A/B Conversations: CFP® Your Way Out Of It
A/B Conversations: CFP® Your Way Out Of It
Ep #126 - Most Important Money Conversations to Have With Your Spouse
Money is an emotionally charged topic and it can sometimes ruin relationships. Savers vs. spenders. Planners vs. non-planners. How can a couple keep the money side of their relationship healthy? It starts by simply building the space and time to talk about it! Whether your relationship is new or mature we encourage you to listen in as Adam and Ben discuss why it’s so important to communicate about family finance with each other, how to go about it, and what those conversations should focus on.
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Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Great Valley Advisor Group and Haas Financial Group are separate entities. This is not intended to be used as tax or legal advice. Please consult a tax or legal professional for specific information and advice.
Adam Werner: [00:00:00] Hi everyone, and welcome to AB Conversations, where we will help you CFP your way out of it. A podcast where you get into the minds of a couple certified financial planners on how we think and feel about everyday financial planning questions, and what should really matter most to you. A healthier financial life starts now.
Ben Haas: Hi, Adam. How are you today?
Adam Werner: I am just fine. How are you?
Ben Haas: Excellent. Very good. Very good. Podcast time. Let's jump right in. This one could feel a little heavy. We're going to try not to take it that way, but when we think of, all the conversations that we can have and try to bring some fun to this podcast, like forcing tough conversations, what sometimes can be tough conversations between spouses.
Should not be high on the list of things that people want out of this podcast, but [00:01:00] that doesn't make it not important.
Adam Werner: So the, the topic today for those, well, obviously it's going to be in the title of the podcast, but it's, yeah, those important conversations to have with your spouse or your significant other, whoever that may be about money.
Because as we all know, money is such a sensitive topic and especially now if you're in a relationship with somebody where there may be, conflicting views on money, different histories with money, yeah, that's, that can certainly lead to conflict or just misalignment of those values when it comes to money.
And certainly that's where life can get difficult if there are constant disagreements about money, which is a thing, for sure.
Ben Haas: Yeah, yeah. I mean, start there. Statistics tell you that it's something like 30, 40 percent of divorces are considered money related. So today is not about signing prenups. It's not about, [00:02:00] Hey, how are we going to split up assets now that we're not going to be together?
This is going to be focused way more on how do we keep that money side of our relationship healthy? How are we going to go about making important, big money decisions together, especially during difficult times? I think you made the point in kind of prepping for this. This isn't just for young couples.
Adam Werner: Yeah, I think that's naturally where a lot of it should start, right? Younger couples just maybe starting a relationship or, you know, first marriage, starting that off on the right foot makes all the sense in the world. But this can also then apply to those that are either getting close to retirement, couples that are getting close to retirement, or are in retirement.
Because it's just a different, I guess, mindset when you are working and maybe you're in your prime earning years, hopefully people are doing the right things right there, hopefully saving for retirement, saving for the future, living within their means that there are still [00:03:00] maybe enough excess cashflow to maybe have a little bit more freedom to spend and not necessarily worry about the long term consequence.
But when you get to retirement, you're getting closer to retirement, the idea of your savings being a finite asset, a finite pool of resources can make spending or saving decisions very visceral, and again going back to the if you are not necessarily aligned or there's not clear communication between partners that says, you know, if this then that, it can be a difficult transition period going from maybe when you're earning to now retirement. You might be spending way more time with your significant other if you're both retiring at the same time.
Ben Haas: Yeah, and have a lot more opportunities for spending when every day feels like it's Saturday. So, yeah, we definitely see this as we prep people for retirement. So, okay, long enough intro on why we think it's important to have these conversations. Let's just touch real quickly on [00:04:00] how we might suggest people have these conversations, and then let's just move into the meat of it.
What, like the podcast title says, what are those conversations we would want people to kind of focus on? So, you know, I'll maybe start with the how to have the conversations. I think it's difficult. Even when you have two people, I'm reflecting on my own relationship.
I love you Desiree. It's sometimes difficult to have the tough conversations. And that's where, if you have an open communication level, whether it's around your kids, jobs, how you communicate on anything going on in your life, not just money. Maybe you have the tools to kind of do this on your own, right?
