PETE: You’re listening to how not to move back in with your parents here on the IU MoneySmarts Radio Network. I’m your host Pete the Planner, this is Alex.
ALEX: There’s romance in the air.
PETE: That’s awesome, just say you like my sweater.
PETE: Just say you like my sweater, there’s a better way to compliment someone. No, we are talking about the impact that a solid romantic relationship may have on your finances as you approach graduation.
ALEX: You are trying to say that in the nicest way possible. [LAUGH]
PETE: Before I fully disclose what we’re actually talking about, we’re joined by the coordinator of financial literacy, a coordinator, the coordinator of financial literacy? Morgan McMillan, hello.
PETE: Give me a title, give me a real long title, what do you got?
MORGAN: Coordinator of financial literacy is good.
PETE: That’s perfect, I like that. Alex, you are the coordinator of cohosting duties on the pod- here’s what we’re talking about, getting engaged. This is what we’re talking about today, the idea that as your college career culminates and you decide to maybe be in, not that you should get married right after college, it’s not the point of the podcast, we’re not trying to talk you into it. But here’s the thing, I was engaged April of my junior year of college and I got married in July the year that I graduated. So I graduated in May, got married in July. So here is A, buying an engagement ring my junior year and B, setting up a marriage, combining finances right off the bat. Morgan, people still do this, I’m not an old man, people do this.
MORGAN: They do, they do this.
PETE: And so what we wanna do today is we wanna have a very uncomfortable conversation. Alex, we’re gonna have an uncomfortable conversation.
ALEX: Super excited.
PETE: You look really uncomfortable, I mean doesn’t he?
MORGAN: He really does.
ALEX: The 1% of the male audience that was still listening after you mentioned engagement already passed out from you mentioning being engaged in April of junior year, so. [LAUGH]
PETE: All right, so here’s what we’re gonna do, we’re gonna take a responsible approach to this. Look, our podcast, we’re not interested in talking about things that are only comfortable, we wanna talk about the uncomfortable. All right, so we’re gonna talk about from a financial standpoint how being in a relationship post graduation, it can go. So we’re gonna start with engagement rings, sorry, did the traditional way. Then we’re also gonna talk about sharing finances and whether you should have separate accounts and, or together accounts which would be combined. So let’s start with engagement rings. Morgan, any thoughts on engagement rings as these affect students’ lives, or recent graduate lives.
MORGAN: Yeah, I mean I guess I’ve always been sort of a minimalist when it comes to engagement rings and I know that not everyone is. But I think, for women in particular, if you are looking at rings post-graduation I think having the mindset that you can always upgrade in the future or your fiance, or your boyfriend, girlfriend, whatever the case may be, they can always upgrade in the future, so going into it maybe don’t start at the top of the line.
PETE: There’s no coincidence that fiance and finance are just one letter apart, I mean it’s really close. The old idea, Alex, was that you’d spend, what, two to three months’ salary on an engagement ring. Where first off, that’s ridiculous. But when you’re in college if you’re, like, a math tutor you’re like hey, I just bought you a $60 ring, I hope you like it, don’t wear it in the shower, you know what I mean.
ALEX: Yeah, it’s such a fine line cuz saying, you started that sentence, you’re like two to three months expenses, all the girls are going yeah, yeah. And then you say that’s ridiculous and they’re like excuse me?
PETE: Yeah, no again, I’m not interested in saying things that people wanna hear.
PETE: But I have to admit, let’s fast forward, let’s say you don’t get engaged to anyone until you’re 32. You’re fully, go back to this fully functioning idea, why do I always say that, what does that mean, Alex?
ALEX: You’re a real person, I don’t know.
PETE: I don’t know why I always say fully functioning, I’m sorry. Let’s say you’re 32, you’ve been in the workforce, you’ve got a job. Morgan, I mean two to three months in, I mean who’s doing this, right?
MORGAN: That’s a lot.
PETE: It is a lot.
MORGAN: That’s a lot of money.
PETE: I mean here’s what we’re seeing, here’s where it’s kind of jewelry marketing. They’re coming at you, that was created by probably De Beers, the diamond company that’s saying this is what you need to spend. Cuz here’s what you can’t do, do I love my love interest $500, do I love them $5,000, do I love them $50,000? I mean, because is that what we’re doing, because it’s kinda what we’re doing, is it not?
MORGAN: Yeah, that’s unfortunate.
ALEX: So I mean if you’re saying two to three months expenses is too much, then I think we need to give a price, or what’s a good range, you gotta give some actionable stuff here.
MORGAN: This is uncomfortable.
PETE: This is great.
ALEX: You need something, I’m sitting here, I-
PETE: Do you have love interest that, you’ve been dating someone for a while?
ALEX: Yeah, so I’m being educated right now.
PETE: All right, here’s what I think. I think, and what I’ve seen going through people’s financial lives in the past is two to three years after people get married they’ll be talking about their financial plan and their finances, and you’ll see ring payment still in their budget. And you’re like, what are you doing, I mean come on, that doesn’t make any sense, right?
