clock menu more-arrow no yes mobile
A photo illustration of a sea of young people in graduation caps, surrounded by coins and bills. Photo illustration by Christina Animashaun/Vox; Getty Images

Filed under:

Money Talks: The couple with differing financial priorities

Kat and Doug are compromising on saving for their son’s education, donating to charity, and building up long-term investments.

Nicole Dieker is a personal finance expert who's been writing about money for over a decade. Her work has appeared in Bankrate, Lifehacker, Morning Brew, and Dwell. She answers reader questions for Vox's On the Money column.

Doug and Kat (not their real names) live in the rural Midwest and, during most years, earn a combined low six figures. Kat, 31, earns around $50,000 a year as a freelance writer; Doug, also 31, earns just under $90,000 as a development engineer. Both Kat and Doug reduced their working hours and their income after welcoming their first child last year — and they are currently trying to decide how to balance their long-term savings, their charitable donations, and the money that might go toward their son’s education someday.

Doug: We’re both very goal-oriented. The first thing we did together was pay off our house, which meant we were both debt-free. Then we had this cash flow, and we started asking ourselves what we wanted to do with it.

Kat: At this point, our emergency fund could comfortably handle a year of us not working. We don’t have a house payment, and our basic expenses are very low. We couldn’t retire, but in 10 or 15 years, if we kept doing things in this vein, I think we could live off our investments. We probably would be on a slightly-sooner track to financial independence if we weren’t donating so much to charity.

We’re in a very low cost-of-living area — there are a lot of towns around here where you can get a house for under $100,000 — and we were able to buy a house and make aggressive payments on it. We have two middle-class incomes, especially for our area — I know there are some areas where our income wouldn’t be considered that, but to us it feels like we have upper-middle-class incomes.

I also had some savings that had been part of my life for a long time before Doug and I were together. Around $50,000. It was a combination of a couple of inheritances and family gifts over my childhood that I had never spent on anything, and we used it to help pay for our wedding and our down payment and part of Doug’s student loans.

When we started building up our savings again, we had our first major disagreement — whether to keep the money in a bank account or put it into a brokerage account. I recognize that we’re losing inflation value by keeping our savings uninvested, but I almost prefer that because I have a bit of a “bury it in the backyard” mentality.

It was Doug who gently encouraged me that, like, “We don’t have to keep that much of our money fully liquid.” Anything that would destroy a brokerage account would most likely have such an impact on our lives that [the loss of our investments] would not be our first priority.

I haven’t ever asked you this, Doug, but what did you think about as you were realizing that I had this kind of bunker mentality? What did you do to convince me that we should invest?

Doug: I took a deep breath. When I think about it, I think I was like, “It all doesn’t have to go into investments right now. I don’t have to convince you right now. Whether we do it now, or in six months, or a year, it can be a slow move and I won’t have missed out on much.” To convince you, I think I just listened to a lot of financial shows and showed you, “Look, in this 10-year period, if we’re going to be long-haul people, this is what does well.”

We are mostly S&P 500, index funds, a mix of mid-cap, small-cap, international index funds. Probably 30 percent, 10 percent, 5 percent. Something like that. Lately — and this was Kat’s idea — we’ve been looking at things that are geared toward environmental and social governance. ESG funds. We’ve started transitioning new money into a couple of those funds.

Kat: That actually helps me a little bit, because even though I know those funds might be hamstrung in terms of returns, the idea of handing money over to people who are doing work I want to be done feels a little less like the money is disappearing into an unknown stock market. I know that’s a very feelings-driven answer, but for me, a lot of thinking about savings is thinking about security. We have some security, so now we can make an impact on something.

Doug: Just like I slowly worked on Kat to get things under investment, she’s slowly worked on me to increase the amount we give to charity. I was interested in giving to charity out of excess, giving some of what’s left over after our buckets are filled, and Kat’s been pushing the other way — “No, we should decide what we want to give to charity, take that off the top, and see what’s left over at the end of the month.”

I was arguing that we should save a lot now so we can reach a number, and anything over that number could be donated. I want to look out for me right now, and then in the future — and she said “No, we need to be doing things now as well.”

Kat: It’s interesting, because both of our families are very generous, but they have different attitudes toward giving. Doug’s family gives of their time, and they give of their money as well, but my family has always been really aggressive charity-givers, and they’ve normalized that for me. In my family, you start by giving what percentage you think is right, and then as your income grows, you also grow that percentage. It’s not just that the total amount grows if your income grows, but the percentage of your total income [that gets donated] also grows.

