Love or Money…Why Not Both? (27:23)
Whether couples have shared or separate accounts, it’s important to communicate about finances, values and goals. Having these discussions can result in reduced financial stress and an increase in satisfaction within their relationships. Sonya Lutter, Ph.D., director of School of Family Studies and Human Services at Kansas State University, joins us to help break down the intricacies of love and money and ways for couples to discuss finances.
Jack Giardino: Hello everybody and welcome back to another episode of Your Life, Simplified. My name is Jack Giardino, and I’ll be the host of this episode. For those of you who don’t know me, I work on a wealth advisory team here at Mariner Wealth Advisors as well as help out with the podcast team, and I’m excited to be able to host this episode. If you’re a reoccurring listener, you’ve most likely heard Brian Leitner explain how at Mariner Wealth Advisors, we are here to serve as advocates for our clients, which means we’re here to help our clients through the best of times as well as the more difficult times. One of those more challenging moments could be the stress and difficulties that come from couples navigating their financial lives together, which leads us into today’s topic of love and money or another way I like to think about it, the role that money plays in love. Now these may seem like two completely taboo topics and don’t go running from this podcast, because I promise we have a lot of great content here. And to help us break down these two difficult topics to discuss. We have our special guest, Dr. Sonya Lutter.
Dr. Sonya Lutter: Thanks Jack. It’s my pleasure to be here. I love talking about this topic and being able to spend more time with one of the graduates of our program is a true delight.
Jack: Thank you. Now I know a quick bio about you but could you give our listeners your background, what you’re currently doing and your areas of research and why you’re so well-known in this area?
Dr. Sonya: Sure. I graduated from the Kansas state university personal financial planning program and it was pretty much the end of my program. I was realizing I had no idea how to talk with couples when they come into my office and started having an argument about money. So I thought, I should probably get a little bit more training than this. So that led me into marriage and family therapy and that was such an insightful experience and enlightening experience to hear from my colleagues in marriage and family therapy who did not want to talk about money at all with their clients. If money came up at all, they pretty much shut down the conversation and that was that. So that really started getting me thinking if I was in financial planning and didn’t know anything about the emotional side of money, and then I’m in the therapy world and my colleagues didn’t understand anything about money, shouldn’t we be conversing a little bit more across fields? So really that got me into financial therapy and started an association for the financial therapy association with a number of other colleagues and it’s really taken off from there. And pretty much all of my research has been related to that since then. And right now I’m serve as the director of the school of family studies and human services, which houses both the personal financial planning program and the couple and family therapy program and a conflict resolution program and a number of other programs that just really tie everything together quite nicely.
Jack: So clearly well-versed within today’s topic of love and money. I remember we did a podcast back when I was in college, and you were talking about how you were at this conference, and you had people come up asking “love or money?” and you were like “no, no, no, no. It’s not either or, it’s both and how can we do that?” And that’s really what I want for today’s conversation. How can both love and money coexist with each other? Let’s break this out into kind of the life cycle of a relationship. The way I like to think about it. You have your dating or pre-marriage stage and then your early marriage or pre-retirement, where you’re starting to bring assets together, talk finances together, make those financial decisions in which you thought, “Hey, maybe I was making alone or by myself in the past” and what those conversations look like. And then really retirement years or maybe widowed years when one spouse is left on their own or predeceased husband or wife and maybe how that changes as well, if that’s okay with you.
Dr. Sonya: Sounds exciting.
Jack: Perfect. For some of our client’s kids, this would really pertain to, is that dating or pre-marriage phase where, “Hey, I just graduated college, or I’ve been with this individual for three or four years throughout college. We both just graduated, we have new jobs, income.” What does that look like when you’re dating or going into that relationship phase and is finances really even a topic between the two of them?
Dr. Sonya: I don’t think it often is a topic, but that doesn’t mean it shouldn’t be. It’s really exciting to be on a college campus to be around some of those couples as they’re forming their relationships. As they’re getting ready to graduate and as they graduate and come back as alum and talk about their relationships and really be able to provide some sort of influence. And that’s why I think it’s amazing to have some of our listeners who might have children that are in this age group and being able to give them some pointers on what they should encourage their children to have conversations about. Within the state of Kansas, for our listeners who are within the state of Kansas, there’s no premarital counseling requirement.
Jack: Which is kind of scary.
Dr. Sonya: It is very scary. But even in states where there are premarital counseling requirements or at least incentives for engaging in premarital counseling, in Texas, for instance, if you go through premarital counseling, you can get a discount on your marriage license. That would be great. But, even in Texas, there’s no requirement for a financial component of that. And finances are the number one thing that couples are arguing about. So not having any sort of counseling or education involved with that for these young couples is really a big miss in terms of our society, and in terms of providing them the resources and the education that they need.
Jack: I couldn’t agree more. So, when is too early to have these conversations? Is it that pre-marriage counseling where one’s already proposed to the other?
