Podcast - April 9, 2024
Latest Episode: Talking to Your Spouse About Money
This episode brings Matt Kempton and Colin White to the mic, discussing a topic close to many hearts: money talks within a marriage. They delve into the dynamics of financial decision-making as a couple, stressing the importance of alignment and mutual understanding. With personal anecdotes and expert insights, they offer guidance on turning potential conflicts into collaborative financial planning. A must-listen for couples striving for financial and emotional well-being.
The transcript is automatically generated
In this episode of the Barenaked Money podcast, hosts Matt Kempton and Colin White discuss the importance of talking to your spouse about money. They highlight the fact that money is one of the biggest stressors in a relationship and that people often have different perspectives and priorities when it comes to finances. They emphasize the need for constant communication and the development of new skills and abilities to make financial decisions as a couple. The hosts also discuss the impact of major life events, such as getting married or having children, on a couple’s financial situation. They stress the importance of setting goals, establishing a common ground, and having a financial plan in place. They also provide tips for successful money conversations, such as setting regular times to discuss finances, focusing on the future rather than the past, and considering different approaches to budgeting. The hosts also touch on the topic of investing and managing differences in risk tolerance within a household. They suggest having a moderated conversation with a financial advisor to find a middle ground that satisfies both partners. Overall, the episode emphasizes the importance of open and honest communication about money in a relationship.
Announcer (00:00):
Welcome to Barenaked Money, the podcast where we strip down the complex world of finance to its fair essentials with your hosts, Josh Sheluk and Colin White, portfolio managers with Verecan Capital Management Inc.
Matt Kempton (00:14):
Hello and welcome to Baremaled Money here today we will be talking about money in a continued series. Today we have myself, Matt Kempton, and of course your familiar and esteemed host. Colin, welcome. Thanks,
Colin White (00:31):
Matt. It’s exciting. It’s even more exciting to talk what I believe Our topic today is going to be talking about talking to your spouse about money. Now, just for the record, and I should, full disclosure, I’ve been married for 32 years, so I’ve been talking to one spouse for 32 years about money, and believe me, that is as instructive as talking with a few hundred clients and their spouses about money. This will be a fun conversation.
Matt Kempton (00:56):
It will be. And well, I’ve been married a shorter period, a little more than two years, but at first, before starting this off, because I’ve done a bit of research into this episode, at first I’d like to thank my spouse, Michelle. I’d like to thank you that we fight about things, but money isn’t our most common site and that puts us in a different group than it seems most are in. So I am thankful we don’t have the same fights. It seems many are.
Colin White (01:25):
Wow, that is the biggest public suck up that I’ve seen in a long time. No, she doesn’t
Matt Kempton (01:29):
Listen to this.
Colin White (01:31):
Oh, okay. All right. Fair enough. Somebody’s probably going to send her a link to this though. No, but you’re right. And it’s funny you’ve done the looking at the studies, but I can tell you from experience, money is one of the biggest stressors in a relationship, and it’s one that people have very different takes on money. They’ve come from different backgrounds, there’s a different reality, and then their financial situation changes over time. And as you grow together as a couple, your financial situation always also changes as a couple. And so you need to be constantly acquiring new skills and new abilities to make decisions that’s not always easy and not everybody’s on, even if you start on the same page, you may not be on the same page all the way through.
Matt Kempton (02:13):
And so just in my experience, we’ve gone through a couple recent of the bigger events, wedding being a big one, we just had, well, our little guy is a year and a half old now. So having a baby comes with a lot of expenses and a lot of just new decisions to make many of them money related. So you find yourself in uncharted territories in a lot of ways, and even in the money discussion ways.
Colin White (02:38):
Well, yeah, because when you get married and you don’t have a child, then you have a certain feeling about money and how it’s important you have a child, all right, that’s going to shake everything up. What are your joint priorities with regards to how you’re going to raise a child? And there’s a monetary consequence to that. So each major event in your life, it causes a different set of money issues. And whether it’s short-term versus long-term or the level of support you want to be putting aside for the next generation, how important that is, the life experiences you want to give you feel you need to give or want to give your family. All these things change over time. So it has to be an active conversation and you need some guardrails. I would suggest to try to keep it on the road because it can very easily turn into a conflict. Often not even a money conversation. It’s like, don’t you love our child? It’s like, yes, I don’t think that sending them to private school is a requirement. Well, that means you don’t love our child. Well, no, it doesn’t mean that it’s just a different opinion on a sensibility that has a fairly significant monetary impact to it. So the lines blur, which is what makes this really, really difficult.
