41 – Four Key Challenges that Hinder Financial Success in Marriage

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Episode Overview:

It’s the start of of the New Year; you and your spouse may have resolved to grow your net worth and find financial success for 2020 and beyond. Ken, along with his son and researcher Daniel, provide an overview of 4 key obstacles that the two of you may face when it comes to financial success and marriage. These challenges are: Lack of Financial Literacy, Lack of Alignment, Lack of a Comprehensive Plan, Lack of Commitment & Emotional Fortitude.

Transcriptions are auto-generated, please excuse grammar/spelling!

Ken: Happy day to you. This is Ken Kaufmann and I am thrilled you’re here for episode number 41, “The Key Challenges that Hinder Financial Success in Marriage.” Now, this is a topic near and dear to my heart. My wife and I through almost 21 years of marriage have had our ups and downs with life, our ups and downs with money and challenges along the way that have kept us from being aligned and from always accomplishing probably the things that we could have. This is a work-in-progress. It continues to be a work-in-progress, but what we found and I’ve employed my son, Daniel, who’s here with us on this episode to do a bunch of research around what are these key challenges, these key things that keep us from being successful with money and marriage, and we’re going to be devoting an episode to each of these four.

But in this episode today, I really wanted to focus on giving you an overview of what are these four main hindrances as well as giving you a little bit of detail to give you some context around them. And then we’ll be devoting an entire episode to each one of these four hindrances that keep us from succeeding with money in marriage. So, first of all, let me welcome Daniel Kaufmann. Daniel, thanks for being on the show and taking time to share some of the insights you’ve gained with us.

Daniel: Of course, I’m really happy to be here and share what I’ve found.

Ken: Now, in this process, you’ve gone through and you’ve identified these four core challenges that keep people from having success with money and marriage. And I’m going to go ahead and I’m going to share those with the audience and then we’re going to go back and we’re going to let you give us a little bit more detail behind each of the four to whet our appetites for what we’re going to be talking about in the future episodes.

So, the first one is a lack of financial literacy, and this is primarily referring to just understanding and applying basics of personal finance. This is a huge hindrance even if people’s motivations are great and they’ve got a lot of other great things in place. The second is a lack of alignment between spouses. So, this is where you’ve got people just on different pages. The third is a lack of a comprehensive financial plan that both spouses agree on. And then the fourth is a lack of a commitment and the emotional fortitude to stick with that plan and then iterate it when needed because we all know that life happens. So, let’s go ahead and jump back to number one, this first concept of financial literacy and when there’s a lack of it in the marriage, the challenges that it can create. So, Daniel, why don’t you share with us some of the research you’ve done and things you found that helped us identify this as one of the main four hindrances?

Daniel: Yeah. Sure. So, for each of these, I chose three of kind of the main subjects that were the most common. And they don’t capture everything, but they help us understand basically the main points, if that makes sense. So, the first one for this financial literacy is a lack of knowledge and skills to successfully manage a budget. And that’s relatively self-explanatory, but it’s really hard to decide where you’re going to spend your money and to push the dollars to the different directions.

Ken: Oh, that’s fascinating. That’s great. Awesome. What’s the second main point you found there?

Daniel: The second was a lack of understanding debt and the role it should and should not play in personal finances. So, in my interviews and internet research and reading books, basically, all of them have mentioned the fact that you should reserve debt for very specific things rather than just wracking it up on a credit card or something like that.

Ken: Interesting. Okay. Great. Again, having some basic financial literacy and understanding, it empowers people to know the role of debt and how they should be using it or applying it in their financial life. Awesome. Great. What’s the third kind of sub-point you have around this topic?

Daniel: The third one is a lack of understanding of how to measure your current income and establish how to live within that income.

Ken: This is so critical. The concept of living within our means. How common did you find that in the interviews and the research that you did?

Daniel: In basically all of them, because, you know, when you get married and you’re trying to merge your lives together and think about your future together, you really have no idea what it’s going to entail and look like and involve. And so, this one is really challenging.

Ken: Yeah. And having a skillset that allows you to be able to assess, here’s what’s coming in and then be able to assess and here’s what that now means needs to go out. And then adjusting lifestyle to match that. It’s really a skill set that you have to develop over time and gain some literacy around. Fantastic. Good. Thanks for that overview. On the second major hindrance that keeps us from having financial success in marriage, this concept of lack of alignment between spouses. Can you maybe highlight just a few of the main research points you had here?

Daniel: Yeah. Sure. So, the first one is having no definition of what financial success together looks like. And this is so critical. Because once you have your destination defined, then it makes the pathway to get there so much easier.

Ken: Oh, that’s fascinating. So much easier said than done, but conceptually understanding that you need it then gives you the juice you need to do the hard work to get alignment around that. Fantastic. Great. What’s next?

Daniel: The second one was poor or no communication regarding finances. No regular money talks. And this one was huge. In all of my research, I found that this was actually the main thing that contributes to divorce is finances and specifically not talking about them and being aligned on them.

Ken; Interesting. Yes. We all know that the topic of money can be very divisive and some conflict and contention can arise around it in a marriage. So, fantastic. Great point. And what else did you have for us on this? Lack of alignment and the topics that came out there.

Daniel: Oh, the last one was financial infidelity. So, lying, hiding, hoarding, everything that goes along with that.

