By Daniel Wrenne, CLU, ChFC, CFP, Guest Writer
How many times have you had an innocent money conversation with your spouse that didn't go so well? The infamous money argument comes out of left field and you're left reeling, wondering what went wrong. According to the 2010 American Express Spending and Savings Tracker, discussions on household finances lead to arguments among 72 percent of young professionals.
Two things further intensify these challenges for the training physician – lack of time and money. Heck, you’re hard pressed to see your spouse much less talk money with them. You are in a position where you must be disciplined with your time and money otherwise things can go south in a hurry.
As a financial planner, I am certainly not immune to these struggles. Today, I would describe my wife and I as financially happy. But we have had our fair share of struggles. I love my family more than anything and that’s never changed – it’s just that this finance stuff is hard. Through my experiences in my own relationship and dealing with my clients’ personal finance challenges, I have learned a few simple habits and practices that work and I would love to share.
Family Financial Roadmap
Do you and your spouse have value clarity? Do you know where you are going, why and how you will get there? Can you point out where you are on the map and how close you are to the destination? Have you set up guardrails to keep you on track? Are you and your spouse working off the same map? Many people – very smart people – are lost.
Clarifying values and developing your family's financial roadmap (or Financial Plan) is crucial. If your map is outdated or non existent, carve out time to have an open and honest conversation with your partner. The conversation should involve defining what the two of you value most. Clarify what is most important for your family in this life and why. Identify your destination – short and long term, where would you like to end up financially? Determine how you are going to get there. Set specific short term goals that will propel you in the right direction.
My wife and I work through this exercise annually. The meeting consists of us working through answers to the following questions:
- What does our current financial picture look like (summary of net worth, expenses, tax planning, cash flow, insurances, investments, estate plan, etc)?
- How did we do last year with our goals?
- Have our values and/or short & long term plans changed?
- What are our goals for the coming year?
The Ultimate Partnership
Remember, “until death do us part”. Great couples function as one unit. It's not my money or your money, it's our money. When financial challenges creep up, there is no need to assign blame. Instead focus on coming up with ideas together on how to improve. The next time a money problem pops up, even if you're absolutely certain it's the other person's fault, don't point fingers. Take 5 seconds to mentally prepare before the conversation. Approach it with love and consideration. This small effort will make a big difference.
Developing an understanding of each of your strengths and weaknesses will help you work better together. It’s very difficult to self-diagnose weaknesses. Encourage your spouse to point them out and listen with an open mind. Own your weaknesses instead of denying them.
Define Roles & Responsibilities
You must be clear on who is going to do what. Figure out who is going to be managing and paying the bills, performing monthly reporting, managing assets and liabilities, completing paperwork and handling the big picture planning. Whomever is handling each respective task should keep the other in the loop and bring them in when bigger decisions come along. In our case, I handle insurances, investments, other planning, paperwork, and tracking while my wife handles daily cash transactions like paying the bills, bank transactions and depositing checks.
Transparency Is Freeing
Great relationships are built on trust. Marriage is the ultimate partnership – a lifelong relationship. Does your spouse know absolutely everything about you financially or are you hiding certain things? If you are hiding certain things, you have likely convinced yourself it’s for the better. Trust me, it’s not. Pure transparency is the necessary foundation for a trusting relationship.
If you’re a money nerd and tend to handle most of your family’s personal finances, don't keep your spouse in the dark. Involve them as much as possible. If they are slow to jump on board, give them time.
Time Is Precious
According to the AICPA 2012 Finances Causing Rifts for American Couples Report, 55% of people married or living with a partner said they do not set aside time on a regular basis to talk about financial issues. It should be no surprise money is a big problem in many relationships.
Everybody is busy. Many medical residents and fellows – particularly those with spouses also in training – take this to new levels. Consider time your most precious resource in maintaining a happy marriage. Kim Blackham, a licensed marriage therapist specializing in working with medical marriages, does a great job expanding upon this in her blog post “Surviving Residency and Making Medical Marriages Work“. She says, “Time together is worth more than anything. Guard it, protect it, and buy it when possible.”
