Solid Financial Planning vs. ‘Magical Thinking’

When it comes to financial planning, Kathleen Rehl, Phd, CFP defines ‘magical thinking’ as notion that if you don’t speak of something it isn’t real.

That phrase also appears in the title of the critically acclaimed book “The Year of Magical Thinking,” in which Joan Didion chronicles the suddenness of losing her child and her husband in a very short time period. A New York Times reviewer wrote that Didion’s novel is “not a downer” despite the circumstances it describes.

In “Magical Thinking’ Isn’t a Plan,” Rehl also doesn’t want to be a downer because she knows that financial planning is very important, especially for women who’d rather not think about these matters. She tells the story of a meeting a woman who insisted that she was going to die first so that she could avoid having to handle the finances that were presently the sole responsibility of her husband. This woman ignored the fact that this was out of her control and that women often live longer than men. Yet, the conversation offered the husband another chance to impress upon his wife the need for her to become more financially literate. He was not denying her access to the family finances; she was choosing not to be informed.

Rehl writes,  “I believe one of the best gift a couple can give each other is talking about their money issues together while both are healthy.”

You can divide up household chores, reasoning that one of you does certain things better than the other…but that doesn’t mean that only one of you needs to know how things work. The same idea applies to your finances. If both partners are not equally involved in managing the household finances, both should know how to access pertinent information.

And no matter what your marital status, you do not have to feel as if you need to figure it all out on your own. You can seek the help of a qualified Fee-Only financial planner who can assist you and offer expert guidance.

About the author

Claire Emory, MBA, CFA, CFP®

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