Till Debt Do Us Part? How to Save and Invest Without Destroying Your Marriage

Feb. 25, 2010— -- Money is the main cause of feuding in many marriages, and those rows may not be limited to debt and spending.

Decisions about retirement and investments can also cause couples a lot of grief, particularly if each partner has a different opinion.

Couple Doesn't See Eye to Eye on Money

Take Juan Herrera and Joan Toro-Herrera of Teaneck, N.J. They have been married for nine years, and have two sons.

When it comes to money, the Herreras agree that they don't have enough and that they should try to make more. But they have different takes on how their money should be spent.

She wants to sell their depreciating home; he wants to wait until the market picks up more. He describes himself as a "workaholic" and isn't looking to retire until he's at least in his mid-60s or mid-70s. She wants to stop working at 55.

And on the subject of investment, their views are diametrically opposed.

"I am very wary of investments. And I shy away from making them, especially if they're not safe," she said.

Her husband is the complete opposite.

"When it comes to money, I believe that I'm definitely a risk taker. I'm not satisfied by just keeping money in … a savings account," he said. "If I see that there is a vehicle that could make a lot more money for my family, whether it be in stocks, investment properties or a business, I'll take the risk."

So, who is right?

They both are, said Mellody Hobson, president of Ariel Investments and "Good Morning America's" personal finance contributor.

She said couples should try to save as much as possible, but investing is important, too.

Hobson said that many good companies give great returns on investments. Even though the economy has been down, the stock market has rebounded, and is up 55 percent since its March 2009 low, she said.

She advised that couples maintain an emergency fund to cover six months' worth of expenses, plus some additional cash on hand, but she said that it doesn't make sense for people to put their additional money in savings or money market accounts. She said money market funds are returning less than 1 percent.

The House: To Sell or Not to Sell

On the question of whether couples should sell a home that is devalued because of the depressed housing market, Hobson said people should think about staying in their home if they can.

If they wait out the downturn -- at least another year or two -- they should be able to sell their home for a larger profit, she said. Of course, the tradeoff will be that they will pay more for their new home, but they also get more for the home they sell.

But Hobson also noted that, for many people, this is the right time to buy. That's because the interest rates on mortgages are at historically low levels, and the government's tax credit for first-time homebuyers and repeat buyers has been helpful. She did acknowledge that this is a bad year for sellers because they aren't getting the prices they want.

Click HERE for Mellody Hobson's quick tips on how you can avoid money problems in your marriage.

When Is Right Time to Save?

Everyone should put some money away in savings, but many people don't save enough -- or at all.

Hobson cited a recent survey by the Employee Benefit Research Institute that found that only 18 percent of workers felt very confident that they would have enough money to retire in comfort.

As for what people should do with that saved money, Hobson said that depends on age and income. The more disposable income someone may have, the more they should invest. When those investments build and people have more money to invest, they can take a few more chances than the average, she said.

How Much Should You Invest?

The younger a person is, the more their money should be invested in stock or stock mutual funds, and less in bonds and cash, she said, explaining that stocks are the best way for an investor to grow his or her money.

As people become older, they should take fewer risks, she said. Older investors should think about saving more in cash and bonds and less in stocks, she said.

Of course, each person's situation will be different, she said, but added that as a general rule, people who are just starting out should put 80 to 90 percent of their money in stocks, no more than 10 percent in bonds, and the rest in cash -- enough to cover six months worth of living expenses.

Investors in their middle years should make 60 to 80 percent of their savings in stocks, 20 to 40 percent in bonds and up to 10 percent in cash. As people come closer to retirement, they should put about 40 to 60 percent of their money in stocks, 40 to 60 percent in bonds and up to 20 percent in cash.

Partners should discuss how each views retirement, she said.

As a rule of thumb, couples need about 80 percent of their annual income to live comfortably in retirement, she said. That means their level of savings will determine how early they can retire.

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