The busier you are, the more intentional you must be. Schedule regular times to prepare for and have money talks with your significant other – literally add it to the calendar. Otherwise the money conversations will be random, off the cuff and often unproductive.
Here is my agenda for the repeating monthly financial review meeting I schedule with myself:
- Update family net worth tracker
- Update prior month cash flow tracker
- Dig into expenses (only if necessary)
- Review investments & insurances
- Complete paperwork & other tasks
- Send my wife email summary
- Schedule time to discuss with my wife
Communication Is King
Talking about money alone doesn’t fix anything, and in many cases makes it worse. It must be the the right type of communication to become king. Every conversation you have about money has the chance of becoming emotional. Try listening to understand instead of listening to judge or evaluate.
Intentionally work on having loving, empathetic conversations. Work to be on common ground with your spouse. Both parties must have an equal vote. Know your spouse – men and women are different! I learned from John Gray in his book Men Are from Mars, Women Are from Venus that women generally want empathy, and men typically want solutions. Cater to your spouse's needs above your own.
Sometimes great communication simply involves getting started on the right foot. I send my wife an email each month after I compile our prior month numbers to tee up the conversation. She always responds favorably and ultimately our conversation gets started on the right foot. It's setup like this:
Subject: Personal Finances Update
Hey Honey,
I just completed last month’s numbers and as always wanted to keep you in the loop.
Last month we had $$ total cash at the beginning of the month and $$ at the end. Total inflows were $$ and outflows $$. Our target spending was $$ and we went (over or under) by $$.
Our goal was ____ and we did ____.
We/You did really well with ___.
I think I/we could improve ___.
Some things I wanted to discuss with you are ____.
Can we discuss this more (time/date)?
Love you!
-Daniel
Control Your Money
Control your money, otherwise it will control you. Having control over your money requires spending and values awareness. I believe Carl Richards coined the term “Values-Based Spending” to describe this idea. He wrote a great book called The One-Page Financial Plan that explores and simplifies the behavioral side of financial planning. This values/spending awareness allows for better alignment. Values and spending alignment produces greater happiness and reduced stress. Alternatively, stress builds as spending and values deviate from each other. Awareness of how this looks in your life is the critical starting point.
How do you increase awareness of your spending and values alignment? Well, first you must have value clarity which we already covered. Assuming that’s clear, it’s all about viewing your personal finances through the value lens. You want to learn to measure your finances based on what's most important to you. It's not about net worth, growth rate, or how much you spend. Although those things are important, I am telling you to measure your finances based on what's most important to you.
Here is how my wife and I do it. Our personal finance systems are designed to help us accomplish the following (in the least amount of time possible):
- Measure what we think we are spending vs. what is actually spent each month
- Keep a pulse on trends with cash reserves primarily and net worth secondarily
- Generally understand expenses without having to analyze every single month
- Audit expenses every so often or when #1 is off
When we “audit” expenses, it’s from the lens of our values. This process shines the light on our values and spending alignment. We do this by going through the following steps:
Gather and categorize transactions for the calendar month under review (We go old school and pull bank and credit card paper statements for all accounts used during the period to provide the data. I advocate simplicity – we use 1 checking account and 1 credit card so this isn’t too painful, although as noted, we prefer to avoid it.)
- Go through each spending category and ask the following three questions:
- Does this expense align with our values today? (Yes or no – maybe not allowed)
- What is the value it aligns with?
- Is there a substitute that might cost less?
- Where could we redirect the cost savings to best align with our values?
- Use the results of #2 to make a couple of positive changes that improve value/spending alignment. This makes expense reduction exciting.
This process provides us with a regular checkup of how our values and spending align. It's never perfect and in some cases surprisingly misaligned. The resulting awareness is key. It either motivates us to bring our spending back into alignment with our values or it reassures us that our spending is aligned with what's most important in our lives. It helps us keep control over our money. Managing finances by itself is pretty lame (except for nerds like me). On the other hand, values are motivating and something you should really be excited about.
What's most important is that you take action. I challenge you and your spouse to get clear on what's most important in your life. Start small and take one step that propels you toward your definition of a better marriage financially.