We're going to go to dinner one night. We'll have these important conversations. We'll kick up the feet, open a bottle of wine. Let's find a way to constructively do this that doesn't make it feel like it's a bad combination of math class and marriage counseling. But there, there definitely are other tools out there that can help you kind of passively have these conversations, books, exercises, wink, wink, nudge, nudge, the use of a financial [00:05:00] planner who cares about this stuff.
I think there's any number of ways to go about that, but the most important part going into those conversations to me is the kind of recognize that even for people that are super close that know each other super well we all just have different experiences with these things. We have a different upbringing, different way of going about how we make these decisions or how we operate. So even what is known you need to go into those conversations with a little bit of sensitivity to all right my my viewpoint is not always going to be shared and my opinion is not always going to be appreciated.
Adam Werner: Yeah, and I'm glad you noticed the experience, the background, like how you were brought up, how was money dealt with in your house as a child? Just those experiences and it's all so deeply psychologically embedded in us that a lot of it, you don't even [00:06:00] have full transparency. Even for ourselves sometimes, like why do I treat money the way that I do? A lot of it is just subconscious. Now you throw another person into that relationship and what may be deeply seeded, just habits again, because of how that other person may have come up with money, sometimes that can be a huge barrier.
The kind of see. And often in relationship there might be a spender there might be a saver and that of course can lead to conflict but to your point getting maybe more to the root of but why what why is whatever this this outcome is or whatever the approach is to money. Why is that the approach, and then hopefully you can come to some common ground or at least understand where that person is coming from and figure out a way to move forward rather than it just constantly being conflict, you know, butting heads.
Ben Haas: Okay. Let's quickly move into like the conversations and not pretend like we're psychologists in this situation. And I'm talking more to myself than you when, when saying that. But. [00:07:00] It is also to kind of recognize what we bring to that relationship and the way that we communicate about things and the way that we treat things. If one person earns more money than the other or it's a single income household, certain times there's decisions to be made.
It can feel like a power play. Like, well, I'm the one in charge of this. Are those the roles of the relationship? Like, where is the give and take in this? It's not uncommon for people to have their own checking account, savings accounts. Whether it's a second relationship, a first one, whether you've matured, you know, kind of in your career before coming together. There is something in all of this that kind of feels like financial infidelity, like secrecy is something that couples would worry about.
So the case in point is you have to open yourself up to kind of recognizing what you're bringing to the relationship, what the conversations that need to be had, what that other person feels like. This all may boil back to how are we going to save. And how are we going to spend, and are we aligned in those places?
Adam Werner: Yes. Let's start there. You kind of just touched on it that number one, I think for a lot of people [00:08:00] is just yeah how are we going to handle spending decisions making sure that wherever we are allocating our resources aligns with what actually matters most to us in the long run. A good example of that in our industry is very heavy into the behavioral finance side of things. His name is Carl Richards, and he has an exercise to start to become aware of your spending. Not so much necessarily what you're spending, but how does it make you feel?
Is that just a temporary, you know, dopamine hit, or is it truly aligned with what I really want to happen in the long run? And his whole point is just have a notebook, have something put jotted in your phone, whatever's going to work for you, but just notice, notice how you are spending money.
What you're spending it on and how it's making you feel. You don't need to do anything else other than that to start, but just start to build that awareness over time. That is okay, I'm going to stop for my morning coffee and I'm going to spend whatever, six bucks at a Starbucks. If that's a wildly [00:09:00] off price, it's because I don't go to Starbucks.
I make my coffee at home, but point being, does it give me what I need or want for the day? And is there something maybe longer term that if your resources could be applied differently if you're just starting to notice where you're spending money and whether that's truly giving you value in the short term. Or if that is a part of a bigger misalignment of your priorities
Ben Haas: Yeah, I love, I love the, the tangible part of like, just jot those things down and then that's what can generate conversation.
I've seen other couples and heard other couples who just try to come to some agreement that any expenditure over X amount of dollars is something that I would appreciate we talk about, right? It's not, it's not the, you know, hopefully no resentment over the buildup of there's Amazon boxes on the porch or yet somebody does really just like that Starbucks coffee.
That's very different than, Hey, I went out and made this huge purchase or I [00:10:00] surprised us with this big vacation, which is supposed to be a wonderful thing. But by the way, you know, I surprised you. We never really talked about it. And maybe that amount of spending didn't make you comfortable, right?
