Getting to financial independence is tough enough as a single person, but dare I say it, doubly difficult if you’re in a partnership with someone else. One of the most common questions in financial forums is how to work towards financial independence when both partners have different attitudes to money.
Peter Thornhill said that “If both people in a relationship are savers, that’s nirvana. If both are spenders, that’s okay too, the relationship is survivable. But if you have one saver and one spender, you’re in trouble. Because one will simply spend their time undoing all the efforts of the other, so nobody wins.”
In this article we’ll explore what influences our own personal attitudes towards money, and understand how to work with our partner towards financial unity.
What influences our attitudes towards money
All of us have values that we hold dear – about family, personal relationships, and even money. A great number of studies have looked at what factors contributes towards forming these values, and there are really too many factors to list and talk about.
One very important factor in forming one’s values is a person’s life experience. In this case, we’ll explore how one’s direct experience with money influences their attitudes towards money throughout their life.
Childhood is the most important stage of one’s life, as it is the time where we’re learning about how the world works. Everything we observe and experience in childhood will stay with us through the rest of our lives.
I’ll use my own mother as a case study. My mother grew up very poor. Grandfather was just starting his business, and things were tight. My grandmother took up a part-time job as a seamstress to help make things meet. At five years old, my mother was expected to help with the sewing and all the house chores. Rice and vegetables were their everyday meals, because they couldn’t afford meat. Birthdays were especially special because only the birthday boy or girl would get a chicken drumstick as a special birthday treat. It was the one time in the year that they would get to have meat.
Her experience being poor as a child shaped my mother’s attitude towards money. She hated everything about being poor. If you’ve never been poor, watch the Oscar-winning movie Parasite. How the Kim family lived is comparable to how my mother and grandparents lived – minus all the phones and tech, of course – since it was a different era.
So, growing up, she learnt to stretch money. She and her siblings came up with creative ways to make extra money so they could afford the stuff they wanted as kids. As an adult, she worked really hard to reach financial independence so that she and her family would never have to feel poor again. In her 60s today, those attitudes remained even though she isn’t wanting for money anymore.
Parents attitudes towards money
Parents are a child’s earliest models of behaviour. It’s hilarious in a sense – I’ve caught FireKid doing things that I had no idea that I was doing. Kids see everything, and whatever they learn, they do. Including emulating their parents behaviour and attitudes towards money.
This time I’ll use my father-in-law as an example. He grew up middle-class in a small town. His father was quite sought after, being one of the only doctors in the town. Even though he wasn’t really wanting for money, he had a very conservative attitude towards money. He’d pay everything in cash. He wouldn’t even take out a loan to buy his house. Instead, he saved up for it for many years. When he could afford a house, he paid for it in cash.
My father-in-law, even though he was educated abroad and had a much larger worldview, adopted the same attitude. When he was in his forties he moved the entire family to Australia. He refused to take out a loan for anything – choosing to purchase the family home with cash. To this day, he’s never taken out a loan, which is almost unheard of in this day and age. Which makes it even more amazing that he became financially independent at fifty just through property and share investing – all of which were funded purely out of the family’s savings.
Have you experienced an event so memorable that it remained with you for life? For example, you might have had the most amazing food during your holiday in Italy – which then inspired you to start cooking Italian food – and over time, you became known as the non-Italian Italian chef? Or perhaps you had a mentor who really helped you shape your career? Or maybe you had a health scare, which then got you into trying to eat and live more healthily.
Hearing a powerful story, or having a memorable experience completely unrelated to our worldview can shape our attitudes in life. For some, it might shape their attitudes towards health. For others, it could influence them to completely change their careers.
These outside influences can apply to money as well. For example, did you go seeking out articles such as those on my website, because you became inspired by the FIRE movement? Were you excited about the prospect of retiring early after hearing about Aussie Firebug’s story?
Whilst we’ve been investing for the sake of investing some ten years back, the idea of retiring early never crossed my mind – until I came across the FIRE movement. Even with all my experiences through childhood and my parents attitudes towards money, I never even thought about the possibility of financial independence until the outside influence of Aussie Firebug came along.
Now I know that not everything we learnt in school remains with us. For example, I don’t remember much of high school math, and those Shakespeare literary critiques are a very distant memory.
