Financial Fitness Friday: Financial Planning for New Parents with Eric Roberge, CFP®

Hey, welcome back. No problem. Parents to another financial fitness Friday. Today, we're going to explore the intersection of family, career, and financial wellbeing with our special guest, Eric Roberge. Eric is the founder of Beyond Your Hammock, a wealth management firm dedicated to helping professionals in their thirties and forties use money as a tool to design a life they love. Today, we're going to talk about the financial considerations and money moves that you can make before having a baby, as well as how working parents can harmonize their career ambitions with family aspirations. Eric has been featured in publications like the Wall Street Journal, Market Watch, and Entrepreneur Magazine. He and his wife Kaylee host the podcast Beyond Finances, and they contribute to Business Insider, Forbes, and Kiplinger. Today we're going to talk all things financial considerations before having a baby, family growth and finances, balancing career and family and financial order of operations for dual income households. Stay tuned.

Hey there, parents. Thanks for listening to the No Problem Parenting Podcast. Are you ready to become the confident leader your kids crave you to be? Are you losing your crap on your kids, yelling, giving in, and exhausted at the end of every day? You are already a good parent, and I'm sure you've sought advice from friends or family. You've read books on your child's specific behavior problem. Maybe you've even signed them up to see the school counselor or an outpatient therapist, but despite your efforts to find the right person or thing that will help, your family is still struggling. You're tired of pretending everything's okay.

Well, if your confidence is shot and you feel like you're failing your kids, but you also don't have a ton of time, register to become a no problem parent. You can start building confidence in your parenting immediately, whether your child is a toddler or all grown up and still living in your house. Don't make this parenting gig harder than it needs to be. Become a no problem parent today. All right, welcome to the show, Eric. Happy to be here. Thank you, Jackie, for having me on the show. I was sharing with you just a little bit before we started recording that, you know, we think as parents, okay, we've got to make sure we plan for what are we going to do for daycare. We've got to plan for diapers. We need to plan for college, these kinds of things. But there's so much more to financial planning when we're preparing to have a family and much less growing a family. You've been in the financial industry for a long time, and then now you're a parent. You've got a toddler at home, but why the focus on working parents? Working parents,

especially when both are working, and even if both are not working and you have a small child, both are working. Right. It's really important to understand priorities and be able to build them into your life so that your energy, your time, and your money are going at the right things. the right things for you. And so that is very intriguing to me. And I've seen through my years of financial planning, how people get stretched thin, they get distracted. They don't focus on the things that are going to move the needle most for them in life. And that hurts them, not only in the short term, because there's a lot of stress involved, but also long-term because their finances don't grow to support their future life where they may not have the same level of income that they have now. So it's really important to get grounded in what you need to do and think about the future, even though you're living for today. Yeah, absolutely. And making sure that we're having conversations about it. Money can be a huge stressor and can cause a lot of communication issues between couples. How do you help a family starting out with financial planning considerations? Asking questions. Did you think of this? How about that? Right. So when you think about having a child, you brought up a few things. Everybody thinks about college for some reason,

because that's the biggest ticket item, but it's also 18 years into the future. And they also think, oh, child care and diapers and food, whatever comes about. But they're not necessarily thinking about how does their insurance cover the pregnancy year? Does it cover it?

Is there more out of pocket right away, especially if things don't go perfectly smoothly? And then there's the energy levels that get drawn thin because you're not sleeping well and maybe one spouse is not making as much money as they were because they are supporting the child. Oftentimes the woman, because having the child, they're out of work based on just health requirements, but then it goes beyond that. And so if your household income was X and now it's Y, that's a shift.

Your expenses went up, your income went down. Oh boy. So we really need to focus on those first one, two, three, up to five years to make sure that we have a design that could work. going forward. Is there a number that we should have saved before having a baby?

People ask that question a lot, where how much should I have? And you really can't look at it as a pile of money that you will have that will provide for your child for 10 years, right? That's unreasonable, just like you wouldn't do that for yourself, right? Your income is coming in, you're paying for certain things along the way. But one thing in any transition, whether it's getting married, buying a house, retiring, having a child, that's when emergencies tend to happen or unexpected events that might cost more money than normal life. So when you're going into having a child, I think your emergency reserve account, typically they say three to six months of average monthly. I was just going to say that. Yeah. Right. You want to have probably more than you normally would have because there are pop-up expenses, not only emergencies, but other things that, hey, you know what? It would be really nice to get that tool to support the baby that we didn't think of getting, and it costs $400. Where does that come from? Well, it comes from this extra money that we padded ourselves with. That's really, really important. And one other thing is to reach out to your health insurance provider and say, hey, for a normal pregnancy, how much out-of-pocket should I be planning for based on our plan? And a lot of times, they'll share that with you. It's not going to be accurate necessarily, but it's going to be an average

