Impulse Spending and Credit in Our Immediate Gratification Society

It’s no surprise that I often talk about the need to have a strong, supportive financial team to pursue financial independence. These financial teams can consist of a CPA, an estate planning attorney or a real estate agent, with your trusted financial advisor acting as the general manager of your team. While each one provides a specialized level of expertise, for individuals who are married, there is another person that can make or break your route to financial independence: your spouse. Often, we underestimate the value your spouse brings to your financial house, which is why it is so important to make them the MVP of your financial team.

In order to pursue financial independence, couples must be on the same page and work together towards common goals. For many, though, that is just not the case. Nearly half of U.S. couples argue over finances.[i] These disagreements can be based on resentment over spending rather than saving. Sometimes arguments arise over differing risk tolerance. The heart of these issues lies in goal mismatch, a situation that arises when your combined goals are not aligned. When you and your spouse are not working together towards your combined financial independence, chances of reaching it are slim.

While some couples argue, others simply don’t communicate. Both people in a marriage need to be involved in their finances, agreeing on their financial goals and the steps they’re taking to get there. Being unaware of your financial household, whether it’s because only one person in the relationship is in charge of the household finances or because both parties have decided to keep separate financial lives, simply causes problems. When you don’t know what the other is doing with their money, you can’t be sure that you’re both working towards the same goals in the most effective way. Additionally, you may be setting yourself up for unfortunate complications if your partner unexpectedly passes or becomes incapacitated. Honestly, I’d rather have my clients argue than avoid discussing finances. At least they’re talking about it.

So how do you and your spouse get on the same page? You can start by taking my financial compatibility quiz. Not only will the quiz show you what areas the two of you are like-minded and what areas you need to work on, but it’ll also give you the conversation starters to mine those areas you may not see eye-to-eye on. If you need a little more guidance on what to talk about, you can check out my book, The Couple’s Guide to Financial Compatibility. Also, make sure to get some time for yourself for date night – particularly a Financial Date Night. Make the investment for a babysitter to ensure some consistent quality time where you can have open, honest discussions on big-picture issues and long-term goals. For those really tough topics, you can use a trusted Financial Advisor to help you navigate the conversation.

I am a firm believer in investing in your future. Whether you invest in a book, a babysitter or your time, these investments go a long way to ensure your marital financial health. It’s when you make sure that you’re working together with your spouse that you build a strong and sure route to your financial independence.

[i] https://nypost.com/2017/08/03/the-reasons-most-couples-argue-about-money/

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine what is appropriate for you, consult a qualified professional.

Not all goals are equal in their achievability. In fact, 92% of people don’t reach the goals they set.1 While goals can be difficult to achieve, they’re not impossible. However, the best way to set yourself up for success is to set meaningful goals.

A meaningful goal sets itself apart from a standard goal in three main ways.

1. It’s Specific and Measurable

The more specific your goal, the more likely you are to reach it. According to one study, setting specific goals led to a higher performance 90% of the time.2 The reason for this is fairly simple: the clearer the path, the easier it is to follow it to the final destination.

I hear so many people tell me their goal is to save more, spend less, or build a retirement fund. The problem with these goals is that they lack specificity. Saving more could mean saving $10 per month or $1,000 per month. You can’t track your progress or know if you’re on track toward your goal if you haven’t specified it and you can’t measure your progress.

One of the first things I tell clients is to make their goals as specific as possible. For example, instead of “build a retirement fund,” you can specify it to “build a retirement fund of $100,000.” Finally, make it measurable—”build a retirement fund of $100,000 by age 45.”

2. It’s Relevant to Your Life

A goal is only meaningful if you’re passionate about it. Those who meet their goals do so not just because they’re hard workers, but because they are passionate about what they want to achieve. Their goals reflect their values and interests, rather than being random or something they think they’re supposed to achieve in life.

For example, some clients tell me they want to build their savings account because they’ve been told that’s what they should do. While true, you likely won’t feel very inspired to save more if you don’t have a reason for it that makes sense for your life.

I tell these clients to think of what having a savings account would mean for them. Would they feel they could sleep better at night? Would a savings account mean they could go on an annual family vacation? If they build a savings account up to a certain amount, could they finally upgrade their unreliable and problematic car?

Whatever your goal, you should be passionate about it and it should be relevant to your life, not what you think you’re supposed to achieve.

3. Frame it Positively

We’ve all heard about the power of positive thinking, and it translates to your goals, too. We are much more likely to work toward something we want to achieve or do rather than what we want to stop doing or don’t want.

For example, rather than a goal of “stop overspending” or “spend $200 less each month,” frame it in a positive light: “spend more mindfully” or “save $200 each month.” This can help you view saving as a good thing you’re supposed to do, rather than spending as a treat that you no longer should do. It’s easy to reverse any goal, so there’s no excuse not to!

Don’t Go it Alone

The process of setting a goal is just as important as the process of working towards it. Think of your goal as the frame of a house. You can’t build a stable home without the proper foundation and a clear blueprint.

If you’re struggling to achieve your goals or aren’t sure how to set ones that are meaningful, an advisor can help. As an independent financial advisor, my mission is to make a meaningful impact on the lives of my clients and the people they love. I help families make informed decisions with their money and pursue a strong financial future, from setting meaningful goals to guiding them along the path toward the finish line.

Contact me for a no-strings-attached meeting to discuss your goals, how to make them meaningful, and what strategies can help you pursue them. Call my office at (949) 221-8105 x 2128, or email me at michael.loo@lpl.com.

1 http://www.inc.com/marcel-schwantes/science-says-92-percent-of-people-dont-achieve-goals-heres-how-the-other-8-perce.html

2 http://psycnet.apa.org/record/1981-27276-001