The Importance of Financial Conversations

The Transcript

Art Wiederman, CPA: And hello, everyone, and welcome to another edition of the Art of Dental Finance and Management with Art Wiederman, CPA. That would be me. I'm Art Wiederman. I've been a dental specific CPA for 37 years. In fact, I celebrated my thirty seventh anniversary as a dental CPA on actually the day after Labor Day, which was as we record this, I guess that's today, if you think about it. That's right.

Today is September the 7th and I started on September the 4th of nineteen eighty four. So 37 years ago today, I walked into the office of the Pride Institute of Management and became their managing director. Wow. Time flies. Time flies when you're having fun. How old was I? Let's see. I was twenty five years old. My goodness, I can't think that far back.

But anyway, so and today we're going to do I guess this will be an anniversary recording of the Art of Dental Finance. And we have a great topic for you today. It's going to be just you and I today. And it's a topic that I've wanted to talk about for a long, long time. I've run into it virtually every time I have a meeting with a husband and wife. And it's how couples should communicate about money.

And just some interesting statistics I'll share with you about money and couples and just things to be thinking about, because folks, you know, marriage is hard enough as it is with everything going on in life, especially today in twenty twenty one. It's just, you know, with covid and all the stresses you hear about on the news and the vaccine, it's just so hard. And when you add to it the stress of finance, then it almost makes it impossible.

So I'm going to give you a lots of hopefully some good tips and things to be thinking about when you are talking to your spouse or significant other about finances. But before we get to that, I get some other things to talk to you about. First thing was the thing I did over Labor Day, which was amazing.

So a couple of years ago at our dental, you know, I'm a member of the founding member of the Academy of Dental CPAs, which is a group of twenty four CPA firms around the United States that represent over ten thousand dentists. And for the last year and a half, we have been go, go, go without a stop between taxes and tax law changes and PPP and ERC and HHS and all the other gobbledygook that you could even imagine.

So we're at a meeting oh my goodness this must have been five years ago in Seattle and our president, my dear friend, Alan Schiff says Art, you need to vet this group from Louisiana. I had never been to Louisiana, I take that back. I've been to Louisiana once. I spoke to the Louisiana Dental Convention once, but I had never really been there other than that. So I talked to them. I go up to them and said, so where are you from in Louisiana? Well, we're from Baton Rouge. Really? Oh, Baton Rouge. Well, that's where LSU plays. You got season tickets for LSU? Yes, sir. I said, do I get to go to a game? They said, yes sir. I said, you're in the ADCPA. It was a very simple vetting process.

And these are my dear friends from Apple Guerin Company. Robbie, Jude and Todd. And turned out that they hosted me not only once, but they hosted me twice at LSU football games. One year it was against the University of Arkansas and the other was the LSU Alabama game where I got to tailgate with two hundred and fifty thousand of my closest friends. It was amazing.

So we found out that UCLA was going to be hosting LSU at the Rose Bowl over Labor Day of twenty twenty one. So we started planning this about a year ago and it turned into ten of them came out, including Robbie and Robbie's husband, wonderful Robbie. I'll be all right. Robbie's wonderful wife, Jessica. And they came out with eight other people from Baton Rouge, bunch of couples. And we had the music going on the party bus and Louisiana music.

And, boy, those guys know how to have a good time. And we went to the LSU, I went to the LSU tailgate party and we went to the football game. Unfortunately for the LSU folks, UCLA was a little better on Saturday than LSU was. They won the game, but we had a great time. So shout out to my good friend Robbie Apple and his wife Jessica. We had a great time at the football game, took me about two days to recover from that.

So with that said, let's give you a little information. We talked about the ADCPA. Twenty four CPA firms across the United States that represent over ten thousand dentists. Go to our website that www.ADCPA.org for the member in your area. I am a dental division director with Eide Bailly. Very, very proud to be part of Eide Bailly, been part of Eide Bailly now for just over a year. Eide Bailly is, I believe, we're the number 19 size CPA from the country. Offices across the western United States.

We in Tustin represent about three hundred dentists, dental practices in Eide Bailly all together. We're approaching a thousand dentists across the western United States. So if you ever want to get a hold of me, you can either email me at awiederman@EideBailly.com or you can call me at six five seven two seven nine three two four three.

Also, check out our wonderful partner, Decisions in Dentistry magazine. Go to their website www.DecisionsinDentistry.com for fantastic clinical articles, content, over a hundred different continuing education courses for a very, very reasonable price to get your CE. A who's who of dental professionals and clinicians are on their board. So again, go to www.DecisionsinDentistry.com.

For those of you who have not filed for your PPP round one forgiveness, you may very well at this point be late unless you got your loan in June or in June of twenty twenty, you may be late. That is not the end of the world. You can file for forgiveness. You might just have to start making some payments. And if you do get full forgiveness, they will give you back all the payments you made, including principal and interest.

If you have not filed or looked into the employee retention tax credit, if you either were shut down by a government mandate that said you had to shut down or more likely, more than likely, you had a greater than 50 percent reduction in your gross revenues in any quarter, probably the second quarter of twenty twenty. We have now gone over the three million dollar mark just in our office in Tustin of getting tax credits for our clients and people that are not clients.

So, if you think that you might have had a greater than 50 percent reduction, give us a call, shoot me an email, we'll send you out an intake form. We'll do a complimentary analysis for you. And the average credit we're getting is about forty two thousand dollars, which is free money in your pocket. The government's giving it out. So do take a look at that.

Also, you want to start going on to the HHS Provider Relief Fund portal and website to look at the rules. Because as of January one, which will be here before you know it, you are going to have three months from January one until March 31 to report your money, how you spent your money. Now, there's two ways you're going to report. One is you're going to talk about what you used the money for to prevent and fight covid-19.

