We Get Along Financially, Except …

When I tell people that I am a marriage counselor specializing in working with couples and their finances, I usually get one of two responses. The first consists of diving straight into the details of their financial lives and various events (a specific event or an interesting situation that's happened to them).

The second is a more cautious response. It goes something like, "We are really fortunate. We are on the same page financially."  Then there's an explanation of why things are good. As I listen for a bit, I respond and say, "That is wonderful." Then, after receiving acknowledgement, out comes the exception. Recently, I was talking with a doctor who thought my work was really interesting, and he said the oft-heard "well, my wife and I get along well in that department. We are blessed." I said, "Great!" Then came the exception ... "My wife thinks I have too much insurance."

Oh, is that so? Now this was a social setting so I did not get into the details, but this one of many examples that I hear once someone feels safe enough to share with me about their life. The reality is that we all have financial sticking points in our marriages. So the question becomes, are these sticking points driving a wedge into your relationship with your spouse? Is it affecting your ability to enjoy each other's company? Most couples can navigate a few minor disagreements, but stack several together and the stress increases. The reality is that there is often both an emotional cost and a financial cost when it comes to financial differences. In the case of the insurance for this spouse, this can be a common source of tension. If someone is spending $200/month in extra premium for insurance that one party perceives as unnecessary, what does that add up to in a year? $2,400.

Peace of mind just became really expensive for that couple. But the bigger question is why is this insurable risk so important to the person? Because often logic alone will not cause behavioral change.

Without knowing the details, we could assume that it was a disability policy that the doctor has. But the policy might not be technically unnecessary or a number of reasons. The reality is that the doctor's father became disabled at a young age, and that memory lays in the back of his brain about the need for disability insurance. Perhaps this is not a connection that he has made, but it then becomes a clear explanation about the disability. Further, the disability was caused by a motorcycle accident. The doctor does not even own a motorcycle and won't ride one. So does he really need this disability policy? Perhaps not. But hopefully these helps show that insurance policies are often more about meeting an emotional need and not a financial need. Yet, if we remain overly-insured based on objective needs, then we may be cutting off cash flow that could be allocated toward other important goals for the family.

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?

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

Compassion Changes Family Finance

Fighting with your spouse is readily acknowledged as one of the biggest challenges of marital life. It is often as if couples are from completely foreign countries and do not understand each others financial culture. Yet when the fighting ensues, there is often much that is provoked just below the surface of the argument that is creating the real challenge. These issues below the surface can be related to past suffering. In the September/October 2014 Journal of Marriage and Family Therapy article titled Family Therapy and The Science of Compassion author Laura B. Wallace highlights the importance of building compassion for improving family relationships. She says "Compassion means seeing and responding to suffering". How we see the problem before us and how we respond will in large part determine the outcome of the argument.

Take a minute to reflect:

How compassionate are you?

How compassionate does your spouse think you are?

What would change in your life if your level of compassion increased?

These are important questions to grapple with. I trust that all of us have room to grow in our ability to provide and receive compassion, especially when it comes to interacting with our family and finances. When our compassion grows, our ability to engage in the difficult topics of our marriage and money will increase.

The Stanford Center for Compassion and Altruism Research and Education has helped advance our understanding of the role of compassion in developing deeper levels of connection in our lives.
The center identified three types of compassion, which are; compassion for others, receiving compassion, and self compassion. Of these three types of compassion which is most difficult for you? What blocks you from experiencing compassion in this area of your life?

As we focus on building the three types of compassion, the solutions that we need to our problems will start to emerge. Sadly as long as we are not experiencing compassion, the pathways to finding positive solutions to our problems will be difficult to find. In counseling the idea of unconditional positive regard which parallels compassion is a key ingredient in helping people grow. Many therapists have found that once a person feels accepted for who they are and where they are, that then becomes the place that the person starts to experience the freedom to move forward in their life. There is an implicit trust that the solution is within the client, and that from experiencing unconditional positive regard the client will feel (not just think) like they can move forward.

My experience tells me that each of us has an easier time with one area of compassion and struggles with the other two. However, if we are not experiencing the three types of compassion then we are not experiencing the fullness of compassion. I see this often playing out in the caring professions, where the professionals have great compassion for others and will spend endless hours serving others, but will not take the time for themselves, or receive care for themselves.

As we slow down to reflect upon compassion for others, receiving compassion, and self compassion what feelings are being evoked in you? What types of resistance are you experiencing in your gut? Become aware of these responses and try to put names to them, as they are what is going to help guide you into deeper levels of compassion. Our resistance points are what will block us from giving and receiving more compassion.

Ultimately compassion is not something that is so much talked about as it is experienced through touch and tone/quality of voice. Growing these areas can help add substantial quality to your relationships. As our levels of compassion for our spouses and ourselves increase it makes approaching the difficult subjects of family finance all the more easier.

What are those areas of family finance that have felt unsafe to address? Hold this experience in your mind, now go to a place in your mind where you have experienced compassion. What did you experience with compassion in another area of your life, what was stirring in your body? Now how can you hold onto those summoned up experiences, and focus on addressing the family finances. Go slowly and with compassion in mind as you try to address the family finance issue at hand.

Investment Charts, Helpful or Not?

Warning, nerd alert. I had the chance to meet with two wonderful financial planners recently. While I was waiting for our meeting to start, I was looking at some charts that they had up on their wall. One 

of the charts was of the stock market over the last 100 years, along with different events that happened during that time period. One line of the chart included the different presidents that have been in office over the last 100 years.

As I was looking at the chart and making sense of the information, Jenny one of the planners walked into the meeting room. She and I talked for a minute about the chart and how they use it to help communicate with their clients about investing. Jenny made the observation that despite what her clients believe about the current president, the stock market has performed positively during both democrat and republican presidents. This discussion reminded me of two important investing lessons.

1. The need to look at the big picture

2. Our assumptions about why things happen can be wrong

When it comes to investing we all have to contend with our emotions, perceptions of risk, and why we think things happen the way that they do, but when we can look at data and talk with someone else about our perceptions, we then have a chance to see things in a new light.

Before I loose you, I realize that the very idea of looking at investment charts is intimidating. Yet this may be the very thing that you need to consider for overcoming your fear of investing. Having a professional help answer all your questions, can in turn help you feel confident about making the best decisions for your family. None of us have perfect information, but professionals through their years of education and experience can usually help put things in perspective.

When it comes to investing, the more that you understand, the more likely you will feel confident to use investing to provide for your families future. Too often the investment world is positioned as a risky one, yet with a good advisor on your side, you will grow in your confidence about inventing. The planners that I met with are members of the National Association of Personal Financial Advisors. This group has very strict guidelines for membership and client advocacy. I trust that these professional would be well qualified to help make sense of investing for you and your family.