for you to expect. And again, padding your emergency reserves to pay for those things. I mean, $10,000 to $20,000 isn't out of the question just to have set aside for that first year in excess of your normal spend. How does Beyond the Hammock help parents to plan for that? Well, it's building the structure. So there's something that I call the financial foundation. And if you're a car person, this would basically be popping the hood of the car and looking at how the engine is running, what type of engine it is. Is it, are there any issues, problems, noises, right? So you're looking at your personal finances from the same viewpoint. You're understanding how much cash you have in the bank currently.

How many investment accounts do you have? Retirement accounts. Do you have a house? Are those your assets? Looking at the liability side, do I have credit card debt? Do I have student loans? Do I have a mortgage? What's that going to cost me? So just getting the foundation, meaning your balance sheet. And then the other piece of the foundation is more about the running system. So that's the cashflow. Do you have a W-2 job? Is it consistent income? Is it a sales job where it's super variable? How much do you expect to make? How much do you expect to spend before having a child? And then get an estimate of, all right, now with baby, it's now it's two, three, $4,000 more a month, depending on what the setup is. Can this cashflow run that? Or am I going to have to reduce my savings to my retirement account initially. And I divert some of the savings that was going to be going into my vacation fund, into my emergency reserve fund, because we're probably not taking vacations that first year anyway. So let's pad the emergency reserve fund. So we just want to shine the light on what's going on now, make some tweaks to make the system able to operate at a different level because child will add that different level to it. Probably a lot more money available to you than what you realize if you just spend differently. That's a really good point.

and people don't, like that's an easy one, right? If you do often go out to dinner, you are not going to be going out to dinner in the first couple of months. And therefore it's easy one. You don't have to reduce your lifestyle at all.

Your lifestyle will just automatically change. You just have to make sure to capture that excess and move it to a productive place. So are there strategies for working parents to consider when they're trying to balance their career and the family care, especially when bringing that newborn home and or while maybe mom or dad has their maternal or paternal leave? Are there maybe some things to consider then, but then also into the future?

That's a big question. And I would advise asking that question before even deciding to have the child. Not that you can always plan for that, but it's one that says, what is your career? Each spouse asking the other, what are your career aspirations?

Let's talk about just career aspirations in general before having a child. And if that doesn't include slowing down, reducing your income, stopping working for a while, taking a sabbatical on either person, husband, wife, whoever, then you need to understand that two full-time working spouses need child care support outside of the two of you. And then you look at, is that a nanny? Is that family, friends that are available to support daily needs? Is it daycare?

those things are really important but you're reflecting back on what you want for your career as you're trying to build in what support you need to support that career because some people might say you know what career is not important I'm going to be at parents full-time okay one income family suddenly does that support your lifestyle but if you're choosing that it's a lot different and probably more appealing than if you're forced into that because you thought you were going to have full-time career. And now you don't have the capacity to do that. And you're forced into being a parent. And now you're mad at the other spouse because they're able to work.

That's a big deal and something you should talk about in advance. Yeah, it goes along with my three-step process of no problem parenting. Step two is to prepare for the worst. We can't always be prepared. Life throws us curve balls, but I think we don't talk about the money preparation enough. And what happens if something goes wrong with the delivery or what happens if, you know, mom's like, okay, I'm going to take my six or eight or 12 weeks of maternity leave.

And then I'm going to go back. And then 10 weeks in, she's like, I don't want to go back. You know, I want, I can't imagine leaving this baby, even though they thought they'd both be working now that something has changed because mom's heartstrings were tugged or dad's, you know, either way. And then, or if something happens with the child later on, or you go through multiple daycares because you can't find a good fit.

And so there's a lot of changing and a lot of time missed from work. I think preparing for the worst is always a great thing to do, whether that means, you know, in parenting our kids and or in this, you know, financial planning process. And the response, we'll figure it out, is very common. Yes.

And you will. You will figure it out, but you don't need to make it an emergency scramble situation. You can plan for certain things. So you can build in the buffer room.

Planning for the worst, people think sometimes I'm so negative because I'm always talking about the things that could happen. But planning for the worst gives you the most buffer room so that when good things happen, you have excess. When bad things happen, you meet your needs. And it's not so scary when bad things happen, because even though it's not great, you're like, hey, we planned for this.