And the other is to report your lost revenues for the reporting period, which for you will be twenty twenty. You have until March 31st. If you received more than ten thousand dollars, if you got more than ten thousand dollars after June 30th, after July one and before December 31st, you have to report in the first quarter of twenty twenty two if you received more than ten thousand dollars from April 10 of twenty twenty, which is when they started sending money out through June 30th, you must report. I repeat folks, you must report to the HHS on or before September 30th.

And if you have any questions about the Provider Relief Fund, we at Eide Bailly are on top of that too. Send us an email at PRF@eidebailly.com, or shoot me an email and we'll get your questions answered. But start gathering your information it's really, really important.

All right. So we talked football, which is very important, and we talked to HHS and PPP, which by law required to do or they throw me off the air. So now I want to get to our topic today. And our topic today is couples and communication about money. And I have spent my professional career counseling couples who, you know, many times one of the spouses is a wage earner, is an owner of a dental practice, the other spouse is a stay at home mom, stay at home dad. We see them both. And there's lots of conflict.

When I see people sitting in my conference room and we talk about money and we talk about retirement, I will see one couple get all animated about, well, I don't want to work forever. And then the other one just sits there and they don't say anything. And I can tell that this couple has not spoken about money. So I'm going to give you some tips tonight. Just kind of tips from my experience and things I've read and things I know about what you should be thinking about.

Are there any magic bullets? Know the number one thing you have to do, folks, and I'm going to say it over and over again tonight is you need to talk about it. You need to communicate. It's not the elephant in the room. It's, you know, how do you approach it? I mean, how do you approach talking to your spouse? We're going to talk about that a little bit tonight.

So let's start out talking about couples who are thinking about marriage. Maybe you're living together, maybe you're dating and it's looking like it's going to go the distance. Or maybe you just got married and you haven't really started. And I always share, you know, personal things on this podcast with my listeners. And when my wife Lynn and I got married in May of nineteen eighty five, thirty six years ago, this podcast will be recorded, will air on, I believe, the fifteenth of September.

So we're going to be leaving the next week for what was supposed to be our 35th wedding anniversary trip. But we all know what happened to trips in twenty twenty don't we. So you know and we got married back then and you know, my wife was working as a graphic artist and I had just started off as an accountant working for Deloitte Haskins and Sells back in the early in the mid eighties. And we were both two young people trying to get started in life and make it and, you know, get your first house and do all that kind of stuff. We did talk about money.

So the first thing you want to do, folks, is you want to talk to your spouse about your philosophy of money. What does it mean to you now? Money means different things to different people. To some people, how you can accumulate as much money as possible is a game. I want to find multiple sources of income and multiple types of investments. And they just get their jollies out of how can I build my wealth. Not that I know what I'm going to do with it, but just to build it.

We have people that are spenders, you know, what do they know? Where do they get that? And remember, folks, you get a lot of this from your parents, the experiences of life, you know, whether you work hard, whether you learn and go to school, whether you what type of a parent you're going to be. A lot of it comes from your parents because, you know, that's all you had to learn from.

My parents got divorced when I was five years old, when we were living in New York and my stepdad, he taught me one thing that I never forget, which is don't get your hands stuck in your pocket, Arthur. He would always say that and we never get our hands stuck in our pocket. Always reach for the check and stuff like that, whether we have the money or we don't. But what's the philosophy? Are you a spender? I've always been a saver. And the reason I've been a saver is, unfortunately, folks, I've been privy to watching dozens and dozens of couples and dentists go to work and work into their 60s and 70s and have nothing.

I had a dentist that I was actually going to sell the practice and he was in his early 60s. This was up north of Los Angeles. And I said to him, I said, so before we do this, how about you have enough money to retire? Well, I have one hundred thousand dollars in savings. So you're sixty two years old and you have one hundred thousand savings. So what are you going to do? Well, I'm going to get a job working for one of them and sell my practice, get a job for one of the big dental companies. And I said, well, I don't know how that's going to go. They don't normally hire older doctors, but maybe you'll get lucky. And, you know, then he told me, well, you know, if that doesn't work out, maybe I'll day trade. And I just shook my head.

So, you know, I over the years have seen this. And I see people who don't save and don't think about it. They just are living for today. And I know how hard you guys work and I know how physically demanding what you do is. I can sit at a desk until I'm 90 and for the benefit of many of my clients who was in this podcast, unfortunately, guys, I won't be working with you when I'm 90, but I could because it's other than having a little arthritis in my fingers, it's not a big deal to do what I do. And keeping my brain sharp is something that I always like to do.

But you as dentists, you have neck and back and shoulders and hands and carpal tunnel and all these things that you have to deal with. So I got to the point where I said I am not going to be someone who's going to get to the age of 60 and not have any money. So I started saving as much as I could. And we're going to have a little example about when you're married later in the in the broadcast about just kind of some ways you should think about it.

So are you a spender or are you a saver? You need to talk about that. And the most important thing that maybe I'm going to tell you tonight is you cannot be judgmental about your partner. All right, if you're a saver and we know saving is good, but your partner couldn't care less about saving money. They just want to take an expensive vacation. They want to have a nice car. They want to have a nice new whatever it is doesn't matter. So you can't be judgmental.

What you have to do if you want your relationship to work and I've seen this in my conference room over and over again is you must be respectful of your spouse. OK, honey, I understand that you want these things, but the fact of the matter is, is we can't run up credit card debt because the interest rates are 20 percent and we are never going to get out of this. So we need to do some compromising. We need to do some negotiating, if you will. OK, well, you know, you want these nice things, maybe we can get one of them or maybe I can go out and make more money, or maybe you can go out and get a job part time.

These are the conversations that you must have, hopefully before you get married or before it gets too serious so that you understand each other. OK, here's the next thing that's really, really important, folks. You need to disclose to each other how much money you have, how much do you have in savings, how much money do you make. I'm going to give you some statistics here later that are going to boggle your mind. OK, how much do you have in savings? And most importantly, how much debt do you have?

