Earlier this year, I wrote a blog post about Measuring Results in Financial Planning For Couples.
In that article, we discussed a few key ideas:
- Making financial progress over and above what you are investing into the financial planning relationship is a very important part of the work that I do, but by no means is it the only story.
- We discussed the three questions I suggest to couples to help them measure the progress they’re making beyond the numbers. (I won’t rehash them here since we discussed them in a lot of detail in the other article – check them out if you want a refresh!)
- Framing progress in terms of the five principles of my marriage-centered financial planning process. The principles are confidence, coordination, communication, clarity, and commitment. Again, I won’t review these in a ton of detail here since they are covered in the previous article and in my book.
(If you’d prefer to listen to this article, you can get a podcast version of this post here: Money and Marriage Podcast Episode 148 – The Four Phases of Financial Planning for Couples.)
The More You Try To Accomplish at Once, The Less Gets Done
All of the above is still true… but here’s the thing:
That’s a lot of stuff to do all at once. So we very, very rarely actually do all of those things as soon as I start working with a client.
The first financial plan I wrote back in 2016 was a typed Microsoft Word over forty pages long. I put a ton of time and effort into it, and it came out great. The math was flawless, the charts were pretty, and I answered every single question the client had for me (and a bunch of questions that they didn’t!)
But there was just one problem: the client never did anything with the plan, because it was a 40 page typed Micosoft Word document.
I gave her way too much to do all at once, and it overwhelmed her.
I’ve learned my lesson since then. These days, my financial plans are sleek, modern-looking documents that track action items and focus on the most important parts of your financial picture. (Here’s a sample plan, if you’re interested!)
And I always put together a plan with the spirit of what I learned back in 2016 in mind: what’s the most efficient way for me to help you get to where you want to go?
There’s a fine line that needs to be walked in every financial plan: getting enough done to make good financial progress (both quantitative and qualitative) without biting off more than you can chew.
Which is why I think of the work that I do with couples these days in terms of four phases. Each phase has it’s own focus and it’s own milestones, and you will see financial and marital progress in each phase.
Let’s discuss each of the phases in turn:
Phase One in Financial Planning For Couples: Fix the Presenting Problem
- Timeframe for this phase: 1-4 months
- Question to answer: “Are we going to be OK?”
Every couple who reaches out to me has an acute, specific problem that they need my help with.
This problem is often different from couple to couple.
Sometimes, the problem is financial in nature, as in the following real examples from actual couples I’ve worked with:
- Can we afford to buy a three bedroom home in our area in the next six months?
- How do we implement the most efficient plan to pay off our student loan debt?
- We got hit by a huge tax bill last year. What steps do we need to take this year to prevent the same thing from happening?
- I have my dream job on the table but it involves taking a paycut. How can we afford to make the move?
- We are expecting our first child. What should we be doing to financially prepare?
Other times, the problem has more to do with the marital dynamics, as in the following real examples:
- We’re getting married and have different ideas on the degree to which we should combine our bank accounts after we tie the knot
- Money is the only thing we ever fight about
- We have different money mindsets and values, which holds us back from making progress
- My fiancée really wants me to sign a pre-nup, and it makes me uncomfortable.
In phase one of working with a couple, my job is very simple: diagnose the problem they are facing, write the correct prescription to fix the problem, and help them address their primary problem.
There’s a lot of other things we could do in phase one if the couple has the capacity and bandwidth to do so. And if there are any time-sensitive things that should happen immediately, I won’t hold those back.
But if a couple comes to me because they’re fighting about money or because they’re trying to buy a house in the next year, we aren’t going to start our financial planning relationship by talking about opening up a bunch of retirement accounts and saving more for retirement.
That might come later, but the first step is to actually solve the problem the couple is worried about.
My goal in the first few months of working with a client in this first phase of financial planning for couples is to help them with this primary problem they need help with, and to get them to the point where they are confident that they are going to be OK.
Phase 2: Financial (and Marital) Orchestration
- Timeframe for this phase: this phase starts as soon as the immediate problem is fixed (1-4 months), and is something that happens on an ongoing basis
- Questions to answer: “Are we managing our finances as efficiently and effectively as we should be?” “Do we have any financial blind spots?”
Once we address the most pressing problem, we shift into a comprehensive review of your financial situation.
The goal in this phase is to make sure that each component of your financial lives is optimized to help you and your spouse build wealth and stay on the same financial page.