Yet some lessons stick with us the rest of our lives. I still do my customer research experiments using the same science approach that I learnt in high school. The power of compounding, which I learnt through the kiddies banking program, is the primary reason why I believe in a long-term investment program.
I’m sure most people in Australia remember the Commonwealth Bank Dollarmites program. Unfortunately it received some bad press during the recent Royal Commission into Banking. But it was effective in that it taught schoolkids the most basic of money lessons – how to save.
How to get your partner working with you
Now that you understand that your own personal attitude to money is shaped by your personal experiences, it’s important to understand that the same applies to your partner. They may not have had the same money experiences you did, so it’s quite likely their attitude to finance is going to be completely different to you.
So the good news is – it’s not that they just aren’t interested in money, or that they just can’t seem to shake their spending habits. Most of the time, what’s driving their behaviour is due to something that happened a long time ago. Perhaps due to experiences in their childhood, or what they believed and learnt was the right thing to do.
Having differing attitudes to finances is not an insurmountable problem. Many a couple have different worldviews and values, and yet they’ve been able to work through their differences to achieve financial unity.
Having said that, financial unity comes in different forms. Just like everything else in a partnership (like marriage, kids, etc) it’s impossible to be 100% on the same page for money. You will have disagreements along the way, and there will be times when both of you just have to agree to disagree. What’s important is that you both work together to achieve a common goal, whatever that goal may be.
Here are some ideas on how to get your partner working with you on your financial journey.
Show, don’t tell
Writers, storytellers, customer experience designers and many others have lived and died by this creed. ‘Show, don’t tell’. A picture is worth a thousand words. A story is more effective if you bring the audience along in the journey.
It’s also why personal blogs are powerful storytelling mediums, but that’s a story for another time.
Despite my review of the Playing with FIRE documentary, the one good thing about it is that it brought the viewer along the FIRE journey. What the couple experienced, we as viewers felt too. We hear the messages of encouragement from people who have already achieved financial independence. We know it’s possible because those people have told their story. We empathise with those still on the journey because we know that this path isn’t easy. And we are heartened by the hope that we may reach it someday – because others have already treaded that unknown path.
You don’t even need to watch the documentary if that’s not your thing. In this age of social media, there’s something for everyone. Perhaps your partner is into Instagram – maybe you can find someone on Instagram both of you could relate to, who might have gone through a financial transformation journey you wish to undergo. There are many bloggers whose journeys you can follow.
If you or your partner are not into influencers, perhaps showing each other the results of a simple compounding calculator can help get the financial independence message across.
Find something you both can agree on
It doesn’t have to be something big. Something like “honey, let’s agree to save up 50% of our take home income starting next month” is probably going to scare the crap out of someone who’s really not into money, let alone the FIRE movement. And let’s be honest, even if they were open to the idea, the sheer magnitude of the task ahead might be too daunting.
FireDad and I started with agreeing on making very small behavioural changes that contributed towards saving money. One of our earliest agreements was that we’d cut down on our daily coffees, and we’d start bringing our own lunches to work twice a week. Sure, it didn’t really make a massive dent in our overall budget, but it was achievable, and not a huge imposition. Over time, that became three, then four packed lunches a week. We also agreed that for our sanity, and to socialise with colleagues, Friday would be a go-out-for-lunch day. Because you know, life is more than about eating cold sandwiches alone in the office.
Ideas you can try with your partner
Having one meat-free day per week. Meat is very expensive. Going meatless for even one day will help save you money in the grocery department.
Invest small amounts just to test the waters. It’s easy to dip your toe in the big, wide world of investing. Apps like Commsec Pocket, Raiz or Spaceship make it super easy to start building your investment portfolio. Some of them don’t even have minimum investment amounts – you could start with literally $1 per week, if you choose to. Of course, you’ll need to do research beforehand and pick the platform that suits your purposes.
Check the budget before making large purchases. FireDad and I used to have massive arguments because I thought he was spending unnecessarily – so we’ve agreed that before he makes any big purchases, he needs to check our shared budget app to see if there’s enough money for that purchase. If there is, he’s free to spend – otherwise, he’ll need to wait until that bucket fills up.
Take over the finances
It’s not a big deal if your partner just doesn’t want to be involved. If they’re open to the idea of getting better financially, but just don’t want to (or aren’t good at) doing the legwork, perhaps you’re better placed to do it all.
