What is the value of financial planning? We know it needs to be done. We know it should be done. Couples that argue about finances at least once a week are 30% more likely to get divorced. What’s more troubling is couples with no assets within the first three years of marriage are 70% more likely to divorce by the end of that period than couples with $10,000 in assets. How valuable can a financial advisor be to a recently married young couple?
How money issues can harm a marriage
Money is commonly found in the top 5 reasons for divorce, and unfortunately, divorce affects over 2.4 million couples a year in the United States. Money can be an emotional topic and lead to stressful conversations and situations. Stress typically shuts down communication, which results in a breakdown of trust. When marriages are founded on trust this can have severe effects on the success of any marriage.
Here are some of the most common money issues that harm a marriage:
- money can be an issue in a marriage if you have too much or too little
- being reckless with credit card debt can set one spouse against the other
- each spouse may have different long-term financial goals–one may want to “live for today” when the other is more of a saver
- one spouse wants a new car every two years while the other is happy to drive a car for several years after it has been paid off
- “Keeping up with the Joneses” mentality that can cause undue stress
How establishing a plan can help couples
I want to offer a different perspective on financial planning that you can use with your clients. My career has crossed over banking, motor sports, and technology. In each of those careers, plans were mission critical to the success of our businesses. For us to make commercial loans as a bank, we needed a business plan. In motor sports, drivers spend countless hours with their team strategizing and building a plan around pit stops, yellow flags, weather, track position and many other variables. During a race, they are in constant communication with their team to adjust on the fly to win the race. In technology we have sales plans, product roadmaps, onboarding plans. and whole planning strategies around product development.
Plans allow everyone involved to understand the goal and what it takes to get there. Here are three different ways a financial plan can impact your clients’ marriage.
The most obvious result of a financial plan is getting a picture of what your future will look like based on certain characteristics of your life, family, and career objectives. The key is also understanding how this picture will change as your life progresses. A plan that is kept up to date as these changes come along will allow your client to continually understand how they will achieve their goals, which allows them to dream about their future with a certainty that is only possible with a plan.
A financial plan, whether it is on target or not, will give you peace. If it’s on target and all you need to do is follow the plan – that gives you peace. If it’s not on target, the path on what needs to be done is much simpler and removes the fear versus waiting until retirement and then finding out you don’t have enough money.
The real value of a financial plan is in potential. It’s the realization of potential changes in behavior you will need to make to achieve your goals and objectives. Life for everyone changes. Whether we choose to marry or stay single we will have family issues, friend issues, job issues, community issues, economic issues. and the need to learn and grow to make the best decisions. Benjamin Franklin said in his book, The Way to Wealth, “an investment in knowledge pays the best interest.” This focus will allow new ideas to be introduced to the couple that will hopefully get them on the same page for their financial future.
Collaborate with your clients
A final thought on successful financial plans: include everyone in the conversation. Understand each spouse’s goals, fears, thoughts, and emotions throughout the process. You have the opportunity to bring order to conversations that are often difficult or terrifying. When everyone is involved, there is better communication and gives everyone to “go back to the drawing board” when things change rather than “winging it” forever. This trust builds relationships, and you never know what that could mean to someone.