Matt Kempton (04:00):
Very true. And I’d like to come back to those guardrails. I think we should spend some time on that. But first I just want to give some stats here, and I think we’ve all heard that money is the one, the leading causes of divorce and just some further stats, and here’s some numbers from Fidelity, in fact, a couples and money study. And what they found in that is that one in five couples identified money as their greatest relationship challenge, and nearly one in four individuals said they were often frustrated by their partners money hats, but let it go for the sake of keeping the peace. And these were couples who were over the age of 25, married during long-term relationships. So these are serious relationships that the survey came out of. And then according to February, 2024, survey from Read Financial, 56% of couples say spending saving and investment philosophies say their spending, saving and investment philosophies aren’t compatible with their partners. That complete to trouble of course. And other respondents who merged their bank accounts with their partner, almost half 48% said they uncovered financial mismanagement, add credit scores or unknown or concerning purchases. Those numbers line up with what you’ve seen.
Colin White (05:21):
Well, but they’re all suspect to be honest, right? Because there’s a materiality aspect of things. So there’s the big issues. What are your priorities short-term versus long-term, owning a home versus auto O’Neal, educating kids versus not educating. There’s big picture items and if you align or can find a way to find a common ground on those big issues blowing up the boat over the fact that your partner stops at Tim Horton’s every morning to get a coffee, and that’s a complete waste of money, even though that’s not affecting any of your long-term financial or short-term financial goals, you really got to question yourself. Some people that that’s just offensive to you shouldn’t be buying a Starbucks every day. Only stupid people do that. Why are you stupid? And to the extent that it impacts larger goals, okay, maybe it’s got some hef to it, but if you’re accomplishing your retirement goals and you’re living in the house you want to live in and you’re living the life you want to live, then that’s where the challenge is to maybe let that go.
(06:22):
The expression I always use in life in general, is this the hill you want to die on? Is this worth blowing up the whole thing? Because oftentimes and in relationships it can get a little bit petty from time to time, a little bit tit for tat. And when you are so completely enmeshed with another human being and they do something that just annoys you, it’s difficult to let that water roll off your back. For sure. So when I’m talking guardrails, and again, we’ve had this conversation in other contexts about talking about money, having a moderator in the room, having a professional who can guide the conversation a little bit can be helpful because I feel the advisor’s role is to build the common ground. Okay, so here are the long-term goals everybody’s trying to accomplish. Here’s the way to accomplish them. If you could get that part relatively lined up, then the little shit my wife likes to shop at Costco, I think that’s dumb. There’s only two of us, but it’s not going to derail any of the plans that we have. So it’s just one of those things. It’s kind of dumb, but alright, fair enough. We’re spending money at Costco. So it’s just putting it in context. How much does it really matter if you try to fight about everything that will make your relationship very, very toxic?
Matt Kempton (07:42):
Well, absolutely. I will agree with your wife on the Costco front. So I am the more cautious around money of our couple, though we are similar, but I would be more on that end. But Costco is what gets me. Costco is the greatest store in the world and I just find myself creeping down different aisles and the character just grows and grows and grows because it’s, well, they set it up that way. But Costco is my weakness.
Colin White (08:11):
Well, we used, again, not to make this a Costco podcast, but we had two young kids at home and we had a house and we’re maintaining a property. You know what the quantities of stuff and the quality of stuff you could pick up at Costco made a ton of sense. Two people living in an apartment, really? How much toilet paper can we store? I don’t need five pounds of chicken spice. The little shaker does just fine by me. But again, the point and to circle back to the podcast, this is what happens even with us, with you and I just talking about relationships. We bunny trailed off. See how easy that is to do. So when talking to your spouse with money, first thing hugely important, ignoring it’s not going to fix it, ignoring, it’s just going to make, it’s going to just build and build and build and be a problem down the road.
