6 – Align with Partner and Waterfall

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Episode Overview:

How do you align with your partner when it comes to money? On this week’s episode, Ken discusses the A in IMPACT, Align Partner and Waterfall. To empathize partner alignment, Ken recounts the first time he rented an apartment after college and how he needed to account for his fiancee. As the two began a family, Ken began to learn about partner alignment and how it is critical for success. Ken then discusses his survey regarding alignment among partners, giving his insight into the findings. Ken also responds to some surprising comments provided by the sample group.

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

Happy Day to you. This is Ken Kaufman and I’m thrilled you’re here for Episode Number six, align with partner and waterfall. As you’ll recall, we’re working our way through the impact your network model, which uses the impact word as an acronym with each letter identifying one of the six key principles for building net worth getting ahead financially, and building financial freedom. Here’s a quick reminder of the six.

I is for iterate mindset and process.

M is for maximize income and enjoy. 

P prioritize the waterfall, which we covered last time. 

A is for align with partner and waterfall, that’s today’s subject.

C is for cultivate assets.

T is for terminate debt.

Now, to set the stage for this, I need to go back to a time when I was struggling to align with partner. In fact, my wife and I weren’t quite married, engaged at the time, my lease contract was expiring. It was about a month or two, before we were to be married, I needed somewhere to live, she had somewhere to live. So I took it upon myself to find a place that I could live in, that she could then move in with me once we were married.

So I looked around, and I did what I normally did when it came to money. I was super frugal, I wasn’t concerned about how it looked or how everything was on the inside or the outside, I was just focused on I needed shelter, and it needed to be cheap. I was just graduated from college, and I was going to have no income starting a business, which ultimately failed. My wife had one year of school left. But that was going to be spent in a classroom as a teaching internship for an entire year. And for the year would be paid half of a teacher salary, which in 1999, was about 900 dollars a month – pretty rough. 

I was thinking about those things. And I was just looking for the cheapest place I could find. It turns out that my wife didn’t quite see things the way that I did. When I showed her the place that I rented, I could tell that she wasn’t very thrilled with my choice. But we figured out how to make it work. Fast forward to about a year after we’d been married, and we were expecting our first child. My wife expressed that she did not want to raise kids in this place. 

I should insert here that it affectionately has become referred to as the pit. It was a basement apartment of a home. And things happened, like sewage backed up in the bathtub. It was just not a good setting, and probably just not one of the best choices, well far from one of the best choices I’ve ever made.

What’s interesting to this is it exposed that I did not understand how to align myself with my spouse. I didn’t communicate. We didn’t understand each other’s priorities. We were just learning probably like every engaged couple or newly married couple, figuring out how to merge lives together and finances and all of those things.

So in today’s episode, we’re talking about how to align with partner and with waterfall. I did a poll on Facebook, in interest of understanding how other people feel about their alignment with their spouse or partner when it comes to money. I asked this question to folks that know me and that I’m friends with. I just put this post out on Facebook or this poll, as a percentage, how aligned are you with your spouse or partner on how you collectively prioritize and spend money.

I gave two choices, either 90-100% aligned or less than 90% aligned.

The reason I didn’t just go straight 100% or less than 100% is because I wanted to capture the group that feels like they’re really just in stride, executing perfectly aligned with spouse. And I wanted to also pick up those who feel like maybe there’s a couple of things where they are slightly off, but they’re minor. And when you consider the whole, they’re just still almost completely aligned. It turns out that that 90-100% aligned is 69% of the 78 people who voted in the poll, the other 31% marked less than 90% aligned. 

So that’s interesting, a little over two thirds feel like they’re pretty darn aligned if not completely aligned. And a little under a third say they feel less than 90% aligned. A couple of comments came out of this that I thought were interesting. One individual said, we always start misaligned and have to work through financial discussions and goal setting constantly. I’m just fascinated with that. They always start misaligned. They’re coming from different places. I think we have to respect this. I think we have to really understand that our spouses think about the world differently. They see things differently. And it’s less about compromise and more about coming together and understanding each other and collectively building priorities. 

Another individual said this: one hundred percent aligned, but only after many years of not being very aligned. Here’s why I like this. The I impact is for iterate, mindset and process. Clearly, this couple has been iterating and iterating until now, and they’re completely aligned. For those who aren’t where they want to be, just take this as encouragement, just let’s pick up the pieces wherever you’re at and figure out how to move forward. It’s possible. 

I then went to another group that I’m a part of in Facebook, it’s the you need a budget Facebook group. And I thought I’d ask the question there. And the polling allowed me to get a little bit more detailed. So I can break out and stratify this just a little bit more. I asked what percent are you and your spouse or partner aligned on priorities for how you use your money. I gave the options of 100%, 90%, 75%, 50%, 25%, and zero percent with zero percent, meaning they don’t feel at all aligned.

Out of 251 who responded, 115, or a total of 46%, said, I feel 100% aligned. So almost half, but actually pretty impressive. 

Another 10% added on to that said they felt 90% aligned. And then another 25% said they feel 75% aligned. That accounts right there for more than three quarters of everyone who voted and they’re 75% or more aligned. 

And then there’s 2% who said they were 50% aligned, 2% said 25% aligned 1% said there’s 0% aligned. And what’s interesting is I had two people who created new options than the ones I offered. The first one created an option said “I don’t have a spouse, thankfully,” and 8% voted for that. And then another 6% voted for a category that someone created called “Spouse does not care. I don’t know if that’s 100% or zero percent aligned.”

So, I think there’s a couple of interesting things to learn from this. First is, it seems like most people are moving toward good alignment. Although it’s not perfect, you can tell it’s a process in order to get there.

