“31 Days to Financial Independence” is an ongoing series that appears every Thursday on The Simple Dollar. You might want to start this series from the beginning!
Last time, we looked at what you can do when your goals change, even in the midst of working toward a major personal finance target. Today, we’re going to look at a much different but also incredibly vital part of personal finance change: getting your family and friends on board.
Up to this point in the series, we’ve mostly treated personal finance change as something that a person can choose for themselves in a bubble. However, anyone who is in a long-standing relationship or has children – or even anyone with a tight-knit social circle – knows that such choices have an additional social impact. Your choices do involve the people around you and they’re not always going to be fully on board with the changes you’ve decided upon for yourself.
If you’re single, you have a bit of an advantage when it comes to making major life changes. You don’t have anyone in your life that’s directly dependent upon you other than yourself. Your major financial initiatives don’t alter anyone’s life other than your own. The biggest impact that others will have on you come from your extended family and your social network, and although there are certainly challenges in those areas (which we’ll discuss near the end of the post), you do get to skip over one major area of personal finance challenge.
On the other hand, people in long-term committed relationships face quite a different challenge when it comes to fixing their finances. Almost always, their individual personal finance choices are deeply connected to the personal finance choices of their partner. If a person has children, the personal finance choices of the parent often impacts the child as well; though children are a more passive part of the equation, they are still a significant consideration.
The challenge, of course, is that your partner and your children might not instantly be on the board with major changes in spending habits, even if it’s something that you’re deeply excited about at the moment. Different people have different financial goals and desires and even if you deeply love those people they form a core part of your life, that doesn’t mean that they will instantly share your changing financial goals.
How do you resolve these concerns? Let’s take a look.
Exercise #30 – Getting Family and Friends on Board with Your Money Changes
If you’re reading this, it’s very likely that the financial principles you now hold in your heart are different than the ones that your friends and family abide by. Those differences will manifest themselves in many ways, some big and obvious and others small and subtle. The biggest factor is how big of a stakeholder those people are in your decision, which basically adds up to how much you value that relationship and how big the differences are in your financial perspectives.
First and foremost, compromise is likely going to be a part of balancing your financial changes with your personal relationships. No matter how excited you are about personal finance, no matter how confident and sure you are about your financial path going forward, you are not the only stakeholder in your life and to respond to the uncertainty of others as if they have no input whatsoever will damage a lot of relationships. This is particularly true with your partner, but it remains true to a smaller extent with your children, social circle, and extended family. You can’t expect everyone to come to you; you have to meet in the middle, at least a little.
Let’s look at four classes of relationships and how your financial changes will impact each of them.
If you’re in a long-term committed relationship, this relationship is undoubtedly the one in your life that will be most impacted by changes in your financial mindset. It’s also, for many people, the single most important relationship in their lives, the one that matters above all others. Thus, whenever you find your values changing, you’re opening the door to potential conflict in the most important relationship in your life. That’s something that needs to be handled with extreme care.
The first and most important tool you have in your relationship when one of you is changing in some way is communication. You need to sit down together and talk face-to-face about these changes, because when one of you is changing in some significant way, that changes the dynamics of the relationship and, often, the dynamics of the household.
This can be a difficult conversation, and it’s often the start of a long series of conversations about how your change in financial perspective affects other aspects of your lives – your spending choices, your career choices, and so forth. Talk about all of these things, openly and without fear. Explain where you’re coming from, but at the same time, listen to where your partner is coming from, too. Listening doesn’t mean just sitting there formulating what you’re going to say next while your partner is saying something that you’re not really paying attention to. It means actually focusing on what your partner is saying and doing your best to put yourself in your partner’s shoes.
Your partner might be on board with this overall change and most of the little changes that it represents. If that’s true, then you have a very easy road ahead of you. Your conversations with each other about money will largely be supportive and positive and the only real conflict will be in resolving minor issues. That’s the “best case.”
However, in many relationships, the two partners have differing views on financial change. Often, you’ll find one partner committed to change while the other partner pays “lip service” but isn’t really committed to changing anything other than the minimum needed to keep their partner happy. In other situations, you’ll find a partner that’s absolutely opposed to the changes and doesn’t want to change their lifestyle at all.
In the first case, where the partner wants to keep you happy but isn’t internally committed to financial change, compromise can be really effective. Your partner will likely agree to some changes that are relatively low impact for him or her while preserving some aspects of his or her current life that are highly valued. That’s compromise. Don’t expect your partner to fully change tons of aspects of his or her life just because you’ve changed your mind; at the same time, your partner shouldn’t expect you to betray what your goals are or what you believe in with regards to all areas of life, either. Find areas where each of you can change things to the way you want them to be.
One valuable compromise that many couples use is the idea of a “free spending account.” It’s a separate checking account for one spouse (though each spouse can have one) where money can be spent freely without question on hobby and entertainment expenses. A certain amount goes into that account each month.
However, if your partner is openly against the idea of financial change, you have a much harder road to travel. Your best strategy is to implement changes that have minimal lifestyle impact, which means you’ll have to step up and take charge of many aspects of household finance. Start making purchasing decisions on behalf of both of you that are smarter ones and then start diligently putting away that saved money for future goals – debt repayment and so on. That means taking over things like grocery shopping and household supply shopping and vacation planning and so on. Bargain hunt for those shared expenses, then put aside the money you saved through that bargain hunting. Implement a lot of low-impact savings strategies around your house, such as switching to LED bulbs and sealing up air leaks in the windows, and then automatically start saving the amount you’ve cut your energy bill with.
You should be able to convince your partner to change somewhat in some areas simply because it’s something that’s important to you, but there will be conflicts as you find that fine line between compromising and demanding.
