Young and Loaded: Building Financial Discipline During Times of Abundance

Dani and Adina Nadoff were enjoying shanah rishonah in style, especially since they’d gotten married a bit later in life. Adina had by then earned a few promotions and even saved up $100,000. With her $90,000 salary plus support from her father, the young couple had plenty of income. Dani was learning in kollel, but even so, they’d managed a few vacations and also ate out quite often. They could easily afford these treats now, but Adina wondered if they were financially healthy. Their cost of living would probably shoot up at some point.

How should young, financially stable couples prepare for the future?

Abstract Saving Goals

Young couples earning significantly more than they need day-to-day may feel like they have tons of “free money” available. Even if they save a bit, it’s difficult to consider budgeting boundaries. How much should be stashed away? What are balanced numbers to aim for?

Most families eventually come to a point where things are quite clear money-wise—usually when they are fighting to scrape through the month, well aware that they are saving too little, not too much. But especially for younger couples, saving can seem very theoretical and abstract, making it hard to work toward in a disciplined manner.

Unfunded Liabilities

From an accounting point of view, the Nadoffs aren’t earning very much at all. Even though their income comfortably covers their current bills, assuming they will follow the typical trajectory of a frum family, they have boatloads of what accountants call “unfunded liabilities.” Will they be able to cover the bills as their family grows b’ezras Hashem? Afford to buy a house? Pay for simchos? What about a stash to open a business or even retirement savings? Focusing on their future’s unfunded liabilities instead of the present’s overfunded checking account can help a young couple maintain a realistic long-term financial perspective and the discipline necessary to stick to it.

Be Like an Ant

Chazal tell us that wise people look to see what will be, not just what is now. Further back, Shlomo Hamelech advised us to learn from the humble ant (Mishlei, 6). Instinctively, this industrious creature hustles and bustles during the summer and fall to accumulate stores for the inevitable colder times ahead. People need to use their heads since, instinctively, we are not chachamim and tend to focus just on what’s in front of us.

Planning for More Income

It does not take much insight or research to recognize that the typical frum family will not manage on a $90,000 salary. Parental support also usually has an end date. Building up a very hefty chunk of assets could help tide the Nadoffs over or even generate some income down the line to help cover the bills. An ant would tell them to plan ahead and build significant stores for a much more expensive future.

Planning for the Roof Overhead

It’s also well known that buying a house in a built-up frum area is a very expensive endeavor. A hundred thousand dollars seems like a massive amount to a single person or newlywed thinking only about the here and now, but in the context of a $500,000 or $1,000,000 home, or more, that number represents a modest down payment. Why not get ambitious and try to accumulate a much more substantial down payment? This will allow the couple more flexibility in their neighborhood selection, which can be worth a lot more than money. A large down payment may also help them maintain a smaller mortgage, resulting in less strain on cash flow down the line.

Reserves for the Long Run

Preparing financially for family simchos is an important responsibility and ancient custom, not a modern luxury. Simchos are often a massive unfunded liability for families; their mathematics require small fortunes. It may seem a bit surreal for newlyweds to contemplate, but their parents likely just spent a whole lot of money on them. One day, before they know it, it will be their turn to start paying it forward! Most people also aren’t able to or interested in working forever, and accumulating a hefty nest egg gives them the option of slowing down when they want or need to.

Time Helps Tremendously

Saving early and consistently makes accumulating large sums down the line much easier. It’s a lot easier to come up with $210 a month for 20 years than find $50,000 in swoop. Time can also work magic on compounding investments. With the power of investing, just $80 a month sent to simple mutual funds (in this example, Vanguard LifeStrategy Growth Index Fund [VASGX]) would have accumulated the same $50,000 from 2003–2022. (Upping the $80 dollars for inflation takes care of that issue.) It’s a pity when young people squander the magic of compounding, swapping trifles now for wealth later.

“Free Money” Turns into a Pot of Gold

A young couple spending thousands annually on luxurious food, vacations, and gifts may view these expenditures very differently if they’d consider a long-term context. A thrifty young couple that in 1985 took $20,000 ($55,000 in 2022 dollars) and invested it in the well-known S&P 500 index fund would have $1.1 million in 2023, a nice retirement nest egg built from just that one holding. That is how wealth is built—by consistently planting seeds and letting them grow into many productive trees. But if today’s seeds are nibbled away, there’s no future orchard.

Hazorim B’dimah B’rinah Yiktzoru

Farmers understand that hard work today is well worth the effort; it’s the prelude to enjoying the abundant fruits of their labors down the road (see Ta’anis 23A). Today’s industriousness plants the roots for a prosperous future, while lazy, flabby habits foretell lean times. Couples who live frugally early on are following the wise path. B’ezras Hashem, they’ll be able to upgrade and expand as their orchard flourishes instead of having to skimp down the line as things keep getting tighter and the seeds run out.

Want to dig deeper?

Try these related articles

Starting Off Your Marriage on the Right Financial Foot

Why Big Earners Need to Save Too

The 10 Commandments of Personal Finance

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