{Poll} Do you have (or give your spouse) an “allowance”?

The other day, we overheard an FOF say she gets a monthly allowance from her husband…we also know FOFs who enforce monthly spending limits on their spouses. It made us wonder — just how many of you get or give an allowance? Take our poll, then find out what financial expert, Elle Kaplan, thinks. (Elle is a financial advisor who specializes in helping FOFs manage their money.)

Sorry, there are no polls available at the moment. Sorry, there are no polls available at the moment.


Financial expert Elle Kaplan on “allowances”:

FOF: Do you think setting an allowance is a good way to protect a couple’s finances?
Elle: Marriages are complex, so what works in one marriage may not work in another and I don’t judge that. What I would say is whether you are the recipient of an allowance or a provider of the allowance it is your financial responsibility to know about the entire financial picture. I don’t care if you are spending 5% of it, as long as you have active awareness of where the other 95% of it is. I encourage and even insist that both parties participate in financial conversations.

FOF: Why is that?
Elle: It’s not a place where you can just leave it up to your partner. I’ve seen this happen, then tragedy strikes and all of a sudden your partner’s not there. Life will be hard enough with heartache and grief, you don’t want to add this to the tragedy to-do list, you really don’t.

FOF: What if you’re worried that your partner’s spending will have detrimental effects on your family finances?
Elle: Honesty about finances is important. Often you and your partner will have different spending styles and that’s fine. Even though the spending will be different, your ultimate financial goals are going to be the same. No matter what you’re spending or whether you’re the giver or receiver of allowance, you can help to get on the same page about these goals by being honest and transparent about your finances.

FOF: Is there an approach you suggest, other than setting spending limits, to help curtail a partner’s spending?
Elle: There’s nothing wrong with what I call the ‘Ménage à trois‘ approach to spending, where there’s ‘his’ money and ‘her’ money and ‘our’ money. The key is transparency; you should both know how to access everything.

FOF: Do you have clients in happy, trusting marriages who set spending limits on each other?
Elle: I’ve seen it work quite well when couples have a baseline understanding about what’s reasonable to spend. That doesn’t mean a wife is calling her husband every time she makes a purchase saying, ‘This is $300, can I buy it?’ or visa versa. Instead, they might have set amount, say $500, that before either of them spend they will have a discussion about it. But below that amount they have the trust and ability to do what they like.

Elle Kaplan is the Founding Partner and CEO of Lexion Capital Management. Elle provides a broad range of wealth and risk management advice to individuals, foundations, trusts, and endowments.

{Money} “I’m 54. Is it too late to save for retirement?”

We recently received this question from an FOF member:

“I’m 54 years old, and I have nothing saved for retirement. Is it too late? Can I live on social security?”

Yes, this sounds scary. It’s also an all-too-common scenario for FOFs: Almost 50% of boomers don’t have enough money saved for retirement, according to a 2010 report by ERBI.org.

But when we posed this question to Elle Kaplan, a money manager who specializes in helping FOF women plan for retirement, her advice left us feeling surprisingly empowered and optimistic.

Says Elle: “Look at your financial assets the same way you look at your health. You wouldn’t wake up at 54 and say, ‘Well, it’s too late to be healthy so forget about exercising and eating right.’ It’s definitely not too late; you can have a wonderful financial future,
but start today!

“Step 1: For the next two months, write down everything that you spend, and all your bills. That way you can really see what money is coming in and what money is going out.”

“Next, figure out what your social security payment is going to be each month. The Social Security Administration will provide this information and tell you how much you’ll get if you retire at 67 or if you put it off until 70.

“Seeing these numbers–what you’re spending and what you’re going to have from social security–will let you know how much you need to start saving to fill the gap.

“Some women may find that by cutting costs here and there, they can save enough to fill their retirement gap. Where can you easily cut back? Do you buy your coffee every morning? Do you pack a lunch or buy it? How often do you eat out? Do you buy clothes on sale? Are these expenditures a necessity? Because saving for retirement is a necessity.

“For some women the gap may be quite large–they need to take a more aggressive approach.

“Three more aggressive, but very doable strategies:
1. Stop taking care of your adult children. This is a problem with so many FOF women. You need to tell your kids: ‘The most loving thing that I can teach you at this point, is how to be self-sufficient. So that hopefully one day you won’t be stressed about retirement the way I am right now. I’m giving you that gift.’

