Not In Our Family Finances

“Let's go to the zoo today,” Sally told her husband Dan. “The weather should be fine, and the kids will have a great time seeing the many different animals.” Sally and Dan get the kids loaded into the car and head off for the zoo. An hour later they are at the entrance to the zoo with their three excited kids in tow. They start off with high hopes and aspirations, but the trip quickly becomes an emotional nightmare. At the front gate Sally asks Dan if they can spring for the all access pass, which includes not only entry, but also the many different activities that are located inside. With a slight look of disgust, Dan looks back at Sally and says, “Oh fine.”

Sally and Dan enter the zoo with their kids ready to have a good time, enjoying looking at the monkeys, giraffes, and lions along the way. After a few fun hours the kids are getting hungry, and Sally and Dan are ready to sit down. The kids all clamor to get the souvenir cups with the funny animal heads, while Dan insists on just getting the kids the regular cups for drinks. As they all sit down for food the three kids look across to see the gift shop and start in with, “Dad we want—”…You know the rest of the details. After some persistence and after finishing lunch, Sally joins in with the kids and says, “Oh come on Dan, let's let the kids get a special treat.” To which Dan quips back “This whole day has been a special treat!”

By this time you are starting to get a picture of Dan and Sally's life. While this is a story about their trip to the zoo, the reality is that their pattern of interaction persists over many of life's situations. Sally wants to give the kids as many rich experiences as possible, while Dan seems like he does not want to indulge the kids in any of their desires. Reading this story likely evokes certain emotions in you.

What do you think of Sally? Why?

What do you think of Dan? Why?

What do you think of their kids? Why?

As you reflect on your answers to these questions, you will start to become aware of your own rules about the way that money is to be used in your life. Day in and day out you live with our spouse and you both have many unwritten rules about the way that you should spend, manage, and organize around money. This is called your family financial system, which is less about the actual amount of money, and more about who says and does what with the money. At a deeper level this is a reflection of the way that the family dynamics play out, and the way that the power is dispersed throughout the family.

Sadly there is often disagreement between spouses/parents about their financial values. The ways in which couples go about addressing these differences can vary, but the reality is that there is a big opportunity for couples to start to build financial intimacy in their life. Financial intimacy is being known at a deeper level about why we hold the values that we do. I surely work with many couples who can pretty easily predict their spouses spending patterns, which they take issue with. But at a deeper level it’s not the spending patterns that they’re upset with, but rather the values that those spending patterns communicate between spouses, kids, and their community.

Dan grew up in a family where he often heard from his dad, “Modesty is a necessity.” Which Dan internalized to mean that splurging beyond the basic experience is unacceptable. So with the trip to the zoo Dan felt as if he was betraying one of his family rules about splurging by getting the all access pass, fancy top lids, and then a gift from a gift shop—it was all too much.

On the other hand, Sally grew up the youngest of two girls. Even though her father earned a very modest living, he lavished his girls with gifts—even when he didn’t have the money to pay for the presents.

So now as Dan and Sally go through their married life, they continue to replay out the messages about money and how it is to be used in within their families. The reality of Dan and Sally’s finances is that they are in a financial position where they can afford to spend the "extra" money at the zoo—it won’t have a big impact on the rest of their family finances. When they slow down long enough to recognize the pattern they’re in and give credence to their own respective experience of living with their fathers and the way that they spent money, they will have a much better sense for the source of their frustration. This can lead them to find new ways of relating to each other that make sense for their family. But without taking the time to understand the connection between the past and present, they are doomed in the future to keep repeating the same problems over and over again.

Your Personal Boom Bust Cycle

In the economy at large, we go through periods of expansion and contraction. This is a known and natural part of Economics 101. Few like it when the economy contracts and turns down, we all have to live in the cycle of boom-and-bust. We would love to have an economy that grew at the same rate, year in and year out, yet that is not reality. Our economic system is vast and dynamic, with many moving pieces that lead the to the boom-and-bust cycles that occur. Yet when we look over time we can see an overall economic expansion.