We prepared for this. So that takes some of the stress out of it as well. So would you say, is there a financial order of operations that dual income households could or should consider that are going to help them to grow their wealth? So I don't want to only talk about, you know, that, yes, the planning is all good, but let's also have a forward thinking mindset of how are we going to grow what we already have?

Yes. I mean, firstly, just outlining again expectations for what you can you can understand your current income, but then expectations over, say, the next five years of income shifts. And a lot of people like to be very optimistic about their careers and the acceleration and promotions and other jobs. But we want to temper that a bit so we can say, all right, here's what I'm making now.

Let's just grow that maybe by inflation over the next five years, not get crazy for planning purposes. Again, if you make more money, you have excess, you can figure it out then. But don't plan on that. And then build a budget that fits inside of that income.

And it's not just income minus taxes minus benefit costs and then spend everything else. you want to fit in some savings in there too. And the amount of savings annually, typically we look at a percentage of gross income, right? Is it 10% of gross income that you want to save for long-term growth assets, meaning investment accounts, retirement, things like that, college savings accounts, or is it 20%, which we would more advise 20 plus percent of your gross income going towards those things. And then automate as much as possible those savings items. Because when it comes down to it, if you hit your savings goals through your 401k, through your paycheck, through the 529 plan that maybe your checking account automatically throws over $100 or $200 a month into 529, and you're done with that, you could argue that the rest of the money in the cash flow system is free and clear to spend, guilt-free, not worrying about saving more. And that is a great feeling. And why we, I didn't make this term up, but a one number budget is just that. Save what you need to save, spend the rest. And if you don't see it, you just almost don't even know it's there. So if you are a W-2 employee and you can just have that automatically deposited into your savings, you're really not, you're seeing it on paper, but you're not feeling like you're losing anything. So, but how do you balance competing priorities?

I think that comes back to before the money conversation, it's the priorities in life. And you can have your own individual priorities, and then you can have family priorities, and they may not be aligned exactly. And that's okay, because you can choose to have certain values as a family and then have your own career values too. And if they're both being met, then things work. If your family values are being met and someone's unhappy, maybe their personal values are not being met. That's really, really important before then diving into where's the money come from? How are we going to figure the money out? What does your career look like? For example, I mean, I own my business, have so for the past 10 years. The first five of those years, I was not married. We got married in 2018. And then we had a child in 2021.

And so that added another layer. Well, 2018 happened. Haley, my wife, joined my business as operations, marketing, client service, like super intentional, very planning oriented person, great fit for the business. Child comes along. We designed a, she is lead parent, but she's also still in the business, which means her capacity gets really thin, especially if I'm at the office for long, long hours. So we have to figure out because we want her to work for sure. Cause that's like you said, it gives energy and like there's some productivity and it feels good. Not to mention there's a good reflection of a child seeing both parents doing their thing versus one parent not doing what they love to do and therefore being unhappy.

and that's just not a good mix. All right, so there's a lot of juggling to go that to happen in there and we still haven't gotten it right, but we are continually willing to try. What can we adjust? How do we make that just a little bit better now now that we know that that doesn't work for a family?

There's a little bit of a dance because even though you think you have it figured out when you're actually going through it, it can be a totally different thing. You find there's things that you didn't even know you should consider. I think it is a bit of a dance And communication, it sounds like is the key to all of it. So rather than being upset because, you know, dad can be at work and his heartstrings are tugged that he can't help mom when she's going through a tantrum, you know, wet noodle on the floor tantrum, and she's thinking about all the work she has to get done yet.

You can feel torn. That's when you call me because I can help you with some strategies on how to be really confident in your situation, despite all the chaos. I was also going to ask, based on your experience now, how has being a parent influenced your approach to financial planning? Leniency is the word that comes to mind because there are very strict ways you could plan financially, which makes sort of the plan very rigid.

And if any variables come into play, it blows up, which is not a good way to plan to begin with. But in the past, I would say that I've heard clients say everything from, well, we couldn't save because we had to spend money on the child's birthday to, well, we were going to do this other thing, but we didn't have the time or the brain space to figure it out. So now the financial planning action item that is somewhat important is being punted down the road.

Right. So that would be like, well, you're not taking your finances seriously. I wouldn't say that necessarily, but I would think it. But then now having a child, I understand that you got to let certain things go. You can't survive and thrive in a very rigid schedule, even if you want to be a very type A person or you are a type A person, because the child needs your support and you can't tell them when to ask for it.

So if you just need to give yourself some grace once in a while, let things get chaotic. As long as you're coming back to the eventual plan, which is the point. The plan is the anchor point. It's not the fine line you have to walk.