What do you think? What strategies have you used to maintain a financially happy relationship with your partner? What are you planning to try to improve? What struggles have you had? Comment below!
[Editor's Note: Daniel Wrenne, CLU, ChFC, CFP, is a financial planner and the owner of Wrenne Financial Planning. Wrenne Financial Planning is a paid advertiser and a WCI Recommended Financial Advisor, however, this is not a sponsored post. This article was submitted and approved according to our Guest Post Policy.]
Thank you for the post, Daniel. Clearly, it is important for partners to be on the same page, or at least the same chapter for both to happy with the way money is handled in the relationship.
Your career and life revolve around handling money, so the structured monthly financial meeting to update your spouse might make sense in your world. Personally, I think once or twice a year would be plenty for my wife and me. There are so many other facets of our family life that are important; a monthly update might make it seem that money is the top priority. And things generally don’t change that much month to month, and if they do, the changes (i.e. net worth down a lot in January) are often transient and don’t apply to the big picture.
Your welcome! Yes, I agree this should all be based on circumstances. Some would probably be fine w/ less frequent updates – for me personally, I do best when I update every single month, especially when life gets crazy, like right now (for us). I suspect all this will change over time and is different for everyone. But like you said, the key is that people are at least on the same chapter. I see some people that aren’t even reading the same book.
I do all the financial stuff in the house, pay the bills and look over CC and bank statements and do investments as well as vacations. I also clean the house and play w kids. 🙂 We used to have rough idea of our net worth (turned out its was pretty accurate). I used to hide our bank balance in the fear she would spend more, if she knew we had 250K in there.
Then we started using personal capital. It gives us the exact net worth day to day if we need it. Plus having all my accounts in one place, gave me peace of mind that she can look where the accounts are in case something happen to me. I have shown her how to go the website and I dont have to hide anything any more.
Since I do all the vacation planning as well, my CCs run high monthly. Her’s is mainly full of groceries. We do talk a lot about Groceries when you are spending 200 to 300 a week (though cant help much as we want to eat more perishables fruits, veggies and all organic).
I only make her look at her CC statement if she is going over 2K a month on her CC. I have never stopped her from spending, just ask suggestions how to bring it down. We have always paid our entire CC every month.
She always wanted a country house, but due to my job we have to live in the city.
She really wanted a second home in country but when she realized I dont want to work another 5 years to pay for it, she relinquished. It took over 2 years to convince we dont need another home, if I want to start cutting down on work by age 55.
Environmentally conscious we have decided to work on our current home instead, like having solar and geo thermal. And that has cooled her down. Having two kids and running every where for the classes also have managed to convince her we simply cant enjoy a second home right now. My little one now is saying she wants a pony, so I have to figure out how to make that happen, any ideas?
Few years back when I started reading WCI and started managing my own finances, I was not sure and used to tell her what I was doing. If I used to buy anything big in stocks I would talk w her before I would buy, how ever lately since I no longer buy stocks only Vanguard MF, and do automatic monthly investments, if I put some extra money if markets are down I may or may not tell her, since we both know the goals.
We do talk about how much in 529 and what total net worth and what to do with the incoming money maybe for 5 minutes once a quarter. Or if we reach a new landmark in our net worth.
I have invested 20% of our portfolio with Edward Jones guy who is very close to her mom. Even though she knew EJ did not coincide with our investment philosophy , it has taken me 3 years to slowly bring it down to only 8%. I still have hope to one day bring it to 0%. Pulling some articles from WCI and leaving them open on her desk top have also opened her mind.
I am really happy and some times think its all a dream. I do keep praying that we all maintain our health and enjoy the fruits of my labor and fortune for generations to come.
WCI for some reason the comment box is coming out very tiny, one can make it long but not broad.
Not sure what’s up with the comment box on your screen. Looks fine on mine. Try clearing your cache.
Regarding the pony, that’s going to be tough in a city. Why not have her do some riding lessons? There is horse property near us and our horse/unicorn/rainbow fairy daughter is going to do a few riding lessons because there is no way I’m buying a pony.
Anything that flies, floats, or is a pony – rent it. The children get bored of these things very fast especially when they are asked to take care of them. Riding lessons with lots of pictures – may be one framed big, will be the flavor of the day one day, and forgotten the next.
