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Contact them to get out of debt today at ChristianCreditCounselors.org. The handling of finances is one of the major emotional battlegrounds of any marriage. Lack of finances is seldom the issue. The root problem seems to be an unrealistic and immature view of money.
Hi, I'm Rob West. That's a quote from David Augsberger's book, The Meaning of Money in Marriage. If money is a source of conflict in your relationship, stay tuned. We'll explain how you can restore peace. Then we'll take your calls at 800-525-7000.
That's 800-525-7000. This is faith and finance, biblical wisdom for your financial journey. Well, ask any couple what causes the most stress in their marriage and they'll probably say money. However, the problem isn't usually money itself or even lack of money. No, financial tension in a marriage more often springs from bad attitudes, unrealistic expectations, and wrong assumptions about how to handle money. Part of the problem is that everything has a money angle. Most of our plans, desires, hopes, and dreams involve some kind of financial activity.
That means you're constantly facing emotional questions about how to spend, save, borrow, earn, and give your money. And chances are, you and your spouse don't always agree about those things. On top of that, you have personality differences. Maybe he's a saver, she's a spender, or she loves yard sales, he prefers buying new, or he wants to borrow to buy a car now and she wants to wait to pay cash. All this disagreeable disagreement can stem from childhood experiences or long-standing expectations or even misunderstandings about how finances really work.
Put it all together and it's a recipe for conflict. If you're married, I'm sure you know what I'm talking about. There's another factor at work here in the matter of money and marriage. As we've said so often, our attitudes and actions relating to money are an indication of what's in our hearts. Sinful attitudes like greed, selfishness, anger, and resentment can affect how you feel about money and how you relate to your spouse about the family finances.
Let me offer four recommendations that I hope will change the way you relate to your spouse about money. First, remember why God brought you together. Christian marriage is a testimony to the world of the love of Christ for his church.
It's meant to be a picture of peace and Godly unity. Christian marriage is also an opportunity for spiritual growth. Proverbs 27 17 puts it this way, as iron sharpens iron, so one person sharpens another. Being sharpened by your spouse in the area of finances can be uncomfortable, but it's worth the effort to work things out.
That brings up my second recommendation. Communicate. If you're out of sync about money matters in your household, it's time for a heart-to-heart talk about money.
In Ephesians 4 2 and 3 Paul writes, Here's how you do that. Set aside some uninterrupted time together. Confess your fear, selfishness, and resentment about money to the Lord and to each other.
Ask Jesus to be Lord of your financial life. Ask him to help you work towards unity in the area of money management. Commit to love each other in this area the way you promised to do on your wedding day. Above all, be patient with each other.
These are very personal issues, but your relationship is more important. Make it a point to look for compromises and middle ground. If you're a spender and your spouse would rather save every penny, create a plan that allows for a bit of both. That brings us to my third recommendation for financial peace in marriage. Make a budget together. Your spending plan can allow each personality a little leeway, and a plan made now will take the pressure off both of you later when you're making financial decisions.
My final recommendation is going to be very difficult for some couples. If you've been keeping your finances separate, now is the time to bring them together. Separate finances are a dangerous step towards disunity in your marriage. Many couples think separate finances will help them avoid fighting about their differences. But the fact is, this isn't his money and her money. It's not even your money together.
It's God's money. Now let me close with the passage on love that's so familiar from 1 Corinthians. It's the ultimate answer to financial conflict in marriage. Love is patient. Love is kind. It does not envy. It does not boast. It is not proud. It does not dishonor others. It is not self-seeking. It's not easily angered.
It keeps no record of wrongs. All right, your calls are next. The number, 800-525-7000. I'm Rob West, and this is Faith and Finance.
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They're distributed by Foresight Funds Distributors, LLC, which is not an advisory affiliate, a registered investment advisor, nor do they provide investment advice. I'm Rob West, your host. All right, it's time to take your calls and questions today. The calls are beginning to come in, but we've got some lines open. We'd love to hear from you at 800-525-7000. Again, that's 800-525-7000. Let's begin today in, let's see, Montana.
