Monday, December 1, 2008

Heading off Trouble Before It Starts

MotherinIsrael and Orthonomics both posted about an Israeli organization, Paamonim, that helps those in financial trouble organize themselves and get out of debt, and teaches them better budgeting so they won't fall back in debt. So I began thinking: what if we could prevent that debt to begin with? What if budgeting were taught before things get bad?

You hear a lot about choson and kallah classes for engaged couples. The rav who was my m'sader kedushin insisted on meeting with any couples he would be marrying to speak to them about their future plans. But to my knowledge no one insists that engaged couples be taught about the truly practical issues of marriage, like finances and budgeting.

So here is an idea, and it shouldn't be all that hard to put into place. Let's make it mandatory that frum engaged couples also have to have a session or two with a pre-marriage financial counselor. At a time that it is going to start to matter, let them get the information about what the real costs of marriage are. No couple should leave this counselor's office without a filled out working budget with ALL possibilities accounted for. And they should also be given a working budget plan for when children appear, with all the new expenses that brings. In the same way that a choson or kallah teacher tells his/her students that disagreements should not be left to fester but that there are proper ways to handle them, a financial counselor could also talk about debts that are left to fester, and about how to avoid those debts. And forget talking about plastic tablecloths and marriage; it's far more important to talk about plastic credit cards and marriage.

Quite frankly, we tell them everything they need to know about sex and forget that married life is not only about sexual matters. The media have long touted the fact that the number one area of disagreement for married couples, the number one factor causing marital strife is money, not sex. We have sex pretty much covered, and it's time to put our efforts into money.

If someone is looking to do a chesed for Klal, then start an organization whose sole purpose would be financially educating engaged couples. Let this organization develop budgeting materials and financial planning packages that address money and marriage before the problems begin. Surely it is easier to vaccinate against a disease rather than having to try and cure someone of the disease once it has taken hold. And until that organization actually arrives on the scene, shuls could help by requiring their engaged members to attend a class or two given by financial experts. And here is a thought as well; let that organization prepare materials appropriate for high school students and let their volunteers go in each year for a lesson or two on financial planning and responsibility before the students find themselves engaged to be married.

And here's another thought. There are lots of women out there, and yes, men too, who are really great shoppers. How about those shoppers taking a group of kallahs into a supermarket and showing them the techniques of how to save money while shopping? I once did a posting on toilet paper and how not all papers are created equal and how some are better bargains than others. Maybe we need to not only tell kallahs that there are ways to hold down expenses when shopping but show them as well. As the movie said: "Show me the money!"

Yes, I know, I'm talking about creating yet another organization. But this organization would not be doing duplicate work of other organizations. And it's the type of organization that would need all those accountants and business people who have been complaining that many tzedaka and chesed organizations are not organized in a business-like fashion. This type of organization would allow them to put their money and efforts where their mouths have been.


mother in israel said...

Thanks for the mention. I agree that it is necessary. I see pre-marital seminars advertised here, but I don't know whether they cover this. It's another skill kids should learn at home but don't.

Anonymous said...

You're so right. Pre-marital seminars focus on shalom bayis and conflict resolution, improving communication, getting used to each other, in-laws, intimacy, red flags for abusive behavior. All important things, but- money doesn't seem to come into the psychobabble (sorry if that offends anyone)as a focus, and it should be a focus.

Anonymous said...

Mii, lots of parents who do talk about budgeting and how to manage money but there can be problems with this as well. Not all parents are good examples of how to budget wisely and what they are passing on to their kids may not be good advice or information. Also, we can assume that most parents are working with more money and different responsibilities then a new couple and they may not know how to deal with a beginners budget any more. And then there is that lots of new couples expect that they will have what their parents have right from the beginning. Sometimes when a parent says that isn't going to happen the couple ignores them. We often take advice from strangers better then we do from family.

Anonymous said...

I just recently got married and I would have welcomed some outside professional help in setting up a working budget for my marriage. My mom did sit down with me but that really didn't work out. I am so not looking to duplicate my parent's ideas of what should be in a house. My parents live in Brooklyn and have very Brooklyn tastes and ideas. I'm very different from them and my husband and I both wanted out of Brooklyn and we are living way out of town. The budget my mom wanted to work out covered all kinds of things that aren't important to us and she got very insulted and took it that we were rejecting her. And yeah, my mil didn't get it either.

G said...

