Power Up Wealth podcast – Episode 80 – 4 Healthy Money Habits For Couples
Sharla Jessop 0:00
Good or bad, money habits have an impact on marital bliss. I’m Sharla Jessop, President of Smedley Financial Services, and today, my guest and colleague, Parker Thompson, will share four healthy money habits for couples.
Welcome to the SFS Power Up Wealth podcast where we provide impactful insight and expert opinions on timeless financial principles and timely investment topics, preparing you to make smarter decisions with your money.
Parker, thank you for joining me.
Parker Thompson 0:48
Happy to be here.
Sharla Jessop 0:50
Parker is an advisor on the wealth management team at Smedley Financial, and he holds a CFP designation. Parker, you have written a lot about money habits, whether it’s budgeting or whatever. But why do you think money habits for couples is so important?
Parker Thompson 1:06
I think it determines whether you have a happy relationship or not. One of the stats that people point to is that, obviously you know, 50% chance of a marriage is ending in divorce or sustaining and the largest issue is typically money issue. The largest issue in relationships is a money issue. So whether you think you know causation or correlation, is causation or not, I would think that those two come hand in hand, and I can tell you that typically from couples who have stayed together or split, money is always a big topic.
Sharla Jessop 1:36
Finances drive everything. You know, our health and our finances. And I think finances drive everything, especially when you’re thinking of younger couples getting started, where they’re just trying to mesh together their own money ideas and what they’re trying to accomplish.
Parker Thompson 1:51
Yeah, there’s enough stresses in life as as it is with families and relationships. Hopefully money is not one of those. And if it is, there are money issues that come up in our own individual lives, it would be terrible to merge that into your marriage swell and to bring that into that relationship, if it’s not done properly.
Sharla Jessop 2:07
Right. It can cause a lot of upheaval, even when it shouldn’t, because of the way we think about money and the way it plays a part in everyday life. Every single day.
Parker Thompson 2:16
We can ignore it and say that money isn’t really that big of an issue, but it when it comes to terms money, runs a lot of what we do. A lot of our life depends on what what we do with money, and how we act and how we control it, and how we spend it, how we save it. And so it has the potential to really create chasms or to make people stronger.
Sharla Jessop 2:34
So what do you advise for people as because you have to think, when people are coming together, they’re typically coming from different situations. You know, they’ve been maybe raised very similar, but maybe the financial habits inside their own homes were very different, and they’ve learned their own biases about money. What do you tell people about these four healthy habits?
Parker Thompson 2:54
The first step is, is to practice financial transparency, and it comes from that same issue that you brought up, that you you and your partner come from different households. You may have the same traditions. You may have very different traditions. Odds are, they’re very different, the same with money habits and money traditions in your family. You may have been raised in a family that money is just an object to be spent and that other things matter a whole lot more than that. You may have been raised in a household that money is the way that we achieve things and that we have to save it, and that it is paramount. I’m not saying one is greater than the other, but you have different ideas around money. You have different biases. You have different ways that you perceive how it’s supposed to be used and what it’s supposed to be saved for or spent on. Merging those two with someone else, a partner or or someone else in your life, can be very difficult, and so coming into a relationship with those biases and being transparent about how you feel about money, that’s the first step to take.
Sharla Jessop 3:53
I think sometimes people don’t want to, they want to say how they feel about money because they don’t want to be judged or they don’t want to be shot down. You know, I don’t want to come up with an idea or talk about money, because you’re going to shoot me down because you come from a different situation.
Parker Thompson 4:06
Yeah. Some people might be embarrassed about it if they if their family was never good with money. Maybe they’re embarrassed about how they were raised and their ideas around it. If someone was, if someone’s family, if they come from a very wealthy background that did very well with money, they may also feel some sort of, you know, embarrassment from that front too, just because they’re, they’re significant other, never had that chance or those opportunities. So there’s, again, there’s a lot of, I guess, hiccups or bumps in the road that you want to make sure you overcome. And it’s not, it’s not an embarrassing thing to tell this significant other what you feel about or how you feel about money and how it makes you feel internally when, when you’re thinking about it, those that’s just the first step to really understanding who, who it is that you are married to.
Sharla Jessop 4:47
Okay so first of all, you’re saying, be transparent. Throw out, throw out all of your ideas and concerns, and talk together.
Parker Thompson 4:54
I mean, there’s some really opening, first opening questions that you can ask, and it is literally just, how do you view money? What are your feelings around money? What do you want the money to accomplish? What do you want our finances to accomplish? What is the goal of budgeting? What is the goal of saving? What is the goal of spending? To what end essentially? Those are first initial questions that you can ask each other and see what your partner responds and it’ll give you a better idea of what they think is the purpose of money, how they feel about it, how it really improves or degrades their life. And you can start on that foundation.
Sharla Jessop 5:28
Okay, so once we start on that foundation, what’s the next step?
