In this week’s blog, we’re telling the story of an imaginary couple, Jim and Pam Jackson, both in their late twenties, who have been married for five years. Jim is a customer service supervisor for a newspaper distribution company and Pam works as a receptionist at a large bank. During the early years of their marriage, they enjoyed a lifestyle supported by two incomes. Without children, they were able to be somewhat carefree about their spending.

Now, however, they are contemplating having children and are raising questions about the financial implications of enlarging their family. Although their jobs seem relatively secure, they have friends who work for downsized companies and who are less certain of their financial futures. Moreover, some of their friends have lost their jobs and are going through difficult transitions.

Discussions with family and friends have led them to the conclusion that uncertainty may be the defining characteristic of their generation. Some of this uncertainty is tied to rapid technological changes, and some is the result of the realization that they personally may be responsible for providing for themselves much of what was previously provided by others (e.g., pensions by employers; social programs by the government).

Here are some of the issues that now concern the Jacksons as they look to the future:

  • Will corporate downsizing eventually catch up to them? Even if Jill intends to return to work full-time after having a baby, how would they cope if one of them should lose their job?
  • What about the world of work in general? Will they go through several career transitions over the course of their working lives due to an economy that might be changing constantly? Is there a way to protect themselves financially?
  • With their college days not too far behind them, they realize their parents made sacrifices to send them to good schools. How difficult will it be for them to save for a child’s education? What about saving for more than one child?
  • They both participate in 401(k) plans at work, but will they be able to save enough for a comfortable retirement? What about Social Security? Will the system change significantly?
  • Will they be protected should they become disabled?

By discussing the various alternative solutions to the difficult questions above, Jack and Jill hope to arrive at a realistic assessment of what they should and should not do financially, what they can and cannot afford, and what sacrifices they might need to make to assure financial security for both today and tomorrow. They know their spending choices will have to be made carefully, and that preparing for a bright financial future will require setting goals now.

As the Jacksons look to expand their family, their financial planning today will make them less likely to be caught off guard by sudden economic or personal changes tomorrow.