Mark, how can we help you? I have a question about life insurance. My wife and I are 29 and 31, and we have a life insurance policy that we bought just a few years ago or took out.
It's very expensive. It was marketed as somewhat of an investment in addition to life insurance, and I'm curious if you're familiar with this type of policy. It's $165 a month for her and $175 a month for me, so a lot more than your typical straight life insurance policy, but the idea was that by the time we retire, it's worth a million bucks or something like that, and we can just cash it out and go on vacation.
Yeah, got it. All right, yeah, I'm not a fan of that approach for saving and investing. You're always going to give up something in that respect, so what I'd prefer you all do is get the appropriate amount of death benefit to truly protect you from the risk that exists if the Lord were to take one of you and the others left here without that income, and that would create a hardship. So we want to figure out exactly how much life insurance you need. At a minimum, you probably need 10 to 12 times the income that would need to be replaced, and you could use that as a starting point.
You could go beyond that and say, well, let's cover that income, plus let's pay off the house, plus let's cover educational expenses and make sure that we've really set that person up to be able to maintain their lifestyle. And the most cost effective way to offset that risk is through a term life insurance policy. So you might get a 20 or a 30 year level term policy with the appropriate amount of coverage. Pay a fraction of what you're paying right now.
If you guys are young and healthy, it should be very cost effective to get the amount of coverage you need, which may be a million or $2 million or more. And then over time, you might replace that policy and get a new 20 year policy because you're probably going to want to have this policy in force until you reach retirement where you're no longer accumulating, your income is being covered by Social Security and your retirement nest egg. And so you eliminate that expense by dropping it, which by the way, in that season of life, that death benefit would continue to get more and more expensive, but we've eliminated the need for it at that point. And then you do your investing outside of that in a company sponsored retirement plan or a Roth IRA or both, and you know, get 100% of the upside with that tax deferral through those vehicles as opposed to trying to mix that with your life insurance policy. That would be my preferred approach though. Does that make sense?
It does. Are these type of life insurance policies typically not so good on the return as opposed to the traditional way of investing for retirement? Oh, with a term policy, there is no return. So you're basically just paying the mortality expense that some actuary came up based on your age and health risk factors and the amount of coverage you need. And so you're paying that pure expense in the same way that you would with a property and casualty policy. So you get protection on your car. If you have an accident, they're going to make you a hole or fix your car, but you're not looking to get any kind of return on that.
The same would be true here. The idea is that you never have to collect on that policy. You've offset the risk that exists during your working years, but you're not going to ever get anything back. All that premium is lost, but you're paying that premium now. It's just that you're paying over and above that to do this additional investment. So in this case, we'd be separating the two. You're not going to get any kind of return for that term policy. At some point, you're going to drop it. All that premium is lost, but you were paying for the coverage that, Lord willing, you didn't need to collect on, and then your investments are separate.
Okay, thank you. So what I would do as a next step, Mark, I mean, you could go online to Policygenius or select quote, or you could find an independent life insurance agent who can shop the various companies for you and find a really strong company that's highly rated from a invest, but also gives you a really effective, cost effective premium, and just get the coverage you need for either 20 or 30 years. And you know that that now is covered, and then really focus on your investing.
I would say look at maybe a goal of 10 to 15% of your pre-retirement income. If you did that in a company-sponsored retirement plan for the next 35 years, you guys would be in really good shape. Thanks for your call today, Mark. We appreciate it. To Court Elaine. Hey, Clay, go right ahead. Hi, Rob. First off, thanks for taking my call.
Sure. So I had a question on tithing. I'm 22 years old, I have a small business in excavation, and I'm just curious, am I supposed to be tithing on my personal income or also my business income? I don't want to short God in any way, and so I just, I don't know, I'm trying to dig and find the answer to that.
Well, I appreciate that. I mean, we're under the law of Christ, not under the law of Moses, and so you could say tithing is an Old Testament concept, and you would be correct. Nevertheless, I think Jesus raises the bar in every situation, and that would include our giving. To whom much is given, much is required. And he celebrated the generosity of an unknown giver.