(09:03):
But try to talk about the big issues short-term versus long-term, the kind of stuff that you want to kind of find a common ground that everybody can live with. Because if one partner is saying, I’m going to retire at 52, and the other one is saying, I’m going to work into my sixties, that’s a disconnect. You got to sit down and talk about that. That’s a lifestyle difference that you guys are going to have to try to work out in one way or another. That’s not something you want to let one supposed gets to 52 and that’s it. I’m retiring and that’s folks going, no, you’re not. You don’t want to get to that moment. You don’t want to get to that moment without having talked about it because you are going to have some very, very real stress in a stressful time because again, the fractures already happened, talking about it for a few years leading up to it. Maybe one of the other can make their peace with some kind of a compromise. Not talking about it is not the strategy and if the talking about it leads to a huge issue, well it’s better to have it earlier than later. Deal with it whatever way you have to deal with it.
Matt Kempton (10:07):
Well, good point. And much of it kind of ties itself into financial planning and understanding the goals. That’s a place where you talk about goals, you each lay out your goals. Maybe one is very interested in traveling, hopefully both of you are trips can come with different levels of lattice or can be very simple. And so just because you’re both interested in traveling doesn’t mean that it immediately aligns you on the money side of it, but at least you’re talking about it a system. I think having especially earlier days, a system around things might be helpful once starting these conversations both decided we’d like to save money, we know toward these future goals. Well let’s put some systems in place if we’re immediately saving our monies to our RSB monies, to our tax-free savings account, here’s the leftover pool. Well, if it gets spent at Tim Hortons, if it gets spent at Costco, that’s okay because we’ve already put things towards these bigger goals that we’ve talked about and there’s a little bit of wiggle room in here for inefficiencies.
Colin White (11:15):
Well, no, and it’s important that for a human being to function, it’s like here’s X amount of money, just go to whatever you want with it so that if you really need to stop at Tim Horton’s because that’s going to make you feel good at a moment in time and stuff, you’ve got the capacity to do that. But I will challenge you that a financial plan per se is not the answer. A financial plan isn’t projecting your financial future is not where the issue lies because life doesn’t go in a straight line and the first time that you run into a bump where an inheritance gets received or there’s some kind of major financial bump where we surprisingly need to spend $15,000 on a roof when those things happen. It’s more about the principles of how you deal with money. It’s more about being able to talk about money because the projection is not going to happen.
(12:06):
Whatever. You sit down and projecting your financial plan, that’s absolutely not the future. But the part of a financial plan that is absolutely worth its weight and goal is talking about goals and how you talk about money. Because developing a language around talking about money and realizing where the commonalities are and how you set goals and understanding where your partner’s head is, allows you to have the words to have a conversation about the inevitable things that happen. I guess all of a sudden it becomes very important that you need a lot of money to support your child. They’re going to go away to school. Then you guys both agree, this is a big deal. We weren’t planning on it, but this is where we ended up. So no, it’s not going to be four or $5,000 a year. It’s going to be $25,000 a year. How do we handle that? So having the ability to talk a money, having shared your principles with your partner and understand where the compromises need to be made, that’s the skillset that you want to develop. Unfortunately, I think too many people when you say financial plan is they can make a projection and then one partner uses that to beat the other one over the head. That wasn’t in our plan and it’s like that’s not healthy and it’s also not real, it just isn’t. There’s too many uncertainties in life.
Matt Kempton (13:22):
Yeah, no, good point. So these conversations and this getting on the same page needs to happen, but how soon is to, so when do you start finding out if there’s this alignment in this conversation? I started actually having an idea of maybe the best first date you should have is at Costco. You’re going to find so much more out about that person than you do that, than if you go to a coffee shop. If you go anywhere else, you meet Costco.
Colin White (13:47):
Now we’re giving dating advice while we’re so outside our lane.
Matt Kempton (13:51):
Well, it’s money related though. You learn about that person in ways that you might not otherwise. But when it’s too early to start those conversations I met, I feel it should happen before a marriage. These are important ways to know if you’re compatible.
