We've all heard the old adage that money can't buy you love. I'd wager to say that this truth runs a bit deeper. It's easy to treat wealth as a relationship safety cushion—something that buoys us up and keeps our relationships floating along toward security. It's a theory that makes sense on a surface level. But if this is the case, then why is money consistently the number one relationship stressor?
We may think this statistic relates solely to scarcity. Struggling to make ends meet would stress out any couple, right? But financial abundance doesn't guarantee relationship bliss. As a wealth advisor, I've seen many family relationships, business relationships and friendships fail, time and time again.
In reality, financial stability is a tool that can move us closer to our goals and afford us the comfort and peace of mind to pursue a life that's in line with our values. But the same goes in reverse: When we're living out of alignment with our core values and not being true to ourselves, our finances tend to suffer.
I've seen this truth play itself out again and again across the board among people of all upbringings and cultural backgrounds. One of the most common scenarios is staying miserable in a toxic marriage in an attempt to preserve the family. It comes from an honorable motivation; wanting to keep the family intact and cause as little disruption as possible to growing children. I've seen many couples "riding it out" until their youngest goes to college. Staying in an unfulfilling marriage, however, isn't a gift to your kids, your spouse or yourself.
Not only do children typically pick up on the relationship tension despite these efforts, this kind of arrangement also lends itself to financial recklessness. Over the years, I've seen serious overspending habits develop as people dig themselves into debt trying to soothe themselves or overcompensate with their children to make them feel happy and secure. Staying in an incompatible relationship also makes it all but impossible to take a team approach to working toward joint financial goals, like living your best life now while building your nest egg, and planning out your retirement dreams. Sometimes this pattern plays out in another way, going through with multiple divorces and remarriages only to continue repeating the same mistakes.
Romantic relationships aren't the only bonds that can lead to financial stress. Business partnerships and friendships, when not tended to and nurtured, can wreak havoc on our financial life. I can't tell you how many times I've advised people against these types of risky financial decisions, from lending a large amount of money to a friend to borrowing against a home to finance an unstable business venture. In almost every scenario, the person's heart is in the right place, but our judgment is easily clouded when emotions come into play. We're more likely to disregard sound advice and leap without looking first. The implications can affect our relationships, our finances and even our health.
Enjoying the wealth we have has everything to do with maintaining healthy core relationships. This is what leads to a rewarding life where our money is empowering us to live the life we really want. So how do we create positive relationships in our lives, and get rid of the negative ones that drag us down? Like anything else, it requires conscious goal-setting.
Take a minute to ask yourself: What is a good relationship to me? What kinds of relationships do I want to have? Whether it's a deep dive or simply an acquaintance who shares your interests, some details should never be compromised. We should surround ourselves with people who share our values and make us feel connected and appreciated; people we can open up to and be vulnerable with, whether it's a friend or significant other. Our closest relationships ought to be ones that make us feel secure and good about ourselves, not worried or stressed.
Healthy relationships are also ones built on mutual respect and kindness—each participant wants the best for the other and is open to learning and growing together during whatever chapter of life you find yourselves in. And while social media has expanded our social circles tremendously, it's no replacement for flesh-and-blood friendships. What we see online isn't always authentic, and spending quality time together in real life is what enriches relationships and fosters authentic human connections.
JJ Burns & Company understands that our personal and business relationships aren't independent from our financial lives. One influences the other, which is why a fresh perspective can go a long way in growing our wealth and making the most out of this one life we have.
Over the years, I’ve received the standard ties, mugs and handmade items that are synonymous with Father’s Day. But the greatest gift of all has been raising money-smart kids. However, with one in college and three more waiting in the wings, I’ve also seen my kids make some “interesting” money choices—and they’re still learning how to manage their funds.
Here’s how you can help your kids navigate the financial waters at key stages of their lives.
The Younger Years
Teach them the concept of earning money. When your kids see you paying for groceries or buying a present with a credit card, they probably don’t associate those actions with you going to work each day to earn that money. A credit card is an intangible idea for most young ones. Paying your kids to do extra, age-appropriate chores, such as taking out the garbage, helping in the yard or washing the car, can instill in them the value that money is earned and doesn’t just magically appear on a small piece of plastic.
Practice goal setting. What do your kids really want? A new bike? The latest Xbox game? Rather than buy it for them (because you can), have your son or daughter save for that special item. Tell them that you’ll match whatever they come up with. Then they can choose to put a percentage of their allowance or a monetary gift from the grandparents toward reaching their savings goal.
Open a savings account with your child. Most banks and credit unions offer savings accounts for the under-18 crowd. With a little research, you can find accounts that offer up to a 1% annual percentage yield, as well as no monthly service fees or minimum opening deposits. Plus, with the online tools available, you and your child can track savings progress and set new goals.
Learn to budget. This is the perfect age to understand how to make—and follow—a budget. Back-to-school, the holidays or planning a weekend family vacation are ideal times to demonstrate budgeting. For example, give your kids a set amount for new school clothes. They can buy whatever they want; but once the money is gone, it’s gone. Your son or daughter may find that they have to make some hard choices about their purchases, or use their own money to make up the difference if they decide to splurge.
Understand how to spend smarter. Children may not be aware of the many ways there are to make the value of dollar last. For instance, a child who wants a new cell phone may not know that last season’s model is less expensive than the current “it” model. Point out sales or how using coupon codes can help you save on purchases every day.
Encourage entrepreneurship. Whether it’s running a corner lemonade stand, watering a neighbor’s plants while they’re on vacation or starting a dog-walking service, pre-teens can learn a lot from coming up with creative ways to make a buck. Sure, mom or dad may have to supervise a bit, but being entrepreneurial may spark a new interest for your child that lasts for years to come.
