How to Approach Financial Counseling for Couples
I view wealth through the lens of overall happiness. Which is to say, if you’re a billionaire who doesn’t have much fun, you’re not actually wealthy. We earn money so that we can enjoy the finer things in life; we don’t find enjoyment just by earning money.
With this philosophy steering the ship, I find myself looking past the dollars and cents and digging a little deeper into my clients’ relationships. I’m not a therapist and would never claim to have the expertise needed to guide a person or pair through all their issues, but my financial guidance is worthless if I ignore the causes of a married couple’s money problems. In all my years of advising, I’ve rarely seen people who find happiness and balance just by making more money. More often, a change in perspective or spending habits delivers much more lasting results.
Money management and budgeting can only go so far in overall contentment.
Figuring this out has been a bit of a revelation, and it’s something I think all advisors ought to consider. It’s not enough to promote good money habits without ensuring a foundation exists that will allow those practices to flourish. We need to make sure our clients are focusing on their families as well as their IRAs.
My objective will always be to help friends and clients make decisions that lead to financial success. Part of that, I’ve realized, is helping to iron out some of the wrinkles within the marriage. If money problems keep popping up no matter how airtight the budget is, there’s an underlying issue that needs to be addressed. Once we identify the real problem, we can get to work on becoming truly wealthy.
Promote Financial Collaboration in Marriage
It’s obvious, right? A married couple is part of a team, living in the same house and working together to raise kids; of course, there’s collaboration! Before you check this box and move on, you have to consider what that collaborative effort looks like. Very few couples have a perfectly even split with cooking, shopping and cleaning duties, and it stands to reason that even fewer sit down and pay every bill together and put their broker on speakerphone for every retirement discussion.
We divvy up the responsibilities so more things can get done, but this kind of compartmentalizing is exactly what leads to financial infidelity. If you haven’t heard the term before, it means exactly what you expect. Couples hide financial decisions all the time, committing a sort of infidelity that can be as damaging to a relationship as the more traditional form of being unfaithful. Every month that a husband or wife stays in the dark about a credit card balance is another month in which lying and deceit become a little easier. Bad habits almost always start innocently, with a beer or a candy bar purchased on the “discretionary” card. When those purchases get more frequent and more extravagant, the downward spiral gets out of control in a hurry.
It’s not just sneaky spending that’s born of this separation of powers.
When one spouse assumes total control of future planning and retirement, they often take on more of a burden than they can really handle. They feel pressure to meet certain goals, then make irrational decisions when it seems like their investments are underperforming. Instead of dialoguing with their partner, a controlling spouse will put everything on the line in hopes of coming out ahead and looking like a superior investor.
That’s financial infidelity, and it’s got no place in a healthy, collaborative marriage.
It doesn’t matter who makes more money or who’s a better bean counter, there needs to be openness and honesty in a relationship where assets are involved. Every relationship needs honesty, but there are a lot more harmful lies to tell when there’s money on the table.
Advisors get an exclusive look into how couples manage their money and how (or if) they do it together. For the sake of the people we’re helping, it’s important to make sure they both know what’s happening. If one spouse says, “don’t worry about it, I’ve got all that stuff under control,” it’s worth pushing back to make sure their husband or wife can trust that they do have that stuff under control.
It’s a hard balancing act.
I don’t want to take sides or push too hard for an honest discussion. At the same time, I can’t knowingly let a client mislead their spouse. I’ve seen the look on a wife’s face when she realizes her husband squandered their retirement without saying anything, and that’s a horrible thing to witness.
That’s why the easiest solution is transparency. To be fair, it’s not actually that easy. If you’re working with someone who’s spent decades handling financial matters all on their own, they’re almost certain to bristle at the thought of opening those books up for another person’s eyes, even if that person is their betrothed. Nevertheless, the concept is straightforward. Husbands and wives need to talk about money and make sure everyone is on the same page.
Ask leading questions with as much tact as possible. Remind your clients that fights are always worse when the secret gets discovered instead of revealed. If a couple is willing to lay everything on the table and make decisions together, chances for a happily ever after go way up.
Look for Clues About a Marriage’s Finances
You might be working with people who already collaborate on their decisions. There’s no need to pry if you’re talking to people who understand the importance of communicating honestly. So, instead of forcing a trust circle out of nowhere, you should keep your eyes open for signs of a fraught relationship.
If you’ve spent your entire career in the financial sector, looking for physical cues might not be your strong suit. Many of us advisors are better at seeing problems on paper, so an angry glance from a wife to her husband won’t register unless we know to be on the lookout for it. Here are a couple of obvious signs that important things are going unsaid:
- Awkward silence
- Questionable memory lapses
- Controlling the narrative
You don’t want to read into things too much since these signs could always be related to something else. However, if a question about retirement is met by a long pause or comment about the mortgage causes the husband to start chewing his fingernails, those are indicators that you might need to dig a little deeper to find out the root of the problem. Is the couple behind on their mortgage but the husband is too afraid to tell his wife? Is there a disagreement about how much is needed for retirement and it’s causing a rift?
After you notice these signs, you still need to address them with a lot of care and even more patience. It might be ten more meetings before someone is ready to admit wrongdoing. It might even take you that long to figure out what the signs actually mean. The point is to be aware and sensitive to what’s going on. Liquidating assets or investing in real estate might be the right logistical advice, but it doesn’t help if the couple is actively fighting over whether to buy a house for aging parents or put them into a nursing home.
If we get too focused on finance, we lose sight of the people. Keep your eyes open so that doesn’t happen.
Lead by Example
Just like we don’t take financial advice from someone who keeps making bad investments, we don’t really want to hear relationship advice from someone who ignores their own problems on the homefront. My wife and I have had our share of money-related disagreements, some strong enough that they really put our relationship to the test. We finally discovered that the fights we were having weren’t really about money, but rather how we talked about money. When we put more effort into communicating, the arguments became much less frequent and much more manageable.
Having learned from experience, it’s that much easier for me to help a client going through the same things I went through. I never ask anyone to talk about something I wouldn’t be comfortable revealing myself, and that honesty helps us keep the conversation going. Then, with a better idea of how to communicate, discussing a new investment strategy is a cinch.
It’s important to remember that none of us is perfect in our relationship with money. The greatest investor still spends too much, and the most intricate budgeter probably saves more than is necessary. Our flaws are closely tied to our strengths, and communicating with our better halves becomes so much easier when we acknowledge as much.
You can’t demand honesty from others if you’re not willing to reciprocate.
Made some bad investments in the past? Talk about it, because we all miss the mark from time to time. Had a secret credit card in the early years of your marriage? Tell that story and explain how you overcame it. I can’t overstate how far a little vulnerability goes in the world of finance. While it’s true we should make decisions with our heads instead of our hearts, we need to connect as people in order to get that done.
Since becoming more in tune with the personal struggles of married clients, the success stories have been overwhelming. Couples on the brink of divorce have faced their issues and come full circle, finding the happiness they thought was long gone. As a result, they end up with less debt, more savings, and a far better plan for the future. All because they opened up and talked about how they really felt about their shared relationship with money.
My wife and I have turned the personal experience into a business aimed at helping other couples find their common ground and get the most out of their money relationship. At TheMoneyCouple.com, we’re all about helping people break down the communication walls we build up over time. Money is sometimes the hardest thing to talk about, and when we overcome that barrier our connections grow much stronger.
It’s easy to tell someone about a good investment. It’s much harder to tell them about the right investment. If you take the time to understand your clients’ relationship with each other and with money, you make yourself that much more valuable as a financial advisor.
Taylor & Megan Kovar
The Money Couple
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