Colin White (14:06):
Yeah, listen, and I got married relatively early in life and no, I didn’t have all the conversations that maybe should have been had and the depth that they should have been had for sure. But for me, when you get to the point of cohabitating, whether that’s a marriage or not, you’re going to start living with somebody. Don’t walk down that road without starting to have conversations because if you’re completely financially incompatible, dude, just don’t, if you guys can’t have a good, honest, thorough conversation about money and priorities in a very honest, open and transparent way, you’re setting yourself up for a world of hurt. Now there’s people that, oh, they’re so wonderful. If you’re going to make your decisions emotionally, you’re going to pay the price for that. But also you don’t want to be on the second date. Alright, so listen, I brought my checking statement with me. Can I see your checking statement? Let’s go through how we spend money. That’s probably not the romance most people are looking for.
Matt Kempton (15:06):
I mean to me that sounds quite romantic. What’s your credit score?
Colin White (15:12):
Oh man U CFA has continued to just amuse me.
Matt Kempton (15:16):
But to your point on the, I mean again, according to this red financial survey, 56% of couples say they are essentially not financially compatible. So
Colin White (15:28):
Well again, but I challenge that because I’ve been talking with clients, my partner stops at Tim Horton’s every morning. It’s like, well yes, but you’re on path to retire at age 55. You both want you take a big vacation every year, your house is paid for and you get two paid for vehicles in the driveway. That’s not a problem. That’s not a financial problem, that’s a behavior problem. And that can be just as offensive. So when you ask a partner about their partner’s money habits, they are going to make a judgment call that may or may not be fiscally material because the lines get blurred and they absolutely get blurred all the time is I deal with those conversations where client’s perfectly financially stable, but one client doesn’t like how the other client is dealing with money and their child. One client doesn’t like how the other client’s dealing with Costco or they buy a new truck every five years and that’s unnecessary. Nobody needs a new truck every five years. So in a survey like that, I guarantee the answers, oh yeah, no, we buy new vehicles. There’s no way we should buy new vehicles even if they’re completely financially stable. So to me, again, that’s not a financial conflict, that’s a behavioral conflict that happens to have a dollar figure attached to it.
Matt Kempton (16:45):
Well, I think I’d push on you a little bit on this one.
Colin White (16:51):
You look getting brave and stupid all at the same time.
Matt Kempton (16:54):
Well, just to take the recognition that we work at a wealth management firm and the clients we speak with, I have qualified to work at a wealth management firm. So there is a segment of the population we’d be having these conversations with more often in a segment. We just frankly aren’t as often because they aren’t sitting in our offices.
Colin White (17:14):
I will seed the high ground to you on that one. That is a valid point.
Matt Kempton (17:18):
Oh no sir.
Colin White (17:20):
Say, look, look it happens. No, absolutely true. But money’s a funny thing. There’s a certain threshold of money that they talk about that up until a certain point, all you’re worried about is money. If you don’t have enough money to feed yourself, you don’t have enough money for shelter. If you’re in survival mode, that’s all that matters to you. It’s 105% of what you care about. Maybe read a certain threshold where your basic needs are looked after and then it becomes, you begin to care about other things priority. You can set priorities, you can have goals, all that kind of stuff. So again, it really depends on where you’re on the socioeconomic scale as well. But again, back to the topic of our podcast, no matter where you are talking about the money and having a money language and if you have a money conversation, even if you know that you’re on completely different pages, because some people look at it and said, well, we can’t talk about money. I can’t get them to stop going to Tim. Well no, you maybe can’t get them to stop that behavior. But it doesn’t invalidate every conversation about money. You need to be able to talk about it. It is important. And if you don’t, it will just cause a problem that’s going to grow and grow and one day it’s going to be an instrumental.
Matt Kempton (18:39):
I agree with you on that. And so actually, so maybe that segues this interestingly into this piece. So I read in an article online, and this is coming from a financial therapist, which did that was a job
Colin White (18:53):
The first time I’ve heard that, I’ve been referred to that.
Matt Kempton (18:56):
I was going to say, I thought that was us. It’s fine.
Colin White (18:59):
Well, it depends on the day, it depends on the conversation. But yes, I’ve been called that.
Matt Kempton (19:04):
So she has a few approaches to having the conversation with your spouse, just maybe some guidelines to put in place. And so one of them is just to first to set regular times to discuss finance, the next to consider putting aside the word money. So I don’t know if you sub another word in or if just don’t say that word money
Colin White (19:34):
Like bagel, I don’t understand where you’re control for this.