I've run into couples where husband and wife will be sitting in my conference room and husband leaves to go to the restroom and the wife says he didn't tell you how much he'd run up in credit card debt, did he? Well, he's probably not going to, because he won't tell me. And I get that. I've had that happen at least five times. And that's very, very difficult to counsel a couple when that happens. As soon as you think that the relationship is going to go the distance, whether it's dating, whether you're engaged. OK. If your significant other talks to you about debt, like I was saying, don't be judgmental. Talk about how can we manage that debt?

OK, sweetheart, I am in this for the long run with you. OK, we have this 20 thousand or thirty thousand dollars in credit card debt. Let's sit down and make a plan, not only how we're going to pay it off over time, but how we're going to make sure that we don't run it up. What's a great way to do that? A great way to do that is to get yourself credit cards that you either have to pay off every month. American Express has one of those, or get yourself a credit card that only has a limit of, I don't know, five thousand dollars a month, six thousand dollars a month, ten thousand dollars a month. I don't know for you what that is.

But we need to talk about our goals as to how we're going to get this debt paid off and how are we going to go down the road in the future. It's so easy to walk into a store and hand that little piece of plastic to the person behind the counter and buy things that cost five hundred, a thousand, fifteen hundred dollars, because guess what? You don't have to pay for it today. It's not coming out of your checking account. Your checkbook is not going to bounce because you can make that minimum payment every month. Thirty nine dollars. And you don't want to do that because you can't get out of that.

And it's just so you need to communicate with your spouse again, not be judgmental, talk about how we can work as a team. This is a teamwork thing. OK, this is a two person team. How are we going to live within our means, save some money, put money away for our children's college down the road and put money away for a nice trip, a down payment for a house and things like that.

So before you cement a permanent relationship, I want you to think about these things and I want you to ask your significant other some of the following questions. So what happens in the relationship if your partner loses his or her job and needs support? So are you going to be resentful about that? You're going to work every single day, your spouse, or your significant other is going and trying to get a job interview? What's going to happen if Wednesday your significant other who's unemployed they didn't go on a job interview? Or they maybe they went to the beach because there was nothing going on. Are you going to be resentful about that? Talk about that, folks. Talk about what happens. Life happens. People lose jobs. I mean, we saw that in March of last year in the pandemic and people were laid off. And I mean, life was just turned upside down. And it can happen any time.

What if your partner comes to you one day and says, hey, I'm making one hundred and fifty thousand dollars a year, I'm in sales. But you know what, I really want to be I've always wanted to be a veterinarian, or I want to be a dentist, or I want to be an accountant, or I want to maybe not an accountant. But anyway, I want to do something else and I want to go back to school. Is the spouse who maybe isn't making as much? Are they going to be supportive if you go from an income of maybe two hundred thousand dollars a year between the two of you, down to seventy five thousand a year, but maybe your spouse is going to go back to school and get a degree or an advanced degree or go to a professional school so that he or she can make a lot more money and be happier at what they're doing? How do you feel about that?

You need to talk about these things. I mean, it happens mid career. One of my dear, dear, dear clients who we lost about a year ago, Dr. Ross Crist, who lived in Sioux Falls, South Dakota, and I loved Ross and his wife, Lisa. They were just two of the most incredible human beings. You know how you have patients, doctors that you just, this is why you go to work? Well, Ross and Lisa were the people that this is why I go to work. And in the middle of his career, he was a general dentist for 20 years in Torrington, Wyoming, with his partner, his business partner. And he came to me one day in the late 80s and he said, Art, I don't want to be a general dentist. I want to be an orthodontist. I have wanted to be an orthodontist since I'm five years old and I just couldn't get into a program.

So what happened with Ross? Ross went and applied to every program. And as many of you may know, it's very hard to get into specialty programs, most universities who have specialty programs, perio, endo, ortho, pedo, they only accept two or three people a year into their programs and there aren't that many across the country. So he finally, finally got in. They lived and they were living in Wyoming. They moved. So he found out that he needed to get teaching credentials in order to have the resume to get into an ortho program.

So what happened? He went and got in at the University of West Virginia. And so Lisa stayed home and raised their two boys and supported him one hundred and fifty percent. And they begged, borrowed and steal, stole, if you will. They didn't steal. But they did what they had to do. And the next thing you know, Ross became an orthodontist and became one of the most successful orthodontist in the state of South Dakota. And they lived a wonderful life.

So she was unbelievably supportive of him. And God bless her. She was a wonderful, wonderful lady. What if your partner decides to become a stay at home parent when you have kids? I mean, you got to talk about your philosophy about children. So and again, I'm not a child psychologist, but I raised two boys and I was very, very fortunate that my wife, Lynn, was able to stay home, for the most part with them pretty much once my oldest got to be about five, I was doing well enough. I said, you know, sweetheart, if you want to stay at home, that's up to you. But we can do that now. We've got enough making enough money to do that.

But you know what if one of them says, I want to be a stay at home parent, what's that going to do? Number one that's going to cut your income, which means you're going to have less money to do stuff. Is that good for the kids? Great. But is the other working spouse going to be resentful if the stay at home parent wants to go buy a new car, wants to take a trip, wants to do whatever? You need to talk about that.

The next thing that you really need to know about communicating and again, I keep saying this is the most important thing, so this is also very, very important. Don't ever, ever lie to your spouse about money or debt, you shouldn't lie about anything. My good friend Dr. Phil Potter always taught me something that the truth will set you free. I have a really good friend who's a clinical psychologist who told me, you know, I was talking to him. I said, my biggest pet peeve is people who lie or they do something wrong, they just won't own up to it. And my friend's answer was, Art, get over it. People don't do that.