PK, you must love your wife.
thanks for a nice comment 🙂
Respect and appreciate your differences. I am a fast thinker: logical, analytical, mathematical. My husband is a slower thinker: creative, artistic, imaginative. Both ways of looking at the world and finances matter and complement each other. When we come to the same conclusion, we know we are making the right decision. Because time is precious, we divide and conquer. We don’t waste time second guessing each other. Personal finance is mine currently, although it has been his in the past. When I get stuck in analysis paralysis, he can quickly get me out with one of his “moments of brilliance” as my kids have dubbed them. We discuss finances annually unless something has changed that I need input on or feel needs to readjust our course. As an example, I was struggling a few years back on setting a reasonable emergency fund. I finally asked his input, ready as always to over explain my thought dilemma. Before I had even finished with my tortuous thought process in reaching my number, he spit out a number 6K higher than mine – apparently totally off the cuff. When I asked him why that number, he had a brief easy answer. I told him my number, we went with his. Whole issue over in just a few minutes. As I have said before, if we were both the same, then one of us would be unnecessary to the relationship.
Great addition! My wife and I are very different as well. I am not sure how we would manage if she was just like me 🙂
WCI – yes this article is a little more touchy-feely but without the ability to maintain a healthy relationship with your spouse while working on shared financial goals, relationships can/will deteriorate and that almost always leads to deterioration of your financial situation as well. As others have said: one spouse and one house are the key to financial security in the long term. So it may not contain any technical guidance, but is incredibly iseful as a way to understand through both the post and comments, what has worked for others that may be valuable to employ.
I have only been married 4.5 years, and I handle all of our finances. While we have been very successful at building our net worth from the outset of our careers (mine 13 years ago and my wife’s first attending job 6 months ago, with a net worth of 3x our gross salary), the outcome is not necessarily more important than the process. I am still learning how to balance input from my wife around our priorities with my responsibility to take care of all of the details. At times she wants no input and at times she wants more consultation. Off-the-cuff conversations do not seem to consistently produce the desired outcome, and so for us some of the structured conversation even if only quarterly for every six months would be worthwhile trying.
Thanks for all of those who share their own experiences- much appreciated!
Daniel – I enjoyed reading your article. Great ideas, especially for couples starting out.
Very good post! Thanks
Thank you for good post. And a good link, too!
I used to have my foot on the accelerator. My wife was my brakes. Now, while I have learned how to apply brakes, I taught her to loosen up the purse strings a little .
I still remember pre-marriage counseling – one of the things our minister said that always stuck with me was that happy couples often start out very different and over time move to the center by becoming more similar (aka becoming one). He pointed that out because our personality tests revealed big differences. Sounds like you have done a great job with it!
I definitely have seen that happen in my 8 years of marriage. Not just with money matters, but with things you wouldn’t expect, like a penchant for craft beer, and mutual appreciation of mid century modern furniture.
Great article, thanks. Took my wife and I several years to figure out some of these things. I especially found the “OUR money” concept to be very challenging during the first year or two. We are now very much on the same page with short and long term financial goals.
Thanks! That’s great to hear you’re making progress. Unfortunately some couples never figure the “our money” thing out.
I’ve set up the mint account to monitor everything, that’s been a useful tool.
I wanted to do money meetings as described in this post, but it never worked out and we quit doing it. Probably mostly my fault really.
All I want to do is quit, so I want to save everything possible and live way way below my means. It’s a pretty unhealthy relationship with money that I have.
She is relatively conservative but still wants at least a middle class lifestyle, and I get that.
So the meetings didn’t work for us, and it’s my fault.
Lots of red flags for me in your response. Maybe wideopenspaces will come along and add something too. Financially you seem out of balance. Perhaps spending a little more now whether for fun or for improving your work environment would be helpful. In your rush to quitting remember with taxes the government punishes the sprinters. Earning a little less for a little longer might help. Finally, depression can help actually improve your finances if you can get it under control. One particular study looked at people’s response to a random pattern on a computer screen. Most people found patterns that weren’t there. (Think technical analysis.) Depressed people did not see patterns – many interesting applications. If you have kids (or not), watch Disney’s Inside Out – spoiler – sadness wins. Sorry if this comment is too much or doesn’t apply. Maybe it will for someone else. Best wishes.