A friend and I happen to be (slowly but surely) trying to create a set of classes for guys in yeshiva, married and single, that touch on various financial aspects of the young jewish home (and the young home in general). The impetus being both of our experiences with young families having trouble, w/ no idea where to turn or what to do - in addition to the shalom bayis issues that many times come along as a result.

Saddly when we approached a member of the hanhala to find out how such a thing could be implemented within the confines of the yeshiva and if they had any input, the response was that such a thing was not a major neccesity and that most guys pick thing up or figure things out along the way. While we were told that it is a positive idea in general it was not something that should be done under the auspices of the hanhala.

More is the pity -

Anonymous said...

I sat down with my about to be married kids (two, married about a year apart) and suggested that they keep track for the first few months of all fixed expenses, and what they actually found they spent on varying expenses (like food, gas) that are crucial. Then they could work discretionary spending into their budgets. I suggested a "budget diary" kind of like the food diary nutritionists recommend to people trying to get hold of managing their weight. What needs to be included in discretionary spending is so individual- what a new couple needs to see is how much is left in their income column after the necessities are taken care of. I stressed that they needed to include only REAL necessities (for example, my daughter did think that waxing was a necessity, and I disabused her of that with almost no trouble :-)- she worked on finding a much cheaper place...)

The point I am rambling about is that my ideas about what is necessary to have in a house were and remain irrelevant unless I was willing to foot the bill for them.
My kids did appreciate the input...

Anonymous said...

I think the second anonymous was right that budgeting needs to set out what is a real necessity and what is discretionary for a couple. But you have to understand that even needs can vary from couple to couple. What did you have in mind as being the items that should appear on a budget in the kind of counseling you are suggesting?

mother in israel said...

Rae,I agree with you! I didn't mean to blame parents, just pointing out that our society has changed and things we used to take for granted aren't.

Anonymous said...

I've been frum for close to 30 years and my extremely frugal parents did set a good example of budgeting and spending. While they were frugal, my parents did not hesitate to spend money on things that were important to them, like overseas trips to visit my mother's family. The reason they had the money was because they were frugal elsewhere, shopping for food, clothing, utilities, etc. What I did not get was a view of how budgeting would be different as a frum parent: large families and tuitions. So as young marrieds, with both of us working and saving (for longer than most couples, since we experienced many years of fertility problems before being blessed with a large family), we should really have been saving even more -- not just for a house, but for future tuitions.

Lion of Zion said...

an interesting post and a very good suggestion, although i'm not sure if i should applaud or laugh. from a purely financial perspective, so many newslyweds probably shouldn't be getting married to begin with. no ammount of financial counseling is going to help many of them.

i also think that this is a sort of band-aid solution (but again, a good one) and that attitudes in general need to change (enter potenetial influence from schools, pulpit rabbis, parents, etc.)

and completely off topic, but on the subject of pre-marital counseling i would like to repeat a comment i made a while back (i think here): the importance of genetic testing should also be stressed. in know this is not an issue in the RW world, but among the MO (at least when my friends and myself got married) there is a *lot* of ignorance.

ProfK said...

I so was trying to be uncontroversial in this posting but you brought up a point that I have thought about a lot and that needs to be said, although I was avoiding saying it. Yes, there are some couples who are getting married who shouldn't be getting married because they can't afford to be married. Even the basics of food and a roof over their heads is not something they can afford if their present economic status remains the same. With all the other crazy requirements for a shidduch why shouldn't having adequate money to live on be right there on the top? But at least if these couples got financial counseling before they got married they might have their eyes opened to reality and they might find the impetus to do something about their earning before they get married. And yes, some of them might discover that their "glick shidduch" is not for them after all.

mother in israel said...

Is it too cynical of me to suggest that the hanhala mentioned by G is opposed to a class precisely for this reason?

ProfK said...

Not cynical at all, merely being realistic. It's what I was thinking when I read G's comment.

Anonymous said...

So maybe we could avoid all this if shadchanim insisted on having accurate and up to date financial information on the earnings of anyone they are setting up. If a couple together falls below the poverty line the shadchan should refuse to redt the shidduch.

Or we could even have a dror yeshorim type of hotline to call for healthy finances. Males and females would be required to register verified earnings info. When a shidduch is redt you could call the hotline and they would tell you acceptable or not acceptable based on financial risk.

Can just see this working, right? Not likely. Barring my suggestions I think yours is a good idea.

Anonymous said...

How about advising people that many of them are best off just not working and applying for government programs?