Matt Kempton (19:41):
That would fix everything. Then finally, I think this is quite important, focus on the future, not the past. We can only look forward here. And if it becomes just a war of, well you bought that double, double three years ago, what I asked you not to, you’re not going to make any progress here.
Colin White (20:01):
That’s just relationship advice. If you’re going to be in a long-term relationship, then you’re going to carry forward something forever. Eventually there’s going to be so much weight in what you’re carrying forward, it’s just going to weigh everything down. So being forward looking is helpful. I guess I don’t like the way the first
(20:18):
Was raised there. Set aside time to talk about money. I don’t think this needs to be a weekly thing or a daily thing or even a monthly thing. I think that having a conversation about money and establishing a sandbox that everybody can play in and then stop talking about it is the best way to handle it. So again, for clients, we sit down and have a conversation with maybe every six months or once a year, okay, that’s the meeting, let’s sit down and let’s put it all on the table. Let’s make some decisions. And those kind of decisions can be to weigh short-term versus long-term. So our monthly savings program is this. We are going to try to reduce our debt over this period of time. We’re going to blah, blah, blah, and we’re going to save 10% or 15% of the money coming to our account.
(21:03):
We’re going to put into savings, right? Everybody agreed, great. Don’t talk about it again, just go live it. And six months later, a year later sit down and say, okay, are we happy with that balance? Are we saving at the right level? Are we making the right progress to all our goals? And then put it all on the table, have a big conversation about it, then make the decision and then stop talking about it. Because if every morning you get up, it’s another conversation about putting money into the TFSA, then that’s not good. That’s toxic because again, there’s no new information available every day. There’s no new information available every week necessarily. So having a conversation and setting, okay, so 500 bucks goes into your individual checking account. You can do whatever you want with that. And 200 bucks is going to go to t fsa, 200 bucks is going to go to the RESP. Then we’re going to set aside money there into do that. Then forget about it for a while. Just go do it. Live within it. And if when you sit down after six months and say, that’s not working, I want to make some changes, okay, let’s put everything on the table and have a conversation rather than a pitched battle that’s being fought every day where you’re trying to make progress towards getting what you want, whether it’s a new truck or a vacation or more money on your allowance or whatever.
Matt Kempton (22:23):
Yeah, a daily calendar event where we see you spent this last weekend, I spent this or that means I get to spend this much more. That’s not going to, that’s get you where you’re trying to go.
Colin White (22:34):
No, it may get you exactly where you’re trying to go, but it’s not a happy place. Fact, the people around you will not be happy there,
Matt Kempton (22:40):
Right?
Colin White (22:41):
The one person who’s keeping score, like that’s going to be very happy. We’re keeping score like that. But that is a toxic way to deal with your finances. Good point. You took a trip, therefore I get to spend money. That’s the other thing I hate doing. People use get into the whole justification like I deserve this. I retired for this, they did this, therefore I did this. No matter what words you put around it, math is going to math. So if money leaves the account, that money left the account, that doesn’t mean there’s more money there in the account to spend. You spend money and use that as justification for spending more money, math’s, going to math, there’s going to be a mathematical consequence to that. And that’s where the birds come home to roost, because math is going to math. And no matter what justification you put forward, if the sum total of everything you’re doing is unsustainable, it’s going to show up.
(23:36):
It doesn’t matter how good your reason was. And it’s funny because people will come in and try to almost get my approval, well, I did this, this, and this. Great. Is that okay? I dunno, you tell me. Is that okay? You’re not going to be able to take that vacation anymore. But you’ve made that choice, right? Well, no, I went to take the vacation. Well, where’s the money? Well, you said it was okay. No, I didn’t say it was okay. Again, there’s a financial consequence to everything. You can make whatever decision you want, but it’s going to be a consequence. And as we’ve already discovered in this conversation, it quickly morphs from you don’t love the kid. Well, yes, I love my kid. It’s like, well, that’s not a money conversation. And you’re talking about how much money to put away towards their education. That’s a money conversation to have that devolve into why don’t you love our kid? That’s why it’s complicated. That’s where the streams get crossed and that’s where people’s feelings get hurt and expectations and all the rest of it.