We don't know her name, but we know she was a widow who gave out of her poverty. So we clearly should be givers. I mean, that big idea jumps off the page in the Old and the New Testament. We were created in the image of the ultimate giver, God himself. So I love the idea of our giving, and when we get to the how of our giving, well, first of all, it needs to be with the right heart posture.
We're doing it as an act of worship and to be obedient, but also to demonstrate our trust in God by saying, God, I believe you as my provider are going to continue to provide for me, and so I don't have to hold what you give me with a clenched fist. I can take a portion of it and demonstrate my trust in you by giving it back, and I get the joy and the blessing of being connected to where you're at work, participating in your activity, and that's a privilege. Now, how do we go about that? Well, I think applying the principle of the tithe is a great starting point. It's what my friend Randy Alcorn, the author, calls the training wheels of giving, and so being able to say, okay, God, I want to give you a tenth of my increase, and by the way, maybe that's just a starting point. I love a progressive giving approach where maybe you raise that by a percentage point each year, but let's say you just said we're going to do a tenth on the increase, and then we're going to give sacrificially beyond that. Okay, well, how do we define our increase? Well, our increase is all that God provides to us. Now, that's easy to calculate when it comes to your income, so you would say whatever income I receive, whatever gifts I receive, whatever inheritance I receive, that's clearly a part of God's increase, and so I would turn right around and say, God, I'm going to systematically give a tenth of this increase back to you. Well, that's very simple to calculate. Now, if you own a business, you have the ability to say, God, part of my increase is not only paid out to me as salary and wages, but it's being retained inside my business, and so I'm going to, after expenses, and that's the key, you can't tithe on the grossed amount, depending on what kind of business it is, you'd go out of business, but after all the salaries are paid, including your own and the overhead and all the expenses and the marketing, let's say once a year you said, what is the profit that I'm keeping in this business? I'm not paying it out to myself yet as income. It's staying in the business. Well, you could take that in a predetermined interval, calculate that true profit or increase, and then say, I'm going to make an additional gift out of the business. That would be the way that you would go about that. Does that make sense?
Yes, it does. Hey, I really appreciate your time. All right, Clay, thanks for calling. We're going to take a quick break back with much more right around the corner. Stay with us. We are grateful for support from Soundmind Investing in the Faith and Finance Program. For more than 30 years, they've been helping Christians reach their financial goals with step-by-step guidance for investors at every stage, from those just getting started to those getting ready for retirement. Through scriptural principles and practical suggestions, SMI offers financial wisdom for living well. More information, including the short video webinar on profit and peace of mind, no matter what's happening in the market, is available at soundmindinvesting.org.
Welcome back to Faith and Finance. I'm your host, Rob West. The number to call is 800-525-7000. To Tampa, Lorena, thank you for calling.
Go ahead. I have a little bit of a situation, not quite sure where to start, but the basic logistics of it is my husband is 61. We have not been able to put back for retirement because of having a handicapped daughter.
We now do. We have some expendable income, some extra income in the household, and I'm looking for the best way to prepare for retirement. My husband is not going to be able to go to 72.
He's a diesel mechanic, and so his work is such that the physical demands will be doing well if he can make it to 62 and stretching it to 65. We only have about 30,000 in our 401K. We're putting back 20% of his income. We have a mortgage of 185,000. It's worth about twice that, actually more than twice that, and we have some credit cards, card loan, and a little bit of unsecured debt, but that's kind of where we're at. Yeah, so is your concern just not having enough when you get to retirement? Absolutely not.
We only have 30,000 put back. Yeah, okay. And your ages are what, Lorena?
56 and 61. Okay. Well, listen, you can only do what you can do, and the key is to be found faithful with what passes through your hands. You've been caring for that sweet daughter of yours that has special needs, and I realize that requires a lot of time and attention. I'm thrilled to hear that you were able to do that, and you guys are now feeling behind, and I get that, and that can feel somewhat overwhelming. And yet, God is your provider, and we know that, and so I think the key is, at this point, just to limit your lifestyle as much as you can. Let's trust God for your ability and your husband's ability to continue to work, perhaps even beyond what you can see today, and we can ask him to intervene there.