Doug: Keep pushing that percentage up!

Kat: That was a little hard for Doug, because he thought, “We’re doing so much already. We’re doing enough.” I think it’s a question you have to answer once you’ve met whatever you consider your basic needs: “How much do we plan for our own future, and how much do we try to address pressing problems in the world now?”

Ten percent after tax was kind of the original plan — but particularly last year, when there were so many needs, I think we were closer to 13 or 14. I wanted the percentage to continue growing in a natural curve, but we also had a kid last year, so we took a ton of time off and our income didn’t actually grow.

Doug: It’s actually 12 or 13 percent of gross right now [as charitable donations].

Kat: Oh, nice! That makes sense, that the percentage went up even though the donation amount remained the same, since we lost money last year.

Kat: Our other big financial disagreement is influenced by our experiences paying for college. Doug paid his own way and was able to get out of debt afterward because of the career path he was on. I felt like I was limited in my options for college because I had to go where the scholarships were. The idea of saving into a 529 account [for our son] really appeals to me, first, because it would have 18 years to grow, and second, because we just don’t know what higher ed or trade school or any of that is going to look like in 18 years. The idea of not knowing what that landscape is going to be, and not having money saved and earmarked for it, bothers me.

Doug: I think we still disagree — I’m 100 percent willing to pay for trade school, and if for some reason we need to pay for a charter school during K-12, I’d be willing to do that, but I’m not 100 percent on board to pay for all of college. I think there’s a lot of value you learn from having a low bank account. Taking some of the risk. Not that I wouldn’t be there — I would probably co-sign a loan, and if [our son] needed to make payments I would help him make payments, but —

Kat: You see it as an independence thing?

Doug: Yeah.

Kat: A mark of independence to do your own schooling even if it means going into debt.

Doug: Right.

Kat: We haven’t really solidified it, but he’s letting me put money into a 529, in part because it has such a nice time horizon. At least for now, while the balance is fairly low, he’s just compromised with me on it. I think it’s helpful that [the money in the 529] doesn’t have to be just one thing. If [our son] wants to go to a particular residential high school, we can use the money for that, or something like that. It gives us options, even though you still seem to really like the idea of him becoming financially independent from us at age 18.

Doug: We’re willing to help!

Kat: But he makes his own calls? His own decisions?

Doug: Yeah. I think we can influence a lot, though. We’ll have a lot of discussions about money and how it’s used. Maybe through doing chores —

Kat: Allowance —

Doug: I think we were both working when we were 15? I think a lot of that, especially when you learn that minimum wage doesn’t go very far, helps you think about money in a different way. When you have to pay for gas and insurance and other things.

Kat: Unless things change for us — which is always a caveat in the United States — we are better off than our parents were at our age, and so our parents had a much easier pat answer: “We can’t afford that.” I’ve been trying to reason through, well, what will we say when he wants things? It’s not like we can give him the universe, but we can give him more than our parents gave us.

Doug: How can we encourage him to practice delayed gratification?

Kat: Right. It’s a weird thing to do on purpose, as opposed to “because life throws delayed gratification at you.”

Doug: I think we might give our son some money. Just not around the time of college.

Kat: I like the idea of his having enough.

Doug: I think it might depend on his personality and capabilities. I don’t want him to expect funding throughout his life, and I think the point at where that needs to stop is college.

Kat: For me, it has everything to do with whether the money is making him happier or not. If money is making him able to get to a dream that he wants to get to, I’m going to be in favor of that.

Doug: Is it a prudent dream? Does it have to be a prudent dream?

Kat: I don’t know. I like the idea of someone bankrolling a really cool creative career!

I don’t think either of us has a hard-driving “You need to suffer,” instead of using money that is available to us. We just want a balance. Some kind of balance that doesn’t create long-term unhappiness for him.


Older Americans are working longer. Some want to; others have to.

Future Perfect

I got to see the IRS’s free tax-filing software in action. Here’s what I learned.

Donald Trump

Trump is suddenly in need of a lot of cash. That’s everyone’s problem.

View all stories in Money

Sign up for the newsletter Today, Explained

Understand the world with a daily explainer plus the most compelling stories of the day.