How To Talk To Your Spouse About Finances: What Is Their Financial Language?

The following is a guest post by MITM from Naked Budgeting. Enjoy! If you’re interested in guest posting on MPFJ, took a quick look at this post, then shoot me an email and we’ll get the party started! 

I was talking to a friend of mine at the park a year or so ago and mentioned that I was facilitating a Financial Peace University at our church.  I said he could join if he wanted. 

He said that they had plenty of money and weren’t worried about it.  I replied that that must help avoid any financial fights with your spouse.  He gave me a strange look and said, “Hell no.  We fight about money all the time.”.

I was surprised, but the lesson I learned was that success with money isn’t necessarily all about having more

My friend had plenty.  But, he and his wife hadn’t figure out how to not fight about it.  My friend’s solution was the math of having more.  But, it takes a different kind of math to keep the relationship side of family finances strong.

Whether you have a good relationship with your spouse around money or not, each of us has a “financial language”.

In my post about the financial statements, I talked about understanding how the financial statements work together is the foundation and after you have that understanding, a balanced approach is the key.  For instance, if you are really good at keeping expenses low but have no income, then you have no money to save.

So, increasing income AND lowering expenses is where the magic happens.  Same goes for the balance sheet assets and liabilities.  There has to be a balanced approach.

So, get to the point! What is this financial language?   Finance is about the math.  And they spend too much!

Okay, here is an example.  I’m always coming up with hair brained ways of making a little extra income.  I know my career is my biggest sources of income but I’m plagued with “What else can I do to make more on the side?”.  I even keep a running list of little business I’ve thought of and sometimes I prototype them or work on them and sometimes I don’t.  But my head is usually in the “Revenue” and “Assets” spaces.

My wife on the other hand glazes over when I talk to her about income or assets.  And for a long time I was frustrated by this.  She and I both want to be debt free and financial secure, so I thought it was strange that she didn’t want to make more money.

So I had to realize a few things about her in order to smooth out the conversation.  A psychologist would probably say that I had to understand her.  And they would be right!

 

Her financial language

1.) I realized was that she was much more focused on controlling expenses and risk.  Which included saving on monthly bills like energy and groceries (both on our monthly income statement).  But it also included reducing debt which does both because it lowers a monthly mandatory payment and our risk of default.  These are perfectly appropriate areas to focus on but they are just a few of the pieces to building a balanced financial approach.  My finance language is different, but together we can appreciate each other and manage the whole picture.

2.) I also realized that she is better at couponing and finding deals than I am.  It is one of her strengths.  On the other hand, she doesn’t want a big career and doesn’t think about buying cash flow assets or investing.  So that is one of her weaknesses.  Her parents saved throughout their life and socked most of it away in cash.  So investing was something they didn’t do or teach their kids.  Getting into rentals was a big fear for her but after we’ve done it for several years, she has come to understand that they have risk but there are ways to mitigate it and they can be good investment to help us in the long run.

Oh and just talking to her about anything like stocks or bonds is guaranteed to put her to sleep.  Believe me.  I’ve done it!

3.) I also had to understand her fears, hopes and dreams.  I thought I knew her but talking about these things in a financial light brought out all kinds of new things I didn’t know.

  • Hopes and Dreams: She and I are aligned in that we want to eventually be financially free.  That doesn’t necessarily mean rich, but free to give and live.  Probably in that order.
  • Fears: She is a stay at home mom, so I had to realize that she has some fears that if I was to pass away or be laid off she would be stuck with big monthly expenses and no income.

So, after many exploratory conversations and making plenty of mistakes I have a decent understanding of her risk tolerance, what parts of our financial picture she understands and is comfortable with, and her strengths and weaknesses.  I would say that her financial language is focused around expenses, debt, safety and security.  Mine on the other hand is on income and assets and taking risks.

Here are few tips to having those conversations

1. Listen

Not just to what they’re saying, but to what they’re feeling and thinking about what they’re saying.  And if you aren’t hearing it, ASK.  Sometimes when she talks about something in our finances, I’ll ask her about it.  “I wonder how our parents dealt with this?  Do you know how your parents did?”.  Understanding her financial upbringing makes a big difference.

2. Listen when you talk.

Huh!!??

Ponder this … “Communication only exists in the mind of the receiver.”  If you’re saying X and she’s hearing Y, then you’ve communicated Y.

So, do you understand how he or she is hearing you? When I talk to my wife about about something and I’m sensing that we’re not thinking about it the same way, I try to ask “What do you think about that?” or “How do you feel about that?”.

Are you getting the picture that listening is a big part of it.  You’re trying to learn about them!

 

Now comes the fun part!

  • I can now look at our financial picture and put her in charge of some of the pieces.  We do it together but she has more responsibility for certain areas.  Because she has strengths I don’t have and I love it!
  • We can talk about our financial picture in terms that she understands.  It avoids a LOT of miscommunication.
  • We can coordinate our goals to work together because they have the same end result of building our net assets and achieving financial freedom.
  • We can openly discuss our fears, worries, hopes and dreams.  Weekly budgeting meets can be open discussions about all of that.  And they deepen our relationship far beyond the financial aspects.

Here is our current financial journey summarized for the last few years and going forward.  See if you can pick out how I’ve had to learn how to adjust our approach to her.

First, we had to invest in the house.  She stays at home and had an equal vote in picking it.  So making it liveable was priority #1 and I working on making that happen during 2010 and part of 2011.

Second, we worked on building up our emergency fund of 6 months.  We did that in 2011 also.  So we had addressed two of her major concerns, secure home and cushion in case something went wrong.

Third, we wanted to pay down debt.  This was a bit of a negotiation because I wanted to start investing more.  So we settled on the goal of investing 15% of our income and funding our kids ESAs and after that using everything else to pay down debt.  We hit the 15% goal in 2013 and started paying down debt.  That is the stage we’re in right now as of the end of 2013.

Next step is that once we pay off debt our next goals are to invest in more rentals over time.  Debt will probably take us about  8.5 years, but hopefully sooner.

These aren’t just casual conversations.  We have a budgeting notebook that somewhere has a page outlining these goals.  Actually it is several pages because it took several conversations.

 

Questions to ask your spouse

  1. What are you worried about when it comes to our finances?
  2. What would you do differently if we had no debt and money to spend?
  3. What do you want to do more/first?  Pay of debt or invest for retirement?
  4. Would you be willing to work with me on setting some financial goals and learning how to achieve them together?
  5. Do you have a good grasp or our finances such as how much we make and what our expenses are.  If not, how can we work on simplifying and learning them together?
  6. If we managed our finances, what part would you like to be in charge of?  Expenses, saving for short term goals, tracking our emergency fund, tracking our debt paydown progress?
  7. When we talk about finances how do you feel? How can I help improve that?
  8. When I talk to you about finances or budgeting how can I improve?
  9. Do you feel like we’re on the same page when it comes to our goals around income, spending, saving, debt?  Which one are we most aligned on and which one do we need to come together more on?

 

Feedback

Although I think we’ve made great progress in this area over the past few years, I don’t always get it right.

I’m always wanting to learn, so if you have any tips on what has worked for you, please leave your feedback by commenting below!