Parker Thompson 5:31
I think that next step, you start to realize the backgrounds that people come from, and now you can start to define the roles, okay, what based on your background, based on your biases, your goals for this money, who is better at what in the relationship? So defining roles can be many things. Who likes to save? There’s typically a saver and a spender in each relationship. It’s very odd to me, but it sometimes can happen where there’s two savers or two spenders in relationship. Usually doesn’t work out too long if that’s the case, that if they’re both spending but there’s usually one who likes to prioritize enjoyment, spontaneity, spending that money on things that create joy and happiness in life. But then there’s a there’s someone usually is more forward or future thinking, thinking about retirement, thinking about saving up for a home or another asset, and they’re the one who’s willing to kind of scrimp and save and set up a budget. So defining those roles in your relationship of who is going to be best at what and what they would better fit for that person, that’s crucial to do for the next step.
Sharla Jessop 6:30
I think it’s really common to have people from different views and different backgrounds, and those people typically do really well, because they balance each other out.
Parker Thompson 6:38
Right? We’re meant to balance each other out. That’s something that I personally believe, is that having polar opposites, or having, you know, opposites that attract in a relationship, is actually very beneficial, because you can really find balance in between both of your ideals and both of your your skills. Personally, for me and my wife’s relationship, I’m the budgeter. I’m the saver. The one who thinks about future, forward thinking and and she’s the one that thinks, you know, we need to spend to have enjoyment and to enjoy things now. And we find a balance. Because if we’re always saving, if I’m always just saving and thinking about retirement, retirement, retirement, we don’t have any fun today, and we both just become, you know, very disgruntled at each other, and we’re not having any fun. But then the opposite spectrum, if we’re just spending everything we have now and not looking forward, then we’ll eventually end up with nothing, and so we’ll be equally or or even more disgruntled in the future for not having done the good things now. But we have to create. We have to create a balance. And so we we define those roles between each other, of who’s going to kind of give us some some joy and excitement spontaneity with the spending, and who’s going to kind of reel it back in and say, we need to save and and look forward?
Sharla Jessop 7:47
Yeah, I can see that. And looking back at my own marriage and thinking about, okay, now how do we approach that? And it’s very true or very, very opposite, but it’s worked very well for us and and I think it does for most. So many people, however, don’t like to keep their finances together. Whether they’ve had a bad money situation in the past, or maybe are coming from previous marriage where there was bad money experience, or maybe they’re just controlling. Some people like to keep finances separate. Talk about that.
Parker Thompson 8:16
Exactly that. There there’s a reason, usually, behind how someone thinks, right? If they’ve had a bad experience with their parents sharing money, and one is taking advantage of the other, then they’re going to be very adverse to that. If they’ve had good experiences, then maybe they’re going to think that is the way to do it. There’s no questions around it. My advice here, and the advice that I got from this podcast that kind of sparked this idea was to write about it may not just be about splitting up finances. It may be about how you split them up, or how you communicate how you split them up, and that’ll kind of be one that we get to here. But some ideas that I had is not necessarily the when people think about combining accounts, they think about just having a one account, one checking account, one savings account, that we’re both on, and we both just pull from that account. It can be a little bit more nuanced to cater to your style of relationship. For example, most people just think it’s a 50/50 split between the bills and everything that we need to cover savings, spending all that. It may not be that case. With most couples we see there’s typically an income gap between one spouse or the other. One is typically earning a little bit more than the other. If you’re truly earning both the same exact salary, then maybe you can split up all the expenses 50/50 and the accounts there for 50/50 but typically, what I would recommend is having more of a 70/30 split or a 60/40 split based on the income. If that’s how you want to split up your money, then maybe do it proportionally to how much each is earning, and split up the bills that way. So whoever’s earning more pays more of the bills. Whoever’s earning less pays less of them, and that that goes for the same spending too. So that’s one idea. Another idea is to have different accounts, so you have a kind of a Yours, Mine and Ours approach. So there is an Ours account that we share that we keep you know that we pay the same bills from etc, but then there’s a Yours and Mine account. So the money, some of the money that I earn, goes into my account, some of the money that that you earn goes into your account, and that money is for you to spend with what you will. And it essentially gives you the freedom to kind of have a separate account and have that I want to say that peace of mind that this money is, in fact, yours, and that can be a good happy medium between splitting or not splitting completely down the middle.
Sharla Jessop 10:27
Makes sense, because it doesn’t seem if you’re 50/50 and someone’s earning a lot less, it seems not very balanced.
