3 Keys For Financially-Healthy Couples (#31)

Greetings everyone.  in this episode host Josh Nelson shares three keys for how to be, not just a financially-successful couple but, a financially-healthy couple as far as being in relationship together and in relationship to money.

The overview:
Key Number One: Don't hide money.
Key Number Two: Agree on your outcomes and your purpose.
Key Number Three for financially healthy couples: Take massive action.

Of course we know you need more than the overview to really understand. So, click on the episode now to learn what Josh Nelson means by Financially Health Couple and how it may pertain to your relationship today.

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Transcript

Hi, Everyone. Welcome to the Wiser Financial Advisor with Josh Nelson, where we get real, we get honest, and we get clear about the financial world and your money. 

This is Josh Nelson, Certified Financial Planner and founder and CEO of Keystone Financial Services. We love feedback and we'd love it if you would pass it on to me directly at josh@keystonefinancial.com . Also, please stay plugged in with us and get updates on episodes and help us promote the podcast. You can subscribe to us at Apple podcasts, Google, Spotify, or your favorite podcast service. Let the financial fun begin!

Glad you could join me today for this episode on keys for financially healthy couples. I've seen a lot of patterns of success, and I've seen a lot of patterns of failure over the 20 plus years that I've been a Financial Planner. I've noticed patterns around being financially successful and being happy with each other as a couple.

It's funny—sometimes when people would get done with a meeting that was rather intense, they would look at me and say, “You know, do you ever feel like you're a marriage counselor? You should have a sofa in here and be a therapist.” And they were kind of kidding but also they were kind of serious because in some cases things get pretty intense when talking about finances. Oftentimes, that's a big source of conflict. In fact, having conflicts around money is actually one of the leading causes of divorce in the United States. And it’s also the number one reason for fights in marriages. Numbers two and three year are around the kids and sex, those sorts of things, but handling money is one of the big areas that can cause conflict in a relationship. So, as a Financial Planner, I get into those conversations with people and I can act as a buffer, which is a good thing because it can help people move forward when they feel stuck. 

I’ll also often get questions from new couples, people who are maybe newly together or newly married, and they're trying to figure things out. They’ll realize, “Hey, we've got these two different financial situations that we're trying to marry up here. How do we work together?” And of course, everybody comes into a relationship with a financial situation that could lead them to have different expectations. They have different expectations of each other as far as what they want to see out of their financial life. 

It’s  important to have grace for each other  in a relationship of any sort—whether it's a friendship or more of an intimate relationship—it's important to have grace for each other and recognize that nobody is perfect and that if everybody has good intentions, which I believe most people do, then there's no reason we can't work things out. 

Today I've got three keys for how to be not just a financially successful couple but a financially healthy couple as far as being in relationship together and in relationship to money.

Key Number One: Don't hide money. Hiding money is absolutely a trust killer in any relationship involving finances, and that’s true of a business relationship, and also especially a marriage relationship where people are really counting on each other to be transparent. Never hide money. Never hide purchases. It's very important that everybody knows what's going on, and there's no effort to be deceitful or try to cover something up—maybe a purchase or something like that. I can tell you this happens all the time. Not in overt ways, where somebody is taking money and sending it to Grand Cayman or something like that in a numbered bank account. Not that so much. (Though, of course, maybe we wouldn't know about it.) But where this comes up more often is when people go out and spend money and don't tell the other person in the relationship. Or in some cases, they really are being deceitful about their shopping habits, their spending habits, and they might have some other credit card that they’re trying to hide from their spouse. I've seen this and it's very destructive. It's a trust killer.

It's important that we be transparent with our purchases, with our money, with anyplace we're putting money—and the decisions we're making with our money. When making a commitment in a marriage or a couple, a commitment to move forward together and plan together, it's important to be absolutely transparent with that, so nobody is in the dark. There have been a number of people that I have seen get divorced over this, when there has been some outright deceit where somebody is taking money. Maybe there have been gambling problems. There are all kinds of things it could be. And in many situations, I've seen it lead to divorce when there's just outright deceit or hiding of money. 

