“In the long run, we shape our lives, and we shape ourselves. The process never ends until we die. And the choices we make are ultimately our own responsibility.” ~ Eleanor Roosevelt
Money is an interesting indicator of our state of mind. Emotions like paralyzing fear, envy, revenge, resentment, scarcity, hatred or bitterness usually reflect less than desirable state of financial affairs in our lives. On the other hand, emotions like peacefulness, kindness, contentment, appreciation, happiness, joy, love and serenity reflect the state of mind that is open to receive the abundance that Universe has for everyone…. Among many things, money is a language we use to express the best in us and the worst in us. (more…)
Do you fight with your partner every time you talk about money?
Or do you have open, candid “money conversations” with your partner?
Or do you avoid talking about money with your partner so you can avoid fights and frustration?
Research has shown that couples that avoid fights about money, often end up having less wealth and not being prepared for a successful retirement.
No one wants to fight, of course. Howevere, money is the #1 thing couples argue about. And you probably heard that fighting about money is often an early predictor of divorce.
So, why would couples get sucked in into the argument about money when it causes so much stress, tension, and destruction?
While nobody wants conflict, avoiding communicating and working through disagreements with your partner can hurt the relationship and put your future financial security at risk.
I’ve met many women who shared their frustration about not being able to “talk money” with their partner in a constructive and candid way.
“I love my husband and don’t want to get into big arguments over money. So, I stopped talking about money with him all together. And now I have my secret money accounts.”
“I was sick of fighting about money. Now we both avoid these conversations.”
“We can’t ever agree when it comes to investing. He does his thing and I do mine.”
While many couples default to “not talking about money”, this solution usually comes back to haunt them.
Here’s why.
Men in a couple tend to have higher confidence and higher appetite for risk than women.
Because men usually have more risky investments and higher balance, women tend to keep substantial amount of cash in case of emergencies. In other words, to balance her husband’s high-risk investments, a wife often compensates it by keeping a high balance in FDIC-insured bank accounts, which provide safety but little or no return. This allows her to sleep at night and avoid arguments.
While it may work for some couples, this strategy may cost couples loss of opportunities in the end. If they invest $100,000 in a super-safe bank account earning 0.5%, rather than a conservative balanced index fund that may have earned 3.5%, they would have passed up 3% per year in earnings for each year the funds are invested.
On a $100,000 account, that’s $3,000 a year, and $30,000 over 10 years (not including reinvested dividends and capital gains.)
On the other hand, husband’s high-risk investing strategy may lead to significant loss of family wealth that he is trying to build by taking higher risk.
I believe, there are better ways to managing money as a couple than fighting over it or avoiding talking about money. Here are a few tips to get couples started on the road to creating wealth together:
Communicate
I believe in candid and transparent communication in the relationship. Have a candid ‘money talk’, be open about your concerns, and share your preferences when it comes to investing ideas. Don’t avoid ‘difficult conversations’ – find a way to have them in a constructive and respective way.
Work through your financial conflicts (rather than fighting about them or avoiding them altogether). If this seems daunting, you may consider talking to a financial planner, even if you are a do-it-yourself investor. If you can’t seem to work through financial arguments and have very different risk tolerance with your partner, get independent help to work through your differences and overcome communications’ challenges.
Set financial goals as a couple
Determine the return you’ll need to get on your investment in order to meet your financial goals. You may not need to take on additional risk to reach your financial goals. Calculate your annual lifestyle spending to determine what your rate of return on your investments needs to be, based on the amount you are currently saving. Don’t take more risk than you need, however, don’t be overly conservative either. Your investment returns must be adequate to meet your goals.
Set goals as a couple and develop investment strategies around those goals. For example, are you going to invest in the stock market? Rental real estate? In your growing business? If so, what percentage of your total assets you want to invest in each asset allocation?
If one of you wants to trade or invest in high-risk investments, limit the amount you allocate into high-risk investments and integrate these investments into your overall plan.
Compromise
I like to remind women that they should “pick their battles.” While some things are definitely worth fighting for, some things aren’t worth the argument. Your financial future is definitely worth fighting for.
