Valentine’s Day Special: Love & Money — Strategies, Wisdom, Prenups, & More with Neale Godfrey
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On today’s Valentine’s Day Special, I sat down with the always entertaining Neale Godfrey, former NYT Bestseller and Oprah collaborator, to explore the topic of Love and Money. Neale joins us for her second appearance on the show, following her outstanding episode on financial literacy.
Money is commonly cited as the #1 cause of divorce, and even when it’s not the main cause, it can exacerbate other problems such as trust, communication, and respect. Let’s breakdown the episode:
Do Not Wait to Discuss Money Until It’s Too Late
Neale opens with the hush-hush culture that the US has around money. In her words, when working for Oprah “It was easier for Oprah to find couples who wanted to talk about their sexual relationships than it was for people to talk about money. They would say — woah no, that’s too personal!”
Neale understands the roots of this ‘shyness’ around money — it has always been a taboo in this country. You grow up not knowing much about your parents’ incomes and expenses, and rarely discuss salaries with friends.
So naturally, in relationships, people carry over this learned behavior. But Neale is begging listeners to reject this notion: “Money is the major issue that will be facing your relationship every single day. And we just don’t talk about it. It’s nuts, and will be the major driver of a relationship over 40 years.”
Having The Conversation
According to Neale, 70% of people couple with someone that has a different financial personality. This personality includes thoughts around spending, budgeting, risk tolerance, etc. However, because money is so rarely discussed and we only see one example of money management (our families), we assume that our way is the correct way. This thought process is wrong and can lead to major fights.
Her advice? Get it out in the open. “Of course, don’t sit down this Valentine’s Day and open up with ‘Hey, what’s your credit score?’” Instead, find a quiet, unrushed day to sit down and talk about it. Frame it as a conversation of trust, transparency, and excitement for setting up your future. Be sure to discuss general assets, debts, and spending goals, as well as investing goals. The sooner you feel this relationship getting serious, the better it is to address it. You don’t need to show people your accounts, but they should have a rough idea. You do not want to be engaged and then learn about a massive student loan balance or high-risk behavior.
Income Disparities — Split or No Split?
“If one person is a concert violinist, and the other is an investment banker, there will be an income disparity. It does not mean there is more worth to the person earning 6–7 figures, versus the person who is not. And that needs to be addressed.” Per Neale, you cannot have either person resenting the other, feeling inferior/superior, or having different notions of what happens with that money.
How do you handle it?
- There must be a shared household account. If there’s a major income disparity, handle this shared account on a pro-rata basis. That way, there is shared responsibility and accountability, but also financial fairness.
- If one person is not earning, that person should still have a ‘guilt-free’ amount each month. The amount does not have to be much, but Neale says the independence that comes with that ‘guilt-free’ account is invaluable. If your partner cannot buy a gift without having to ask you for the money, it’s going to set up a “parent-child power dynamic” that is extremely unhealthy. The guilt-free account should rarely be scrutinized.
- Always split responsibilities each month, even if it’s a 95% / 5% split. Each partner needs to look at accounts, pay bills, speak with the financial advisor, etc. You need some sort of shared responsibility and find tasks appropriate for each person.
- Discuss risk tolerance in investments, gambling, and spending. If one person likes risky investing or spending, you cannot cut the person off completely. But, you can negotiate it to “you can take 10% of our savings and do whatever you want.” Neale emphasized that this monitoring cannot happen in a ‘gotcha’ way, but instead in a hey, we’re building a shared life together…let’s build together.
- Lastly, Neale begs you to buy life insurance.
Prenups
When should you get one? In Neale’s view, it’s only really necessary if one partner is coming in with a lot of pre-marital assets, whether that be money, homes, trusts, or even physical objects like family emblems. If you are both starting roughly from zero, it is still very good to have but not as crucial.
A prenup can be a signal of mistrust, almost contradicting her earlier advice. How to avoid it? She says just blame it on your parents! Say hey, these are their assets, and I promised that no matter who I married that I would sign a basic prenup. It was decided many years ago. We’ll never have to worry about it, but it will give them peace of mind.
Awesome WSJ Article on the New-Age Prenup
Fintech Today Tips + Apps
I’d like to thank Julie VerHage-Greenberg of Fintech Today for sharing some of her insights in preparation for this show. She recently polled the FTT community on this topic after her own marriage (congratulations!). Below:
1. The FTT Community was almost unanimous on keeping some money separate.
2. Never co-mingle trusts or inheritance.
3. If one of you already owns a home, keep that separate.
4. Find a way to analyze all of your accounts for a full financial picture (Zeta, Mint, Personal Capital, and others can help here).
5. Have a joint card but also separate credit/debit cards to maximize rewards.
6. Consolidate memberships and subscriptions.
7. Life insurance. Lock it the low rate now.
8. Discuss all major financial purchases with each other.
9. Take a quiz to figure out your financial personalities and where they do and do not align. This will help with making decisions like what % of your income to save.
10. Couples counseling is great for this as well as any other issues you encounter in the many years you’ll have together in the future.
Also, if you’re not already subscribed to FTT, it’s a must…
Some Good App Choices I Found:
- I’ve become a big fan of Aditi at AskZeta, a shared banking app for the modern couple. They also have their own podcast, the Money Date Podcast.
- Sofi is the only large fintech with joint account capability at the moment (happy to be proved wrong)
- Good asset aggregators/budgeting tools include Mint, Personal Capital, Copilot, and Strides
- Couples specific apps: HoneyDue, HoneyFi, and the aforementioned AskZeta
Happy Valentine’s Day everyone!
Previous Stories You May Enjoy:
Financial Literacy, Mocking Oprah, and Life Lessons with Neale S Godfrey
Noah Kerner, CEO of Acorns — Leveling the Investment Playing Field
Farewill CEO Dan Garrett — Revolutionizing Wills, Probates, and How We Handle Death
Jackie Reses — Leadership Lessons, Fintech Innovation, & Helping Small Businesses
Redesigning the Asset Management Experience — Brian Barnes, Founder & CEO of M1 Finance
Did Fintech Save Minority-Owned Businesses in the PPP? With NYU’s Dr. Sabrina Howell
Frank Rotman, Founding Partner at QED Investors — Past, Present, and Future of Fintech!
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Ryan Zauk
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Ryan Zauk is an MBA Candidate at The Wharton School, where he runs the Wharton FinTech Podcast. He currently works with the US International Development Finance Corp looking at technology impact investments in developing markets. After graduation, Ryan will join Morgan Stanley’s Menlo Park Office working with the world’s largest technology companies. He has a passion for music, media, and all things FinTech.
You can reach him at rzauk@wharton.upenn.edu or on Twitter.