If this has happened in your relationship, it doesn't mean, “Hey, we should go out and get divorced.” What I would strongly encourage you to do is to go get some counseling around this, simply because there is going to be some pain, probably with one or both partners. There's going to be some baggage that really needs to be dealt with to be able to move forward. Otherwise, it can just come up again and again and again and there's this lingering trust issue forever.

Another thing to notice is that in any couple one person does tend to take the lead with money, and that's fine. If that works for you, that's absolutely fine. That one person might be interested, whereas the other person may not be as interested. Sometimes couples will split the responsibilities where one person might handle the day-to-day budgeting and the other person might handle more of the investments and planning around their future. This is perfectly fine, just make sure that everybody is in the loop and everybody has the opportunity to understand everything, at least from a high level. 

So transparency is an absolute must to being a financially healthy couple. 

Key Number Two: Agree on your outcomes and your purpose.  Ask, “What are we trying to accomplish here?” You might be surprised that more often than not there is a mismatch, or maybe just a misunderstanding between the two people in a couple as far as that question of what they’re trying to accomplish. It’s important to ask, “What are we putting money away for? Why are we really trying to build our wealth over time?”

I can tell you it usually boils down to income. At some point, it’s, “Hey, we want to have income that we don't necessarily have to work for. We want to build our wealth up to the point that it covers all of our priorities, so that we might get to work instead of have to work.” For a lot of people, that seems pretty attractive to be in that position. 

It’s important to be very clear, and to get an idea of what you are trying to accomplish—not only generally speaking, such as being financially independent or covering a certain amount of higher education for children—but also to look at the specifics and make sure to have smart goals together. Create goals that are specific, measurable, achievable, realistic, and time sensitive, so there’s a time frame in mind. It's really important to do that because we have to have a common enemy, right? We have to have a common goal. Otherwise, people start to wonder, “Why are we doing this? Why can't we go on that crazy vacation?” 

“Well, because we committed. We wanted to plan for the future, and we don't have the money.”

The other possibility is that a couple might be trying to establish a good financial foundation. That can also be a good common enemy—trying to eliminate debt and build a good cash reserve for emergencies. The idea is to keep the end in mind. 

In any couple, the two people tend to balance each other out. In healthy couples you tend to have that dynamic financially. Something I've noticed is that one person does tend to be more of the spender and the other person tends to be more of the saver. That doesn't mean one is right or wrong necessarily. But I've seen a lot of couples end up being two extremes. In some cases, somebody is such a good saver that it means they’re really not able to enjoy life today at all because of being so focused on saving money. Maybe it's overkill, maybe they’re putting away so much money that they could retire early. Meanwhile, they missed out on so many experiences. And then in some couples, they end up being on the opposite side, overspending and trying to figure out how to rein it in so as to plan for the future.

In this episode, don't worry about the “how” right now. That can come later. It's just important to get very clear on what it is we're trying to accomplish in the big picture of our financial life.

One tool that I'll give you for if you find that you are really on opposite ends of the spectrum as far as priorities, is Dave Ramsey's book The Total Money Makeover.  He’s also got great podcasts on the Ramsey Network, so I do recommend you listen to those together. I've seen some couples do this and find it helpful because it's largely a call-in show. People call in and ask financial questions. Sometimes it is a husband and wife trying to figure out, “How do we get around this?” For example, “How do we get our debt paid off?”

Maybe one listens to an episode in the morning, one listens to it in the afternoon and then that night they discuss it. “Hey, did you listen to that episode? They were talking about paying off credit card debt.” Or whatever it was about.

It’s good to get those conversations going and to keep money from becoming a taboo topic in your household. I think that's important not only for couples, but also for any kids in the household. Kids are watching everything that we're doing, and my wife and I have to remember that all the time. Everything we're saying, everything we're doing, they’re watching. So, it's really important that money does not become a taboo topic. So many kids end up going into adulthood feeling completely un-equipped. They don't feel like they have any good financial habits or good financial role models, not necessarily because their parents didn't do a good job and make good financial decisions, but it was considered a taboo topic and so they never had the opportunity to learn about it.