So if we apply this same concept to our personal finances, what do we make of it? Through meeting with a number of different professions, I have discovered that people within their own family have boom-and-bust cycles of their own. These cycles do not necessarily correlate with the broader macro-economic patterns, but they seem to have a similar psychological effect—perhaps an even more profound impact because the individual experiences it personally.

For the point of this blog let's assume that people earn money in one of two ways. 1) Regular Basis (same amount): typically these are hourly employees and salaried non-bonus employees. 2) Variable Income: where much of their income is tied directly to what they produce. They can be entrepreneurs, sales professionals, contract based employees. These folks do not get a regular paycheck every two weeks or once a month. Rather they get paid based on a contracted basis.

So what does this do for families that receive variable incomes? They live with a higher degree of variability in their earnings. That level of uncertainty creates practical challenges like managing cash flow to pay bills, and also psychological challenges as their income and ability to pay bills are directly contingent on producing.

As you look at your own family economics

1. How does income flow through your home now, does it come in a steady stream, mild waves up and down, or in big waves with potentially big breaks in between?

2. How did the family you grew up in earn their living—was it a steady paycheck or uneven cash flow?

3. What was the perceived ability of your family to create, sustain, maintain, or grow financial security?

4. What was the variance in your families’ income?

5. Where there big swings week-to-week, month-to-month, year-to-year?

6. Did your families’ income remain relatively flat, grow as you grew, or decline?

7. Where there interruptions to income producing ability—perhaps a significant career shift, disability or death?

8. What emotions come to you as you reflect on these questions?

As we become more acquainted with the patterns of income we saw from the family we grew up in and the family we currently live in, then we have the opportunity to better understand the points of stress we experience. In our married life it’s especially important to understand how our spouse experienced their family cash flow, and what that meant for them as a family—the things they got to do, the things they did not get to do.

As you think about your life horizon and the planning process that goes on, there are a number of variables to consider. There are some questions that will get answered soon, and some that will remain unknown until further along in growth and understanding.

The personal boom-and-bust cycle often plays out when there are larger variances in family income. If mom earns a big bonus check what does the family do with it—new cars, vacations, clothes, charity—what happens? Then what happens after the money is spent?

What about those families where income expands and contracts on a regular basis—are they able to set aside enough in the boom times to even out life in the bust times? This takes the ability to look into the future and anticipate the bust times to come. A family without a future orientation, may be more subject to having to expand and contract life style as income fluctuates. What stress is that placing on you? What kind of stress is that placing on your partner?

I was recently working with a couple where the husband was not concerned about the home equity line of credit and said they would get it paid off, whereas the wife was very concerned about getting it paid off. Below the surface of their argument lie deeper personal convictions and money scripts that caused them to see the situation from two very different perspectives. This family had variable income from both partners. The husband earned a small base salary with the potential for a big bonus, and the wife was a small business owner and did her own consulting work, which led to variable income. This dynamic ultimately led to a level of uncertainty in the relationship about when and how the home equity line of credit was going to be paid off.

So what's your personal boom-and-bust cycle? If you don't receive regular income for any number of reasons, what is that experience like for you, your spouse, your kids and perhaps other people that count on you to produce an income?

Where are you in the cycle?

Do you often have a steep recovery to climb out of the bust, i.e. is there debt that has to be repaid?

If the boom-and-bust cycle is wearing you out, what are those things that you can start to change that would reduce the variability in the cycle?

Falling In Love With The Profession And Not The Person

You would never marry for money—or would you? You meet the special someone and they tell you about their line of work. You think to yourself, “Wow this person must have it going on! I sure would like to get to know them better.” You engage this person in fun, friendly conversation. Over time the relationship develops and you decide to get engaged to this amazing person. At the conscious level you are thinking, “ This person is smart, charming, seems to be doing all the right things. Why wouldn't I want to be with them”. In return they are thinking the same thing about you.

So the relationship progresses and you get married. You think you’ve hit the jackpot. You met this wonderful person and will spend the rest of your life together… Until one day you wake up and you realize, “Wow I thought I married this person because I love them and they make me feel so wonderful.” But things are not always as they appear.

There are some professionals that our society holds in high esteem—you know, those people who will get to live the good life: doctors, lawyers, successful business professionals, etc.  It can all seem like a wonderful windfall of good fortune, especially if you were not expecting to marry this type of person. But over time you realize what it looks like to actually live with someone who’s achieved that level of success.

