Striving to reach a savings goal by yourself can be difficult, but add a significant other to the mix and things can get even more complicated. Even with our best efforts, there may be things we are doing, or allowing our partners to do (or not do) that may be sabotaging us from saving our money and getting that much closer to financial freedom. This is why my wife and I don’t use a budget.
Regardless of how you determine who is responsible for paying what, having a unified savings goal with the person you want to spend the rest of your life with is essential to reaching financial success. Whether you intend to save and invest together or keep things separate, sharing a life together will require commonalities on how your financial future will look like. Where will you retire? How much will it cost you each year to retire? How long do you/they want to work? etc. This post highlights the everyday things we may be doing in our relationships that is keeping us from reaching our savings goals. We use Personal Capital to map out our budget and savings without the hassle (plus it is free).
Falling into fixed roles in the home without knowing what the other person is doing
This is common in most relationships as couples fall into their ‘assigned’ or ‘unassigned’ roles in the home. Although there may be some benefits to this, have fixed roles while being unaware of what your partner is doing can be detrimental to your money.
Share The Financial Responsibilities
For example, in our home I naturally take on more of the bookkeeping and money management tasks in the home, making sure that we stay within our agreed upon budget. My husband on the other hand is more interested in the investing aspect of our money, so the amount we designate towards investing is where he focuses his attention. Finding the right long-term investments, balancing and re-balancing and keeping up with market news every now and then. You can also to make a little extra money online. Maybe even start your own blog!
Know What Your Partner Is Doing
How can not knowing what your partner is doing in their role with the family’s money affect your savings goal? In the example provided above, if one spouse neglects checking on the family budget, they may forget to curb their spending habits when needed to reach the savings goal. It is important for you and your partner to be on the same financial page.
Even if both parties are involved in creating the budget, both parties need to review the budget to understand how their spending is affecting their savings goal. Alternatively, if one spouse fails to check in on the progress of the family’s investments, they leave themselves vulnerable to financial loss or mismanagement of their investments in the absence of their partner. Set a time at least once a year to discuss your investments and any major changes done to the family’s investment portfolio.
Not having a fair and equal vote on financial issues
Regardless of the income earned by each partner or the level of financial knowledge one partner may have over the other, financial goals are more likely to be reached when each person feels as though they have a fair and equal vote in financial matters affecting them. In my experience a general consensus is more likely to be reached if both parties feel heard, understood and that there views and opinions are taken seriously. This is especially true when dealing with your spouse, if they are not as knowledgeable as you are in the financial issue being discussed. If you are trying to get your partner to agree with you or see things your way regarding a financial matter, try the following:
- Don’t dismiss his/her questions or concerns by saying that it is too complicated to get into. Instead, try explaining in different ways so they understand. If that still does not work, recommend financial literature for them to read and learn more about the subject matter. If they are really interested in learning more, they will take you up on the offer, if not, you would have done your part to inform them.
- Don’t undermine or dismiss their role in money management in the home. Rather, help them feel involved and engage them in every aspect of your family’s financial planning
- Be patient with each other and consider tabling financial issues that may cause major disputes until you have time to consider both sides and reconvene to discuss further at a later date
Not discussing what your future will look like or having a common savings goal
Even if you do not agree on how money should be spent on a day to day basis, there should be an understanding and discussions around long term savings goals for couples that wish to retire together. Make sure you both have a clear understanding of what your future will look like 10, 15, 30, 40 years down the road.
Some questions you may want to discuss together as a couples may include:
- What kind of retirement lifestyle do I want?
- When would I like to retire?
- Will we have children, if so, how many?
- Do we plan on paying for all or some of our children’s post-secondary education?
- Do we plan on gifting some money for our children to buy a home?
- How much will we need each year to live comfortably during retirement?
Saying yes to everything
Whether it is failing to say no to ourselves for things we may want but will break the budget, or having a problem doing this with our partner, either can cause major financial setback in the future. The inability to say no to our wants sometimes may seem harmless in the present, but long-term this type of behavior will either cause one to go into debt to finance their wants, or forgo saving money for the future or both. Many times we may fail to say no to ourselves because of our desire for instant gratification. We may fail to say no to our partners to appear more cooperate or because we want to make them happy. Whatever the reason, the end result is the same; not reaching your long term savings goal.