Matt Kempton (24:39):
Now to these other points. So one about having a conversation about bagels.
Colin White (24:45):
See, this is the problem. I am not that person. I don’t exist in that space. So not saying the word money sounds all colors are stupid to me, but I’m not going to say that that’s not going to work for some people. For some people that’s going to lift the emotional weight of the conversation. I’ve reached a point in my life where I recognize what doesn’t make any sense to me, can still make sense to others. The triggering effect of the word money because you’re supposed to scream the word at you enough that you have a negative emotional response to it. Every time you hear the word post-traumatic stress to call it a bagel and make everybody giggle for a second and put them in a better frame of mind to have a conversation. You know what? Fair enough. You’re writing your own movie. If that works for you, fantastic. I’m not going to hold that out and say this is how you have to do it. I just am not that person.
Matt Kempton (25:35):
And then to the last point, I think we’ve already touched on it. Focus on the future, not the past. Yes, do that. Well
Colin White (25:41):
That’s a healthy philosophy for anybody on anything really, right? So I don’t think that’s specific to money. Well,
Matt Kempton (25:50):
Historians might disagree.
Colin White (25:53):
Well, for me it’s next. I mean all we can do as humans, we’re moving forward. You can’t go back in time. So no matter where you are, let’s focus on what’s next. Worrying about anything has never made any difference in the entire history of humanity. Carrying things from your past with you doesn’t help. You should learn from the past. Take the lesson, but don’t relive the moment. Don’t be tortured by the moment, just what’s next? What are you going to do about it? Well, and this happened. It’s terrible. That wasn’t the question, what are you going to do? And that’s something, again, all my years in coaching you deal with, I love sports as a metaphor for life because it very much is you’ve had a negative outcome. The rough is bad, you had a bad game or whatever. You’re all pissed off and you’re pissed off at your teammates. You pissed off at the referee. And my question to the athlete at that moment, I was like, whatcha going to do with that? I’m not going to address, we’re not going to get into any of that. But what are you going to do? That’s all that counts. What are you going to do next? Well, okay, so now you take that energy and put it into the next thing rather than put that energy into complaining about something and carrying something forward.
(27:06):
But then that absolutely applies to money. Whatcha going to do next? I should have could have. If I would’ve had a million dollars would’ve done this. Whatcha going to do right now?
Matt Kempton (27:14):
I almost pulled the trigger on the video and I just didn’t bend here.
Colin White (27:19):
Here we go.
Matt Kempton (27:21):
Pomo. Oh no. So we spend most of the time here talking, I think mostly about budgeting as it comes to money issues within a couple. But what about the differences when it comes to investing and maybe the risk tolerances within a household when they can differ because I’ve seen this one with a much more tolerance for growth or risk and maybe the other more safety, more preserving that capital. Do you handle, how do you manage those conversations and think about investing for the household when they both have a different comfort with the risk within investments?
Colin White (28:00):
One of the roles of a professional advisor is to give enough oxygen for everybody to speak, which I’m very, very big on. I need both members of the household there and they’re both going to participate. And that goes against how some houses are organized. Some houses, there’s one spouse or the other that looks after these things. No, you don’t shut up. And the man who thinks that they’re looking after is shut up. You’re going to die first. Statistically your wife is going to be my client longer than you, so shut up. She needs to be here. But it’s giving that oxygen and that’s a moderated thing. Let everybody in the room speak because I often find, if not always find, they’re not as far apart as they think. They don’t understand what the word risk is. And honestly, risk is a very nebulous word. Some people think that the stock market is risky.
(28:55):
Well, it’s volatile. Yes, it moves up and down, but many people equate the risk of going to zero. So as I explained to people, you’re investing in the stock market and you are afraid of losing all your money in order for you to lose all your money. Every company has got to go to business on the same day. And if that happens, we probably have more trouble than the fact you’ve lost your RSP money. So it’s like, oh, I can’t lose all my money. Well, no, you don’t have to put yourself in a position where you can lose all your money. You can put yourself in a position where it can be volatile and move up and down. So having a good thorough conversation about what everybody means about risk, because oftentimes when you get into a couple that’s fighting over money, it just becomes at 30,000.