It's just as you're zooming side to side, you know where the center line is. And that center line is your plan. Yeah, I love it. So share with us a little bit about what you do with a client that comes in and is looking for some assistance with mindfully planning their future for their family.

What does that look like when somebody first comes to you? I think the mindfulness is really important. Coachability is really important because we're going into this and nobody knows what the plan is going to look like. There's no cookie cutter system here.

We really need to hear from people about what their priorities are, what their needs are, what their goals are. Although sometimes you don't even know your goals, right? You're just saying, I know that I want to get support because I'm smart at what I do and I'm not smart at what you do. So I want you to outsource certain pieces of this so that we can build a strong team.

And so that's the beginning of the conversation. And then we're working with dual income couples. I mean, they're definitely making three, four, $500,000, lots of money coming in, but it's like a fire hose with the water turned on. If you have no direction in ways to collect that water, it's just going to be wasted in flooding everything.

So we need to really build a system that allows your money to go where you want it to go, to spend well today and enjoy yourself, to save for college, to save for your retirement, to build in some flexibility for a sabbatical or family vacation. We just really want to build something that reflects what you want for your life. And then when we do that, things happen. You change jobs.

your priorities change, your goals change. So that plan is not really a static thing. It's a living, breathing organism that evolves as your priorities and your life changes. I'm glad you brought that up too. How often should we be looking at our plan, re-evaluating, tweaking proactively and or just to stay on track with it? Because I think oftentimes we'll get comfortable, things will be going along smooth and we're kind of ignoring the plan.

There's, well, there's a couple of things. If you're talking about cashflow and budgeting and just managing that system, some would do it daily. Some would do it weekly, monthly. That's a lot of, because your money is continually going in and out and you need to make sure you're not overspending or even underspending so you can live the life that you want to live here and save appropriately.

But from an overall financial plan, like let's look at the long-term projection of a plan to identify. Are we still going at the right goals at the right speed? That I would say six months is probably a good marker. Every six months, I think you can look in.

Sometimes it's just, yep, everything's cool. Other times it's, you know what? I don't feel that strongly about that goal anymore. Let's just drop that and focus on something else right now so that we're not saving the money for the wrong thing because it just doesn't feel like it's aligned anymore with what we're trying to get at.

And so I think sometimes too, when we're thinking of financial planning and such, we're looking at all the investments that we have and maybe not focusing as much on the day-to-day or the, like you said, the quarter-to-quarter, treating it more like our family as a business. Yeah, and you should, right? The long-term investments are very important because they are the fuel that's going to drive things forward. I always say savings rate, annual savings rate, plus a rate of return on that savings is going to make you wealthy unless you are the founder of Google and you just lucked out on something, right? It's a blocking and tackling, not ultimately sexy type of a strategy, but it's a very consistent strategy that if you talk to anybody, even Charlie Munger, who just passed away at 99 years old, Warren Buffett's right-hand man, it's a long game. And you have to commit for the long-term on the investment side, but you're living your life along the way. So you do need to check in with yourself. How am I feeling right now? Am I feeling fulfilled? Does my family work? Does it not? Are my kids satisfied? I'm not going to use the word happy because happy is very fleeting and it comes in and goes out, but are they satisfied? Are they content? And if they're not, the long-term plan is garbage because you need to deal with right now and be right up here in your mind. And also I like that your company works duly with the couple,

right? It's not just, oh, my husband takes care of that or, oh, my wife manages the budget and the finances just can be so stressful. I think we can have fun around money. I think we need to shift our mindset on money a little bit and make it not so stressful. It can be super fun.

I agree. And a lot of times, right, there is that one person that might be naturally more inclined to deal with the money and the other person checks out. From my experience, it's really, really hard to build a family financial plan with one person. We need both insights. Even if you're not a financial expert, we need your insights into what you value, what the blind spots are for the other person that may be dealing with the money so that we get a full 360 degree view of the family finances and what we should be doing. Because otherwise it's just a huge missing piece there and it's not as productive. I don't enjoy it as much at all. I really kind of stray away from working with just one individual if they are part of a family.

Beyond Your Hammock is the name of your company. Can you just tell us a little bit about how you came up with that name? When you think about society, there are norms in society. And I very much don't love to be pigeonholed into, well, do what everybody else does. And so when I apply that to financial planning, it's living beyond your hammock because the hammock is essentially the representation of working and then retiring to your hammock, right? Beyond your hammock is just living powerfully throughout your entire life because you're being intentional about your money You spend wisely, but spend well.

