Ah young love; it is wonderful and carefree, but sooner or later reality will set in and differences of opinions will most certainly arise. As individuals we each develop a belief system based on our upbringing, education and life experiences. Even if you are fortunate enough to find a partner with similar values, it is likely that your views and approach to personal money management differ.
It is very important to make sure you and your partner are on the same page regarding your financial goals and how you plan to achieve these goals. Here are 5 ideas to help you get your significant other on-board with a sound financial plan.
- Recognize that this idea is based on YOUR view of the world: This is your idea and you are trying to sell this idea to your significant other, so you need to have a thoughtful and compelling storyline. Do not expect your partner to instantly change their entire financial management philosophy (or lack there of) just because you have a new “master-plan”. Take a step back and recognize that your financial beliefs, risk tolerance and method of money management are not necessarily the same as that of your significant other. Be prepared to dedicate time and energy to discussions regarding individual and family goals and how you plan to manage your finances in support of your financial goals. In short, a 5-minute conversation is not going to cut; this is going to take some time.
- Appeal to your partner’s desires: Think about your significant other’s long-term wants and needs. Are they interested in having kids (or more kids)? This may require upgrading to a larger vehicle, purchase a bigger home or investing in home improvements. Maybe travel is important, which of course also requires significant free cash as well. Having conversations with your partner about these goals and also talking through your own personal goals is great lead-in to a financial planning discussion. Your partner will see that your interest in building a savings plan is directly connected to helping he/she attain these goals as a team.
- KISS: (Keep It Simple Stupid): Now that you have your partner’s attention, it is the perfect time to explain your savings plan. In order to obtain buy-in from your partner it is best to have an easy-to-understand savings plan. If the plan it too complex or difficult to execute it may be viewed as burdensome or if too aggressive, as controlling. Simplicity is key! For example, it is much easier to explain that saving 10% of you and your partner’s combined income for 5 years will allow for the purchase of a new home, as opposed to “budgeting” every single household expenditure. Instead of focusing on “cutting back on Starbucks”, think about the big picture with this question, “Dear, do you think it is reasonable to live on 90% of your income, this way we can save 10% on the goals we talked about?”
- Explain the impact of personal debt: Debt is often a stressful topic for couples, and it is important to approach this topic delicately, especially if your partner has a significant, pre-existing debt load. Again, it is important to use the “team effort” concept during your discussions. For example, during your discussions you could use a chart that shows how long it will take to reach your home purchase goal if you are debt-free (or low-debt) during your saving years vs. having a heavy debt load. Immediately follow up with a specific debt reduction plan that you both participate in: “Dear, it will take us 5 years to save for our new home if we maintain our current debt loan, but we can cut it to 3 years if we do this…. (enter plan here, e.g. save an extra 3% of income to be put towards credit cards). You can also show your partner the true cost of carrying debt, there a few ideas in this article about that: Debt is a Killer; What was True Then is True Now – Opportunity Costs of Debt.
- Establish rewards for achieving financial milestones: “All work and no play makes Jack a dull boy”. Saving, financial planning, communicating; this is all hard work and it is tough to stay motivated. A savings plan is not a prison sentence and by no means should financial planning stop you from having fun. Spend some time thinking about the little things your partner likes to do and when you reach certain milestones give them to him/her. For example, Let’s say that you and your wife just reduced your debt by 25% or maybe you saved the first $10,000 of a $50,000. Well, it’s time to celebrate, go out for that special dinner at the new French restaurant she has been talking some much about. Just don’t charge it on your credit card….
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