ALEX: You got those chocolate diamonds.
PETE: Choc- a little Evian.
ALEX: They got the brown diamonds now.
PETE: No one likes chocolate diamonds.
MORGAN: I would have to disagree.
PETE: Really, you like the chocolate diamonds?
MORGAN: I mean I think they’re pretty, I know some people who would go crazy for them, yeah, absolutely.
PETE: The chocolate ones, they look like Cocoa Pebbles.
ALEX: Yeah, it’s like-
PETE: I would get hungry, every time I’d be around my lady friend, she’d have on chocolate diamonds, I’d be like does anybody else want cereal?
ALEX: If I’m getting a diamond I don’t want it to be brown.
PETE: Right exactly, it’s like clean that stuff up, polish it. Yeah. I just bought this, could you at least wipe the dirt off of it?
PETE: That’s what I’m saying.
MORGAN: Now I wanna know what you think of black diamonds.
PETE: No, those are awesome, Jay-Z has those.
MORGAN: Okay. [LAUGH]
PETE: So I think we go here, you don’t wanna start a relationship in the hole financially, right? I mean the pressure of that, I mean we’re not even talking about planning for a wedding or paying for a wedding, I mean that’s a whole other thing.
MORGAN: It’s a lot of stress associated with it, put a lot of strain on your relationship and as an individual too.
PETE: I think people lose their mind around, we’re all of a sudden talking wedding planning here on our podcast. But people lose their mind around wedding planning and they think well, it’s our marriage and it’s like no, no, no, no, it’s a day. You’re tens of thousands of dollars, it’s a day, it has nothing to do with your 50 year marriage or whatever.
ALEX: Right, there are ways to make it memorable without dropping six digits or even like $50,000 on a wedding.
PETE: I’m gonna get hate email from this episode aren’t I, I can feel it.
ALEX: There’s gonna be a lot of angry women emailing you.
MORGAN: Mostly from women, yeah.
PETE: Well, guys have dream weddings too. No they don’t.
ALEX: So what’s the recommendation though specifically, even if it’s not specific number-wise as a way to go, you avoided the question, we gotta hear a specific.
PETE: Of course, cuz there’s no answer, the answer is what you can afford. The idea of going into debt to start a relationship just seems stupid to me.
ALEX: So that’s the answer, is whatever you can afford without financing it.
PETE: Yeah, okay do you wanna a real deep, touchy feely answer, cuz I’ll give you one.
ALEX: I was okay with what I just said if that’s the right answer.
PETE: No, no, if Morgan-
ALEX: But if you wanna get weird, then yeah.
PETE: I’m gonna get weird cuz Alex has escalated this and Morgan and I are gonna have a real conversation, you just listen.
MORGAN: Let’s do it.
PETE: Morgan, if you love someone that much, what you would do is take the effort to earn the money to get them what you want to get them. Does that mean going and throwing boxes at the UPS hub or FedEx hub at the airport in the middle of the night, I don’t know. Alex, if you really cared about your significant other you would be on third shift, second shift, and first shift until you had the money that you needed.
ALEX: I’m gonna be shoveling the snow off the streets by hand.
PETE: I know, $2 an hour to shovel streets in my neighborhood so come on by.
ALEX: Two dollars an hour?
PETE: I made that up. So Morgan, I mean if we talk about this I can’t imagine. I mean here’s the thing, the pressure in many cases, many cases, not all cases, is on one person to make the financial commitment to the other person, okay, that’s a lot of pressure on one person. I mean, you don’t have a lot of ladies specifically giving engagement rings to men, and it just, it’s complicated.
MORGAN: It is, it’s complicated.
PETE: I have a $12 wedding band, the one you’re seeing right now, right here, $12.
MORGAN: That’s $12?
PETE: Why, here’s why. I got a gold wedding band my wife got me one or something when we got married and she’s like what do you want, I’ll spend whatever, I was like I don’t care, I really don’t care, so got me a gold wedding band. Our ten year anniversary we’re out shopping and I saw this ring, and it was literally on our tenth year anniversary and was like I wanna get that, maybe that’s my new wedding ring, it’s 12 bucks, I love it, it’s $12, who really cares, right? They always say diamonds are a girl’s best friend, but here’s the thing, Alex, cubic zirconia are a guy’s best friend, write that down.
ALEX: Cubic zirconium, all right. I thought you we’re gonna go different, I was like no it’s not diamonds, it’s actually puppies that are a girl’s best friend but that’s a whole other story when it comes to finances. [LAUGH]
PETE: I don’t know who a girl’s best friend is, I don’t anything about any of this. Morgan, anything else to add? I mean, you don’t wanna throw away discipline and stability for that, it just doesn’t make sense, get what you can afford right?