We know that at the end of the day, he is your provider, not the government, not your employer, not anyone else, and so he said that he will provide for our needs. So I think at this point, we try to just maximize whatever you can put away in the years that you have left while you're still working. Given that you're over 50, you could put away $30,000 in a 401k.
If you have two of them, you could double that, but you can put away quite a bit of money. The question is just your ability to do so, and that's going to come down to just maximizing these years while you have this double income for as long as they last. Let's try to build up that nest egg. Let's work as long as we can to delay taking Social Security, because every year you wait, we're going to push that check that you get out by 8% a year. If we can limit your lifestyle and live modestly and get some Social Security coming in down the road and try to save as much as you can in the meantime, then we're going to trust God for the rest.
I think that's all we can do, but give me your thoughts on that. I did want to ask a question about the $30,000 annually for the 401k. I am self-employed. I clean houses, is what I do for a living. My business is doing very well.
I'm currently making close to $80,000 a year cleaning houses. How would I initiate a 401k as a self-employed person? How do I do that? You wouldn't be able to as a self-employed person. You can do something called an individual K, but what's probably better is for you to open what's called a SEP IRA. It allows you to put in for 2023, you can put in 25% of your compensation or $66,000, the lesser of the two. That would allow you to put away quite a bit of money. The combination of that SEP plus if your husband has a 401k, I think that would set you up really well.
You could open that SEP IRA at Fidelity or Schwab and then you could put that money in as you're able to and then take a tax deduction on it. It's like the same tax treatment as contributing to a traditional IRA or 401k. You get that as a current year tax deduction. Okay, and that amount that I put in, would that come off of our overall income to lower our tax bracket if we're falling within the question of the 15% or the 22% tax rate?
It would, yeah. So you would get a deduction for the amount that goes into the SEP IRA for the year. Okay, so that's our concern too is with my income coming in as high as it is now, we're going to be going into the 22% tax rate this year and I'm trying to find ways to reduce that. Yes, and so that would be a way to do that.
And so you would get the tax deduction as that money goes in. Okay, that's great information because that's exactly what I needed was just a direction. So thank you very much for that.
Well, you're welcome, Lena. And listen, you all hang in there. Don't be discouraged.
You know, God will provide and I think we just need to take advantage of these years that you have some extra income to do as much as you can in saving and try to catch up a bit. We can help further along the way. Let us know quickly to Chicago Storm. Are you with us?
Yes, I am. Thanks, Rob, for taking my call. I'm calling because I wanted to know I have a, I'm getting a late start with my 401k. My job just started a 401k and I'm getting a late start.
I'm 48 years old. I was told to put 15% of my income into 401k, but I'm a little confused because usually I see one option, but this 401k has two options. It has a pre-tax option and then it has a 401k Roth option. So I'm just confused about how much of that 15% should go on which one.
Yeah. So I think the key is that you just make that contribution as to the one that would be most effective. A lot of times when we're getting closer to retirement that the traditional 401k is the better option. So you actually get the deduction on the money as it goes in. Later in your working life there's often a greater benefit to you getting a tax deduction today while your earnings are higher because you're in the kind of twilight of your earnings years versus you putting in after tax money and then being able to take it out tax free later. You're just not going to get the benefit as much of that tax free compounded growth with the after tax 401k. So I think the pre-tax 401k with the current year deduction is probably going to be a greater benefit for you. If you wanted to run the calculations and know for sure, I would check with my CPA on that.
But I suspect just given your age and kind of where you're at, the pre-tax option is better. Does that make sense? Yes, that makes a lot of sense. Thanks a lot, Rob. All right, Storm.
Thanks for calling today. Stephen, I see your question in Albany about whether I expect a recession this year. I wouldn't take my word for it. Ninety percent of economists are saying we will have some sort of recession.
Most think it'll be fairly shallow. I think the key is that we're ready with our own financial lives living according to biblical principles. Well, that does it for us today. I'm Rob West. Thanks to our amazing production team and to you for listening. I hope you'll join us again next time right here on Faith and Finance. Faith and Finance is provided by Faithfi and listeners like you.
