Meet Nancy*. She’s a 55-year-old mother of two with a career she loves. But now that her youngest has finished college, Nancy is thinking about scaling back work to spend more time with her new grandson.
With an empty nest, Nancy thinks she and her spouse can handle the reduced income. Although her retirement savings are modest – Nancy chose to work part-time while her children were young – she trusts that her husband’s retirement fund will see them through comfortably, especially since he doesn’t plan to retire anytime soon.
Or so she thinks. The truth is Nancy and her husband have never seriously discussed their retirement plans. She has no idea at what age he plans to retire or how much money he’d like to have saved by then – or whether his thoughts on either of these things match her own.
If you can relate to Nancy’s story, you aren’t alone.
According to a Fidelity Investments 2018 Couples & Money Study, more than 4 in 10 couples disagree about the age they plan to retire and 54% disagree about how much money they should have saved by that date.
Retirement isn’t the only financial talk couples avoid, and avoidance isn’t the only cause of financial disfunction in relationships. In a recent online poll conducted by Credit Canada and the Financial Planning Standards Council, a third of Canadian respondents admitted to lying about their finances to a romantic partner. And, not surprisingly, the same number said they’d been on the receiving end of a financial lie.
Lying about your finances, or just not talking about them, can damage the foundation of trust and transparency needed to maintain a healthy relationship.
So why do we do it?
Money is emotional
When Nancy chose to work part-time in the past, she had her husband’s full support. A few years later, when she ramped up her career, that support never wavered. One might think this would make it easy for Nancy to be open about her plans now, but it’s actually had the opposite effect.
Nancy is afraid of letting her partner down. Even though she contributes a significant amount to their joint income, she’s concerned her spouse will see the disparity between their retirement savings as, well, a little unfair.
Fear just might be the second biggest reason people avoid discussing or resort to lying about their finances. There’s also things like pride, shame, the need for control, and a lack of trust.
No matter how we look at it, money is emotional. And often, the emotions that keep us from discussing our finances openly with our partners – like guilt, fear and anxiety – are the same emotions that get us into financial messes that are even harder to discuss. The problem is perpetual.
Now, you might be thinking the solution is obvious: just talk about it. Just tell the truth! But that’s easier said than done. Because do you know the number one reason couples don’t talk about money?
To avoid a fight.
So, what do we do about it?
Start by putting it all on the table.
Be honest about your financial situation. Tell your partner the cold hard facts (and by that, we mean show them the numbers), and ask them for the same. In a committed relationship – especially one where you share financial responsibilities and goals – you should have a clear understanding of your partner’s finances, and vice versa. If you’re only focused on your money, you’re only seeing half the picture.
Your partner should not only know the state of your finances – they should have access to this information. In the Couples & Money Study, 3 in 10 couples disagreed about whether they’ve shared important access information, like account passwords, with their partners, while 1 in 5 disagreed on where important financial and legal papers are kept.
If something were to happen to your partner, would you be able to access all their financial information? Would you even know where to look? What if something happened to you?
This level of honesty may feel scary and uncomfortable, but that doesn’t make it any less important. Once everything is on the table and you know where you stand as a couple – financially and emotionally – you’ll be ready to take the next step.
Work together to make a plan.
Figure out your net worth. Set a budget. Keep an open record of your spending, saving and investments. And schedule regular check-ins (like a date night, but one where you talk about money instead of spending it.) Be specific when talking about your future, including when and how you want to retire.
When planning, consider your differences and similarities, and look for opportunities to support each other and compromise. For example, if one of you is a generous spender, agree to discuss purchases over a certain dollar amount first and wait 24-hours before making a decision (for more tips like this check out our FREE E-BOOK: TOP 10 FINANCIAL TIPS). If one of you is a conscientious saver, budget for individual discretionary funds that you can each freely spend (or save). And if you’re worried these discussions will lead to a fight, set some ground rules (like ‘no name calling’).
Ask for help.
We seek outside help when we have challenges in other areas of our relationships. We should seek help with managing our finances too, especially when it comes to our long-term financial goals. Because even with a plan and ground rules in place, money is still a touchy subject.
An objective professional, like an advisor, can help you talk through your challenges, focus your priorities, and find common ground. In fact, couples who work with an advisor are more likely to agree more often on financial matters than those who don’t.
In Nancy’s case, the couples’ advisor helped them to align to a retirement plan that allowed her to spend time with their grandchild now, while also ensuring they’d have the financial resources they’d need to support themselves and their loved ones in the future.
Talking about your financial future can be a positive experience that brings you closer as a couple. By working together to achieve shared goals, and supporting each other in pursuing individual goals, you’ll strengthen your finances and your relationship.
It worked for Nancy. And it can work for you too.
* Nancy isn’t real, but her story is true for many of our clients. If you feel like Nancy, reach out to one of our Wealth Advisors today. We’d love to help you and your partner create a wealth strategy that meets your short and long-term financial goals.