But you should not lie about money or debt to your spouse. If you have run up credit card debt, if you have financial issues, if I mean, there might be one spouse who handles the finances and the taxes. I had one spouse who hadn't paid taxes for six years and his wife had no idea. And it was when they actually told her in the conference room, my gosh, I thought there was going to be a fist fight, I really did. And this is God's honest truth. Don't lie about money or debt.

If you have a problem, if you have a gambling problem, you have a God forbid. I've had ones I've had drug and alcohol. And they run up debt and they find a way to get money to support their habits and try to be truthful. You need to be truthful with your spouse about money or debt. And again, spouses, if the spouse that has a problem comes to you and says, oh, honey, I've been afraid, I've been so afraid to tell you, but I've now got the courage to do this. I have a gambling problem and I owe one hundred thousand dollars on credit cards.

What you as a supportive spouse need to say, in my opinion, is. Oh, my goodness. OK, we're going to deal with this together. We're going to work through this. We're going to get you into a program to make sure that you get healthy when it comes to that. And we're going to sit down with a financial planner and figure out how we can get out of debt. It's not going to happen overnight, but we're going to have a plan and we're in this together. And as long as you do your part, which means you get some help, I will do my part, which is to be one hundred and fifty percent supportive. That's what needs to happen.

What doesn't need to happen if one spouse admits to debt or admits to overspending or admits to not paying taxes or whatever it is you know. Yelling and screaming and why did you do this, and you're horrible person, I've seen that too. And your marriage will end. It'll go up in flames. Because as we've talked about over the course of the two and a half years of this podcast, the number one reason that spouses get divorced is our finances, in fact, according to a study done by SunTrust, money is the number one cause of financial stress in couples and marriages.

Twenty two percent of divorces are caused due to disagreements on finances. That was a study done by the Institute for Divorces Financial Analysis. So we hear about that. Some people say, I mean, 45 to 50 percent of all marriages do not go the distance. And of those, like I say, about 20 to 30 percent of the reason for divorce has to do with money. So don't lie, be honest, be supportive, work together as a team.

OK, what are you going to do if one spouse makes more money than the other spouse? Is there going to be resentment? I have a couple where one of the spouses is a dentist and that dentist does very, very well and the spouse works in another industry. They work in sales and the dentist makes probably twice as much money as the spouse does. And what's great when I sit with them is they talk like it's a team, like it's our money, OK, we're going to work together.

The spouse that doesn't make as much money in this particular relationship would always say to the one that's making the more money, are we good? Is everything going well? Do you have everything you want? And when you're supportive of each other like that and one spouse is not resentful that they make more money than the other spouse or resentful if they make less money, maybe there's an excuse. Oh, well, you just always had it so easy. I've heard this too. You've had it so easy in your life and your parents were rich and you were able to go to the best schools. And I had to struggle through community college. I get that. I understand that. And I've heard it in my conference room.

So one partner makes more money and wants a bigger house or nicer vacations. OK. Can we afford it? That's why it's important to set a budget. We'll talk about that a little bit and decide who pays for what and discussing long term financial goals. So, you know, in any financial discussion, you have. Goals, setting goals, debt, debt levels. How much are we going to spend every month? Make sure you listen. Don't be judgmental and come to a compromise position so both of you are happy.

A budget is really important for young couples starting out, because once you get into the habit of putting things on credit cards, you will never get out of it. It's like a treadmill. It's like the little, um. Yeah, it's a treadmill. It's horrible. You just can't get out of it. Here's some other interesting facts I found. This is from Forbes magazine. One. And now we're talking about not even sharing information. OK, so we talked about lying. We talked about, you know, working as a team, but there's lots of couples to keep their finances separate. We're going to get into this conversation now, and that's OK.

One in five people keep and manage their money separately from their partners, whether they are living together or they are married. One in five. An even greater percentage twenty four percent don't share any major financial account information or accounts, including a checking savings, credit card or mortgage account. This one blew me away when I read this, almost 30 percent of couples don't even know how much the other spouse in their marriage earns. I mean, I can't imagine not knowing how much money my wife or my husband would earn. I mean, you both look at the tax returns, right?

And, you know, I want to stop here and talk about something else. A lot of situations in this life when it comes to finances, it's one spouse that handles all the finances and maybe it's for convenience. Maybe it's that the other spouse doesn't want to. I am the CPA in the family. I handle my I handle the family finances. I pay our bills. Um, my wife has her own separate account for her business as a professional painter.

And, you know, but what we have you know, we've talked about how much do I want to save, how much do we need for retirement? And, you know, we just talked about in the last several weeks where I finally got to the point, I said we need to do some remodeling on our house. And so we're going to do that. And she's real excited about that because I don't ever do things like that. But we're doing this now. And it was a conversation about what do you want, what's important to you? And that's what that's really what needs to happen.

So let's talk about if you keep your finances separate, how's that going to work? OK, you need to discuss how are you going to share your major expenses like rent and food? You know, is it going to be based on who earns the income? Is it going to be 50 50? Because if you keep your finances separate, right. Well, you know, the person that's making more money is going to say, wait a minute, wait a minute, we're going to keep our finances separate. But I live in half of the house, just like you live in half of the house. Why? I make 70 percent of the money. Why should I pay 70 percent of the mortgage? That's not fair. And that's where you get into trouble.

OK, so this is where you put your heads together and you talk about, OK, together we make one hundred and fifty thousand a year. Together we make two hundred fifty thousand a year. And I've got an example coming up here how to think about this. So, you know, just I always like the term. Honey, what do you think is fair? And then you're listening instead of well this is the way I make more money than you do and this is the way we're going to do it. And that's how you're going to end your marriage and then you're going to end up losing half your stuff in most states, maybe even more.

So if you keep it separate, you get to discuss how are you going to share it? How do I like to share it? I guess it really depends on your philosophy of money. If you are all for one and one for all, then you throw it all into one pool and you say, OK, we need this amount for this and this amount for this, and maybe you don't have enough. But you know what you want something. I love you. I'll kick in for it. That works the best. Do you have separate accounts or joint accounts?