You don't necessarily have to share dollar amounts and every single detail about your financial planning, but make sure if you've got kids, that your kids are listening and they have the opportunity to learn and understand that money is important; that it's important to plan around it and use it from a from a stewardship perspective. Our money really is a gift; the fact that we're able to earn income and have abundant income where we can put money away and invest it and pay off debt and all kinds of stuff, is important to recognize. Kids need to understand that money doesn't just happen by default. There's some good planning that goes into it. 

Key Number Three for financially healthy couples: Take massive action. Take massive action together. It’s really important to be on the same page. Even if you don't completely agree on things up until this point, it's important that you are moving forward together rather than just doing your own thing. This is about planning together. That's one of the things that you've committed to. If you're listening to this episode, you probably have made a commitment to another person that, “Hey, we're in this together and we're building a life together. We're building a financial life together as well.”

It's been said that where focus goes, energy flows. It’s important to be focused together on whatever actions need to be taken. You can't do 20 actions at one time. You do have to prioritize. All of us only have so many hours in the day. We only have so much energy. So, it is important to focus on what's important now. What do we need to do next?  When figuring out the “how,” oftentimes people realize that they would benefit from having somebody else in the mix that can be their advocate or fiduciary. That’s my two cents. Of course, you know, selfishly, I own a business and we've got a couple Certified Financial Planners. We're a wealth management firm. But I do think that a Certified Financial Planner who is a fiduciary can be invaluable, especially in the financial life of a couple, because that person in addition to being an advisor, can act as a sounding board and a buffer between the two of you. I have done that many, many times. And  sometimes I do feel like I'm a marriage counselor in some of the sessions. It can get really awkward, in fact.

I remember one time years ago, a couple got into a heated conversation and literally I felt like crawling under my desk. I was just hoping that they would leave, it was that bad. Things got pretty tense but just so you know, they worked it out. That’s just an illustration of the fact that money can be very stressful. It can be very emotional. And it's important to recognize that we don't want to give up on it. Instead, have a healthy way to get an outlet and be able to interact with each other as you're doing your planning together. Don't give up on it. 

Sometimes money becomes a taboo topic in your household just because there's so much tension and unresolved conflict around money that it gets to the point that people stop talking about it. At those times, it just feels more comfortable to avoid it, and that doesn't help. Unresolved conflict with anybody is not a healthy thing. Hiring a Certified Financial Planner or somebody who can act as an advocate for both of you, someone with a lot of experience, can help you through the planning process. That's the idea behind hiring somebody who has seen a lot of people that are successful and a lot of people that are not so successful so they have a sense of what works and why.

I don't care how good or bad you think your financial life is, there's always a next level and it’s helpful to recognize that everybody has those feelings to some extent; everybody feels like they wish they had started earlier. They'll often say to me, “You know, we wish we would have seen you five years ago or ten years ago. We'd be in a completely different place.”

My advice: Don't worry about the past because there's really no power in the past. There's power in the future because it can get us inspired.

It’s about taking action now as a couple, getting focused, figuring out where to go. There is compromise in that, of course. In any kind of marriage relationship, you probably don't always think exactly alike. There are probably some different opinions. You've got different backgrounds. But coming together can be a powerful thing because now you’re taking two perspectives. Two ideas will come together with a compromise and hopefully that's a happy compromise. In a lot of cases it is, and we're a good balance for each other. My wife and I are a great balance for each other because I can get a little bit squirrelly and distracted and so forth. She's very focused and organized, so we can be a great balance for each other. I urge you to see any differences that you have as strengths, because there probably are good perspectives on both ends that can be helpful in your life.

So with that, I hope that's been helpful today. Recognize that this is a really important area. It can be the largest source of stress or arguments and it can lead to divorce if this stuff doesn’t get addressed. But also recognize that there's always a next level in any relationship and in any financial situation. I hope we can play a role in that for you and your family. 

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I hope you have a great week, and God bless.

The opinions voiced in this episode of the Wiser Financial Advisor with host Josh Nelson are for general information only and not intended to provide specific advice or recommendations for any individual. Investment advisory services offered through Keystone Financial Services, an SEC Registered Investment Advisor.