Ken: Wow. So, it’s really being honest with each other, which is ultimately going to underpin the ability to trust each other.

Daniel: Yeah, that’s exactly right.

Ken: And that’s in finances. And really these are great principles just for life in general and in being aligned with your spouse in all areas, but specifically in money. Yeah. This concept of financial infidelity has become a popular topic recently and it definitely is, it causes or drives a wedge in trying to be aligned. Awesome. Okay. The third overall point here which hinders us from having financial success in marriage is lacking a comprehensive financial plan that both parties or both spouses actually agree on and are committed to. So, can you walk us through some of the key points here that you found in the research you did?

Daniel: Yes. So, the first one is lacking a plan to fund major life events for yourselves, your kids and your grandkids. And this is a big one because a lot of times people just go through life and suddenly these major life events come up and they are not financially prepared and cannot contribute or be as much value as they wish they could have been.

Ken: Interesting. So, it’s about not missing those opportunities and starting today to figure out how can you maximize those opportunities you want to help create for yourself and kids and grandkids and everything that goes into that. Fascinating. And that’s a critical piece of having a financial plan and then having both spouses agree on it. So powerful. So powerful. Great. What else did you find here?

Daniel: The second one was a lack of plan for optimizing investments between risk tolerance and aversion. So, couples not really knowing how risky they can be with investing and that leads to them not being prepared for the future.

Ken: Fascinating. And this sitting down and building a financial plan helps them see what risks should and shouldn’t be taken in their financial plan, I would imagine.

Daniel: Yeah, that’s exactly right.

Ken: Oh, fantastic. Okay. Great. What’s the third point you have here to help us understand how this lack of that comprehensive financial plan holds people back on succeeding with money and marriage?

Daniel: So yeah, the third one is no vision for what you want or need in the future. And this is kind of like what I was talking about with alignment. When you have a defined future together, then the path to get there is really clearly understood. But when you don’t, it’s kind of like what are we working towards? Where are we going?

Ken: Yeah. It’s kind of like you’re wandering aimlessly and, “Hey, maybe we should buy this. Maybe we should invest in that. Maybe we should go into debt for this.” All of a sudden everything’s an option versus yeah, maybe everything’s an option. But your financial plan helps you hone in on how to drive the right result that you and your spouse have agreed upon that you want to achieve. Whatever that is. You know, as many of you know, my wife and I have set goals for ourselves and we have these outcomes that we want to achieve. And I can’t tell you having a comprehensive financial plan that we agree on, it has helped us so much to make sure that we’re both moving forward.

It doesn’t mean that we’re going to restrict one spouse or another from spending money on things that they want or they think are important. It’s all about helping to know how to prioritize and know what we want to give up because there’s something better and more important versus no plan, again, wandering aimlessly. Fantastic. Great. So, we’ve gone through these first three, the fourth one I think is pretty obvious, but it’s actually, in my opinion, so critical and it’s a lack of commitment and the emotional fortitude to stick with your plan and then iterate it or change it as life happens and as things go on. Can you maybe share with us a few of the main points you found in your research in this area?

Daniel: Yeah. The first one was that people lack the ability to defer their gratification. So, they have a really hard time being patient and understanding that it takes a long time and that they’re in it for the long haul.

Ken: Interesting. Again, these principles apply to all areas of life, not just money, but definitely money. That ability to say, I’m not going to buy that car or I’m not going to spend money on this because there’s a bigger plan and a bigger vision in place. Awesome. What else do you have there?

Daniel: Oh, the second is the fear of missing out or more popularly known as FOMO. With so much media and messages being pushed toward us all day, every day, it’s really hard to not want the next big thing every time something big or new comes out. And so, being able to stick to what your is, regardless of these temptations and messages coming at you is huge.

Ken: Awesome. So, this is really about putting FOMO in check? Outstanding. Great. And what else did you find here?

Daniel: The third one was having or lacking, you know, a mechanized or automated system, and having this stuff automated or mechanized is really helpful because then you don’t have to think about it. There’s no emotion involved.

Ken: Interesting. So, it’s kind of like, in fact, I’ve always said that software and things like that, they don’t necessarily solve problems, but they can automate the solution and make it so that it just happens on a recurring basis with no mental bandwidth expended toward it. And so, I love that last point because it’s so critical to helping get and maintain some motion. Was there anything else on any of those that we missed or that you wanted to touch on here on the high level?

Daniel: No, that really sums it up.

Ken: Great. Well, we want to thank everyone for joining. We’ve successfully identified through Daniel’s research, these four key things that keep us from finding success with money in our marriages. Moving forward, we’re going to devote an episode to each of these four main challenges that we’ve defined today. My hope is to give you some insights that can help you increase financial literacy in your marriage, help you obtain and maintain alignment with your spouse, help you create, and then stick to your joint financial plan and then iterate that plan and know how to go through that process when life happens. Many, many thanks to you for joining today. This is a wrap for episode 41. Happy day.

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About the Podcast

Join Chief Financial Officer Ken Kaufman as he helps you track and hack your net worth. For those seeking financial independence, your net worth is one of the most significant measurements of success. Using his two decades of financial experience, Ken Kaufman helps you overcome your financial obstacles and look onward towards a better, brighter financial future.

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