We have like I was saying, there's lots of couples who every single bank account is separate. They each write a check for a percentage of the mortgage payment. They write a check for part of the food bill. They put it into a kind of a joint kitty. To pay joint bills. In thirty six years of marriage, the only separate account we have is an inheritance account, which I said this is an inheritance that was my wife's. And I said, this is your money. I want you to have it. I don't my name is not going to go on it and it's all yours and whatever you want to do. And she says, well, what's yours is mine, mine is yours. And that's the communication that we have.

OK, agree on your priorities. Right. Talk early about your priorities. Do you want a house? You want kids, OK, if you want a house, how big, how much do you want to spend? Where do you want to live? What do you like to spend money on? So Art here. I am one, as I've told you before, I've owned four cars since the age of 20. I'm now 62. I've owned four cars in my entire life. My current car is now over two hundred fifteen thousand miles. The check engine light comes on every once in a while. The back windows don't go up or down. Now, it makes a weird sound, but the car runs really well and I don't want to buy another car. Can I buy another car? I can buy any car I want, but I don't want to.

OK, but what do I like? I like really nice vacations. I like to go to nice places. I like to go to places I've never been. I've got bucket lists and when I go I like to go nice. I don't like to go cheaply. That's what I like to do. OK, I'll go to lower end stores for clothes. My favorite joke for myself is that my definition of shopping is to lay down until the feeling passes. I hate clothes shopping. I think clothes shopping should be made illegal and outlawed, but many of you probably don't feel that way.

OK, my two boys don't feel that way. My two boys dress really, really well and they say, look at Dad and say my youngest Forrest was down last week. He was down for the football game and he says, all right, dad, we're going to go to the mall. And the number one priority today is to get you new shoes. So dressing well, and he dresses exquisitely and God bless him for it. He looks great every time I see him. But he's trying to help me. And I know. And he's right. And I should. And I will. I promise. I promise. Wiederman family I'm going to do better, OK?

Public or private school for the kids. Big difference, folks. OK, I you know, public school is not very expensive. Private school could run ten, fifteen, twenty thousand dollars a year. Is it worth it? That's a decision I can't make for you. But where is the money going to come from? It's got to come from somewhere. How important is retirement and college savings to each of you?

You know, there are people who are twenty five or thirty years old, you're just getting started. Thirty five, forty even, you're in the prime of your career, the last thing you want to think about is retirement. But you've got to do it. You've got to do it because we never know what's going to happen in this life.

As a dentist, you know, I just saw a very prominent dentist, you know, someone in the Midwest. Forty five years old at the top of his game. The neck went and he's done, yeah, he's not going to be a dentist anymore. He might teach, I don't know what he's going to do, but he's done. Absolutely done. And you need to plan for that.

All right. So how about once you get married or you've already been married? Let's start off again. And I've used this before and I'm going to use it again. Let's talk about my sixty five, twenty five, ten rule. At the beginning of every year, I want you to set a budget. So let's take an example. Let's say that between the two of you, you're going to earn three hundred thousand dollars before taxes and any of your expenses.

All right. So my sixty five, twenty five, ten rule says you're going to live on sixty five percent of what you make. You're going to pay about twenty five percent of your income in taxes. And don't say to me I'm in a 50 percent tax bracket. No, no, you are. Remember, we've talked about tax brackets. You've got a marginal bracket, which means every additional dollar that you make may be taxed at thirty two percent federal and 10 percent state. I don't know. Depends on the state you live in. Or you might live in a state that doesn't have a state income tax. But on the average, you're going to pay about twenty five percent of your gross income in taxes.

So sixty five percent for living expenses. Twenty five percent for taxes and 10 percent what we do is for savings. And I've used this before on the podcast. How about my clients that use the ninety, twenty five, minus 15 rule? They live on 90 percent of what they make. They barely squeak by and they owe the IRS money all the time and then they put money on credit cards. And that's not what you want to do.

So my example is we make three hundred thousand dollars projected for the year. That may be just the dentist with a stay at home spouse, or that might be the dentist and his or her spouse working at a job outside or might be two dentists. So taxes are going to be let's just say they're eighty thousand dollars leaving you two hundred twenty thousand. We are going to put into the budget out of that three hundred thousand. Not negotiable. Signed, sealed and delivered. We are going to put away forty thousand dollars for retirement because that's a priority to us.

Now, it might be thirty thousand dollars and maybe ten thousand dollars for Junior's college education, he's now one year old. That leaves me one hundred eighty thousand, so I had three hundred thousand for income, eighty thousand for taxes, left me do 220, retirement, 40 thousand leaves me one hundred eighty thousand. That's fifteen thousand dollars a month. So that's our budget.

Now, what do we have to pay for out of our budget? We pay for a lot of stuff. I want to encourage you that before you even start with a budget. Your first budget item is going to be putting money into a personal savings account, get into the habit of saving money every week, every month, every two weeks, maybe you take two hundred and fifty dollars a week and you put it into a savings account. Maybe you do that. And now that's a thousand dollars a month. That's twelve thousand dollars a year.

Remember that we want you to have an emergency savings fund, folks that represent somewhere between three to six months of your personal living expenses. So, for example, if I'm telling you that we're talking about fifteen thousand a month, three months of personal living expenses or forty five thousand dollars, six months would be ninety thousand. So maybe you have a goal of sixty thousand dollars to put away into savings. It might take some time to get it done. Maybe it's a thousand of us. Now that leaves you fourteen thousand.

So how much is your house payment? Rule of thumb on a house payment? One week's take-home pay. So what's one week's take home pay on we said our take home pay after taxes and savings is now maybe we say it's fifteen thousand a month. That's thirty seven hundred and fifty dollars a month for housing. If you have a seven thousand dollar a month house payment, you're going to bury yourself.

