How to Work a Financial Plan as a Couple
Couples that save together, get rich together.
After the initial discovery of the FIRE (Financial Independence Retired Early) movement, I got really excited about the concept and its “freedom” feeling.
Before reading about Financial Independence, I was already a person with a “saver” mentality. Reflecting over it, I personally think that I got it from my parents (or not exactly).
As a teenager, I have witnessed a lot of money arguments between my parents and observed how there was no financial planning between them. On one side, there was a high fixed income and on the other a highly volatile income from an entrepreneur running its own business. That fact just by itself makes planning necessary.
To add to the mix there were mortgages, two teenager kids and a change in the economic landscape. Today I realize my parents were paving the way to the financial disaster that fortunately never really happened! If it did, I might never get the chance to go to university and my life would be tremendously different.
“Is amazing how much our parents choices can affect our adult life.”
Looking back, I can quickly imagine a lot of if’s and a list of not so pleasant results… From that point onwards, I have decided on the back of my mind to learn from their mistakes and make things different. After all, I have the decision power over my finances.
Apart from all the drama, I always had my gifts for Christmas and we’ve always gone on vacations at least twice a year. So everything seemed alright at the time.
Fast forward a few years, an economic crisis killed my father’s small business, a divorce hit, and the house mortgage is still not paid.
Today, when I speak to my father about it, he reinforces to never take things from granted, plan ahead and calculate the risks. I am pretty sure a lot of the choices made back then would be way different now.
“ I guess that is what we learn from Risk Management. “
All of this somehow acted as a catalyst to my “saver” mentality. Since a teenager, I would save up all my coins and gifts money to buy something I really wanted.
After getting my first job, the same would apply but I would spend my earned money mostly into traveling. Today I do not regret the traveling discovery but I agree that I should have planned better by budgeting, which is something that I now do.
Bringing my Wife to the Game
After reading about FIRE, I felt it was an obligation to introduce it to my wife.
While the wonderful thing about having financial freedom applies to everyone, not all of us are ready to give up on our current lifestyle. Tracking expenses, limiting ourselves to a budget and setting saving goals are not simple tasks.
“For most people, it sounds dumb to work hard to get a good paying job and then not enjoying the results as they wish.”
One of the learnings of FIRE is to sacrifice the short term for the long term in a way. Small compromises of not spending or establishing a budget are common if we wish to retire early.
Lucky me, my wife is not really an addicted consumer.
Yes, she likes her iPhone and all the Apple ecosystem but she understands that we do not need a new phone every year or get the latest iMac. We also do not need to stay in 5-star hotels if our main goal is to discover the world rather than luxury hotels.
“What we need is to start appreciating the little things rather than the materialistic lifestyle that we are pushed into.”
By discussing freely as a couple and establishing together a direction we are more likely to succeed on a financial plan. Splitting tasks and holding responsibilities are other important factors of success.
In a nutshell, this is how I brought my wife into financial planning:
- We have discussed the benefits of FIRE
- We have agreed on the general direction
- We have set goals and deadlines
- We have mapped our top priorities
- We have prepared a monthly budget
- We have agreed on the tasks, reviews, and corrective actions
By making it a step-by-step discussion, the chances of actually succeeding in something are far higher.
At the end of each month, we have the data to back up our discussions. We can review what happened, discuss how and why we might have missed/surpassed our goals.
Making it an ongoing ritual will reinforce the feeling of commitment towards a common goal. Reaching our targets solely depends on us and no one else. Numbers are there to help us and guide us in the direction we have established.
“Two heads will always think and execute better than one.”
Do you save as a couple? I am curious. Let me know in the comments below.
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Disclaimer: I am not a financial advisor. Always do your own research when investing.
This article is for informational purposes only, it should not be considered Financial or Legal Advice. Consult a financial professional before making any major financial decisions.