Ask the Experts | The Value of Financial Independence is More than Monetary


7th Sep 2016

Despite the fact financial compatibility in a relationship is important for its success, most of us are actually financially incompatible. 

The good news is that financial independence and financial compatibility are not mutually exclusive. 

In fact, returning to work and becoming financially independent could actually be the key to an even more harmonious relationship.

Why Financial Independence Is So Valuable

Financial independence is critical for self-esteem, confidence and emotional wellbeing – that’s as true for women and as it is for men.

What’s more, by earning your own money you can take a massive step towards financial compatibility, which in turn is important for relationship harmony, and even your children’s happiness too.

When you consider that the impact of financial incompatibility can be devastating: -

  • 75% of couples find money the hardest subject to talk about
  • 30% of people lie to their partners about how much they spend on their credit cards
  • And a third of couples are kept awake at night because of money worries (1)

You’ll see why it’s such an important and valuable goal.

By returning to work you will achieve financial independence, enabling you to follow the next simple steps to achieve compatibility, and realise the true value of your monetary freedom: -

Realising the Value of Your Fiscal Independence - 3 Steps to Financial Compatibility

  1. Tackle debt jointly

Don’t be afraid or ashamed of debt – yes it’s a financial challenge, but no debt problems are unsolvable

There’s also scientific evidence to back up the validity of the old adage a problem shared is a problem halved.’ 

Speak openly about debts, prioritise them, make a plan, pay them down, move on. 

It sounds simple because it actually is. 

And if you want help, a chartered financial planner will listen to you without judgement, then help you sort out any outstanding debt as part of working with you to create a complete long-term financial plan.

  1. Make spending, saving and investing decisions together

I have no idea why men still make the majority of a family’s major financial decisions, but evidence suggests that they do.

And as a father to a daughter it exasperates me, because I believe in financial equality on every level – from financial education and earning potential to decision-making.
 

Women have as much if not more to offer to the investment planning conversation as well.  Women have a completely different take on risk for example, and they’re also more likely to spend more time in retirement, requiring a pension that lasts longer than a man’s, which in turn requires a completely different thought process when it comes to saving and investing.

I personally wish more women would be proactive in financial decision making because I know that investment outcomes can be positively affected by female judgement.

Work with your husband to find an adviser you’re both comfortable talking to.  (Make sure it’s someone backed up by qualifications and regulatory licenses that you take the time to check, rather than one who cold calls you or who purports to be your friend.)  Then have all the conversations about your family’s finances together with your husband.

Equal choices and equal decisions equals financial compatibility and relationship harmony!

  1. Have an agreed limit for self-spending (then don’t judge!)

Finally, we all need and deserve treats.  Fact! (2)

It pays to agree a self-spending limit per month or annum for two reasons – it gives you both freedom, and it gives you both a threshold that’s safe for the family’s finances.

Once you’ve agreed the limit, don’t judge or comment when your partner blows the lot on more gadgets, and remind him not to comment when you make an investment in another handbag or spa day with your best friends.

APPENDICES:   (1) Financial Bliss: How to Grow Wealthy Together by Sarah Pennells     (2) Actually just my opinion, but my wife and children agree with me…

Article written by Sam Instone, he is leading a revolution in international financial advice. From his company AES International’s offices in DIFC he’s enabling financial empowerment through education, bringing professional standards to the UAE, and speaking out about financial salespeople who prey on expats. 

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