Spouses and Money

There are an infinite number of ways to handle finances as a couple. This post is a walkthrough of the considerations and discussion points at the TFC household.

Backstory:

An important aspect of the TFC situation is that we met in undergrad prior to career success. Neither of us had any money or earning potential at the time.

Finances have always been an open discussion topic. The biggest discussion point at this time was paying for nursing degrees and Future Mrs. TFC paying off her $27,000 of undergrad loans. She handled her loans in just 10 months working as a Registered Nurse and as a restaurant server.

At this point, we were both debt free. We had separate but similar goals of saving for advanced practice degrees. Goal achieved.

After knowing each other for almost a decade, we began our marriage with two advanced practice degrees and no debt. No savings, but no debt.

Prior to Marriage:

It’s essential to talk about finances before marriage. They cover this in basic pre-marital classes for a reason. Since we knew each other for so long prior to marriage, understanding each other’s assets and liabilities was old news.

It’s equally important to talk about objectives because without teamwork, it won’t matter if you join accounts or not. It’s okay if these answers are vague at first. Find the general heading. These are areas we discussed:

• Financial Aspirations

• Standard of Living

• Risk Tolerance

Financial Aspirations

Understand if your partner is expecting to work until the arbitrary age of 65 or if the traditional career timeline isn’t for them. Retiring at all requires saving, but retiring early requires an abnormally high savings rate. This could be accomplished by working a lot to increase earnings or living frugally to decrease expenses. Neither is superior, but it’s good to have an idea of heading.

Mrs. TFC was agreeable to my chronically heavy workload knowing the future outcome. We prioritized building a financial security net and a solid financial foundation as quickly as possible.

Here is one discussion point turned reality… Is the “stay-at-home parent life” in your future? Childcare costs are high. Does one parent lack the earning potential to exceed childcare costs? CRNA income greatly exceeds these costs. Losing a CRNA level income is a massive shift.

Money aside, does one parent want to stay at home? We elected to drop a nurse practitioner income to have a stay-at-home parent combined with a locum CRNA.

Standard of Living

What is your partner’s expected standard of living? Make $1M, spend $1M? What are they accustomed to? Did your spouse grow up with a relatively low or high cost of living? Understanding expectations reveals compatibility and necessary topics of conversation.

Mrs. TFC knew I was frugal. She didn’t expect a CRNA income to translate to a CRNA level luxury within the first year. I think this was made easier because she knew me during the midnight ramen gatherings in the dorm.  

It’s reasonable to say lifestyle inflation has become a reality. The gradual introduction was/is welcoming. I don’t think twice about paying $6,000 for a family vacation. I’m starting to read a menu left to right. Feels empowering. But I still gripe about the thought of buying new clothes or paying $6 for a dozen eggs.

I’m currently being mindful to pay less attention to the minors. The little financial things in life that really don’t carry weight.

Risk Tolerance

Risk tolerance covers topics such as debt management, investments, and insurance coverage. Discuss what’s important to each of you. Financial literacy helps a lot with this area. Put it out there.

Goal for pre marriage: Ensure similar values and goals around money.

Intra-Marital Discussions:

• Joint Accounts

• Joint Goals

• Spending

• Managing Finances

• Investing

Ideally, have a plan for post marriage money moves before saying vows, but shortly after will do fine.

Joint Accounts

To join or to not join accounts? This is the most asked question. If you commit to marriage and a life together, it’s easier to join accounts. Separate accounts won’t save your marriage from financial disagreements.

Upon marriage, we consolidated bank accounts. I added Mrs. TFC to all of my accounts including business accounts. She is also my beneficiary for everything. It’s convenient to have two names on assets such as bank accounts and vehicles.

If you are concerned about merging accounts, consider a prenuptial agreement. I would consider this avenue if meeting after career success AND with a significant net worth disparity. Always best to be on the same page, but if you lose sleep over the ramifications of a divorce, it’s worth considering a prenuptial agreement.

Be aware that the suggestion of a pre/postnuptial agreement causes its own problems such as perceived distrust and a perceived lack of commitment to the marriage. It’s a whole process with a lot of nuances that I won’t go into. While we were both willing to go the prenuptial agreement route, ultimately the TFC family chose the “vet your partner and be on the same page” strategy.