Second, I feel badly for those who feel thankful that they’re not married, perhaps they’re getting out of a rough situation, I certainly have a lot of respect for that.

But the work in the rigor of prioritizing with your spouse and getting aligned with them on how you spend money is actually something I found it helpful. I found that additional perspective helps me see things that I couldn’t see, like the pit that we lived in. Had I consulted my wife and had we talked about things more, we possibly could have avoided some painful things that happened to us. So again, neither here nor there, if you want to be married or not, it’s certainly your prerogative to decide that, and 8% chose that option in the poll. 

And then the response that my spouse does not care, and I’m just left to have to deal with the mess and deal with you know, whatever happens. That’s not a safe and unhealthy place, unfortunately. 

I want to share just a couple of the comments that were made. One person said: we have things where we disagree, but as long as our big picture goals are on track and being met, we don’t mind how we get there. I like that – there’s a lot to this. 

Another person said that they have his priorities, my priorities and our priorities. I like that too. But I would just throw one additional perspective in: Why can’t his priorities be your priorities? And why can’t your priorities be his priorities, once you guys are accomplishing what your joint priorities are. For example, if I feel like I want to save money, and I want to see my bank account grow, which is true, I don’t spend much money ever on anything, I like to save it and just see it there. My wife, on the other hand values money in that it creates experiences and connections and wants to use it in that way. So going out to eat occasionally date night and doing those kinds of things are important to her. 

Well, I’ve learned over the years, that just my way of thinking is limited.

We’ve had lots of conversations where she now sees my priority as a joint priority. And vice versa, I value using our money to have experiences and to create those personal connections and deepen those personal connections.

Another person said this: we each spend money on things that the other person thinks are silly, but we haven’t built into our plan.

See, this is great. Maybe you’ve got a little silly thing over here that you want to do. And spouse has something silly over here. But as long as you can come to agreement on what your big overarching priorities are, really isn’t it that you’re just making it your priorities, to allow each other to go and maybe do silly things. 

Another person said this: we agree on the big picture stuff. But we each have our things the other thinks are stupid. It is what it is, we agree on the stuff that matters. Another great example, I love how this works. And how this is described. With a plan in place, we are now getting better. So this is somebody who’s figuring out how to force rank, what the different options are that they can use their money for, and go through and force rank what’s first, second, third, fourth, fifth, going down the list, and they’re slowly working on getting alignment, and working to keep it in alignment.

This person says I’m single, and I cannot even agree with myself on what my priorities should be. So I’d love to see how two people can actually make it work. I love the honesty and transparency in that response. And it’s true. And it kind of highlights another part of not just aligning with our partner spouse. Alignment also has to represent that we are spending our money and we’re actually following the prioritization that we’ve established with our waterfall.

If I was to ask you, what are your top three priorities in your waterfall, and then look at where you spent your money last month. Is there a chance there are things off a little bit. Even if you’re just on your own, we can learn a lot from the waterfall and aligning our activities with our prioritization of the waterfall.

Another person said this: budgeting and money is probably one of the strongest parts of our marriage now, and I’m super thankful for that. And by the way, the word budgeting, all that really means is prioritizing. It’s how are you going to allocate your resources, So don’t be turned off ever by the word budgeting. Just insert the word prioritizing and waterfall and it should emotionally feel a lot better. And I think it’s a more accurate way to describe what we’re doing and what we’re trying to accomplish. So this person goes on when we first started budgeting five-ish years ago, it was a fight. He didn’t agree that we needed to use all our extra money to pay off debt, but they’ve snowballed, and pretty quickly they got out of debt. And now he sees the value. And he’s been on board with this prioritization process ever since. 

And then one last quote in this area: our main area of disagreement is that he keeps wanting to add expenses to the budget without removing others. Again, that’s a place where we have to keep opening up the dialogue and keep working toward alignment on how do we want to prioritize our waterfall and get aligned with each other and how we each see the world when it comes to aligning our expenses. Or I should say what we actually do with all this prioritization work we’ve done and getting ourselves aligned with our waterfall.

One other person said something that really stood out to me, they said, in theory, they are 90% aligned with their spouse, but in practice zero percent. So they say they’re at 90% alignment in terms of what they have agreed to do. But what they actually do, it’s zero percent. I love this honesty. And it points out that even if you spend this time to prioritize how you want to spend your money, and you and your spouse spend a lot of time getting aligned on what that is, and force ranking things and deciding what should be ahead of others and how that should all come together through that cascading waterfall, filling up the pool one and then spilling over to pool to if there’s anything left and so on all the way down that cascading waterfall. If you don’t actually put it in practice, it all is for not if everybody just goes and spends and users resources in a way that’s not in alignment, the end of the day, it’s a lot of effort for no real traction.

And whenever this topic comes up, I always go back to my analogy of the rocking chair. Imagine a rocking chair on the porch of a beautiful house. A rocking chair creates a whole lot of activity. But it doesn’t get you anywhere. Back and forth, back and forth. But there’s no forward progress. There’s no traction, you have to get off the porch, and you have to get traction. And you have to move forward with what that plan is that you create for yourself. 

So there it is, Align with your spouse and the waterfall. In future episodes we’ll spend some more time talking about how to do this and how to accomplish it. Our next episode, however, we’re going to get into the fifth letter of the impact acronym, which is C for cultivate assets.

Make sure to subscribe to the podcast so you don’t miss it and the following episodes on the impact your network model. Many many thanks to you for joining today. This is a wrap for Episode Six. Happy Day.

Transcribed by https://otter.ai

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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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