In the end, communication is still the key here. You have to discuss these things openly without fear of reprisal or attack. If you feel you can’t discuss finances openly with your partner, then there is a deeper relationship problem going on that’s outside of the scope of mere financial issues. Money problems in marriages usually come back to a root problem of being unable to communicate well with each other and without that key communication part, differences can grow and grow until a marriage falls apart.
When your children are young, significant financial changes aren’t really going to have a major impact on them. They might notice offhand that they don’t get as many new toys or that you’re not going out as often, but it’s not going to have a major impact on their life.
As children grow older, the impact of your financial changes will be felt more and more. Teenagers and young adults will definitely notice it when you make financial decisions that impact their daily life and, usually, the reaction will be a negative one because it means a reduction in some treat or other element that they value. If your vacations move from luxury to camping, for example, they will probably voice some pushback against that.
My recommended approach is to simply talk to your older children frankly about the changes. Treat them as adults, but also voice the changes in terms of the impact on their lives. You are making these changes so that over the long term there is much less risk of you becoming a financial burden to them later in life. They might not have a fancy vacation right now, but when they’re in their forties, you’re much less likely to have to move in with them or accept financial help from them out of financial need. In other words, make a conscious effort to voice these changes in terms of cost and benefit for your child as well. Your financial change is going to have a short-term cost for them, so what’s the benefit for them?
One big financial change that parents make when their children are adults is to cut off “outpatient financial support.” In other words, you simply stop giving them money to help them “get started” in adulthood. The response to this from your children depends a lot on their maturity and their reliance on that financial stream. If they’ve made smart choices along the way and are not dependent on that money, then this won’t be a problem – they’ve anticipated that this would eventually happen. Some adult children, however, make financial choices that rely on those changes. If that’s the case, give them a deadline when the financial support will stop so they can make necessary changes in their life.
Those conversations might be difficult, but they go right to the source of the one true solution for almost every familial crisis: communication. When you talk freely, openly, and frequently with your loved ones about these issues and make sure that they know you’ll respond to their comments without judgment or negative emotion, it becomes much easier to talk through these problems together. You can even build a stronger relationship through such challenges if communication is healthy.
Your Social Circle
Your financial changes will also have an impact on your social circle, mostly due to the changes that will occur in terms of your social interactions. Things like going out for a night on the town or going out for dinner or going to a movie are suddenly different value propositions for you and may not be “worth it” any more.
So, how do you explain that change to your social friends? You have a number of options.
The easiest option is to simply not explain it at all. If you follow that route, you can simply avoid it by cutting back on your expensive social obligations and suggesting different low-cost obligations. So, for example, you might choose to reduce the number of times that you go out to eat with some of your friends by half and instead replace some of those dinners with potluck dinner parties at your house.
Another option, of course, is to talk openly about it. You’ll probably find this easier in a series of conversations with individual friends or couples. Simply lay out the fact that you’re making some financial changes to your life. You don’t have to directly describe the changes going on, but you’re giving them some context that will explain some of the things you’re doing.
Some of your friends will be fine with this. Others might not be and you may find a bit of distance growing in that friendship, in which case you can either talk frankly with them or accept that change in friendship.
If you find that many of your friends aren’t on board with your changes, you’ll find that changing your financial strategies and spending choices opens the door to many new opportunities for building friendships. For example, my own spending changes as I went through a financial overhaul resulted in spending less time with my previous circle of big-spending friends and more time at lower-cost activities in the community (found via Meetup and the community calendar). I retained some of my earlier friendships, but many of them simply drifted away over time and were replaced with new friendships, a transition that wasn’t all that painful as we didn’t end our friendship and we’re still on good terms.
To summarize, make the changes you need to make and be open to new friendships and social opportunities as you try new things. Your strong social bonds will remain, while the ones that weren’t all that strong to begin with will slowly fade.
Your Extended Family
During a period of financial change, many people with tight-knit extended families struggle with those relationships as well. Those relationships often include conversations about topics that might be more personal than you would expect from friendships or professional relationships and thus you can wind up in some pretty awkward situations when it comes to family occasions.
For those types of families, here are three key pieces of advice.
First, be open about the changes in your behaviors if they come up, but don’t bring them up and don’t talk about dollars and cents specifically. Some of your astute family members may be noticing the personal changes you’re making to achieve your financial goals and they may come up in conversation. Don’t hide those changes, but try your absolute best to not discuss specific dollars and cents with anyone. Just state that you’re trying to spend less money in order to achieve other goals, which brings us to the second piece of advice.
Second, don’t emphasize that these changes are intended to build wealth. You’ll find that people who are perceived to have money in the bank are often targeted by financially struggling family members for help or loans (more on that in a bit). You can avoid a lot of that interaction by couching your financial changes in terms of the goals you hope to achieve with it. You need to clear out debt. You’re thinking of a career change. You’re thinking of having children. Your financial changes are simply steps to make your life ready for other changes.
Finally, don’t loan money to family members. If a family member comes to you for money, either give that person non-financial help in some fashion or give that person a one-time financial gift. You do not want to wind up in a situation where you’re the lender and they’re the borrower, because if anything goes wrong in that lender-borrower relationship, you’ve suddenly poisoned a lot of family events and relationships. It’s not worth it. It’s never worth it.
Remember, these people may be loved ones, but they’re not a part of your day-to-day life and they do not have the right to pass judgment on your decisions (unless you come to them privately for advice because you view that person as a mentor, but that’s a one-on-one relationship that you chose). If they criticize you, just let it roll off your back and remind yourself that they’re passing judgment based on their own financial experiences and choices, not yours. If they want to know specifics, just avoid the conversation because it’s none of their business.
Next time, we’ll wrap up this series with some final thoughts, along with a full directory of all of the entries in the series.