How to get your partner involved in your household finances


Vanguard investing experts Maria Bruno and Kahlilah Dowe offer tips on how to get your partner more involved in household financial decisions.

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TRANSCRIPT

Beth Orford: We had a question that came in previously from Laura. And Laura says, currently I’m the household CFO. And I’d like to get my husband more involved but it seems to be a personal thing; AKA he’s not interested. I’ve tried different approaches, I’m not sure how to go about doing this. I’d love to get him more involved, I’d like recommendations from you about how to get the person who sort of holds their nose and puts up their hand and says nah, I’m not really interested in this. Any ideas for how you get that person to the table?

Maria Bruno: Well that’s an interesting question. I think we probably see that a lot working with clients. But I think part of that might be just understanding why. Is it a lack of interest? Is it a fear? And or just a comfort knowing that my spouse is the CFO and can handle these and I really don’t need to? Because I feel very comfortable. So it’s just trying to understand why—And it can be tough. And I think you need to start gradually, maybe start by saying hey can you look at this with me. Or I would like to get your thoughts on this. And maybe starting that dialogue basically putting your toe in the water as opposed to going full force and saying okay we’ve got to sit down for a monthly finance meeting. That would be my recommendation just starting small and just starting that dialogue in terms of well why don’t you want to get involved. I think it’s important for these reasons. And then just start that dialogue because then you can get a sense of okay where are we headed? Does he or she not want to do this? Or is it just they feel more comfortable with me? And this may be where bringing in a professional can help navigate some of those conversations to help chip away at this.

Kahlilah Dowe: Yeah and I think, again, that is really tough because you can’t really, if someone doesn’t want to be involved, you can’t really force them to do it. And I think it can take a toll on a relationship trying to, you know. And you know when you think about kind of sitting down for those monthly meetings, and you have like the stack of bills . . .

Beth Orton: Binder yeah right.

Kahlilah Dowe: You know it can be intimidating. Especially if you have an aversion to doing it. I would say again kind of tiptoe into it, maybe it doesn’t have to be a formal meeting. Just kind of asking questions here and there. The other thing is sometimes it helps to approach it from a high level. So maybe not looking at these are all of our investments, but this is what we have. This is what we’re spending. And maybe a spreadsheet where you say this is what we’re spending, this is what we have, this is what we save every month and so kind of keeping it high level but also keeping them in the loop. Again I feel like I keep going back to the planning but I think that’s another area where you can bring them in. I think it’s easier to bring someone in at the planning stage than to bring them in once things have already been planned out and it’s kind of in the working and you’re executing it. So that’s the other thing I would I would say is to try to bring him or her into the planning stage of it.

Beth Orton: Have you tried like sort of the education route? I think some people’s fear is that it just seems so complicated and you know I really don’t know that much about markets and investments and things like that. You know we’ve got a lot of sort of basic materials. More educational materials. So before you ask people to start making decisions and digging into our own personal finances, I found you know in the past in my career just helping with a little bit of education here or there. Have you seen that work?

Kahlilah Dowe: I think that that definitely works where they can kind of take their time and look at it as they get more comfortable. But the other thing I think is you know when you think about someone being and I hear this a lot like they’ll say they’re not financially inclined or I hear quite often my wife isn’t into this stuff. Or she’s not a numbers person. I hear that quite often and when you think about this, what it takes to be good at let’s say planning and the finances, it’s really more of those skills around organizational skills and discipline and details. And often times you have people who are very good in those areas in other parts of their lives. But when it comes to the finances, you know this kind of the misconception that you have to be really good at math, or really good with numbers in order to do that. And most of the time that’s not the case. And when you get books that talk about it, many investors are surprised to see that it focuses a lot more on discipline and details rather than the numbers part of it.

Beth Orton: And in fact I think, you know our goals for our principles, for investing success, I’m going to ask us to bring that up on the screen now. It’s really four steps. Sort of easy, you know we can talk people through it. It’s maybe a way to step into this to bring people to the table. And maybe we can talk about it; goals, balance, cost, discipline. Those are really the four basic pillars of establishing a successful investment plan. Anybody want to go into that a little bit more? Like what do those mean? That might be some education that we can lure people into the discussion by using these principles.

Maria Bruno: Yeah and I think that’s a really good way to start. When you think about goals is okay well what are we investing for? So we talk about retirement. Well what does retirement look like? How many years away is it? What do we want to do in retirement? So really defining what that goal is and how long will it take us to get there. That will then determine how you need to build your investment portfolio. That’s where this balance comes in to play in terms of how do you balance your asset allocation among stocks, bonds or cash, in terms of properly diversifying the portfolio to make sure you have the right growth and income balance to meet these long term goals. The third being cost. So when I talk about costs it’s both investment costs, management costs, but also taxes. So really focusing on the things that you can control, because you really, you know we can’t control the markets or the economy, but we can control things like how much are we spending in terms of investment fees. Are we being as tax efficient as we can be? And then the last which is the key and probably the most difficult is the discipline aspect of it in terms of making sure once you determine how much you need to save, for instance, or if you’re retired how much you can spend. Having the diligence to keep up with that, it also entails things like rebalancing the portfolio, which behaviorally is tough because when the markets get a little bit choppy it may be a little bit more difficult for us to rebalance the portfolio. But we know it’s something that we need to do to make sure that our portfolio is in line from a risk standpoint with our goals. So . . .

Beth Orton: But in that rebalancing or the discipline part, we really suggest that that’s almost a once a year, not more than twice a year activity. So I think talking through these four pillars with the reluctant person, the person who doesn’t really want to come to the table, first of all we say it’s not that hard. It’s pretty easy. A financial advisor can certainly help you through these steps but it doesn’t take a lot of time or investment personally. There’s a good discussion that needs to be had, you probably need to discuss your vision and your goals for and your approach and preferences to your financial lives together. But the actual execution of it doesn’t need to be that daunting or that hard.

Maria Bruno: No it doesn’t. And that’s key. I mean Kahlila had mentioned it before in terms of if you can take advantage of technology and make things automatic. So if you can do an automatic investment program, that handles the discipline so the money is being directed automatically into the appropriate funds. When you get two funds and you think about how the portfolios are designed, there are balanced funds or all in one type funds that manage the asset allocation for you, so you don’t have to be as concerned about around the rebalancing aspect of it, because the fund is designed to manage that for you. So it can be broadly speaking simplified, which could make it very much more comfortable for these individuals that may have a fear or just a discomfort in getting started.

Beth Orton: Yeah and there’s great materials on that resource list widget out on the webpage that you’re looking at right now for those of you in the audience to be able to dig a little bit deeper on a topic like a target date retirement fun, or you know some of the other topics that we’ve talked about here. That’s great, great Maria.

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