Dr. Sonya: Yes, I think it’s probably too late, by then. My husband told me he did a lot of reading on the dating process, and he says pretty much by the third date you know whether or not this is the real deal or not.
Jack: He’s a straight shooter, I like that.
Dr. Sonya: So you think by the third date you really should be at least starting to have some of the conversations. There are really three bigs, if you will, in terms of that early relationship formation and what are going to be probably the most difficult conversations and topic areas for couples. It’s going to be the in-laws; that’s something you can have a conversation about really early on. Let’s meet the other person’s family or at least talk about them and what they value and what their traditions are and things like that. Let’s talk about kids. Do you already have kids? Do you want to have kids? Is that completely off the table and then, let’s talk about money. Those are three really big topics, but if you wait so long into the relationship, then doesn’t matter. Let’s go ahead and at least start the conversation.
Jack: So you say, let’s have these conversations over these three bigs, and I guess we should focus more on the financial one, but I’d love to hear all three. What does that conversation look like? How do you approach it? Is that one person or the other who should just step up first? Do you get a third party in, whether it be a financial planner or a therapist or something along the lines of that? What do those conversations really look like?
Dr. Sonya: Yes. It was the first date with my husband where we talked about money. The first date, not the third date, which is may be a little bit more unusual. But it came up in terms of student loan debt, and I can’t for the life of me remember how we started down this road of student loan debt, but it was a really interesting conversation, because right then I learned he has a quarter of a million dollars in student loan debt. So I mean that could be a deal breaker right there for a lot of people to know that you’re forming a relationship with somebody who’s got this huge debt load that they’re making monthly payments on. If we decide to form a serious relationship, even if that’s his debt, I have become responsible for that debt, because he’s not able to contribute to the household in ways that he would have been if he didn’t have that debt. So I think just having conversations in terms of what was your college experience like, did you have support? Did you work during college? I think those are very easy ways to work yourself into the conversation. I think it would be wonderful if couples looked at each other’s credit report. I wouldn’t recommend that on the first date. It would be…
Jack: Come to the dinner table with your credit report.
Dr. Sonya: Yes, but I feel like if you’re getting ready or you’re thinking about getting engaged or maybe you have become engaged, let’s do look at each other’s credit report and not in an accusatory way, but just an educational way. And there might be things on your credit report that you didn’t know were on your credit report and being able to address that in a lower stress environment. Then, okay, now we’re already married and there are a lot of new things that come with being married. Let’s not introduce one more thing on top of that.
Jack: So we have our hypothetical couple, we should have probably started this out in the beginning. They were on top of things. They have this great conversation, maybe swap credit reports, they decide to tie the knot and now they’re into the second phase of their relationship and it’s early marriage and really where they’re going to start combining their assets and their financial lives where you said they’re going to start, you know, your debt becomes my debt and these financial decisions they now become not my decisions but our decisions. How are the different things such as joint accounts versus separate accounts and a transparency with each individual spending? What do those things look like? How do you again have those conversations with each other and set yourself up to not ignore it forever and then it’s a ticking time bomb when it blows? Back to kind of your research and what you focused on. I believe it’s financial stressors as the number one predictor within divorce. So how does that all tie together?
Dr. Sonya: Yes. You know, I think the joint account and individual accounts is a really fascinating topic regardless of what age you are or how long you’ve been involved in a relationship. Because the research is really straightforward here. It says the more joint accounts you have, the happier you are with your relationship. I don’t know which comes first. Do you have the joint accounts because you’re happy in your relationship or were you happy in your relationship and then you have the joint accounts? But what we do know, they are highly correlated with one another. I hear a lot of times from couples who say, “Oh, we’re happier because we have individual accounts.” I think that’s fine. If you want to keep individual spending, let’s do that. But there’s no reason why you can’t do that within the context of joint accounts. And even if you have individual accounts for small expenditures, I don’t see a problem with that either. But the more that couples can join their finances into joint accounts, the research is pretty clear. You’re going to be happier with that relationship. So just thinking about though, it doesn’t make people very happy when one partner goes out and spends $200 without telling the other person.
Jack: I don’t think it would make me very happy.
Dr. Sonya: No. So having that conversation is really important too. Like, what’s our dollar amount that I can spend without telling you and is this a yearly thing? Is this a monthly thing? Like how are we going to handle that type of situation? You need to have that part of the conversation, but having the joint accounts is really a very smart idea regardless of where you are in the lifecycle.
Jack: I completely agree. And I think one thing you know I’ve seen within my time at Mariner Wealth Advisors and within the industry is that there tends to be a lot of time where maybe one individual within that married couple really controls the finances. They tend to make all the meetings. Maybe they’re the only one who is showing up to the client meetings and I know at Mariner Wealth Advisors we push, “Hey, both spouses should be involved.” How do you get that other spouse involved and attract them to want to learn and make these decisions or help make these decisions with the other individual?