(29:41):
It’s like we need to take more risk. I hate risk, but we need to take more risk in order to retire. But I hate risk. And it just talking points back and forth. It’s never, it’s like, well, what do you mean by risk? They never get there. Well, I don’t want to risk losing all our money. Oh, okay, that’s a valid fear. Everybody should have that peer and that’s not what’s necessarily being proposed. So again, having a moderated conversation where you get away from, oh, they don’t take enough risk or he takes too much risk, they’ve already made their judgments, they’ve retreated to their mountaintops and they’re just going to throw stones back and forth to turn that into. Well, what do you mean by that? Drive conversation. Have a moderated conversation where everybody gets to talk. The vast majority of the time, I’ve been able to feel that I have found a good middle ground for them that satisfies everybody.
(30:30):
Because again, there’s this misconception that again, I got to swing for the fences. I got to be in the next hot thing and I got to be that. And I need to take that level of risk in order to be financially successful, what Warren Buffet did or whatever. And that’s not always the truth. That’s not always accurate. So having a nice moderated conversation where everybody gets to describe what they’re talking about with risk, and then your portfolio can be different things. You can have a spouse say, okay, what if we took X percentage, invested it this way and we took X percentage and invested it this way. And then as a professional, you do the math to say, this will still accomplish your goals. The expected rate of return of investing this way is still likely to get you where you want to be. And also as a professional, you sit back and say, well, if you do this, you’re going to have to change your goals, but you’re not going to be able to retire at that age. You should expect to work longer or whatever the impact is because it’s all about is what I’m doing now effective And then, okay, is it or isn’t, is it likely to lead to success or is it likely to lead to failure? And these things are not normally black and white, it’s all probability. But that’s why it’s a complicated conversation that couples honestly are not really well equipped to have.
Matt Kempton (31:44):
No, that’s one that we especially find ourselves in the middle of. And a financial plan can be helpful in just finding that middle ground around what does it mean? Like you said, what does it mean to take risks And if these are the things that are most important to you, and those are long-term considerations. Well here’s the long-term asset allocation or risk maybe overall level that should be able to get you there. It’ll fluctuate. Things will fluctuate in the meantime. But we’re not looking at a scenario going zero. And so if that’s what you were worried about, well that’s not really what we’re talking about here today. It’s just looking at statements month, the month, the balance will change.
Colin White (32:25):
Well,
Matt Kempton (32:26):
Are you up at night because,
Colin White (32:27):
Well, this is the other thing you can do it X the right thing, but somebody comes into the office, I haven’t slept in three days. Oh my God, we have to change something. Obviously this isn’t working all the rational conversation in the world, it doesn’t matter. I mean, I can remember back in 2008, I had a client whose mother passed away in Florida. So she was down in Florida in the retirement community and she was kind of dealing with their mother’s affairs and this was 2008. So she was at the epicenter of streets and streets of empty houses and bankruptcies everywhere and everything was a complete mess. And everybody around her was absolutely up to the neck. And her mother just passed and she was emotionally very wrought. And in 2008 when the market was doing what it was doing, the advice we gave was just if feel, the goals are still long-term, let’s just ride this out. It’ll be fine. And she called me and she was in such a state, it was like, okay, we’ll sell everything emotionally. There’s just no way she was going to, I was going to be able to build a bridge to get her anywhere comfortable because of the environment and that particular situation. So that can trump rational thought.
(33:33):
You try to insert rational thought there just so it was in the conversation, but it’s going to get overwhelmed by the actual facts of what’s going on for that person at that time. So that’s one of those judgment calls. That is absolutely one of the things when it comes to talking about money, whether it’s your spouse or your parents.
Matt Kempton (33:52):
Are there any areas you think we’ve missed here when speaking with your spouse keys to success of a long-term marriage, and this is one of the areas you obviously had to find some odds of ways to work together on. Any advice to people out there?
Colin White (34:10):
Again, it’s just talking about money is tough, but do it anyway. This is not that. The cost of avoiding this dramatically weighs the temporary comfort you’re going to have by not talking about it and develop a bagel language if you need to find a trusted advisor that you can sit down in front of once a year or once every six months or whatever frequency, and just put everything on the table again and rebalance everything. But don’t turn it into a daily conversation. You brought up something earlier about budgeting and there’s different kinds of budgeting. Different people have different proclivities towards budgeting. And budgeting itself can be wrought because then you, our accounting, every expense, how much money you did spend at Starbucks or how much money you did spend on groceries or eating out or whatever. But some people can make that work in certain couple situations.