So maybe just make that an exercise and all this too, that helps you come to some middle ground on what those expenditures can be that I think you said it well, we're going to focus on saving and spending because that's the root of a lot of these conversations. We believe money is the tool to help you live the life you want to live, but there certainly is a balance like you said between what's really important to us and long term versus a dopamine hit.
Adam Werner: Yeah. And I think that one of the points you just made Ben was that what is so difficult, I think for many people, it's, it's walking that fine line between saving for the future at the cost of enjoying today. That's such a common battle for anybody going through this planning process with future goals in mind, trying [00:11:00] to thread the needle between still enjoying your money today. Right. You don't want to completely, devoid yourself.
Yeah. Of enjoyment, joy, short term. For what may or may not even come to fruition in the future, but you still want to be prudent about it, right? You want to do your future self a service by preparing. And you will thank yourself in the future, but yeah, there needs to be a good happy medium there to be able to maybe enjoy both or at least have your end results still happen and not completely have no enjoyment in the short term.
Ben Haas: So have the conversation like the saving and spending that is probably the most important conversation to have. If I can pivot to the second one, yeah, it's going to probably be that proactive communication around how do we feel we should plan ahead for any of the bad stuff that can happen, right?
Because I know that we talk about this in other podcasts as well. A lot of the point [00:12:00] in planning is to make sure that we have all the options before us right now, where once something bad happens, many of those options may have gone away.
I think it's really important to have that estate planning conversation when it's younger. It's who's going to care for our kids when it's the end of life. It's how are these things going to be divided and who are we entrusting with being the communicator to the rest of the family on, you know, what our estate wishes were.
Like you have to have that conversation.
Adam Werner: Yeah. Yeah. And then you take that one step further and thinking about estate planning, right? It's planning for when I'm not going to be around. what would I want to see happen from a financial standpoint? So does that need to include some type of insurances, right?
Life insurance, or maybe even disability insurance, right? You're still around, but you just can't earn maybe what you were earning. Everyone's going to have maybe a slightly different opinion on that. We certainly meet people that are incredibly adverse insurance.
Don't like the [00:13:00] structure, don't believe in it, but I'm going to self insure that would be something that should be a conversation in a couple so that, again, worse comes to worse, something happens that you at least have had the conversation and have some sort of plan and laid out that you're hopefully both on board with.
Ben Haas: I'd say the same thing around like just market volatility and market turbulence, you know, it's, I think it's important. I guess that's kind of building off of the whole savings conversation, like where are we saving, where are we spending? How are we allocating that savings should be some sort of joint conversation that here's how we're going to react, or here's, here's the strategy that we want to put in place so that we collectively can support each other and feel okay during bad times, but also, you know, celebrate the good.
Adam Werner: Yeah, I think that's a huge one because I mean, how often have we been in meetings and husband and wife, for example, may just have very different feelings on risk. [00:14:00] Sometimes there's a person that is fine to see market fluctuations, and I know things are going to rebound, and I can just block out the noise.
But then the other spouse may say, but then I can't sleep at night because I see these fluctuations and I worry about where we're headed or kind of the impact of negative events. And again, it all comes back to that psychological and emotional component where you just, you wouldn't want that to be too misaligned.
How are we going to deal with our investments? How are we going to deal with market turbulence because we know that when people make emotional decisions around their investments, when the market is kind of going through a phase of volatility, that's where you can take theoretical losses and turn them into real losses in your investments that make it hard to rebound from if you're moving from investments now to something super safe and secure, like cash at [00:15:00] the bank.
Those can have very huge long term implications. For retirement and so forth, you know, way down the line.
Ben Haas: Even there. So if that feels like a heavy conversation to come to some sort of conclusion on your own, or whether it's the insurance conversation, whether it's state plan conversation, even the savings and spending, all these conversations talking about.
It's okay to have a mediator like I think that's part of our job and I think that should be part of any financial planner's job is to not only facilitate some of those conversations, but try to funnel that down to make sure that as a unit, right, everybody's kind of getting part of what they need out of it.
Like there is a degree of compromise. I mean, relationship 101 compromise. So, you know, part of the reason we want to share this podcast is we can be that mediator to those conversations to make sure that we've got a plan, everybody's aligned to it, and if we keep coming back to the roots of what we said was most important and what [00:16:00] roles each person is going to play and what the parameters to these decisions are, then no matter where life takes us, we're on the same team and we're rowing in the same direction.