Work Together As a Couple
To minimize this, strive as a couple to regularly revisit your savings goal and the ‘why’ behind your need to save for the future. Answering the ‘why’ behind your goals will help cultivate the right emotions and desires needed to get closer to your goal. This method tend to be more effective than scolding your partner and constantly reminding them to spend less and save more.
Avoiding your money problems. The ‘bury your head in the sand approach’
This approach never works on an individual level and will surely end in disaster if practiced between two people. Most people avoid their money problems because they know there is an issue they need to address that they may either feel helpless to address or they may not want to take the necessary steps needed to improve their financial situation because of what they may need to give up in order to do so. Avoiding money problems can make a problem much bigger than it really is.
An effective way to dealing with money problems includes:
- Reviewing and getting a clear understanding of your current financial situation. This includes a list of all our assets, debts (liabilities), income and expenses. This is usually the first step to understanding the depth of the problem and how long it may take to get out.
- Getting financially literate. Many times, we may feel that we have no options because we don’t understand the financial options available to us. This is where financial education can be incorporated.
- Taking incremental behavioral changes to how we manage our money. Once we have the head knowledge and we know our options, then we need to translate all this into positive behavioral changes that will bring us closer to reaching our goals.
Not setting contingency plans in place
Whenever we strive to set a goal, life typically throws us curve balls and road bumps along the way, the same is true for our financial goals. Not having a contingency plan is the same as putting your eggs in one basket. If the conditions are not in your favor, you stand to lose a lot. As a couple it is important to set contingency plans you both agree with and revisit them regularly to see if they need to be revised as your family situation changes. Some examples of contingency plans include:
- Create an emergency fund to deal with a temporary job loss or illness. A job loss without a financial contingency plan can significantly detract you from reaching your savings goal and cause undue stress and anxiety. It can also cause one to search for lower paying jobs in hopes of securing any employment, significantly reducing their savings rate and possibly the time needed to reach their savings goal.
- Diversify your investments. By having different types of investments in different industries, you are essentially creating a contingency plan that keeps you from wiping away a sizable portion of your net worth (if not all) at any given time. By not diversifying your investment portfolio you may be taking on high levels of risk, resulting in potentially significant losses in the future. Start your investing early and often with low cost investments using Ally.
Blaming the other person
We often get into a relationship with someone whose money habits may be slightly different from ours. Even if you both happen to be savers or spenders, money habits are not fixed, but swing left to right like a pendulum. With differing views on how money should be saved, spent or shared, it becomes easy to blame others for financial failures or setbacks that may be caused by something they did. Instead of pointing fingers, it is better to work together towards a solution, keeping past mishaps in the past when doing so.
Some of the way blaming your significant other can impede your savings goal are:
- It may make every budget meeting and discussion about money a contentious one, even if you don’t bring up the blame. As humans, we tend to take to heart the things that people closest to us say about us. It is important to convey your disappointment, anger and frustration regarding the issue, but be sure to move past it.
- It makes it hard to convince your partner to see things your way, even if it will ultimately be the best for the family. Continual, blaming and finger pointing can lead to resentment from your partner, making them less likely to listen to your point of view or work towards a common goal
- It may affect other areas of your relationship. Even though money fights is the most common reason for a relationship breakup, the fights typically don’t stop at money, but may trickle into other areas of the relationship. However, money is involved in so many areas of our lives, that learning how to manage it well with your spouse is essential to meeting your savings goal.
Keeping debt hidden from your partner
Hiding debt from your spouse can negatively impact the quality of the relationship and will most definitely impact your savings goal long term. Whether you have joint or individual accounts, eventually if the relationship lasts a long time, all debts will need to be addressed regardless of who incurred them. Sometimes, we may even incur these debts out of good intentions.
For example, if we want to please our partner and give them whatever they desire because we care for them we may go beyond our financial means to do so. Other times, it may be years of keeping financial roles fixed in the home without providing regular updates on how things are going. For example, if only one person is given the task to manage and pay the bills in the home, but there are no discussion about how the family is doing financially, it becomes easier to hide debts over time.