Sadly, we often pursue a certain career or someone in that career, because we have an idealized image of what it would be like to become or be with that person. We can become blinded by our own idealism of being associated with that title. Okay, now I know by now you are saying who me, “I would never do that,” and maybe that’s true. But from my experience we all tend to romanticize certain types of people. If we are fortunate enough to meet and then "fall in love" with them, we are in for a rude awakening—they too are people, subject to their own faults and limitations.

Eventually you will hit this point of waking up from the idealized image of who you married, and see them for who they are. Then the hard work of the relationship begins. Sadly, this is when many couples bail out and say, “This is not who I married. What happened to that amazing person I met and fell in love with?” Well the sad reality is that we fell in love with an idealized image of the person, not the real person. But once we recognize this, then we can start to effect positive change in ourselves to learn how to love the person who we fell in love with.

At a deeper and often unconscious level, we have internalized money messages about what certain society positions should be able to provide us. There is often a period of disillusionment when we realize that this person who holds an idealized position is not as good as they seem. At this very juncture it is time to lean in and get to know the person behind the profession. They are likely neither as good or as bad as you might think.

Entering into this season of life can be challenging and overwhelming. If we put the position before the person, then the relationship remains shallow and unfulfilling for both people in the relationship. But given time, and often a bit of professional help, you can move to a place of loving the person behind the profession, and then ultimately enjoying the benefits of their position as well.

In my next post I will be looking at the effects of what I call the personal boom and bust cycle.

Written By: Ed Coambs – Marriage Counselor and Financial Therapist

Edited By: Joey Glass

What Is Your Financial Story?

The power of narrative is often missed and misunderstood in the process of financial planning.

We all have an untold financial story that is working in the background of our lives. Bringing light to this story helps us to find our way forward.

I don't know when the first story was told, but I know that it was thousands of years ago. For as long as we can go back, stories have carried the power to pass along values of the family, community and broader culture. Modern day Hollywood has figured out how to tell the best stories, and they make huge money telling stories. They’ve become so adapt at telling stories, that I wonder if we have lost the ability to tell our own stories—the stories of our families, and the challenges and triumphs that they’ve overcome and yet to overcome.

Stories, when told by the people who have lived them, do not miss the little details of family history and the meaning associated with different events. Stories are often how we learn best, as there are strong emotions associated with stories, which tie into the facts and figures of our lives. Stories take us on a journey and carry us through to the next generation. Yet as I meet with people to talk with them about their finances, I am surprised to learn how little they know of their own story, that is, their family story—how they came to be, what values they stood for, and what direction the family is headed. Sure they can tell me a few details, the highlights, but the deep knowledge of family story is not there.

Yet more often than not, it’s the deep family story that continues to carry forward strong convictions and beliefs about how the world works and should work. People with all levels of educational achievement will often refer back to something their mother or father did, and how that has shaped the way they do something now. While they may gain new knowledge that advances the direction of the family, there is still a pull by the family back into what they’ve been told.

So as you face looking at your finances, what is your story? Here are 10 questions to help you start to open up and look at your own family’s story of money.

1. What financial successes did your family have?

2. Who made the money (did one member make much more that than the other)?

3. When where you left wanting for something but could not have it?

4. Who controlled the money and why?

5. Who spent the money and why?

6. What arguments over money existed?

7. How does your spouse view money?

8. How do you view money?

9. What did your family say about rich, middle class, and poor people?

10. What did you learn about money from watching your parents?

These are just ten questions to help you start to examine your own story around money. As we become more familiar with our family story around money, and how we want things to either stay the same or change, we then gain new insight into the directions that we can head.

In the stories we create, we want to look for places of consistency, and when there are exceptions to the rule. We want to start to look at how we want to rewrite the story so that it goes forward. While it is important to understand the story up until this point, we also want to start to look to the future to determine how we would like the story to look going forward. What would the script of your financial future include? How can you start to write into your new script?

In my next blog post see how your story may have led you to fall in love with a profession and not a person.

Written By: Ed Coambs

Edited By: Joey Glass