Joint Goals

SMART Goals are a priority. Write a few short and long-term goals. Without a team mindset and shared goals, James Hetfield shows up and Nothing Else Matters.

Spending

No one views spending identically. I’ll recommend a budget to allocate dollars. It’s ideal to monitor the dollars.

Discretionary spending is where issues arise. Set an allotment that you are both okay with. I feel uncomfortable writing this, but we chose a $1,000 per month per person discretionary limit — no questions asked. This amount allows us to enjoy everything we want while maintaining our investment goals.

We still talk about upcoming discretionary purchases in the name of transparency, but the pushback isn’t there. The latest example was Mrs. TFC attending a concert during a girls’ weekend trip.

• No Airfare

• 2 Nights Shared Hotel

• 1 Friday Concert Ticket

• 1 Saturday Night Event

• 4 Meals Out

When she presented the weekend, we ballparked pricing. $250 for hotels/transport, $200 concert ticket, $100 sporting event ticket, and $200 for meals. That’s $750. The actual expense ended up closer to $625. My only contingency was time off work. Price isn’t an issue.

I rarely use any of my discretionary allotments. Mrs. TFC uses quite a bit of hers. This doesn’t bother me. There will be a day where I make a substantial purchase utilizing my “rollover” discretionary allotment.

Managing Finances

Managing finances jointly should be part of every couple’s monthly routine. We sit down on the 1st of the month and complete our financial framework. We update our asset spreadsheet (financial framework) and review expenses for the month. This takes 15 minutes, and it is a great progress tracker.

It’s time to review abnormal expenses to spot any outliers. It’s time to look at the month ahead.

Mrs. TFC pays the credit cards and monitors the statements. She also handles the travel and lodging logistics of the business for the upcoming month.

Investing

Investing at the TFC household is primarily done by yours truly. Our investing strategy is established. Hold funds in the business account until after quarterly taxes. Hold an emergency fund in a money market account. Invest cash flow in low-cost, passively managed index funds. Channel my inner Jim Simons (rest in peace) with a little bit of stock picking.

We discussed frontloading our tax-advantaged accounts by the time tax season ends. Not a bad goal for April. This includes our Solo401(k)s, IRAs, and HSA. We discussed the continued frontloading of a 529 plan in Creating Generational Millionaires. We discussed using income from May onward to continue padding the bridge account.

Expense Sharing

I’m not recommending married couples divide finances because common goals are more difficult to manage, but split finances work for some couples. So how does that affect joint expenses?

With a CRNA income in the mix, it’s common to have an income disparity. If dividing expenses, some areas are tougher than others. Each partner has their own vehicle, so it’s easy enough to pay for what you choose to drive.

How about housing? A single dwelling presents difficulties splitting expenses. A $200,000 earning CRNA and a $50,000 earning spouse. Should housing expenses be split evenly — Everything 50/50? Or should expenses be split as a percentage of earnings?

Here are a few considerations. Different incomes are at different tax rates, so use NET dollars. A CRNA may have massive debt payments that the other person doesn’t have to deal with. This makes the income shovel feel smaller.

Who chose/chooses the dwelling? A CRNA can afford a $500,000 house. Someone earning $50,000 would not qualify for the required home loan. It’s tough to tell the lower earner to live to their income and net worth, but a necessary discussion. For divided joint expenses, either live to the lower income’s reasonable cost of living or somewhere between the two.

If maintaining joint accounts provides greater peace of mind, go for it.

Communication is the theme of this entry.

Without being open about personal finance, expect trouble. It’s not easy to admit to your partner that you carry $200,000 in student loan debt. But hiding that information until a later date will have major consequences.

If you find yourself in an unfortunate financial situation, try something like this. I worked hard to arrive where I am today. Fortunately, as a [your profession, probably CRNA], I’m in a profession with a great earning potential. The opportunity cost resulted in a heavy debt burden. Let’s make a plan to meet our goals.

Be on the same page about living the moneymoon to get ahead. Then talk about how doing X action will lead to Y result. Find a mutually agreeable plan that leads to success.

Be respectful throughout the process. Discuss the pros and cons of different interventions. If you are looking for a third party’s input, check out my course. Even better when taken as a couple. It provides guidance and discussion points that will bring your relationship closer. You can do it! Thanks for reading!