When you have a “money talk”, listen to your partner, really hear his point of view when it comes to investing family money, and see if there is a way to find a common ground. Willingness to compromise is important for the healthy relationship. However, never compromise on your core values in life.
For example, if Freedom is your core value and you feel that your current employment is totally draining your energy and health, although paying you a very good salary, leap your way out of this situation even if your partner feels it’s wrong for your family finances.
When you force yourself to do something that you utterly resist, you compromise on something that is deeply important to you and can make yourself seek. Money is important, but your health and vitality are more important than money.
Dream together
Your money talks don’t need to be only about bills you have coming up and debt you need to repay. These conversations do need to take place, of course. But you can also share your aspirations that require you to save and grow you money – maybe a new house, or a trip, or a business that you’re passionate about. Whatever it may be – dreaming together, having common goals will help you get closer and inspire you as a couple to work toward your goals.
Do the “Five-Year Exercise.” If you only had five years to live, what would you like to do, have or experience?
Don’t overthink or censor yourself. Just start writing it down. If you are married or in a relationship, each of you should write your lists separately. Then, as a couple, choose what you’d like to do, have or experience, both together and individually. It’s hard to fight or argue about money when you are working together toward important goals. Don’t give up on your dreams!
Become Financially Empowered
Invest in yourself – let go of your inner blocks, become equipped with knowledge about strategic investing.Although having a MBA in finance might be nice, you don’t need it to be financially successful. Having a solid base of financial knowledge will take you a long way. Couples who both understand financial fundamentals, can make better financial decisions, especially when they make them together.
Besides, it’s quite likely that at some point you may be 100% responsible for your own investment and money decisions. Now is the time to upgrade your skills and knowledge about savvy money management and investing.
As excited as you may be about this idea, you need to recognize that there is an inherent risk in cryptocurrencies. This is a brand-new market. So, I want you to remember that the risk of a 100% loss is ALWAYS present in cryptocurrencies. That’s why I urge you to go small should you decide to invest in this space.
Investing $100- $400 is small enough to cause you only minor financial pain if one of your cryptocurrencies goes bust… But it’s still big enough to create real wealth for you if only few become a major success.
The smart approach is to build yourself a “basket” of different cryptocurrency plays. Some of them will become superstars. Others will be good winners. And a few will go to zero.
So, don’t go crazy!! Don’t invest all your investing funds in one particular cryptocurrency – diversify with well respected cryptos. Do your research. Join cryptocurrencies forums. Be calm. Be rational. Stick your toe in the water with just $100, or $200 in each of ideas you want to test. Get started, and see where the game will take you.
The blockchain technology is young… the cryptocurrencies market is young… and it’s changing every day. That might make you a little nervous. Usually, conservative, rational investors like to stick to known, stable, predictable investments. Warren Buffet publicly shared his distrust of this new digital money.
However, there is another side of the story. Blockchain is a budding new technology. It’s an exciting, massive new movement and a trend that you may want to be part of. After all, when you can get in at the ground level of such an opportunity (and I believe that we’re still at that phase), you have a chance to plant seeds for the life-changing wealth.
You can do that… while being smart about it. All that means is that you need to invest sensibly, start small, and avoid risking more money than you’re willing to lose.
I recommend allocating no more than 3-5% of your total net investing money in cryptos. In other words, of all the money you have to invest, only put 3-5% of that toward these investments. From there, you can take even smaller positions in each individual cryptocurrency.
Remember: It doesn’t take much to turn a small stake of $100, $500, or even $1,000 into the life-changing wealth.
As I write this post, the stock market in the US had one of the biggest day declines in the history (4.6% in one day), then turned around and jumped up the next day. Bitcoin price too fell below $7,000 from its highs of $20,000 in 2017. Does it mean that the cryptocurrencies are heading to the graveyard?
If you’re really interested in learning more about cryptocurrencies, sign up for my 4-day Masterclass “Bitcoin, Your Money and Building Wealth” and get a lot of specific details about investing in Bitcoin and other cryptocurrencies while managing your risk.
I want you to see the big picture of building wealth. Cryptocurrencies could be part of your portfolio but very small part. The key element to building lasting wealth is to diversify your investments.