I agree. There are definitely relationship concerns there. You guys have to get closer together on money for the relationship to flourish long term. Middle class lifestyle, a physician income, and early retirement CAN go together. The biggest concern is that all you want to do is quit. Have you considered reading “Stop Physician Burnout” that I discussed a few weeks ago? Hopefully you’ll find a way to enjoy the job more. Very little is worth misery at work for decades.
As we prepare to finish residency and move toward a completely different financial position, I’m trying to run back through the basics. Originally skipped over this post thinking I wouldn’t learn much, but have found it to be one of the most useful I have read recently. I handle all of the finances, insurance, budgeting (Spreadsheets – I’m the Dave Ramsey “nerd”) My wife is fairly apathetic on her own, but does her best to indulge me. I get long winded trying to explain the concepts and 50 year plan every time money comes up and I catch her interest. The tip about sending an email is pure gold. She can read it on her own time without feeling like she is in a financial summit and I don’t stick my foot in my mouth. Thanks.
That’s really great to hear – glad it was helpful! I have had very similar experience myself and hear the same from clients that implement it.
Just curious how some of the other couples are setting up their finances structurally. As I’m a novice to this I was originally planning the following if anyone has any suggestions to improve:
1) One joint account (we both use BOA currently) that would have all our income deposited into and would allow freedom to withdrawal cash as needed, pay bills automatically
2) High yield savings account (not sure which one yet will research)- would deposit all remaining money at the end of the month into this, and as I assume only is allowed 6 withdrawals a month I could use that for large deposits into yearly Roth contribution/other investments/emergency money
Just stumbled across this article. I just became financially literate about a year ago thanks to your book, WCI, and have had a very hard time trying to get my spouse to be on the same page. I have been doing backdoor Roth IRAs, starting and funding an HSA account, starting an individual 401k, and want to put chunks of money every month towards paying off student loans. I am a “delayed gratification, prepare for the future” type of person so this makes complete sense and feels great to me; however, my spouse is a “let’s build memories” person. We have kids who are getting older (oldest is 13) and she feels I am being extreme and too focused on money and will in the future regret missing out on opportunities to build memories while our kids are still at home.
We have tried to compromise by me allowing our kids be in moderately expensive extracurricular activities, going on a family vacation every other year instead of every year, etc. She also wants to give to others, which I love about her, and I like to do as well, only I want to get ourselves on solid financial footing first since we still have a negative net worth. However, she sees it as being a mistake by bypassing opportunities to help others in need NOW in order to selfishly focus on our own financial security before helping others, because, as she sees it, we are already much better off than most other people since we have a stable, high income career. I have tried in the past to get her to read some of the books I have been reading so that she can understand where I was coming from, but she has resisted. Finally, after another financial discussion today that did not go super well, she asked if she were to read one financial book, which one would I have it be?
So, my question to the forum is, which book would you have her read to get her to a basic financial literacy level and hopefully get us closer to being on the same page?? Any input is appreciated.
This isn’t a financial question, it’s a relationship question.
You’ve heard the phrase “It’s cheaper to keep her,” right? Reading between the lines, I think you need to really, really spend some time thinking about that until it sinks in. It sounds to me like you’re the extreme one in the relationship.
Find a compromise, and I bet the appropriate compromise is going to be a lot closer to what she is wanting than what you’re wanting. Make sure you’re saving “enough” (I define that as 20% of gross for attending physicians for retirement) and spend/give the rest guilt free.
One family vacation a year sounds ridiculously low and one every other year is borderline insane. Go on some trips, give some money away, and spend time with your kids or I think it is very likely you’ll regret it.
I hope that wasn’t too harsh. It sounds like you guys are making progress. She’s willing to read a book. Have her do so. Perhaps Clement’s How to Think About Money. Read it together, talk about it, and apply the principles in your lives. Keep talking, with professional assistance if necessary. The relationship matters more than the retirement date.