How to make your financial differences work for you
Many of my clients are in their late 50s/early 60s. While they all have very different lives and experiences, I’ve noticed that many of them share similar problems.
They have elderly parents to take care of and grandchildren to babysit. They’re wondering how they’ll help their loved ones pay for weddings, houses and children, without hindering their retirement. They’re trying to make the most of the time they have left, while also craving stability and security.
On top of this, many of the couples I work with disagree on how they should spend their money and most importantly, their time. Here are three of the most common issues I see, and how a financial planner can help you address them.
The saver and the spender
Charles is a saver while his wife, Joanne, is a spender.
Charles wants to save for emergencies and later life care, the money brings security. Joanne wants to travel. The money allows her to express her freedom and enjoy ‘life’.
In Charles’s defence, he’s got good reason to be cautious. If you don’t plan for a 30-year-long retirement, what’ll happen if you live long enough to get a letter from the King?
In Joanne’s defence, she simply wants to make the most of the time she’s got left. We’ve got to enjoy our life and money while we can. There are no guarantees.
In truth, they can do both.
The worker and the retiree
Paul has sold his business for a life-changing amount of money. After decades of hard work, he’s now content playing golf, reading the paper, going for a run, and brewing craft beer.
His wife Ruth, on other hand, is finally at a place in her life where she has pretty much written her own job description. She occasionally goes into to the office. She knows her job, enjoys it, and is well rewarded for it. She might have almost reached retirement age, but why would she want to give up what she’s got now?
They’re wondering how to combine these two slightly different approaches.
The homebird and the free spirit
I overheard an interesting conversation on my way to the Spurs game a couple of weekends ago.
A man was talking about his latest holiday. It was a safari. South Africa. His friend said it sounded like the lifestyle suited him and asked if he’d live there.
The man replied: “I’d go tomorrow.”
He told his friends about his £750,000 house with no mortgage and talked about what a great life he’d live if he sold his home and packed his bags. His friend asked what was stopping him.
The man said: “My wife doesn’t want to go.”
Opposites attract
The above examples might sound like dealbreakers. If you and your spouse want different things in life or you have completely different attitudes to money, you might assume you’re no longer compatible. But in reality, opposites attract, and our financial differences can help us bring out the best in each other.
Two savers might sound like a match made in heaven. But they could spend 40 or 50 years together only to realise they’ve wasted their life away. They’ve spent their whole lives thinking about the future and never given themselves permission to live in the present.
A saver and a spender, however, can live harmonious lives if they know how to work together. The saver can encourage the spender to budget and plan for the future. Meanwhile, the spender can encourage their partner to take risks and be spontaneous.
How financial planning can change your perspective
To make it work, you need to find an objective third party. Someone who’ll listen to both of you without judgment or bias.
Our individual strategies are so often framed in childhood, our money beliefs are influenced by our upbringing, personal experiences and personalities.
Money, and what we do with it, is closely related to our deepest hopes, dreams, aspirations and identity.
People often think in black and white. They assume they have limited options. That’s until I get involved and inform them that actually, there’s an in-between.
A good financial planner knows all the rules and regulations. They may have worked with clients with similar problems to the ones that you have. They’ll be able to combine their finance knowledge with their real world relationship knowledge to find a solution that everyone’s happy with.
I enjoy working with couples and helping them find compromise. After taking my advice, many clients tell me how happy they are. Instead of arguing over whether to spend or save, let’s look at the numbers and find a way to do both. Permission granted.
Instead of selling your house and moving to Africa, you could go on three holidays a year and hire an interior designer to make your home feel like a luxurious hotel.
Instead of focusing on your differences, focus on what you have in common. The worker and the retiree might live very different lives but they’ve both found a way to prioritise their passions and needs.
After spending many decades together, it’s easy to run out of things to talk about, but that’s unlikely to be a problem for Paul and Ruth who live full and satisfying lives of their own. How many other couples can say the same?
My job often involves bringing these wins to my clients’ attention, even if they originally hired me to manage their pensions and investments. When you hire a financial planner, a whole world of choices can open up. Suddenly you start to see your differences as a blessing, rather than a curse.