My wife and I both played by all the blog rules, like,going to college, working,not having too many chilren(the decision we regret the most)not taking out mortgages we couln't afford, etc. and guess what?All those uneducated Kollel people had their mortgages and other expenses legally paid for by Uncle Sam, while we are still renting an apartment much smaller then them.And of course those who did default on their mortgages now have the media up in arms that they must be saved from 'predatory loaners'(i.e. their folly)

And please none of this self rightous talk about supporting yourself.In real life I've never seen anyone decline government handouts that were available to them, no matter how years thay made fun of other people for taking such money.

Anonymous said...

To the anonymous who had fertility problems: we're in the same boat, sans the kids.

When I start thinking about saving for future tuitions, I think that instead, I should be putting that money into paying off the principal on my mortgage. That way, I won't be the rich person paying full tuition because I saved a lot of money - regardless of what I earn at that point (and thus unable to apply for scholarships). Rather, I'll be like everyone else, only having more equity in my house. Worst case scenario: I'll take out the money that I put in into the house. Plus, I will be saving on the interest while paying off the mortgage early.

Also, I'm not talking about putting all your savings into paying off the mortgage. Instead, I advocate to have at least 4-6 months of monthly expenses in a liquid account (savings/money maket, etc.)

A Living Nadneyda said...

I still remember being in college and walking around the drug store with a calculator, doing some price comparisons, when a store worker came up and stared. I asked if everything was OK and he replied,

"Yes, of course. It's just that I've never seen anyone from this area (i.e. the university area, as opposed to the poor, Black area immediately surrounding it) price comparing before!"

Miss Teacher said...

From the point of view of a newlywed-

When we were engaged my husband traveled to a different city with a group of 4 other chassanim to take chosson classes from a well known rav. Part of their week of learning were sessions on financial planning given by a professional in the field who was hired by the Rav. I am extremely greatful to this Rav - it was the most thoughtful and practical thing he could've possibly done for those boys and their marriages.

In addition - my parents never offered to support me financially, however being that my chosson was going to be learning in kollel and we would be living off my salary alone - a tight budget - my father understood that there may be times that we will need some money help.

His words exactly:
"If you create a budget together and you keep to the budget then you'll know that you have enough money to live off of and you'll know where your money is going. If an unexpected expense comes up and you need my help I will want to know if you have been spending responsibly."

I may be of rare breed but I am living off less than half the amount of money than some people I know and I have never ever felt helpless, desperate or poor since I got married.

I should mention as well - we have not touched our wedding money since it was given to us, and we also make an effort to put a small amount of money into savings each month. It doesn't always happen but when it does it sure feels good. I wish my friends had been prepared as well as I was.

Anonymous said...

I have found formal budgets not particularly helpful. What has been very helpful has been developing frugal habits and distinguishing wants from needs. The former only get indulged in when there is extra cash above the retirement, college (when I was young enough to be putting in rather than spending these) and rainy day funds. The problem I have had with budgets is that, perhaps because we have ben very frugal, the only items that have had us spending above income even briefly have been largely beyond out control: unexpectedly large tuition increases, the time a car and the boiler gave out in the same month and the like. A budget would not havbe prevented me from spending for these needs. Also, if you have a budget line for indulgences, it will get spent. If you develop frugal habits, you will probably spend less.

And, although I know I will get flack for this, I do think that combining hard work and frugal abits with bitachon, generosity to tzedakah and gratitude for what we have is important. Certainly on more than one occassion when something as threatened to push us to the edge (and my edge means we miss a month or two of savings, not that we pull out of savings unexpectedly or go into debt) financially, Hakadosh Baruch Hu has blessed us with an unexpected raise or windfall. The Navi says: "Ub'chanuni gam b'zot...."

ProfK said...

I suppose there are two ways to look at what a budget is. One way is to call it a recipe; in order to "cook" your finances correctly you have to follow the recipe exactly. Everyone knows, however, that sometimes you have to substitute one item for another because you don't have the right ingredient available to you. A second way is to look at a budget as a nutritional guide; it says "these items are needed and you need to plan to have them at some point during the month; anything else is "wants," and can throw proper nutrition out of whack. Indulge in those wants as if they were your needs and you can become financially ill."

Frugality grows out of knowing what you need for good financial health. My suggestion would provide a couple with the list of "foods" to choose from.As long as that couple makes sure that they have chosen nutrients first and as long as they don't exceed their "calorie" count, how they put together their menu is their choice.

