Do you find that your money philosophy is different than your wife’s (significant other)? Well, I do.
Steve recently sent in an email with the following question:
I recently got married. My wife and I are working on our future finances. I am aggressive and she is conservative when it comes to investing.
Example: Her money is in a savings account and her 401k is making nothing (also not losing anything). My money is in stocks and my 401k is in stocks (fluctuating).
We do not have plans to co mingle our money at this time which I feel is best. However, I want to get her money working for her even if it is more conservative than mine. What do you think?
First of all, be mindful of the fact that you should attempt to guide, not dictate. Respect that she should be entitled to do whatever she wants with, as you put it, her money.
Our Own Situation
Actually, Emma and I are in the exact same boat. I’m pretty aggressive with our investments, but Emma likes to keep her money in a safe place. I don’t mind the volatility at all and believe that the market usually wins in the long run. But instead of trying to take over what she feels is safe, here’s what I have done.
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Adjust Accordingly – No matter how separated your finances are in reality, they are combined by law unless you have a separate contract that says otherwise. What is my money is Emma’s and vice versa. It’s perfectly okay that Emma wants to put all her money into a certificate of deposit, because I can be just adjust and be more aggressive with my investments to even out our overall family portfolio. At the end, it achieves the same objective without the extra potential tension.
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Selling Your Ideas – If you believe that your investment philosophies are sound, then there should be no problem trying to take a more long term view to sell your idea to your spouse. Every time you come across a situation where your suggestions worked out better, you should mention them. Be proud and vocal of your results, and everyone around you will eventually see it your way.
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Be Credible – It helps Emma feel comfortable to at least give my opinions and suggestions serious consideration because everyone knows I’m thinking and talking about personal finance topics on a daily basis.
While you may not want to start a site about money issues, you can show your significant other that you really care about your finances by example. It’s really tough to take dieting advice from someone who’s overweight, and the same idea applies to investing advices. -
Forget the Ego – Know the true reasons why you want her to invest. If you truly care about her and her future, your concern will naturally carry out in your tone. It’s much easier for Emma to accept my ideas when she feels that I’m trying to look out for her. Conversely, it would be impossible for her to listen to my suggestions if all she can sense is my desire for her to act one way. Take a step back and figure out why you want to give her advice first.
Everything I’m doing seems like a roundabout way to reach the goal, but with a delicate manner such as finances and marriage, who can afford to screw it up?
Any suggestions for Steve (or myself for that matter)? Your ideas are welcome and appreciated!
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{ 12 comments… read them below or add one }
I think education is key. You can direct her to credible sources of information to learn about investing. You can also help her see how some investments can offer better returns with limited risk. For example, you can introduce her to index funds or bond ETFs. While no investment is totally risk-free, there are some investments that are low-cost and provide some better returns without really gut-wrenching risk.
Great idea. While reading investment magazines might not be her interests, you can direct her to short articles every once in a while so she learns bit by bit.
We keep our investment accounts separate. While she is so much more patient, I am not. As a result, she can ride out storms like a priest, and is doing very well in her investments this yr.
It’s about optimizing skills though. You don’t NEED to people investing. One can be the portfolio manager if you will. However, always good to have a conversation about asset allocation decisions.
Once you save up a certain chunk of change, investing becomes an after thought, b/c the interest income received just from your cash hoard is big enough to satisfy you.
Imagine saving up $500,0000 in your bank as purely retirement money. That yields $20,000/yr just in i-income guaranteed! You bother less with trying to trade your portfolio anymore.
I would suggest that Steve begin by inches. Move from those ‘nothing return’ investments to bank CDs. Surely thsoe are safe enough for even the most conservative investor.
Maybe after seeing that a small return means something, she will realize that investing for growth is worthwhile.
I agree with Miranda education is the key. I suspect your wife does not realize the consequences of saving at such a low interest rate. If you share that information with her she will thank you for it, and you both will be richer for it!
I suspect she believes that a percent or two differences doesn’t seem like it would be a big deal, and not worth taking any risks. Over a few years it is a trivial difference but it is a huge difference in the long run.
Show her the Compounding Different Interest rates graph- once she realizes how much a few percent will cost her in the long run she will at least find a reasonable CD. She may even be willing to consider taking a small amount to invest in stocks or bonds.
-Rick Francis
First you should feel very lucky that you are married to a woman who cares and wants to be involved. Everyone has a different view on risk and reward. Keep this in mind and then consider what it took you to open up to other and more risky investing ideas. It is all about awareness and understanding, education is the key.
If your wife is willing to read about it, buy her books, send her blog posts, share articles and finance magazines. Otherwise, spend quality time together, sign up for a finance class at a community college.
You must also remember not to try too hard to change her because its really not possible. If she doesn’t agree with your philosophies, accept her as she is and try to look for other ways around this really big problem instead of trying to bend each other to the others’ will. Sitting down and setting well laid financial goals and discussing how to get to them will help you guys make a plan on how to get to them with both conservative and aggressive investing.
I’m surprised that no one has mentioned to just listen to her and maybe understand that your agressive way is too much stress/risk for her to be comfortable with…. Why is his way necessarily better?
One should only invest where/what they are comfortable with.
There is no magic that says that one way is “better” than the other. Both are saving. I’d say mention CD’s and government bonds and tax-free muni’s to her – but otherwise, if she wants to stay out of such a volitile market – leave her alone…. maybe even join her
My “safe” investments made money last year, while all around me people were devastated about how much they lost.
To each his/her own
After all it’s NOT about how much money you are making – it’s about how SAFE your investments are, and how they WILL be there for you when you retire 
It’s a security blanket – peace of mind 
Disagree with the “adjust accordingly” advice, such as investing in yet more aggressive instruments to counter her playing “too conservative”. Is it possible she is investing very conservatively because she feels the husband is being too risky with their money ?(I know at least 1 couple like that). A discussion needs to be in order, possibly with a fee-based financial advisor, about what their shared goals are, and how to reach those goals together. She may then realize that she needs bigger returns to reach those goals. In turn the advisor may suggest that the risk/return ratio for the husband is out of whack (generally more than 80% in equities doesn’t increase return but does increase risk).
Great advice and comments guys. I am glad David’s readers are so eager to help.
This article actually caused a fight between Vicki and I, because she thought it made her sound stupid. Fortunately, the discussion that followed brought out the fact that I was more concerned about finding way to invest conservatively and get the highest reward possible.
I have a basic knowledge of CDs and money markets, but my portfolio is pretty agressive which I am okay with, but would never try to push her towards.
So what I was looking at was possibly layering CDs or something like that so she is making a little money but would have money available if needed.
Since he is not doing well himself I think both of them need to educate themselves in what interest they both would do as a combine investor. So what they can do is put some money together and invest it they can look at it as if it was a combined bank account. When this is successful then she will be less conservative with her investment.
Who said I am not doing well? My portfolio is doing great. I got into cash before the crash and have made decent returns this year. I think stocks are the best way to go if you are willing to study. I am not a day trader, but I am not afraid to sell or to hold.
I like your idea about putting some money together and doing some investing together. Great learning experience and some good quality time.
Thanks for the advice!