A few years ago, we met with a married couple—call them Fred and Ginger—who came in wanting help planning for retirement.
“What brought you here today?” I asked.
Ginger answered, “We want to get our financial house in order. We’re on the path to retirement, and we’re not sure whether we’re in good shape.”
I turned toward Fred. His arms were folded across his chest, and he wore a scowl: “She made me come.”
I asked what their current living expenses were. Ginger, who paid the bills, answered that their annual expenses were approximately $300k. Fred thought they were half that amount. Ginger was interested in securing their financial future. Fred was more interested in maximizing their investment returns.
Fred and Ginger had different ideas about their current financial circumstances and their future financial outlook. Their case isn’t uncommon. We often see married couples who have very different ideas about money and how to manage it. A 2021 Fidelity Investments Couples & Money Study found that 48% of couples disagree on the age they plan to retire, and 51% disagree on how much they need to save for retirement.
There are also differences in temperament. One partner, for instance, might ignore money issues till they become emergencies, while the other worries incessantly about money to the point of being unable to enjoy day-to-day life.
These differences often stem from different financial upbringings. Marriage therapists know that the way your parents interacted with each other provided you with a model for how you believe married couples are supposed to interact. That model influences the ways you and your spouse interact and communicate with each other today. Sometimes the behaviors your parents modeled promoted a healthy relationship—and other times not. Part of having a healthy marriage is knowing what kinds of models your parents provided and evaluating whether or not those models actually contribute to a healthy common relationship with money.
Managing your money is like managing your marriage. The way your parents managed their money provided you with a framework for managing your own money. Perhaps, for instance, your parents fought about money. Alternatively, maybe money was never openly discussed in your household. Whatever the details, the model they provided influences how you’re inclined to manage money today—for better or for worse!
What you saw and heard about money as a child—the attitudes about money you inherited from your parents—have become part of your financial DNA.
Your spouse likely had different experiences around money and therefore has different financial DNA. Part of managing your money well is knowing about the different financial DNA each of you brings to the marriage and evaluating what that DNA can contribute—positive or negative—to your financial well-being.
Evaluating your financial DNA is part of what financial planners help you do. They also help mediate compromises. Fred might want to save for a vacation house on the coast, whereas Ginger wants to save so they can both retire early. These goals are probably mutually exclusive. Sorting them out requires compromise. But compromising about money is something many couples struggle with. Financial planners can help couples find a middle path so your most important goals can be achieved.
Here are some tips that you and your spouse can use to manage your money more effectively:
- Manage the financial DNA you have, don’t try to remake it. It’s unrealistic to suppose that you can change your financial DNA. Those ideas and attitudes toward money are already deeply ingrained in your behavior. It’s instead a matter of learning to manage the financial DNA you have, so you and your spouse can work together to achieve your financial goals.
- View money management as a team effort. Some couples are all-or-nothing about their money management roles: one spouse manages all money-related issues with little or no feedback from the other. But money management roles needn’t be all-or-nothing. And often it’s best to view money management as a team effort with different people playing different roles to achieve a common goal.
- Work with your financial planner to clarify your long-term financial goals and make ongoing adjustments to ensure you reach them. Financial planning is an ongoing process similar to working with a personal trainer. As your level of fitness changes over time, your trainer adjusts your workout routine to ensure you continue making progress. Likewise, as your financial condition and goals change over time, your planner helps you make adjustments and reset priorities, so you continue moving toward those goals.
- Realize that money is just a tool for achieving your goals. Money is more than just green paper in your pocket or a digital entry on your bank account app. Money is a tool for accomplishing things—a medium you can exchange for things you value. If you and your spouse have different financial DNA, you probably have different views of what money is. You need to come together and view money as a tool to achieve the goals you have in common.
- Work with your financial planner to develop a plan that calibrates your level of risk to achieve your goals. Risk can’t be completely eliminated from financial life. It can only be managed. The right way to manage risk is to develop a decision-making framework that evaluates risks and rewards and aligns your investment choices with your long-term goals.
- Don’t search endlessly for painless financial solutions. Some financial problems don’t have easy solutions. They require tradeoffs, just as some health problems can’t get fixed by taking a pill. If Fred and Ginger have different and incompatible goals for retirement, they’re going to have to work out a compromise that’s in both of their best interests.
- Be coachable. Learning how to take advice from others is an important life skill. It involves being open to change, and being able to listen to advice that could reveal different and better ways of doing things.
- It’s okay to say you don’t know. The financial planning landscape is extremely complicated. You can’t know everything. Give yourself permission to acknowledge your limitations. Seek independent guidance and expertise to help you make smarter decisions.
You and your spouse love each other. That’s great! But just because you love each other doesn’t mean you have the same way of making financial decisions; it doesn’t mean you have the same financial DNA. Life is something you want to experience and enjoy together; it isn’t just a series of problems. To get on with enjoying life, you and your spouse have to work together to create a successful approach to money. Each of you needs to reflect on your own financial habits and recognize your strengths and weaknesses. Start there. Ready for a real conversation?