As to unexpected expenses, that's why they are called unexpected; you can't plan for them exactly. But you can keep in mind that the unexpected does happen--how might you deal with it in the best way so that you can keep a "cold" from morphing into raging pneumonia.

Dave said...

Unexpected expenses are part of the reason for building up your savings.

You can't budget for "the radiator and the furnace died this month", but you can budget each month for "put money away for when something unexpected happens".

Anonymous said...

Sure. or you can just make sure you save each month, and pull down from savings for needs like that. I did try a detailed budget a couple times, and it didn't help me control spending much; the overhead of changing it every time the relative price of, say, heating oil and vegetables fluctate relative to one another was all out of proportion to the value. We set goals for savings, and only indulged in "wants" when we had money left over after meeting those goals.

Of course, this method doesn't work for everyone. In our case, we had a tight enough definition of "needs" that they fit into our income with a little left over. If one has a more expansive set of "needs"a budget might be helpful to convince one that either some of those needs are really wants or that some leisure time is a want, and a second job is needed to generate enough income to cover needs.

Miss Teacher said...

Budgets do not have to be so specific- they can range from very vague to very specific. Living frugally may save a person money, but it does not teach them how to manage their money.

Keep in mind also that the expenses of newlywed young couples are more simple than those who have families and have been married longer. It is easier to set a budger when your necessary expenses are simpler.

Anonymous said...

Well if you call "we'll spend $X abd save $y" a budget, I had one. I am sure different things work for diffrent people, but I find that, for me at least, focusing on the bottom line is more effective than breaking it up into a bunch of categories.

ProfK said...

Thanks for mentioning the term bottom line here. I think that it's a mistake to call it a "bottom" line. It might make more sense to call it the "top" line--here is the total of how much money we have for this month/year. Any expenditures are subtracted from that top line, with the balance being left for the next month, a clearly visible balance.

Orthonomics said...

Living frugally may save a person money, but it does not teach them how to manage their money.
One should learn about investment vehicles, which is what I assume you refer to when talking about "manag[ing] money." But, in my own opinion, some young people, especially young men, are overly concerned with investing and not concerned enough with having cash on hand, which will ultimately be their best friend through rough patches. When it comes to finances, I can't emphasize the importance of a cash cushion enough.

There are different effective ways to budget. Our "budget" probably looks most like Mike S's budget. I believe the more frugal the easier it is to budget because there are simply less line items.

nmf #7 said...

ProfK- you have no idea how desperately this is needed in circles of newlyweds- at least that I've seen personally.
I'm lucky in that I grew up in a well budgeted household, and I know how to keep one, but MANY people don't have this.
Can't we do something, maybe online- to alleviate this?
Maybe posting an average newlywed budget online might help- for a specific state, and an average family with one child...

Ya'akob ibn Avi Mori said...


It is sad that a post like this is even necessary. When did it become praiseworthy to be ignorant in financial matters. The avos were wealthy and yet we dont seem to view wealth as something we should try to manage, the Tannaim and Amoraim all had jobs, ( see Maimonides Laws of Talmud Torah chapter one :
יב [ט] גדולי חכמי
ישראל--היה מהם חוטבי עצים ומהם שואבי מים, ומהם סומין. ואף על פי כן היו עוסקין בתורה, ביום ובלילה; והם מכלל מעתיקי השמועה, איש מפי איש מפי משה רבנו.) It was never part of the Real Mesorah to not understand work and finances. In fact just the opposite, hard work and financial understanding were always valued by the Chachamim, the Rambam continues in chapter 3 of Talmud Torah

יא מעלה גדולה היא למי שהוא מתפרנס ממעשה ידיו, ומידת חסידים הראשונים היא; ובזה זוכה לכל כבוד וטובה שבעולם הזה, ולעולם הבא: שנאמר "יגיע כפיך, כי תאכל; אשריך, וטוב לך" (תהילים קכח,ב)--"אשריך" בעולם הזה, "וטוב לך" לעולם הבא שכולו טוב

Yes , I can hear the screaming now, there were plenty of poor chachamim and plenty of poor Jews in general in Europe and the East, but this was never the ENDORSED position of the Am! I fail to see how and why we have propogated this fairy tale image that everyone in Europe was learning in Kollel and too holy to deal with money? When did it become acceptable to bankrupt Jews who DO WORK because all you do is sit and learn , living off the chesed of your wife and Neighbors??