Managing money in marriage can be a challenge. For one thing, money arguments are not about money. They are about our hidden dreams, identities, and core beliefs about what we need to live a rich life.
The path to a rich life is full of detours and myths that can hold couples back from achieving the financial freedom they dream of. Below are three of these myths and their realities.
1. Spend less than you earn to be wealthy
The other day I was talking to Daniel and Suzanne about how they are planning to achieve their rich life. Daniel instantly spoke up. “Being rich is simple, just spend less than you earn.”
While mathematically speaking this has a degree of truth, it can provide couples with a false sense of wealth. Spending less than you earn will keep you in the green but it won’t make you rich.
Ask yourself: Is wealth really that simple?
I asked Daniel, “Are you happy with your finances and how you spend your money? What system do you have for getting ahead? What are your financial dreams? How are you investing your money? How much do you spend eating out or paying off debt?”
Daniel gave me a Scooby Doo look.
He quickly realized his belief to spend less than you earn was not as helpful to achieving his dreams as he thought.
My conversation with Daniel brought up an important point. Just knowing the numbers does not mean it’s something you will implement into your life.
This is why America is one of the most obese countries in the world. We know we need to eat less fast food and exercise more. That’s a given. But just because we know doesn’t mean we will actually do it.
Knowledge is useless unless you apply it within a system.
So ask yourself, “Do I have the right accounts set up? Is my money automated to save me thousands? Am I picking the right investment allocation for my financial dreams?”
Just as your exercise routine and diet is a system that leads to weight loss and vitality, a financial system of saving, investing, and spending leads to wealth It’s more than just “Losing weight is simple. Burn more calories than you consume.”
An attitude of spending less than you earn is too simple to actually create the rich life that most couples dream about.
Reality: Take time to create and implement a financial system that will put you on the path to a rich life. I’d recommend reading I Will Teach You To Be Rich to get started.
2. Wealth is about willpower
If America had a tattoo, it would say, “If I just try harder, I can do anything.” So many of us have been branded by this idea without even knowing.
I hear it all the time. “Just try harder and you’ll save more money” or “Just try harder and you’ll lose weight.”
Seriously? Has that really worked for you over the past year? The past five years?
Every choice we make has a cost.
That’s why trying to save a penny here and a penny there doesn’t make as much sense as building a system that saves you $10,000. Not to mention, it goes against our nature to handle so many “penny saving” choices.
Psychologist Barry Schwartz describes in his book The Paradox of Choice that the more choices you have, the less likely you are to choose any of them.
In his book Nudge, economist Richard Thaler shows that for every additional 10 choices offered in a 401(K) plan, contribution rate decreases by 2%.
Trying harder does help, but what matters most is how you are trying. Draining your willpower day after day trying to save pennies is not as beneficial as spending that time creating a system and answering the bigger questions that lead to financial freedom.
Reality: Do not let willpower be a determining factor. Instead follow Ramit Sethi’s advice to “spend extravagantly on the things you love, and cut costs mercilessly on the things you don’t.”
3. We can’t save more money
I hear this from couples all the time. What they are really saying isn’t that they can’t save more money, but rather that they can’t cut more things out of their life. Granted, there are couples in a financial situation that actually can’t, but I find that to be less than what couples assume.
My rebuttal: Yes you can. Countless studies have shown that we significantly underestimate our own consumption habits.
For example, in his book Mindless Eating, Brian Wansink, Ph.D explains that many of us dramatically under report what we eat. His studies show that with a smaller plate, we eat less without a noticeable difference in energy level because we consume what our body needs. A bigger plate leads us to unconsciously eat more, which leads to weight gain overtime.
Another example is a study out of Berkeley that shows humans have a tendency to overestimate going to the gym by 70%. For most of us, it would be much cheaper to pay for day passes than a membership.
I find that couples who believe they can’t save more money are really just scared to learn about themselves and their spending habits.
Couples that come to me for help with money issues in their marriage are stuck with no end in sight. But as we talk during our session, I ask questions to understand each partner’s world. These new details allow for the couple to understand each other better, make healthy compromises, and work together to make sure needs are met. I’m not saying it’s easy to face these questions about money, but it’s completely worth it for living a rich life.
Reality: Take a hard and honest look at how your spend your money. When I did this, I uncovered hidden money I was wasting and started saving a comfortable amount on a consistent basis.
What are some of the myths you’ve heard about money in marriage?
This article was originally published on The Gottman Relationship Blog