When we started on our financial independence journey a decade back, I was quite insistent on financial management being shared 50/50. In this era of equality, I thought financial chores, just like house chores, should be borne equally. That ended up becoming a bit of a disaster though. Bills would go unpaid, because sometimes one party thought the other would do it. Research into investments would be half done.
I want to stress though that it’s not a bad thing to take over the chief financial officer role in the family. We all play according to our strengths. I love detail, and finance makes me excited (nerd alert!), and so it makes sense for me to manage our family’s money. FireDad is great at cooking, and being creative, so he manages the family dinner and runs his own artsy side hustle. We both give each other space to be amazing at what we’re good at – for me, it’s managing money, and for him, it’s making more money via his hobby-turned-business.
Encourage them to do at what they’re good at
So your partner isn’t really good at staying within budget. Or their eyes glaze over when they see a balance sheet. That’s alright, they may have strengths elsewhere. Time to put that to work!
I touched on this before – having both partners in a relationship play to their strengths. Are they business minded? Do they have a hobby that could be monetised? Encourage them to set up shop! If they’re not great at saving money, perhaps they could be good at bringing in more money. Win-win all around.
It also doesn’t have to be about getting more regular income. Think outside the box! Here’s an interesting story – FireDad has a natural affinity for finding loopholes in the system and gaming them to his advantage. One of the things he loves to do is to churn credit cards for frequent flyer points. Sometimes those go towards our holidays, thus saving us money on our holiday budget. Sometimes he redeems them for Coles/Woolies gift cards which we use in place of our grocery budget. Whatever he does contributes to the household becoming financially better off.
If your partner is not interested and doesn’t want to make any changes, there’s no reason you can’t go it alone. Separate finances in a committed relationship is not taboo. I’ve known of many couples in long-term stable relationships who run separate finances in varying structures.
Running separate finances achieves a few things. For the more financially-attuned partner, you can go off trying to achieve financial independence for yourself. And maybe, once your partner sees how successful you’ve become, they may be more inspired to get themselves financially fitter too.
To make separate finances work, you’ll need to set very strict rules. Your money is yours to manage as you wish, their money is theirs. Under no circumstances will you fund their lifestyle. I know it’s not easy, but you don’t want to have all your hard work come to nothing because you’re constantly bailing your partner out.
There are a few ways I’ve seen separate finances set up.
Think back to the time when you were single and just met your partner. Perhaps you hadn’t moved in yet, or maybe you were cohabiting. Your money is yours, and you managed it as you saw fit. Having completely separate finances just means going back to that time when everything was separate.
Share expenses equitably. Equitably doesn’t necessarily mean going halves. If one partner earns significantly more, equitably might mean that they pay a slightly higher percentage of the household expenses. Maybe to make it easier to manage, certain bills can be in your name, and others in their name. Whoever owns the bill, pays the bill.
Shared household, separate fun money
I like to think of this structure as a ‘yours, mine, and ours’ approach. All income goes into one single account. The household expenses get paid first. What’s left gets divided up between both partners to do as they please.
Your partner might choose to spend it all on themselves, or their hobbies, or the kids – that’s their prerogative. You can choose to spend part of it on yourself, and invest the rest – it’s all up to you. It’s important to remember that what you do with your money and what they do with theirs should not be questioned – after all, it is their money to do as they wish.
Personally we’ve also gone with a similar structure, though I wouldn’t consider our finances separate at all. We’ve approached it slightly differently though. Instead of just deducting household expenses, we’ve also included a ‘deduction’ for investments and savings. So each person’s fun money gets allocated only after the entire family’s investments, savings and expenses have been accounted for. This works for us, mainly because both of us need an outlet for guilt-free spending without the other questioning our every spending decision.
Rome wasn’t built in a day. No one has achieved financial independence overnight. It’s important to understand that transforming one’s beliefs and attitudes that they’ve had since childhood can be difficult and uncomfortable.
Be kind to each other during this process, and keep an open mind. Financial independence is a big goal; financial unity is a lot more achievable. Focus on small improvements first, and the rest should come naturally later.
Are you and your partner on the same page financially? Do you have any tips to share on how to get both partners working towards a common financial goal? Let me know by leaving a comment – and if you like my content, please subscribe!
The post How to work with your partner towards financial unity appeared first on A FAMILY ON FIRE.