Spend a lot when it counts and save a lot when it counts. And if we can do that right, you very much are living beyond your hammock. And it sounds like you can enjoy your hammock all the way through life and not just at retirement. That's another thing.

People always talk about, well, I'm just going to live for today, which is the opposite of the spectrum, and not worry about tomorrow. But you can also save too much for the future, thinking that you're going to enjoy yourself when you get there. but you haven't practiced enjoying yourself along the way. Oh, that's so key.

That is so key. I see that all the time, people that do retire and then they don't even know how to do it. Right? Like, I'm gonna go to Florida when I retire.

I've never been to Florida. I go down to Florida. I don't like Florida. Well, you should have practiced along the way, enjoyed yourself, know how to spend your money because if you never spend your money, you're not gonna spend your money in retirement.

Exactly. You know, I had Glenn Lundy on the show not too long ago and he talked about the difference between investing and spending. We often talk about spending money on a vacation or spending time with our family. And really we need to switch that word. It needs to be investing your money in a vacation and investing time with your family. Because when you invest in something, you expect a return versus spending where it's like, Oh, it's just gone. So as a, you guys are an independent fee only firm. So you're not selling products. You don't earn commission or receive kickbacks from third-party companies.

And so why do you find that so important? Transparency is really important. Being honest and having the integrity to say, here is what I advise personally for you based on my experience and my education, not based on the limited product line that I can sell or the extra bonus I'm gonna get for hitting a certain sales number. That is garbage when it comes to helping people.

And so from a fee-only perspective, we can be true fiduciaries. We can be honest. You see exactly what you're paying us. And so there's no, what's going on behind the curtains here.

And that's where I love to thrive because I do enjoy and get excited about honest delivery, even when it doesn't feel good to hear it, what I think about what's going on for you. I love it. It's like you're, and you get to be sort of that mediator between, you know, the two-parent home that, hey, this might sound like a great idea, but you're going to kill yourself working towards it and never be around for your family. Or, hey, if you spent less in this area, you're going to be able to bring, and you get to be kind of that middle person that has, it can be very matter of fact, which I'm all about here at No Problem Parenting. We give problems only as much attention as they deserve, and then we keep removing. So you can kind of take that, any kind of argument out of that equation when the couple is talking about their financial future.

Right. Right. And I can then pay attention more to what's not being said in the conversation. I mean, you know this, right? When one person's spouse is saying something and the other person responds, but you heard what that person was initially saying, the spouse didn't actually hear it. Right. I could say, you know, what I think you just said was this, not saying like You heard it wrong, but just repeating what I think they said, then, oh, I get it now.

So that's really helpful in the communication between the two. Very key. Well, Eric, for people that are interested, I know you're in the Boston, Massachusetts area, but you do provide services nationwide. How can people get in touch with you?

What's the best way to learn if you're a good fit for each other? I think our website is designed for this very thing. So beyondyourhammock.com is going to give you everything from what we do for people, who we do it for, how we work with you, to the podcast and blogs to understand just more education about financial planning for couples in their 40s with kids.

Absolutely. So beyondyourhammock.com. And then let's real quick, before we wrap up, talk about the podcast a little bit.

I'm all about podcasts. Yeah. Yeah, my podcast is actually my wife and I talking personal finance. And it just came from the idea of we have these really cool conversations behind the scenes for ourselves.

And we just wanted to bring that to the forefront to have it for other people, because I am the CFP, the expert in the field. But she is a personal finance writer. So she very much understands the system. She knows personal finance.

She appreciates money. She just is really great. So we bring that conversation to the forefront, but it's us personally talking about our stuff. I just, here's what we think about it instead of here's what you should know about a very robotic person that is in this industry.

Love that you're, it's you and your wife and you're on there having conversations just about real life, everyday stuff. I really appreciate you coming on the show and being with me today, Eric. And you know, couples reach out if you're feeling like, oh, we should have started this earlier and we didn't, it's not too late. reach out to Eric and his team and get your financial plan in place and then just start dreaming about the possibilities. So thanks so much for being with me today. Thank you, Jackie.

This was fun. All right. That's it for today's episode of the No Problem Parenting Podcast. Hey, thanks guys for tuning in. If you found value in today's episode, click the subscribe button and share it with other parents who might need a little boost. Stay connected on our socials by following at No Problem Parents for more parenting tips and get your free download of the 60 ways to respond to your kids without losing your cool. Go to noproblemparents.com. Until next time, remember your confidence comes from embracing both successes and setbacks. So take a deep breath, embrace the chaos, and remember you got this.

Thank you.