Parker Thompson 10:32
Yeah, I think if you’re trying to figure out a way to split finances or to combine it, and there’s apprehension there, we maybe want to go back to the first step here, or the first tip here and look about, why is it that we’re having a hard time splitting finances, or why is it that we feel like we can’t combine accounts? Is there some fear that one is going to walk out on the other and leave the other one hanging and leave the other spouse just out to dry? Is that something that is, you know, born out of a childhood experience or with their parents or grandparents or something that they have had a fear about. If you can retouch back on that and see the biases, or the bias or the feeling that you have and the reason that’s causing it, and that’ll kind of help you decide, Okay, do we need to combine finances? If I don’t feel like we need to or I don’t want to, what is that reason? And we can kind of overcome that approach by maybe splitting up things a little bit more creatively. If we, if we do need to combine finances, maybe we do more of a Yours, Mine, and Ours approach.
Sharla Jessop 11:28
Makes sense. So now that they’ve gone through the three steps, how do they keep on track?
Parker Thompson 11:33
The overarching theme here is, is to communicate in every one of these steps is to talk with each other. I think that should be a fairly obvious thing for couples, and especially married couples, to really communicate about everything. But you’d be surprised how many people do not. They just go their separate ways and assume that everything’s gonna align. The communication should be key throughout this process, in at the from the beginning, obviously, with being transparent all the way throughout, and deciding how you’re going to split up or combining accounts, making sure that every financial hurdle or problem or thing that you need to assess that comes up, that there’s communication about that, that we don’t just assume someone has it handled, and the other one doesn’t necessarily have to participate. So communication, I think this is just going to be speaking to the choir here, but communication is key between couples, especially about money.
Sharla Jessop 12:20
I think it sounds, you think it sounds like preaching the choir, but I think that maybe it’s a message that people don’t really listen to. We have a lot of people that we meet with, many couples, and we can see that there isn’t oftentimes there’s not a lot of communication around money. Sometimes, when they sit before us, one of them is, you know, eye opening experience.
Parker Thompson 12:42
There’s some that don’t know that there’s accounts out there that they’ve been saving in and there’s others that you know, know all about it, but have never known what the purpose is or why they’re saving in that account. You have some of the sadder situations that you know. You have a spouse that passes away, and the other one has not known anything about the financial situation, and they’re left scrambling to try and gather, how did we pay the bills? How did we you know, what was this account used for? Who manages this money, etc, etc. It’s hard when they’re scrambling, because there’s been no communication.
Sharla Jessop 13:13
So whether they’re separating finances or combining finances and keeping them together, there should be regular communication about exactly where everything’s at and what’s happening.
Parker Thompson 13:21
And sometimes it’s just not their forte. Again, I’ll go back to my my own marriage. I’m the one that that looks at the money and that looks at the numbers and and my wife doesn’t as much. She she does a lot more of of the other things that I that I don’t do. But essentially, I try to bring her in as much as possible, even if it’s, you know, some boring topics that I think are exciting, but not necessarily for her. But I try to bring her in just so she’s a just so she’s aware of what’s going on, because I just don’t want her to be left, left hanging. And I think that that would do for a lot of couples, just communicate about why they’re saving, or why they’re spending or what this account is for, where to find this certain detail. So those, those are all crucial things that we may not think are important now, but there’s, there comes a time where that is really useful.
Sharla Jessop 14:03
I agree. I also believe that sitting in front of a financial professional and getting some guidance on your goals and letting them help you map things together and using an advisor’s resource is really valuable.
Parker Thompson 14:17
We are not counselors or financial therapists by any means, but we sometimes take that spot because there’s a lot of times couples will be at odds, not necessarily odds, but they can’t necessarily find the right decision themselves. Should we buy a home? How much home could we afford? Should we buy a car? What interest rate is good? What should be our plan going forward, as far as savings for retirement versus savings for other things? A lot of couples, they either butt heads or they just can’t come to a conclusion. So that’s when usually they they are contacting us, and that would be, my advice was to be, if you need someone to kind of be the intermediary and look at the situation objectively, then that would be a good thing to do is see what I would call financial therapists. Even though we’re not licensed to be therapists, we sometimes act in that capacity.
Sharla Jessop 15:02
Good information Parker. Thank you so much.
Parker Thompson 15:05
Pleasure to be here. Thank you.
Shane Thomas 15:11
Thank you for joining the Power Up Wealth podcast. Smedley Financial is located at 102 S 200 E Ste 100 in Salt Lake City, UT 84111. Call us today at 800-748-4788. You can also find us on the web at Smedleyfinancial.com, Facebook, Instagram, Twitter, and LinkedIn. The views expressed are Smedley Financials and should not be construed directly or indirectly as an offer to buy or sell any securities or services mentioned herein. Investing is subject to risks, including loss of principal invested. Past performance is not a guarantee of future results. No strategy can assure a profit nor protect against loss. Please note that individual situations can vary. Therefore, the information should only be relied upon when coordinated with individual professional advice. Securities offered through Osaic Wealth, Inc., member FINRA/SIPC. Investment advisory services offered through Smedley Financial Services, Inc.® Osaic Wealth is separately owned, and other entities and/or marketing names, products, or services referenced here are independent of Osaic Wealth.
