Decision-Making Question (Couples)

[scfr]

For the forum folks who are currently (or used to be) part of a couple where both partners are actively involved in financial-decision making, what are the healthy ways you make decisions? Do you know of systems other couples have successfully used?

I know sometimes one partner leaves most of the decisions up to the other (as long as both people agree that is the way to run things and the non-decision-maker is ready and able to take over should the decision-maker die, then that is fine.) And I know sometimes financial-decision-making is not healthy (say one thing but do another, one person controls another, etc ... ugh). But neither of these scenarios are what I'm talking about. I'm talking about relationships where both are equally, or at least heavily, involved in making the decisions. What do you do when you start out not agreeing?

Sometimes it's possible to compromise and "meet in the middle." For example, if one person thinks $20K is a reasonable price for a new car and the other person thinks $30K, $25K might be a reasonable compromise price (assuming the big financial picture allows for spending that much).

Sometimes the decision is made based on avoiding negative feelings. In the car-buying example above, if one person feels $20K is the max reasonable price and they feel that spending more would cause unnecessary stress (worry about where it would fit in the budget, feeling the need to work unwanted overtime to make up for the extra cost, etc), then $20K should be the decision.

Often you just do nothing unless both partners agree. For example, you wouldn't quit your job and start a business unless your partner was on board. You wouldn't relocate to another part of the country unless you both were in agreement on where to go. Or you wouldn't change your asset allocation or invest in a new investment or make a major purchase unless your partner was on board.

But what if you can't do nothing and a decision needs to be made? What other strategies have you successfully used?

This is not an empty question. Yesterday DH & I had a meeting to discuss taxable investments, and I wanted to include some bigger picture questions beyond specific investments. So, we revisited things we have discussed before (asset allocation, when to retire, retirement "number" goal). We also talked about initial withdrawal rate, something that we had only briefly touched on before and something that I had realized DH wasn't familiar with. Currently we have different numbers (his is 2%, mine is 2.5%). This is not a huge deal right now because we have time to figure this out, and I know that part of the reason DH came up with his number is because of the way I explained it (I included the words "the most conservative approach is to make 2% your initial withdrawal rate" and I'm 99.9% sure that is where he got that number, heheh). But it got me thinking ... What do we do if we still don't agree when we get to the point where we actually have to start making withdrawals? Do we just go with the more conservative number? Consult a professional? Edit: For clarification, when I say "consult a professional" I am referring to consulting a third party knowledgeable about finance, such as a CFP.Something else?

I'm not really looking for opinions on the withdrawal rate. That one may resolve itself as we get closer to retirement and as DH learns more about it. But other issues may come up, especially as we are getting close to retirement and will need to be making lots of big decisions.

I'm looking more for other "for couples" decision-making strategies to consider. FWIW, while DH & I have had some lively (and sometimes comical) discussions & disagreements about finances, we have NEVER had a fight about them. And that's how I'd like to keep it.

Thanks for reading the long post, and thanks to anyone who is willing to share their strategies.

[james.hendrickson]

Are you setting regular times to meet/discuss? Like twice a month or once a week on Saturday mornings?

[snafu]

Manage Money: We use a great many financial protocols like pay yourself 1st, save/invest 10% of income, whatever the source, pay off mortgage in 15 years, finance a vehicle no more than 2 years etc. We've a Budget, referred to as Cash Flow which sounds familiar and less restrictive to DH. I work out figures based on spending 'actuals' of the previous year. It was originally set as percentages of income like 30% for housing and utilities. We've been at this a l-o-n-g time and faced a lot of serious medical issues as a complicated add-on that we must factor into the mix.

Generally, we start by reviewing the issue, find facts and then work out costs typically set by the marketplace, not in our control. We agreed, long ago, most items over $100. requires some level of research and agreement.

Major Purchase: Do we 'need' another car or merely want a new[er] one? That can shut down the discussion pretty fast! What features do we need + want? What vehicle meets those needs best? What fits financially? Bring facts to the table. The primary user will have more 'sway' on details. DH wanted a specific make, model, year vehicle but when we went to try them out he found 'head space' too restrictive. Repeated the process twice more until we agreed on a specific vehicle.

Retirement: It's mostly about health, the lifestyle you want [decade by decade], the funds that requires and the rules government imposes [which can easily change]. At a certain age, government decrees you withdraw a minimum percentage of retirement income. Whatever withdraw rate you anticipate now can be increased or decreased in future as needed.

At the moment the research explains retirees seem to spend the 1st few months in their new roles, attending to tasks that have been waiting. If in good health, they are quite 'spendy' the next several years traveling, visiting, socializing. Many are bored and return to the workforce or volunteer in an area of particular interest. By the 2nd decade they are often motivated to live in a smaller abode, reducing 'chores.' The current figures suggest by 3rd decade a major percentage need 'assisted living' and that is much more expensive.

Residence: We've moved a lot to support DH's career. When we were smart location was primarily impacted by convenience to office. I got primary input on size, layout and financing. DH has a long list of 'must have' which are easily accommodated.

[Snicks]

Why do you think you won't be able to agree? I don't see why you can't come to a compromise. However, usually it comes down is who is it more important too. Maybe he won't really care about that all that much when the time comes to do those things. Or, if he does and you want to do more, can you you just agree to meet in the middle?

[scfr]

Are you setting regular times to meet/discuss? Like twice a month or once a week on Saturday mornings?

Yes and no. We've been married almost 25 years. In the beginning, finance discussions were very regular, very detailed, every weekend when we were both in town. With time, and with finances solidly on track, it's now less frequent: big annual discussion when the taxes are done, smaller discussions when the net worth is calculated quarterly, plus as needed (when a decision needs to be made). I think "as needed" financial discussions may become more frequent the closer we get to retirement.

[scfr]

Why do you think you won't be able to agree? I don't see why you can't come to a compromise. However, usually it comes down is who is it more important too. Maybe he won't really care about that all that much when the time comes to do those things. Or, if he does and you want to do more, can you you just agree to meet in the middle?

Besides the fact that we are both strong-willed and opinionated?
The decisions that need to be made as we approach and enter retirement seem to be increasingly important and complicated, and with a wider array of options. We still have a ways to go, but I'm starting to see that the ways we have come to agreement over the decades may no longer work. I know we'll figure things out, no doubt about that, just curious to hear what others have done that has worked.

Thank you.

[Snydley]

DH and I are also both strong willed and opinionated, and we have fought about money in the past (back before I truly saw the light about the need to save for a down payment for a home, that we actually needed an EF, etc).

He keeps track of all the bottom line #s and pays all the bills (I do know the vast majority of what comes in, what goes out, and how much $$ is where). My job is to do all planning for retirement /wealth building (how much to put into 401K, etc. each year, investing decisions, planning to pay off mortgage/DD's college, etc.). When we started investing in the stock market ~6 years ago, I did some research (read Bogle's book, joined this site) and then I put together a powerpoint presentation for DH explaining my thoughts on how to invest, our target goal, etc. I've made 2-3 more presentations for him since then, and I'll make another likely in Jan. It actually makes it easier to lay out my thoughts in this business-like way and he's always been in agreement with my plans using this method.

[snafu]

scfr, Having slogged through a lot of research, the best book I read was 'The Essential Retirement Guide', Vettese

I used Bach's books, initially, 'The Automatic Millionaire', which made wealth planning routine. Later, 'Smart Couples Retire Rich' ok, but Vettese so much more aligned with my experiences.

These are easy reads, available electronically at the library, easily transferred to your computer with a few clicks.