Things Most Advisors Don’t Tell You #4:
Financial harmony in the home
Ever heard the saying, “No man is an island”? It means no one is so self-sufficient that they don’t benefit from the help and comfort of others. It also means that no one is so isolated that their actions affect only them. The decisions we make – including those related to our financial goals – always have an impact on other people.
One of the saddest and most common obstacles people must overcome is a lack of financial harmony in the home. This can happen when two or more persons (usually spouses, but not always) have:
- Competing goals
- Different attitudes about money
- An unequal relationship
- A lack of communication
According to one study, finances are “the leading cause of stress in a relationship.”1 Often, the cause of that stress is no one’s fault. Maybe one spouse lost their job, or a partner is up to their neck in medical bills. But sometimes, that stress is entirely avoidable.
For example, let’s take a hypothetical couple, Bob and Betty, and go through some common scenarios.
Competing goals. Betty wants to start a business, but Bob wants to travel. How do they allocate the time and money it takes for each to do what they want?
Different attitudes about money. Bob is a natural risk-taker and prefers to invest in riskier assets that offer potentially higher rewards, so they have more money to do all the things they want in life. Betty is more conservative and wants to ensure they never lose their hard-earned savings, so their family will always be protected. Neither approach is necessarily wrong, but how do they create a balance so both can sleep well at night?
An unequal relationship. The classic example here is when one person in a relationship “handles the finances” and the other…doesn’t. This could mean, for example, that one decides where every dollar goes while the other has no input. Or, it could mean that one pays all the bills and balances all the checks, while the other spends impulsively. How do Bob and Betty leverage boththeir skillsets while balancing the workload and ensuring both have an equal voice? (Often, this problem is the main culprit behind financial disharmony.)
A lack of communication. This one stems from – and worsens – the others. Bob and Betty have different goals – and they don’t talk about it. Which means no planning and no prioritization, just competition for limited time and resources. Bob and Betty have different attitudes about money – and they don’t talk about it, which means each one’s habits stresses the other one out. Bob and Betty have an unequal relationship – and they don’t talk about it. Which means one of them will always feel overworked, unappreciated, and unheard.
Maybe even un-loved.
Any of these situations can destroy financial harmony in the home, and when that happens, it makes reaching both individual and family goals so much harder and less pleasant. In many cases, it means some family members never even get to try. That’s why financial harmony is so important. Because when you have it, loved ones work together, each lending their talents and experiences so that everyone gets to achieve what they want in life.
None of this, of course, is meant to suggest that you don’t have financial harmony in your home. I simply want to show how important it is, not only for a family’s financial success, but for their sheer happiness, too. But what if you don’t have financial harmony in the home? What’s the solution?
Well, I’m not a relationship counselor, and there’s no way to cover this entire subject the way it deserves in just one letter. But in my experience, there are two simple steps you can take. The first is to work with an experienced financial advisor who can help create a plan for your entire family. A good advisor can help put your entire picture in view, so everyone can understand the “what, when, where, why, and how” of working towards your goals in life.
The second is even more important, and you’ve probably already guessed it: Communicate. Have a discussion with your family about goals, feelings, and opinions about money. When you’re all “reading from the same sheet music,” the result can be glorious music instead of strident cacophony.
I hope you enjoyed this blog. My next will be the second-to-last in this series. Want a hint as to what it’s about? Here it is: Why working towards your goals is like driving in an unfamiliar city – and how to make the ride go much smoother.
1 “Fighting with your spouse? It’s probably about this,” CNBC, February 4, 2015. https://www.cnbc.com/2015/02/04/money-is-the-leading-cause-of-stress-in-relationships.html
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