Introduce investing. If your kids have been regularly building up their savings since they were young, now is the time to show how investing can grow their hard-earned money even more. There are plenty of online tools available that demonstrate the power of compounding interest, understanding risk, and the importance of asset allocation. Or, consider having your teen invest his or her summer earnings in a Roth IRA to experience first-hand the value of compounding interest.
Talk about smart credit management. It’s a fact that credit rules our lives. And it’s relatively easy for older teens and college students to receive multiple credit offers from department stores, their financial institution or other credit issuer. Teach your teen sooner than later what a FICO score is and how credit usage can impact that score. Another credit management tool is to link your credit card to one for your teen. Monitor spending together and reinforce the importance of paying the balance in full each month to avoid interest charges.
Allow your kids to make money mistakes. We all make them—no matter what our age. By letting your kids experience the sting of a $35 overdraft charge or a hefty late fee when they don’t pay a bill on time, they become comfortable asking questions and learning from their financial choices. This helps prepare them to seek guidance in the future when they’re faced with making much larger financial decisions.
Of course, the best lessons you can teach your kids about money is through your own actions. Every family handles money differently so there’s no one-size-fits-all approach to financial education. By being open about your values and financial philosophies, you can help your kids develop a solid financial foundation to carry into the rest of their lives.
This Father’s Day, take some time to start the financial conversation with your kids. You’ll be glad that you did. Happy Father's Day!
It’s not that women are from one planet and men are from another. It’s just that women tend to end up with different life circumstances than men. Top that off with lower salaries, and there’s a greater need for taking a closer look at financial strategies.
In my 25 years’ experience serving women clients, I find that they can multitask far more than men. They make the family’s social plans, maintain relationships, take care of kids, parents and in-laws—all while juggling their careers. This presents enormous challenges to their time.
It’s true that women control about half of household finances. That means they are watching the bank account, paying the bills, making large purchases, putting something in the savings account, and paying off the credit card.
But they often don’t understand the inner workings of investing. Some of them do, but they just have a lot on their plates. Looking from the outside, investing can appear to be a world of complicated strategies and men making deals.
Seeing Things Another Way
Of course having kids changes everything—finances and all the other aspects of your life. But even without kids, women can have cultural biases toward money, who handles finances, and how to save.
When attending financial workshops, our firm has noticed many men often ask about the best tips for investing. Many women, however, ask about balancing saving for retirement, sending the kids to college, and taking care of elderly parents.
They want to enjoy life while their kids are younger. Women feel some of the most precious gifts are right now in the present.
We often see men wanting tips on when to buy and sell. Women want to know how to support their daughter who’s moving home from college, and their elderly father who needs assistance to stay in his home a few more years. They wish to live a richer life, and at the same time successfully manage the relationships that are important to them.
Saving More, Having Less
Women tend to save a larger percentage of their salaries. They also contribute to their 401(k)s in greater numbers than men.
Despite putting more money away, we often see women ending up with less at retirement. Salary disparities can take a toll on investing over the long run.
But for those women who started saving early, the benefits of compounding can help make up some of the difference in the total amount saved.
We have found women who have children might take some time off during pregnancy or after the kids are born. For some families, they’ve had to make the difficult decision of balancing childcare vs. going back to work. Re-entering the workforce can often lower wages and position.
When parents get older and need help, women are often the ones to take on the added responsibility. When kids are also in the mix, that makes those women part of the “sandwich generation.”
Life expectancies are increasing for men and women, but women still tend to live longer. That means women need more money for living out their retirement dreams.
Women also are usually the ones initiating divorce. They’re willing to be on their own, and want to know what they can get for themselves and their children, and can they be happy with that.
Getting help from a professional can help in many situations. Developing a financial strategy is one.
Women are often not as comfortable taking risks with their investments. Sometimes this is because they view money a little differently than men. Other times, they haven’t spent as much time learning about investments.
It’s been our experience that women often take fewer risks with their money. They want to remain in a position of control. They might not mind our assistance, but they want to feel in charge of the situation. Circumstance like being in debt can weigh heavily on a woman’s conscience. She might feel like she needs to get that paid off before taking what she could perceive as the risk of investing.
It can be easy to let a husband take care of the household finances. It can be nice to let someone do the worrying, researching and planning for you. But if something happens and he is no longer there, some decisions will need to be made—and that will fall on her.
Worry More, Plan More
Many women have more control over the well-being of the family. This can make them worry more about finances. The balancing act of life can fall heavily on women.
Seeking advice from a professional can help teach her about investing, planning for retirement, and even saving for the kids’ college education. Seeking help from someone who has been trained can help alleviate uncertainty in many situations—whether the advice is from a financial advisor, lawyer, or accountant.
Getting help from the pros can help women feel like they are placed back in control. They can learn about investing strategies, plan for contingencies, prepare for retirement, set goals, and balance all the financial elements of life.
Despite often being good planners, we’ve seen many women don’t seek advice until something major happens. But once they engage our help, they tackle the plan like the other aspects of their life.
Someone “Gets” Me
You’ve decided you’d like to talk with a financial advisor. Don’t be afraid to ask them questions. When you start your search, you want to make sure it’s a good fit. When a match “clicks,” you feel more confident and ready to take what comes your way.
Don’t be afraid to explore how your relationship with an advisor would work. You may want lots of contact or just a little. You may want your financial advisor to give you a couple of choices to choose from, or a wide range.
See how comfortable you are with the way they explain things to you. Are things clear, or do you need more information?
You are building a relationship, and not just with an advisor but also a team. Make sure it feels good to you. It may be one of the most important decisions you make regarding your family’s future.