Sadly, debt issues oftentimes negatively impact relationships.
It is not that surprising because our money personalities are unique. There are many ways we can have differing priorities, especially compared to our spouse or partner. With such a wide variety of attitudes about our financial lives, it is imperative to have a financial plan. Among the many virtuous things about sound planning, one of the best (but least talked about) benefits is that the process helps couples better communicate about their financial needs and desires.
Part of any thriving relationship is for each person to understand the other’s values. Most of the time, there are some shared values as part of the attraction that brings folks together. The most successful couples start with having a great financial plan with thoughtful life goals that are in alignment with shared values. And where our values are different, there is potential for goals to look different. For example, one person may value prestige and status more than another. Understanding that can help each member of a couple agree to consider the priorities of the other in choosing the house they buy. This process of identification helps the couple to recognize the trade-offs that will have to be made for the financial plan. Open communication followed by tough prioritization of goals can help prevent a misunderstanding from causing major disagreements.
I suggest the following four-step process for cultivating a great financial plan involving spouses or partners:
- Commit to communicate. Agree to the creation of a financial plan that considers life priorities in the short, intermediate and long term. Take plenty of time to identify your shared values and priorities.
- Recognize differences in goals. Do not expect them to be the same (but hopefully some will be). Understand the trade-offs and seek agreement on the prioritization. Expect changes to occur.
- Act. The best plans come with actionable items that move people toward their life goals. Be aware of any behaviors and decisions that stand in the way of progress toward the highest-priority goals.
- Track progress and adhere to a flexible process. Financial life planning changes as our lives unfold. Sometimes the change is gradual, and tracking progress is easier. But when there is sudden change, a plan must be flexible and account for that.
We encourage you to work with your financial advisor as an unbiased third party on these steps. Managing your portfolio wisely and adhering to a financial plan can help to save on taxes, reduce risk and increase your chance of retiring by your goal date. But perhaps the greatest advantage of the planning relationship is the focus that it puts on communication between loved ones about life’s biggest goals and values. Sharing differences and getting in front of any possible challenges is perhaps the greatest benefit of a couple’s shared financial plan.
Rick Manske, CFP®, BFA™