In this context, I think of my role as a financial planner similar to the role of a conductor in the orchestra. A conductor’s job is to make sure that every instrument in the orchestra is playing their parts correctly, fine tuning the volume, speed, and balance as the orchestra plays. The end result of this work is that each section works together to create a moving piece of music that is only possible to create when each instrument is functioning optimally.
In the same way that a conductor orchestrates the band, my role as a financial planner is to help you orchestrate each component of your financial lives so that you build and maintain a solid financial foundation for your family while you achieve your goals.
We’ll review each of the components of your financial situation – investments, cash, debt, insurance, taxes, and so on – to make sure that your entire financial lives are set up correctly.
I’ll also help you to check your financial “blind spots” to proactively address any issues that may arise in the future.
And as always, we always put financial optimization in context, making sure that the strategies and tactics we put in place will work for both you and your spouse.
As you might expect, reviewing each component of your finances in detail is a great place to generate a financial return on investment from our work together.
But this process will also get you plenty of qualitative results from the planning process, not the least of which being peace of mind knowing that you are set up for financial success.
Phase 3: Adapting the Plan When (Not If) Things Change
- Timeframe for this phase: ongoing
- Questions to answer: “What if _____?”
One of the most important roles I have for my clients is to be there when they need me. In this phase, I’ll be here to help you keep your plan on track and answer questions as changes arise.
Some couples experience big life and financial changes every few months. Others might go years on the same consistent path, and then have a major change arise out of the blue.
By having regular review meetings with a financial planner, you have someone in your corner who’s well versed in the intricacies of your family’s financial situation.
When crap hits the fan, it doesn’t take me hours of review time to get caught up to speed on a couple’s financial situation. There’s very little risk that something will slip through the cracks because nobody has been reviewing your finances for the past several years.
Instead, I’m there in the wings, fully caught up to speed, so that I can quickly and efficiently work with you to make sound financial choices and keep your plan on track as things change.
Change is inevitable… but by working on an ongoing basis with a financial planner, change can be surprisingly easy to navigate.
My goal in phase three is to make sure that you never are in a situation where you need to go back to Phase One where you are dealing with a large, acute problem.
Just as scheduling an annual physical with your primary care doctor can help keep your health plan on track and help you detect any challenges or issues early, a financial planner can do the same when it comes to your finances.
Phase Four: Turning Financial Daydreams into Reality
- Timeframe for this phase: once financial orchestration is complete (sometimes sooner!)
- Questions to answer: “What can we do with our lives that would be really extraordinary?”, “Are we doing what’s really important to us?”
Most financial planners stop at phase three. But as a Certified Financial Therapist™, I like to go a little bit deeper in financial planning for couples.
Phase four is all about helping you to avoid “good enough”. It’s about helping you and your spouse dream big about your futures.
If you’re reading this article, I’m willing to bet you’re in one of two camps:
- You have an acute problem that’s taking up most of your financial attention and keeping you from dreaming big when it comes to your money and your lives.
- You’re financially responsible enough to want to read personal finance blogs to optimize your finances. You’re more interested in taking steps to retire a few years early than you’re interested in dreaming big when it comes to your money and your lives
If you’re in the first group, phase one of my financial planning process is designed to help you get out of this rut, as we’ve discussed. It’s only after we solve this problem that we can begin to dream big.
If you’re in the second group… phase four has the power to completely transform your lives for the better, if you let it.
In phase four, often we make decisions that look like poor financial choices on paper that help you live a rich, fulfilling life. And we make these decisions confidently because you’ve gone through phases one, two and three.
If we work together on an ongoing basis, we will take some time to dream big. What could you do with your finances that would be truly spectacular?
Rather than rushing as fast as possible to your retirement date so that you can immediately change everything about your lives once you retire, what if we slowed down your retirement progress so that you create a life that you don’t WANT to retire from?
What if we bought a beach house? What if we bought an RV and taking two years off when your kids are in elementary school and homeschool them while you drive across the country seeing Gettysburg and Selma and the Alamo and the Oregon Trail? What if you left a job that’s burning you out and took a paycut or started a business?
These aren’t necessarily changes that you will make immediately. But they’re the changes that you can confidently make in the context of my firm’s financial planning progress.
Financial Planning For Couples Is A Long-Term Process
Ultimately, financial planning for couples is about helping you get on the same financial page, setting ambitious and extraordinary goals, and achieving them.
These things can take time – and usually can only happen once you solve the immediate problems that you had in mind when you reached out to someone like me.
But if you’re sick of the status quo and you’re ready to solve your financial problems, optimize your family’s money, and dream big about your financial futures, I encourage you to schedule a free breakthrough session with me.