When it comes to financial planning, a surprising number of couples choose to put one person “in charge” of their wealth management. It can make sense to have one member of a couple be responsible for some financial tasks (think: setting up bill pay, tracking progress toward goals, and even maintaining daily budget items).
However, when it comes to setting goals, and creating a financial strategy, it’s critical that both members of a couple are involved. Let’s walk through how both individuals in a relationship can come together to make financial decisions in an effective way.
An excellent place to start in your financial planning journey is to clarify your values as a couple. The truth is that every individual will have their own values. Sometimes, those individually held values conflict when a couple tries to come together to make a strategy for their wealth and estate.
Talking through what values the two of you share, and how you want your finances to support those values, can be immensely helpful in getting everyone on the same page.
Once you have your values solidified - shared, and individual - you can set some financial priorities that align with those values. Let’s look at a case study.
Both Joe and Mary value family and faith. With that in mind, they can allocate funds to take care of their kids and grandkids through education funding and building out an estate plan to ensure their assets are passed along. They also dedicate themselves to donating a tithe to their “home church” each month as part of their budget.
Of course, not all of your values are going to align with one another. This is where determining a compromise in priorities can be helpful to ensure everyone feels that their shared wealth is working in a way that provides fulfillment.
Let’s continue our case study from above.
Individually, Joe values security, while Mary values adventure. These values may seem like they conflict. However, because they're willing to compromise, they come up with a solution that balances each of these unique values. Joe’s need for security can be fulfilled with a solid retirement savings strategy. Once he and Mary have their emergency savings topped off and all debt but their mortgage paid, he maxes out his work place 401(k) and Mary contributes to hers up to her company match.
Mary still values adventure, so they choose to do something drastic to shift their lifestyle. Instead of continuing to live in their large, suburban home, Joe and Mary downsize to a comfortable townhouse closer to Joe’s office once their youngest moves out to go to college. Joe also has the option to work remotely periodically. Mary works from home.
With the extra cash flow freed up from downsizing, they’re able to take “working vacations” to travel for weeks at a time, renting long-term stays or Airbnbs when they go. This allows them to comfortably travel more frequently, and “test drive” different locations before retirement, as well.
The key factor in the above case study is that both Joe and Mary were willing to be equal contributors to the financial planning process. Because they each were able to discuss what they values, how they wanted to leverage their money, and what their long-term goals were as a couple, they both felt confident in the new strategy they came up with.
As a fee-only financial planning firm, Wood Smith Advisors can help you and your spouse or partner collaborate to create a financial plan that moves you toward your goals. Ready to learn more? Get in touch with us by clicking here.
Wood Smith Advisors, a woman-owned Registered Investment Advisor (RIA), is a fee-only financial services firm that partners with its clients to simplify their financial lives. We focus on women, entrepreneurs, and individuals with complex financial situations, providing objective and competent advice, education and services to help them develop and build their businesses and reach their financial goals. We can be reached by clicking here.
"Finance Made Simple" blog posts are intended for educational purposes and not for specific advice. Each person’s situation is different. Consult your financial advisor for advice relating to topics discussed.