Couples and Money – Part II

This article was originally published for RC Peck’s Fearless Wealth Newsletter in May 2008.

I think you’ll agree that couples can have problems when it comes to talking about money, and that the four ‘problems’ we talked about in Part 1 of this article can interfere with that dream of happily ever after: 1) Unrealistic expectations; 2) Fighting about money; 3) Thoughtless action or inaction; and 4) Men and women handle stress differently. And there’s another one (as if these four aren’t enough): People have different money personalities, and chances are good you’ve partnered with someone who thinks differently about money than the way you do.

Take a test with me right now. Read the following three categories and choose the one that describes you best, and then the one that best describes your partner:

Are you more of the Top Ramen or filet mignon type of spender? A Top Ramen spender controls his or her spending. A filet mignon spender acts as if he or she is sure to get hit by a bus tomorrow, so they better spend everything they have and then a bit more.

If you’re living way beyond your means and have credit card debt, then you are closer to the filet mignon type of spender. If you are a saver and live within your means, then you’re closer to the Top Ramen lifestyle.

The next category is about risk tolerance. Are you the roulette wheel investor or are you more likely to be the tic-tac-toe investor? How do you feel when you invest? Does investing get you excited and make you want to learn day trading?

If it does, then you are closer to being a roulette wheel investor. If, however, your investing approach is to put money in a CD or cash, then you’re closer to being a tic-tac-toe investor. Neither extreme is good for your wealth.

This last category is about being a team player or a captain. Are you a team player, like in doubles tennis, or do you like to solve problems on your own, the way a captain would? If you like to solve problems on your own, and have low interest in consensus building, then you are probably closer to being a captain.

If you like to build consensus and work as a team to solve problems, then you are more likely to be a doubles tennis player. I find that the couples who thrive in regard to their wealth management work as double tennis players, and not as two captains or a captain and a mate.

At this point I’m hoping that you’re asking yourself what you can do to improve the way you and your partner interact so that you can grow your money. You have many choices, and I have found that the four steps below work extremely well.

Four Solutions for Improving Wealth Management Team Work

  1. Develop a Financial Plan that you will actually follow. The key words are actually follow. I’ve seen too many couples who bought a plan and then put it on the shelf, never to look at it again. You’ll need to work together to set goals that complement your wants (a financial plan has to be developed before it can be followed and monitored).

    I know this my sound obvious, yet very few people are willing to spend the time it takes to make a plan. What you’ll want is a plan that reflects your dreams, and then you’ll have to act to put the plan to work. The plan should include your goals, a list of all your accounts, a section that shows your monthly income, a section that shows your monthly expenses and a section that shows your current investments.

  2. Share Responsibilities. You must work as a team to get what you want. It is critical that you both become involved and keep aware of what is happening with your wealth.

    Be certain that both of you can clearly articulate your partnership’s assets and debts, and that you both know how to locate back-up documentation. Sharing responsibility means that one partner may manage the short-term goals, long-term goals and investments while the other is managing the income, expenses and account balances.  Teamwork builds intimacy.

  3. Monitor Your Money. This may be the most overlooked step. Once you have a financial plan and are sharing the responsibilities, you will then want to monitor your wealth every month.

    Yes, you read that correctly. Every month. For 60 minutes you will sit down with your partner and take a look at what your wealth has done for that month. You’ll start to notice that if you can monitor your wealth, then you can grow it, and grow it more effectively. Monitor what you save, what you spend and what you grow.

  4. Get a Third Party Advocate. Danger! Do not try this on your own. As you already know (or maybe you don’t), money conversations are charged with energy. You’ll want to bring in a third party advocate who can support and guide you in getting what you want. That person, at a minimum, should be a Certified Financial Planner® who has worked successfully with couples in their money management. It will be worth your investment to get that third party expert to work with the two of you to build a plan.

The process of building the plan that matches your and your partner’s dreams can be an exciting and, actually, a relationship building experience. Enjoy.

RC’s Signature