So let's knock out the other big expenses, how about car payments? Well, it depends on car and your philosophy on cars and people get all messed up over that. So in Art Wiederman's mind, a car is something that gets you from point A to point B. Nobody is going to be impressed with the kind of car I drive. We live in Southern California. Everybody drives a Tesla, Mercedes, BMW, Jaguar or whatever it is. Nobody is ever going to be impressed because you drive a fancy, schmancy car because guess what? Half the people in your neighborhood also drive the same fancy, schmancy car.

So, you know, do you do you go and buy that fancy car? Do you lease that car? That's another podcast we're going to have at some point. So how much you want to spend on a car? You can get a car with a car payment of five hundred dollars a month, get a car with a car payment of fifteen hundred dollars a month. That's up to you.

Student loan debt. OK, that's another big deal that we got to put into the budget. So after all that's done, we have this amount of money just left and we go down to how much do we spend on food? You know, I had two children. They ate me out of house and home. Food bill was high. Do you shop at the expensive market or do you shop at the regular market? Do you save money? It really depends.

If you make a million dollars a year, you can shop wherever you want. If you're just getting started, maybe you can't. And I'm going to say this again. Try really, really hard not to run up credit card debt. So that fifteen thousand a month. Am I going to say to you now you need to make sure that your credit that your that your cable bill is no more than two hundred and twenty two dollars and fifty cents? No, I'm not going to say that because you're going to have unexpected expenses come up.

Your dog or your cat is going to have to go to the vet. You're going to have to go, you have to go to the doctor and pay copayments. You're going to have to buy a new dishwasher. I mean, this is life, folks. Life happens. But as long as you have a pretty good feel for how much you have and as long as you agree on these things, we get back to vacations.

How many vacations a year are you going to take? Where are you going to go? Are we flying first class? Are we going to stay in an Airbnb or are we going to stay at the Ritz Carlton? The Montage, I mean, where are we going to stay? These are things that we need to talk about. All right.

If you if you're running into some problems, but you see things that are going to get better, OK, you might consider using a home equity line of credit to consolidate your debt. But I have seen so many couples and this drives me crazy. OK, OK, so this is this is it. We owe $80,000 credit card debt and we want to remodel the bathroom. So now we're going to take out a loan for one hundred twenty thousand dollars. And so we're going to and we're going to refinance. And the interest rates are really low. And this is great. And it's going to cut our payments because right now we're paying like five thousand dollars a month in credit card monthly payments and our payments down to twenty five hundred.

But what's going to happen? Are you going to run those credit cards up again and that's what they do. And three years down the road, they come back to me and they say Art. OK, so who do you recommend for refinancing? We ran up the credit cards again. This is about communication and living within your means.

Another thing I like to have couples do is to pay the bills together. You don't have to do it every time. But sit down. I love bank bill pay. I sit down once a month with the bill pay. I go click it on. I have all my vendors in there. I sort out my bills, I sit down and, you know, I usually do it by myself. Sometimes I'll say to my wife, by the way, did you know we had this and this bill and what have you? And she knows and you know, that works out just fine. But pay the bills together so that you know what they are. And maybe your spouses can say, hey, wait a minute, I heard about this in the service that we can get this cheaper and we can get the same service.

Go to financial meetings with advisers together, this drives me nuts, I have I'm going to say 20 percent of our clients that come to see me. When they come for their year end meeting, they just come by themselves because the other spouse doesn't. They're not interested. They don't know.

And let me take a digression for a second here, if you have a couple where one spouse is handling all the finances, deals with all the taxes, deals with the accountant, pays the bills and the other spouse has absolutely no idea they have a credit card, they know how to use that really well, but they don't know what they have. OK, sit down with your spouse and write out a net worth statement. I have a letter. It's in three places. It's in my safe. It's in my desk locked up with my long term secretary, knowing where it is. And it's in a drawer somewhere.

And my wife knows that if she has to open this letter, the letter starts something like this. Dear sweetheart, if you have to open this letter, it means that something very bad has happened to me. I've died. These are the people that you need to talk to. The first person you talk to is your estate attorney. Who will tell you what you know, where how your estate is set up and how to transfer assets and what happens there.

The second person, is your CPA very important. Your CPA knows everything about your finances. They can work together as a team with your estate attorney and your investment adviser, your financial planner. So those are the three team members that you need and probably also an insurance agent. Those are the team members that need to work together.

But if you don't go to financial meetings together and you don't know what's going on with your investments and you don't know how much in taxes you're paying, I mean, I've had situations where a spouse will come for the first time in five years and they'll go I cannot believe I have not come to these meetings, I have learned so much from you Art and this is not about me. I'm just saying they learn a lot.

So go to financial meetings together, even if maybe part of the time you're sitting there doing a crossword puzzle, you need to listen to what's going on. It's OK if one spouse is more on top of financial matters than the other spouse, it's OK. It's not a big deal. It doesn't bother me as long as the spouse that's not on top of everything knows what you have, knows what your assets are, knows what your debt is, knows what the budget and the plan is, and is part of the team to make sure that it happens.

As long as you both know what's going on and you discuss financial issues together, you can't lose. Agree to disagree. This is another thing I love. OK, maybe one spouse wants a new car. That's really, really expensive. And the other spouse says we can't afford that. It's not in the budget. Now, could it be in the budget? Sure. You know, if it's that important to you, sweetheart, that you get that car, that's fine. OK, where are we going to cut back on other things? Because we can't afford that extra thousand dollars a month car payment without cutting something out.

Well, OK, I won't go to Starbucks three days a week and spend fifteen dollars. So that's forty five dollars times four is one hundred eighty. Well I got you 20 percent of the way there paying for the car payment. I'm going to work a couple more hours at the office. I'm going to maybe look for a higher paying job, make more money to pay for the car. These are the conversations that you've got to have with your spouse.

