Carl Richards is a certified financial planner in
Park City, Utah, and is the director of investor education at BAM
Advisor Services. His book, ''The Behavior Gap,'' was published earlier
this year. His sketches are archived here on the Bucks blog.
Years ago, my wife and I had dinner with another
couple, whom I'll call Bob and Sue. During the meal, we discussed money,
the market and our goals and dreams for our families. Then we started
talking about retirement, and that's when Bob got a big surprise.
Sue mentioned that traveling more was her primary
goal for retirement. As Sue talked about her travel plans, I looked at
Bob and could see he was shocked. Bob then admitted that he'd never
heard Sue say anything about travel. ''I didn't know it was a goal,''
said Bob.
What made this so surprising is that Bob and Sue had
been together for over a decade in a solid relationship. Clearly, even
the most engaged couples or partners don't automatically cover all the
bases when it comes to the big stuff, which means we need to make a
concerted effort to do better.
More than once, I've been in client meetings where
it's clear that couples are having their first discussion on big
decisions -- kids' education, saving, even retirement. Without fail,
either one or both individuals is surprised, if not shocked, by their
partner's opinion on a topic. So from what I've seen, it seems obvious
that the more conversations you have about money before you have to make
major financial decisions, the happier you'll be in your relationship.
I think it's safe to say the rules apply to whatever
relationship you're in, whether it be personal or professional. Having
the conversation before the decision gets made can make a huge
difference in not only your happiness, but also the long-term success of
your relationship.
Here are a few things I've found that can make a difference:
1. Set a spending threshold. Often our biggest
arguments come from surprises. For instance, one of the easiest ways to
start an argument is for one spouse to make a big purchase without
telling the other. I've found it helpful to set a predetermined limit.
You choose what it is. Depending on your budget it may be as little as
$50 or as much as $500. The point is that you discuss it with your
partner.
2. Talk about education. It may seem odd, but one of
the most common disagreements I see between couples revolves around
their children's education. One parent may say, ''I supported myself and
paid for my school. It's better for our kids if they do that, too.''
The other wants to pay for the best school the kids can attend, no
matter the price. The point isn't that one is right and the other is
wrong. Since it's a topic that can raise strong feelings, it needs to be
discussed, preferably before the first child is a senior in high school
and sending out applications.
3. Decide where to live. Some people really want to
own a house, others don't mind renting. Couples need to have this
discussion because it can be an emotional decision. There needs to be an
honest conversation about expectations on both sides and what's right
for you as a couple and family. I also can't emphasize it enough: Don't
view your home as an investment. Buy a house for reasons that aren't
connected to selling it again in a year. Otherwise you may head down a
road that causes frustration in the future.
4. Talk about vacations. Because big dollars can be
involved, you need to talk through your vacation expectations. You need
to be honest with each other about a budget that makes sense for travel
and put it in the context of your other financial obligations. The last
thing you want to do is go on vacation and then come home only to be
shocked by the credit card statement.
5. Review your retirement expectations. The way we
think of retirement is changing, and you need to discuss it with your
spouse. You may be in the camp that says, ''I'm working for 40 years and
then I'm done.''
However, I'm seeing more people say they want to work
long enough to then be able to do something that's less stressful but
more fulfilling. Talk it through and be clear about what's important to
you.
At this point, you may be wondering how to get started. Here's a few ideas:
Each month set aside a specific time and place to
talk. Doing so can help you avoid tricky conversations when they're
least expected or when you may already be irritated by something else.
By setting aside time, you can prepare and know what to expect. There
may still be disagreements, but because you're talking about money
regularly, it's less likely to get blown out of proportion.
Also, have a ''no shame, no blame'' rule. Many
discussions around money can end in heated arguments. Take the heat out
by giving both individuals permission to have these discussions without
shame or blame. The point is that you're talking through the problems.
Then, take responsibility for your actions. While there shouldn't be any
shame, with every discussion you should commit to learn from your
mistakes and move forward.
Write the decisions down so you can track your
progress. A benefit of monthly meetings is that you can assess how
you're doing, but it requires keeping track of what you've agreed to do.
Write things down and revisit them during your meeting. Have you made
progress? If not, what needs to happen? The list can be a great way to
manage your monthly conversations. Don't be afraid to use it and hold
each other accountable.
Finally, automate your decisions. If you decide it's
important to save $200 for education every month, give this decision a
head start. Work with the institution that's holding your savings to
make the payment automatic. It will give you one more thing to check off
the list and save you from having to remake the decision monthly.
Talking about money with our spouse or business
partner doesn't have to be a scary or stressful affair. In fact, I think
we can dial down the stress significantly when we have a better
understanding of what matters to the other person in our relationships.
It also doesn't hurt that we get the added benefit of greater financial
success in our lives by talking through these big financial decisions
before they become critical.
No comments:
Post a Comment