There’s a key step to managing your money effectively that most couples overlook. In this popular episode of the Money and Marriage Podcast, you will learn what this mistake is, why it’s so critical, and how to avoid making this mistake in your family.
If you want more help implementing the lessons from this podcast episode, I encourage you to pick up a copy of my book, Marriage-Centered Money: Get on the Same Financial Page and Achieve Your Life Goals Together.
Full Episode Transcript
I want to invite you to close your eyes for a second and imagine your favorite company in the world.
What’s a company whose products or services you just can’t imagine living without?
Now for me, I can’t imagine a world where my day doesn’t start with Dunkin Donuts coffee. I might be a DC resident at heart, but I grew up in Massachusetts… And those roots run deep. I love me some Dunkin coffee.
But enough about me, let’s go to you. I want you to pretend – Whatever company it is that you can’t imagine a world without their stuff, imagine that you are in charge of making financial decisions at that company.
Your employees come to you as the person in charge of making financial decisions with two different product ideas to invest the company’s money in. Both of them are great ideas. They’re potentially good investments. You can expect that they could do well in the marketplace, but you only have the funds available to do one of them. You can only choose one of these two investment options.
How do you decide how to allocate your resources? How do you make that decision on which of these two new services or products to invest the company’s money in?
There are some different answers you could potentially give to that question. But in my view, the correct way to make that decision is by reminding yourself what the company’s all about in the first place. By focusing on what your company is known for, what they’re best at what their competitive edge is, right?
What’s the most important thing to the company? Which of the two options best aligns with that. That’s where you’re gonna invest the resources, right? When your values are clear, the decision becomes easy.
Now for a company, what this would mean is going back to the company’s mission statement. What is the company’s mission? That right there should make the investment decision crystal clear.
Quickly going back to my Dunkin Donuts example, I’m gonna give you Dunkin’s mission statement, as of this recording, right now. It’s a couple of sentences long, but pay attention to the words that they choose to include in this mission statement.
Here it is: “From coffee beans to jelly filling, Everything we do is about you. From chefs who create exciting new flavors, to crew members who know exactly how you want your drink—we prioritize what you need to get you on your way. We strive to keep you at your best, and we remain loyal to you, your tastes and your time. That’s what America runs on.”
When you think about Dunkin, they’re all about providing a consistent product, efficiently, so you can get where you need to go. They don’t want you spending all day sitting in a Dunkin store doing your work. That’s not who Dunkin is. They could be, but that’s what they’re not choosing to be. They want you to come in, get what you need and go about your business and get on your way. Right?
So if you’re the head of Dunkin Donuts, and you need to figure out what new products or services to offer, you choose the option that’s in line with those values, right? Anything else is the wrong option for them.
Now compare this to their biggest competitor, Starbucks. When you go into a Starbucks, think about it. Think about the last time you walked into a Starbucks. There’s a heavy emphasis on the experience you have while you’re there, from the overall ambiance, and the lighting, and the music, to the customized, fancy drink orders, to the weird, I would say, names that they have for their drink sizes. Nothing is generic there, right? The Starbucks experience is very distinctive – from the table settings to the different snacks that they offer, right? Everything.
Starbucks is all about the experience. It’s not about efficiency at all. You have to wait in a couple of lines. You need to wait to get your order. They’re all about the experience. And of course, all of that, as you might imagine, is in line with their company mission statement, right?
Their mission statement is shorter. I’ll read it to you here: “To inspire and nurture the human spirit. One person, one cup, and one neighborhood at a time.”
You might have noticed this looks nothing like Dunkin’s mission statement. <laugh> And what that means is that the “right” new product idea for Starbucks should look very different than the “right” new product idea for Dunkin. If you’re the head of each of those companies, making financial decisions for them, the ideas and the things that you offer should look very different.
But the only way you know which product to choose if you’re in that role is because the companies took the time to articulate what’s most important to them, what they stand for, and who they are in the form of a company mission statement.
Now I’ve talked through this example a few times over the years, and I always title this lesson “The Biggest Mistake Most Couples Make With Their Money”. And after having spent five minutes talking through company mission statements, Dunkin Donuts, and Starbucks, you might be wondering, what in the world does this have to do with the biggest financial mistake that couples tend to make?
I’ll answer that question for you by asking you another question in return: What’s your family’s mission statement or vision statement? What does that look like for you?
We’ve talked about how Dunkin and Starbucks make their financial decisions. It’s not just about the numbers or the potential ROI, right? Those things matter. But at the end of the day, the most important thing is prioritizing the things that are most important to them and most in line with that, right?
You need to do the same thing with your household finances, but that’s difficult because you can’t do that and prioritize those most important things until you actually identify what those things are in the first place.
So let me ask you: When was the last time, if ever, that you took some time as a family to clearly identify what’s most important to you and your partner? Have you ever spent 20 or 30 minutes defining what “financial success” looks like for your family?
Now, if you have, that’s awesome. You’re one of the rare few who have.
If not, now’s the time to do so. This is the most important step to making good financial decisions as a family that you can take. And it’s the one that almost everybody overlooks.
We immediately get into questions like “Where should I put my money?” “How should I be allocating my resources?” “How can I get the best return on my investments?” But we do so without figuring out why it is you’re investing in the first place.
The right financial decision for you and your spouse is the exact wrong decision for a lot of other couples out there. Over the years, I’ve seen couples make the wrong career moves, buy the wrong house, invest in the wrong type of accounts, and settle down in the wrong part of the country. The list of mistakes goes on and on. And almost always, when we run into those types of dilemmas, the thing that’s missing in the decision-making process is that mission or vision statement, knowing what it is they’re trying to work toward in the first place.
You can find a few different strategies to create your family mission statement in Chapter 9 of my book Marriage-Centered Money: Get on the Same Financial Page and Achieve Your Life Goals Together. You can get your copy of the book for just $9.99 here. But whether you do that or go about this another way, you need to implement this in your life. You need to know what it is you’re working toward because when you do, when you are able to articulate what that vision is, your decisions become a lot easier.
And in the meantime, I invite you to go check out your favorite company. That company I asked you to think of at the beginning of this podcast – go look up their mission statement, see what they have to say about what’s most important to them and think about the types of products and services that they offer and how that aligns with it.
And then go ahead and do the same in your family.