You don't just say, well, I want that car and I'm going to get that car. Do you understand? I've heard that, too. OK, yeah. We want you to have everything you want in this life because we're only on this planet for a certain number of weeks, months and years. But you got to be able to afford to pay for it.

OK, like I say, maybe the spouse who wants the more expensive car is going to spend less in some other areas. Maybe, you know, maybe if the husband wants to go and buy the expensive car, maybe he will only play golf twice a month instead of four times a month. Oh, did I just say that. Oh, my God, no. I didn't just say that. Golf is off the table. By the way, any financial matters that you have, golf is off the table. Just, you know, just kidding.

Talk about how finances are going to change once you have children. So I had two fears when I had my first child. The first fear was financial. Oh, my God, now I have another mouth to feed. And then I found out that when you have a kid, your entertainment budget goes down to zero because you don't do anything because you're home taking care of the kid. So, you know, that's one thing to consider. The other was sleep deprivation. And I was very lucky that after six weeks, they both slept through the night.

But you have to talk about finances. Are we going to start saving for college, or are we going to be spending money on the baby's room? Are we going to be spending money on more clothes, things like that.

So if one or both spouses are self-employed, I believe that each spouse should have the full access to look at the other spouse's sets of books and records for the business because you'd be shocked at what gets buried in businesses, folks. I'm a CPA. I know how the rules work. So I think that each spouse, if you're both self-employed, should say to the other spouse, listen, this is how I'm doing. Let's say once a month I'll show you how my business is doing. You show me how your business is doing. Oh, well, I got an extra twenty thousand dollars in the account. We're having a really good month.

Oh, OK. Well, you know, we talked about taking that trip to Hawaii or that trip to the Maldives or wherever you're going to take that trip. Maybe now's a good time. If you know how much everybody has and you know what your philosophy about money is that you're not going to be resentful if your spouse doesn't make as much money and you've got the money, but they want to do things. If you have those situations, you might want to consider some going to a counselor and having the conversation with them if you can't talk to each other.

But if you don't communicate about money, something is going to hurt your marriage and it's going to be the finances at some point. Here's another one that I like marriage, in my opinion, is about unconditional love. Don't try and change your partner's philosophy about money, OK? Know I am there are things I just won't spend money on and my wife knows that. And there are things that my wife wants to spend money on, and I know that. And I don't try and change her philosophy and she doesn't try and change my philosophy, that will not go well, right.

Communicate about your philosophy, communicate about your concerns. If your you know and again, I'll just put one example out of the air. You know, I want to play golf once a week with my friends on Saturday, and that costs one hundred dollars. That's four hundred a month. That expense is really important to me. My wife might say, I want to go and get my hair done twice a month or once a month, and that's going to cost three hundred dollars. I don't know. I have no hair so I don't know. My hair care is twenty dollars about every two months and takes about 20 minutes. But if that's what's important to her, that's what I want her to do because it makes her happy and my golf makes me happy.

You don't want to be, you know, trying to change. Well, you know what? You don't really need to play golf. You complain about how bad you play. Yeah, but I like it. Don't do that. You should be meeting at least once a month. You could go to your favorite breakfast restaurant on Saturday morning, go over your budget. It does it have to be on an Excel spreadsheet perfectly balanced. No, it doesn't. You say, hey, we brought in twenty thousand dollars last month. We paid six thousand dollars in taxes because we paid our Quarterly's or we paid our withholding, you know, after our car payment, the house payment, hey, we're actually had three or four thousand dollars.

And guess what, if you've got financial goals and maybe after six months, you've saved that thousand dollars a month into your emergency savings account. Or what if a year ago you guys had fifteen thousand dollars in credit card debt that you just thought you were never, ever going to pay off and you worked really, really hard with each other and you scrimped and saved and you paid off that credit card and you ripped up that credit card because you never wanted to deal with it again. What should you do? You made a financial goal and you better reward yourself.

OK, it's kind of like losing weight. If you lose 20 pounds on your way to losing 40 pounds. OK, are you just going to continue on your diet or maybe you reward yourself one time if you have the self-control to do it? Same with money. You guys paid off those credit cards. We put fifteen hundred a month like clockwork. Like clockwork. Into that credit card, and we got it paid off in 10 months or eight months or whatever it was.

So here's what you should do. Next month take that fifteen hundred dollars a month and go treat yourself to something. It might be a really nice three day weekend with dinners out and a massage for each of you at a resort. It might be treat yourself to a special event, OK? Maybe you treat yourself to a VIP show. Go see your favorite. Now that they're doing concerts again, go do that. Treat yourself. Maybe take a trip. Maybe there's some out of town friends you've been talking to for years about, oh, you got to come and see our new house in Texas or Oklahoma or Mississippi or wherever it is, get on an airplane and go visit them and spend some time with them.

Reward yourself for success. You guys met a goal. You set that goal. You worked really hard to meet that goal and you met it. Now, before we move on to the next goal, reward yourself. Because if you don't do that, you may not want to meet the next goal. But it's always nice to give yourself an attaboy, a treat.

And by the way, folks, if you have a spouse who's maybe changed some financial behavior, maybe that spouse now isn't spending as much on his or her credit card, or maybe that spouse isn't spending money on things that really didn't meet the cause, whatever that would be, you must let them know. Boy, oh boy. Susie, I'm telling you, I'm so proud of you. I know it's hard for you to give up golf. I know it's hard for you to give up this or it's hard for you to give up that. But I'm so proud of you that you did that. And it's very important that you know that that I'm proud that you did that.

So. Let me put a bow on this for you. I hope this has been helpful to you again, everything I do is a call to action. I did. I give you every single answer to every single problem you're going to have with your spouse as far as it comes to finances? No, I didn't, but I gave you some things to talk about. So what if you and your spouse have never communicated? What if you've never communicated with each other about finances? Well, here's my first rule, there's never a better day than today to start.