2.  Change your location. I have a client who works in New York City, however she’s from a small farming community where she still has friends and family. Her retirement strategy is to return to that community where the cost of living is significantly less and her dollar will go much farther.
3.  Consider semi-retirement. There’s nothing wrong with thinking about second careers to keep some income coming in. It doesn’t have to be a full-time gig. Consider some aspect of your job that you enjoy–how can you continue it on a part-time basis?

“Now that you know how much you need to save, you need to figure out where to put those savings.

“First, is there an employer match for your 401K? If so, you need to max that out immediately. If not, a beautiful option for this woman is a Roth IRA.  The IRA is the asset class, but then you have to choose what goes in the IRA. There are a number of really nice market-based index funds. They are inexpensive and you’re going to have instant diversification. You’ll own a basket of 500 different securities and they’re low cost–low fees.

“The most important thing: Saving for retirement doesn’t have to be radical. It’s like anything else in life. If you said to me tomorrow that you were going to be on an all-vegatable, 1,000-calorie diet, how long would that really last? An hour!  It’s too extreme. But if you said, ‘instead of a donut in the morning, I’m going to have whole-wheat toast,’ that’s realistic.

“Retirement is no different. If you’re 54 and you’re retiring, let’s say, at 70, you’ve got 16 years.  You can change your reality in that time.”

Elle Kaplan is the Founding Partner and CEO of Lexion Capital Management. Elle provides a broad range of wealth and risk management advice to individuals, foundations, trusts, and endowments.

{Poll} Which celeb is the stingiest?

We hear so much gossip about the lavish lifestyles of loaded stars, but, talk is cheap…and so are these 4 FOF celebs. In your opinion, who is the stingiest?

Barbra Streisand

The frugal facts: Barbra is the veteran of vintage. A 1997 New York Times article about the rising popularity of vintage clothing credits “Babs” as the first female celeb to perform in thrifted togs.

The multimillionairess allegedly left $10 on a $457 bill at a New York restaurant. Shortly after she was heard singing all the way to the bank….
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Madonna

The frugal facts: Everyone knows “we are living in a material world” but did someone forget to tell the “Material Girl”?  A 2007 novel by a New York waitress exposes Madonna for not leaving a tip after being served in a restaurant. Hey, Madonna, we have a tip for you: Pop icons aren’t excused from dining etiquette!

In a book about Madonna, her own brother calls her “stingy” for giving their grandmother only limited financial help: “But my sister –who in 2008 is worth in excess of $600 million…opted at the time to send our grandmother just $500 a month and to pay her monthly household bills, for Madonna, a drop in the ocean,” wrote her brother. “When I think of Madonna’s wealth, I can’t help but think she’s being stingy with the grandmother who helped raise us.”

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Teri Hatcher

The frugal facts: Almost-FOF Teri Hatcher plays a well-off Desperate Housewife on television, but in real life this single mom desperately pinches pennies. The actress, estimated to be worth $50 million, told People magazine, “I’m a very conservative person. I drive my cars for 10 years until they have 100,000 miles on them….I don’t spend my money on sports cars or new million-dollar houses. To me, feeling comfortable means having way more than I need in the bank.”

And there’s no costly outsourcing for this Supermom, who “stayed up half the night to turn out such extravaganzas as 300 individually wrapped homemade chocolate butterfly lollipops” for her daughter Emerson’s school, according to an article in Vanity Fair.
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Queen Elizabeth

The frugal facts:
The recession has even Queen Elizabeth II, the world’s largest personal landowner tightening her royal purse strings. According to FrugallyMinded.com, “The British tabloids frequently allude to the Queen’s passion for turning-off the lights around Buckingham Palace, and tongues have wagged about her cautions to the princes, saying that she sternly has warned them not to flaunt the royal wealth.”

A royal Thriftmas? In 2008 the queen cut back with £7.95 crown decorations to decorate her Christmas tree and by having her presents made in China to save money. “It’s not just at Christmas but right throughout the year that she tries hard to keep costs down.” A spokesperson told Britain’s Hello! magazine. “The queen has been extremely thrifty all her life and jokes that it’s her Scottish blood.”

The spokesperson may not have been kidding about thriftiness being in the queen’s blood… Her mother had a reputation for frugality. According to a recent Telegraph article the Queen Mother “refused to buy a TV…and relied on an ‘antiquated’ video recorder to watch horse racing.” She also “regarded her favourite Burberry jackets as “old friends” from whom she was unable to part. He [her aide] said he did not see her wear a new raincoat during his 28 years of service.”
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Sorry, there are no polls available at the moment.

Images via Zimbio: Barbra Streisand, Madonna, Teri Hatcher, Queen Elizabeth