MORGAN: Yeah, and I think putting yourself in a position where you make it more about what your relationship is, not worth but-
PETE: It’s about the marriage, not the wedding.
MORGAN: It really is.
ALEX: Yeah, so if your significant other is like you better buy me a $10,000 dollar ring.
PETE: That’s not someone you wanna be with!
MORGAN: But I will say-
MORGAN: No, there’s an option to do, I mean you say cubic zirconia a lot of women would probably get really mad about that.
PETE: But why?
MORGAN: But I would be okay with doing a cubic, with doing what they call a CZ.
PETE: A CZ?
MORGAN: Yeah, doing a CZ ring until my significant other can afford a diamond, I mean, I’m gonna want a diamond that’s real.
PETE: This makes you the perfect catch.
PETE: Not to get weird here, and I’m taken, but that is amazing.
PETE: Not to get weird on diamonds, cuz the last thing we need to do is battle with the diamond industry. But the idea, okay we like a diamond, you look at a diamond we’re like sparkly! And it’s great and it’s fancy looking, well, who cares what it’s made out of? I mean, this is a terrible perspective, but right?
ALEX: It’s a total dude perspective but I’m totally with you on this.
PETE: It’s like a knock-off purse. It’s like that purse isn’t real, I’m like does it hold stuff?
ALEX: It looks the same.
PETE: Yes, it looks the same, it’s real.
MORGAN: Is it gonna fall apart? [LAUGH]
PETE: That’s a better answer.
ALEX: That’s the other question.
PETE: Okay, so I guess if what we’re saying is some of these manufactured diamonds, not real diamonds, fall apart, which I have a hard time believing they would, then that’s an issue. I mean you could get plexiglass and be like this thing won’t scratch, right, I don’t know. Has anyone ever thought of this, did we just create this whole idea of fooling women and men who get rings?
ALEX: I feel like we might get a lot of dudes into trouble from listening to this podcast. [LAUGH]
PETE: All right here’s the thing, we’ve enjoyed this podcast but don’t take any of our advice on this.
PETE: Right, Morgan did say that the ladies like-
ALEX: Listen to her.
PETE: Yeah, the chocolate diamonds, people are into that?
MORGAN: They are, I mean I don’t know about engagement rings but it’s jewelry
PETE: I’m always just like clean it up!
ALEX: But they’ve got all different, I’ve seen commercials for colored diamonds, there’s purple and yellow now.
MORGAN: Okay, and now we’re getting specific, those are gemstones.
ALEX: Well no, but they were marketed as diamonds. But they’re colored.
MORGAN: Okay, canary diamonds are yellow diamonds?
ALEX: Maybe. I don’t know. I don’t know.
PETE: Sounds pretty good for the single life.
PETE: All right, so today we talked engagement rings. And, you know what, we got a couple of minutes. Let’s talk about whether you should combine finances, briefly, maybe we’ll do a whole other episode on this, upon graduating. By the way, the former thought, back in the day people would combine finances immediately. Because it was like if you don’t combine finances you don’t trust each other, I’ve decided that’s garbage. There’s no particular reason to combine finances, you can have separate accounts and have it still be our money. But then to let someone have their own spending mechanism, their own checking account, that just a lot of times makes more sense and it’s a lot more practical. Alex, have you considered that as you kinda look forward in your life?
ALEX: Honestly, I haven’t thought about it too much.
PETE: Yeah, you can’t put the cart before the horse.
PETE: Not to call anyone a horse, that got weird, this is getting really awkward.
ALEX: Yeah, anyway we’re gonna skip that. And I don’t know, I haven’t really thought too much about it honestly. I’ve got my simple, I’ve got a checking and a savings account, and I mean I’ve only been thinking about how those apply to me.
PETE: Morgan, thoughts?
MORGAN: I mean, I think it’s a scary concept to jump right into a relationship and start sharing finances. But I mean, there’s always an option to have your own finances, for them to have their own finances, and then to have a joint account that maybe you build into as your relationship.
PETE: I think one of the scariest things that people do, especially when they’re not married or it’s early in a relationship, is they go into debt together, that to me, that is terrifying.
MORGAN: It’s so scary.
PETE: It is not a symbol of love or commitment, it is a symbol of stupidity, I would not do it.
ALEX: So that’s the scary thing too, is if you’re marrying somebody and say one of you has a lot more student debt than the other, or one of you doesn’t have student debt, one of you does. If that person’s offering to help pay your student debt with you and that’s a whole thing.
PETE: That’s a whole other episode, let’s do it.
ALEX: Whole other.
PETE: All right, Morgan McMillan, Alex the Alex, and me, Pete the Planner. If you want more information go to moneysmarts.iu.edu, plenty of information about cubic zirconia on there, no there’s not
ALEX: And chocolate diamonds.
PETE: Chocolate diamonds, black diamonds. And that’s it, so that’s what we got this week on How Not to Move Back in With Your Parents here on the IU MoneySmarts Radio Network.