How do we start? Start with sitting down and looking at what you have, how much money do you have in the bank, how much is in savings, how much is in credit cards? And then start talking about, um, you know, talking about your goals. When do you want to retire? Um, what do you want? Do you want to have a second home? Uh, do you want your kids to go to Yale or Harvard or Stanford or something like that. I mean that's going to cost a couple of dollars. Do you want that really, really nice car that you got to drive in one day? And you just said, this is what I want. Communicate.

Set the ground rules. If you haven't. If you're in your 30s or 40s and you've never talked to your spouse about money, set the ground rules, OK? Nobody will be scolded. Nobody will be criticized. Nobody will be held accountable. You will listen to the other spouse. If the other spouse says, well, it's really important for me to have that really fancy car and you're sitting in your mind and you're looking and saying, are you freaking kidding me? Are you really serious that car is so important? You must respect your spouse's wishes as to what they want and say, OK, I want you to have that. But, you know, and you can use this, by the way, and say Art Wiederman came up with this, our life is a math problem because that's exactly what it is.

There's got to be enough money to do all of this. And if there isn't enough money to do all of this, then you're going to put it on credit cards and there's going to be stress and you're never going to meet your financial goals. So nobody gets scolded or criticized. You're held accountable. Start slowly. Don't say, OK, well, we're going to save our house, we're going to have two years are going to have the kid's college funded at two hundred thousand dollars, and we're going to get these two new cars. Don't try and do it all at once.

It's kind of like when a patient walks into your office and they've got all kinds of dental issues. Do you lay down a fifty thousand dollar treatment plan with six different parts of their mouth, or do you attack it in bite sized pieces and you say, OK, Mrs. Smith, the most important thing right now is this tooth, because I'm really afraid we're looking at a root canal if we don't do some really quick treatment here, the other things can wait. The same with your finances, OK, the same with your finances.

Let's start by getting out of debt. Let's start by establishing that emergency savings fund. Let's start by saving for a down payment for a house, because that's a goal that we both have. And finally, folks, well, two things finally, number one, be truthful, take responsibility for your past mistakes. Do not be critical again of your spouse if they've made a mistake. People are human. They make mistakes. Don't hesitate to say I screwed up. I'm sorry, and if someone does that, you must give them a hug and say, Sweetheart. We're all human. It happens and we're going to get through it together as a team.

And finally, the last thing I want to point out is. If you need help, don't hesitate to ask. There are wonderful financial planners out there, certified financial planners, people that are not certified financial planners, there are people that will sit down with you and they will help you to meet your personal financial goals. And they know how to do it. We do it at Eide Bailly all the time. People at the Academy of Dental CPAs do it all the time for their clients. I've done it many, many times. I'll sit down for a day and I'll just say, guys, what do you want to do? Where do you want to go? And some couples at the age of 40 or forty five have never thought about that. Ask for help.

If someone needed to get their teeth fixed, they're not going to do it themselves, they are going to go to you because you're the professional. If someone needed an estate plan, they shouldn't be going on the Internet doing it themselves. They should go to a professional who knows how to do this and who's trained to do this, go to a financial professional.

And, you know, at the end of the day, folks, you're team. Act like a team. Be respectful, be supportive and most importantly, listen, I hope that's been helpful for all of you guys.

So, again, don't forget, our partner in crime is Decisions in Dentistry magazine. Go to the website at www.DecisionsinDentistry.com and they will definitely provide you with great, great content and articles, not only in their magazine, but also on their website.

Go to www.ADCPA.org. Twenty four CPA firms the Academy of Dental CPAs, my mothership. Um you know, we are the financial first responders. That's what we've been for the last 18 months.

If you are looking for some help from me, you want to talk to me, you want to talk about the ERTC, the employee retention tax credit, the Department of Health and Human Services Provider Relief Fund. My phone number at the office is six five seven two seven nine three two four three. My email is awiederman@EideBailly.com.

Go to our monthly series on the Business of Dentistry. You can go to our website, which is www.EideBailly.com/dentalseries. We're going to be having a wonderful webinar and I think the one in September, again, you can see them all on our YouTube page. We're actually doing one tomorrow night. We're recording it. It's going to be live tomorrow night. You won't hear it by then, but it will be on our YouTube page. We've got our YouTube channel and you'll see the financial planning. We're actually going to do a financial a mock financial plan for a, uh, for a dentist through our financial planning software and show you how that all works interactively it's going to be really cool. We do that.

We're going to be also having on our Clint Johnson, who's been on my podcast, is going to be talking about how to work with PPOs and maximize your reimbursements out of there. And we're going to have my good friend Rachel Wall and her team talking from inspired hygiene in North Carolina about hygiene. That's going to finish up our program for the year.

So with that, folks, I want to thank you so much for the honor and privilege of your time. The thousands of people each week that listen to this podcast is just mind boggling to me. Every time I talk to a dentist, it seems these days they've heard the podcast. They've heard the webinars. I thank you all so, so much for all the kind words, everything that you do to help people to be healthy, to improve the quality of their lives.

Dentists are so important in this economy and in this life, again, like I've said over and over again. And I'll keep saying it because I want you to remember it. You know, it's not about you don't just fix people's teeth. You're about a better life and a better job and a better relationship and a better self-esteem. I mean, you save people's lives when you when you help them with sleep apnea, you're saving someone's life when you get them a beautiful smile that they can't imagine that they ever would have had the confidence in their life and the improvement in their life. You know, it's amazing. It's absolutely amazing.

So keep doing what you're doing. But let's make sure that we get you financially solvent so you can enjoy yourself in retirement. And with that, I will say adieu, adieu, goodbye. Our au revoir, whatever you want to say. This is Art Wiederman for the Art of Dental Finance and Management with Art Wiederman, CPA. Please tell your friends about the podcast. Write a review and we'll see you next time.