to start your thinking:
Provide. In the past it was usually Dad who went to work and Mom stayed at home with the kids. Your case represents more and more the norm these days, with both marital partners making a direct financial contribution the family unit.
Protect. We all hope things will go “as planned” with no interruptions. But we cannot bank on that. Investors and regulators require most large companies to have a formalized disaster recovery plan. Your family needs one too, in the form of an adequate insurance portfolio. Since both of you are providers, I suggest you protect one another against the possibility of disability or death.
Prepare. For what? For the future. For the unknown future. That means saving up to a certain level. Once a savings base is built, it means intelligent, disciplined investing in preparation for the day you choose to (or are forced to) stop working.
Participate. When both spouses work, both spouses need to help around the house, help around the yard and help with family finances. It’s OK to delegate certain tasks to one spouse or the other, but you can’t delegate ultimate responsibility. Both must participate in the financial future of the family.
Persist. Things will go wrong. One of you will fall off the wagon. Then the other one will. Minimize the blame game, maximize the encouragement and never, never give up – on the financial responsibility or on each other. The marker of success won’t be a lack of mistakes or even “failures,” but your mutual commitment to get back up and back on track.
These five skills all complement one other, yet must compromise with one another. You cannot have it all.
That’s a long answer to whether or not you need more insurance.
But I think if you and your wife will focus on the need to balance the five financial skills listed above, you can reach an answer you’re both happy with.