Adam Werner: Yeah. Well, and just to add one more thing on this topic, I think sometimes for a lot of people that don't live and breathe this stuff like we do, it's, it's somewhat hard to quantify impacts of, so use, use the market turbulence as the example, the fear of market volatility thinking my accounts are just going to go to zero and what am I going to do?
So just to be able to work with an advisor or some sort of media or just give context. To maybe some of those variables that, go back to the psychological component, in the absence of information, our mind will immediately fill in like worst case possible scenario.
Ben Haas: I just make stuff up.
Adam Werner: To yeah, and that that may not be fair in different [00:17:00] instances where.
Again, having leaning on a resource there, whether that's also the planner or some sort of other mediator to just guide that conversation and hopefully be able to give a little bit of perspective so that everyone's still playing in the same field and not just wildly often in different realms, hopefully just makes that communication a little bit easier.
I think people, generally speaking, I think people are often closer together in opinion than maybe they feel it just, again, human communication. And history between people can lead to conflict, even though their their opinions may not be that far apart.
Ben Haas: Well, I guess maybe this is a good way to summarize it.
Long term planning, we know is a hard thing, right? People live really busy lives. If you're still in that phase where there's kids. You're going in different directions all the time. These conversations are so important though.
There needs to be some accountability, and we can be that for people to just check in throughout this [00:18:00] process. Check in throughout the planning process that takes years and years to develop. We're going to be working towards that idea of, you know, what is enough? At what point are we finally reaching long-term goals, but we can pivot so many times throughout there.
And it's just really important for people to have those check ins to know that we're still moving in the right direction. I'm hearing what you say is important to you, you hear what's important to me, and we're working together on that.
Adam Werner: Yeah, yeah, it's that, you just touched on it there, it's that focus on what is enough in life, especially when it comes to the financial side of things.
To what end are we working? To what end are we saving? What end are we spending? Just getting clear on that, going back to the Carl Richard, just noticing, being aware of your spending and being aware of how that's impacting you. The what is enough conversation. I know we've talked about that in other podcasts, too.
That is such a [00:19:00] huge issue, or at least a topic that people should spend a lot of time thinking about. And of course, in a relationship that should include two people, because they may not necessarily have the same idea of what enough is, but to at least just get clarity from your partner of, okay, if my enough is here, but there enough is maybe a little bit further.
Now, I know that let's try to figure out how we're going to approach that moving forward and not just be okay, well, my enough is closer, so that's where we're going to stop because obviously that will not lead to long term relationship success.
Ben Haas: Yeah. And here's maybe the last point I'm going to make. I don't have data to prove this.
This is just anecdotal and our clients, but I think the days of, well, he handles the finances or she handles the finances is long gone. Like people have different roles that they fulfill underneath that relationship. You know, the working environment has changed. All of that. Everybody's got their own benefits. They've got their own income, all of [00:20:00] that stuff.
I think that's why it makes it even more important to make sure that you are aligned in these ways, because it's not just, I fully trust whatever they're going to do, I don't need to know anything, you know, God forbid I lose my spouse now I'll pick it up and try to understand it. The more that you both have things going on, the more important it is to be in line.
Adam Werner: Yes, well said.
Ben Haas: I don't know, I told you. I wasn't sure this would be a fun one and I'm not feeling like we got, you know, people are gonna be jumping up and down after hearing this but hopefully it was helpful.
Good info.
Adam Werner: It's important may not necessarily be the most fun, but it is important. In the absence of it being fun, if you don't do it as you stated earlier, what is it, 40 percent of divorces end up happening because of money related issues? So if you're not having these conversations, that's the risk.
Ben Haas: All right, sir. We will catch you next time. Thanks for the help.
Adam Werner: Yep. Bye.
Ben Haas: Bye.
[00:21:00]
Ben Haas: Hey everyone, Adam and I really appreciate you tuning in. Please note that the opinions we voiced in the show are for general information only, and are not intended to provide specific recommendations for any individual. To determine which strategies or investments may be most appropriate for you, consult with your attorney, your accountant, and financial advisor, or tax advisor prior to making any decisions or investing. Thanks for listening.
Investment Advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Great Valley Advisor Group and Haas Financial Group are separate entities. This is not intended to be used as tax or legal advice. Please consult a tax or legal professional for specific information and advice.