(35:02):
And there needs to be, and you brought this up, really it needs to be slack in the system. Don’t plan everything down to the nickel. There has to be slack and nobody, life doesn’t go in a straight line. The planet doesn’t travel in a straight line. So leave slack in the system, let people be people because there’s going to be a day that your brain just desperately needs to have something. And if there’s slack in the system that’s going to allow it to happen and not derail something that’s more important, let it happen. Don’t look for financial perfection and don’t look for one person to live up 100% to somebody else’s financial sensibilities. That’s an expectation. That’s too high.
Matt Kempton (35:43):
That’s true. And so to our engineering friends, I helps you put that lasts point in, it’s quite important.
Colin White (35:50):
It’s the whole ball game. And again, it’s just the hill you want to die on. I do have clients with spreadsheets and they laugh at themselves, most of them, and they understand the limitation of a spreadsheet, but it’s also a compulsion. They need to do a spreadsheet, but let’s try to do it in such a way that you don’t set the world on fire. Nobody else is going to give a shit about your spreadsheet. You know that, right? But some people, that’s how they feel in control. So it’s not worth it. Not talking about money. You should talk about money. You should do it with a moderator in the room and whoever that moderator is, financial advisor should be well suited to that and recognize that if you think you are an intractable point, that there’s no way forward. There very well could be. Sit down in front of somebody, have a conversation, see if they can find a middle grad, and maybe relieve all the tension and stress you’re feeling.
Matt Kempton (36:42):
Yeah. And I guess as a closing thought, do you think people are going to start going on first dates at Costco?
Colin White (36:51):
Well, you’re such an influential, you’re an influencer. So I think that there’s a very good chance that over the next five to seven days that that’ll become a trend and then fade out right away.
Matt Kempton (37:03):
Alright, well Costco shares some sales in that first week of this trend continuing on. And actually maybe one final thought. It’s interesting. Money is such an important item in marriages and it’s such a cause of divorce. But do you think anyone, do you ever hear of someone breaking up or ending a relationship and money is the reason why? Or is it money becomes, it’s a big frustration, which then leads to this, which then leads to that. And then that’s the reason why. Do you ever, this just struck me that I don’t think I’ve ever heard anyone ever say that we broke up because of money.
Colin White (37:40):
I absolutely have. But money is the manifestation of something else. It more goes like, we broke up because of money because I found out that they had a credit card that didn’t tell me about and they put a mortgage on the house that didn’t tell me about. So it was the deceit. Deceit, the trust and the alignment of what’s important. I’ve got no skill whatsoever in the giving marital advice, but you have to be aligned on a moral level. You have to share, have a shared belief in what’s right and what’s wrong at some level. And sometimes that gets manifested in money. It could be somebody is they gamble or adventure seeking or whatever, or they’re constantly trying to spend money to make themselves feel better or whatever. There’s some kind of disconnect. Now you could argue, is it that disconnect that caused the marriage to break up? It was manifested in money, it had a money effect. So it, was it money that caused the breakup or was it the fact that they just weren’t compatible on a moral level?
Matt Kempton (38:54):
That’s deep. That’s interesting to that. I think that’s beyond our expertise.
Colin White (38:59):
Oh, I think I prefaced my whole comment with that. Yes, it’s beyond my expertise. I’m sitting at the edge of the abyss staring in going, I think this is what I see. No, it’s a complicated conversation. It can be an ay conversation, but it’s a crucial conversation. If you’re not having it, you’re not having it at your own peril. Alright, so thanks for leading our conversation and coming up with these ideas. If the viewers give us enough positive feedback on Matt’s performance, we’ll let ’em keep doing this. So make sure that the Matt Fan Club is heard from and if you like what you’re hearing, pass it on to your friends, hit follow. And we’re always hoping to suggestions for future content. So reach out to us and let us know if you’d like to hear a particular topic, dissect it. So thanks Matt. Thank you, Colin.
Speaker 4 (39:47):
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