Dr. Sonya: Yes. I bet you would be surprised that a lot of those partners who aren’t that involved with the finances may actually want to be, but they don’t know that they can be. So I’ll tell you, I worked with a number of couples on their love of money relationship through a curriculum that I developed and more than once, it was the female in both situations who had no idea what was going on with the household finances. She didn’t know how much debt they had. She didn’t know what the mortgage was. She was clueless. She didn’t even know where the accounts were held and that’s a really serious problem.
Jack: They could get in a sticky situation very quickly with that.
Dr. Sonya: Very quickly. Both of these couples I’m thinking about were in very happy relationships. They had just gotten into this pattern at the beginning of their relationship. He chose to take on the organization of the household finances, and they never revisited it. She didn’t know that she should bring it up or that this was a conversation piece. And so the way this came up was a rather silly activity, but it was quite effective in terms of just having couples think through. I think there is a TV show about this, but I don’t know what that well, where the couple sit back to back, and the financial planner asks the question, so raise this card if it’s him who engages in this activity, raise the card if it’s her that engages in the activity, and so they could vote the same or they could vote differently, but they weren’t seeing each other’s answers.
And we started the activity just by asking like who’s responsible for yard maintenance, who’s in charge of holiday planning? And then you start getting into the harder questions, who is in charge of tax planning, who is in charge of retirement savings? And then at the end, we told them what the responses were, and it really was very useful for the couples to say, we both agree that it’s your responsibility to do retirement savings, because that’s the way we set it up. But we’re not happy with that relationship. And both of them weren’t happy. It wasn’t just the female in both of these situations who wanted to know. The husband actually wanted his wife to know that he didn’t think that she did want to know. I think simply asking your partner, “Hey, do you want to sit down and look at the finances with me?” You might be surprised.
Jack: And I think of like at weddings where they do that, you know, who is the funniest, and things like that. It’s something that doesn’t have to be so serious, but it gets the results that you need.
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Jack: That brings me into another thought. So you have a financial planner who maybe sits down and does this activity with you, and I think everything is great when you have a third party there. But how do you carry these conversations out of the financial planner’s office, into the home with each other and continue working on these issues and making these decisions together? What does that look like and what do those conversations look like?
Dr. Sonya: The conversations definitely could look different. Because it’s uncomfortable and it’s hard to know how to navigate that conversation, but the concept is the same. You’ve got to have that time that’s scheduled. That’s really the primary advantage of the third parties because you know that we have it on our calendar. We’re going to go see Jack on Friday at 3pm, and you know you’re going to have this conversation. You can have all that mental pre-work going on before you get there on Friday at 3pm. It’s the exact same way when you don’t have the facilitator, you’ve got to schedule the time in or else something else is going to come up. Something else way more exciting than talking about your finances will overcome. Like, why don’t we just watch this movie? It’s already on TV. So you’ve got to schedule the time. For example, on the first Saturday of the month, we’re going to spend one hour each of those first Saturdays talking about our financial situation. Let’s review our goals, let’s see if we need to modify any spending or if we want to change any of our gift allocations, have that regular time scheduled and keep consistent and don’t let other things come into play.
Jack: I think it’s easy to, you know, when you’re there meeting with the advisor, it’s easy because it’s top of mind, it’s in front of you and there you go. But then a lot of times you walk out and then you might check off a couple of the tasks of the things you need to do but then it’s forgotten. They’re going to reach back out to us and another three months to meet with us and then we’ll start the process over.
Dr. Sonya: Absolutely.
Jack: And I think you had touched on it a little bit, but you said that you had developed a curriculum, I believe it’s the love and money curriculum. Do you want to talk about what that looks like and the results that you found? I find that whole thing very interesting.
Dr. Sonya: Yes, it’s a five-week curriculum, and we run couples through of all ages and stages. So we had couples who weren’t even engaged yet. They were just pretty serious about their relationship. We also had people who had been married for 15 years, and the results were the same for all couples. We walked them through conversations about their values, about money, which is huge, and oftentimes something that people just forget to have that talk about. We talk about their family background. We talk about the behavioral side of money. We talk about the practical side of money. A lot of the couples thought that they were coming in and talking – this was going to be a financial literacy, financial education session about those practical pieces of money – and that was a very small component of what we did. But what we saw is at the end of five weeks, on average, some people a little bit more, some people, a little bit less, that couples ended with lower financial stress and greater satisfaction with their finances and their relationships. And that was just huge that it wasn’t just me working with these couples who had these responses. Even couples who were led by people who knew nothing about the curriculum were coming out with the exact same outcomes in terms of happier with their finances and their relationships.
Jack: That’s awesome. At the beginning of that you led with couples all ages pre-marriage, married. I read a statistic, and I’m going to butcher this, but it’s something about the new wave of divorce. It’s called the “gray divorce” or pre-retirement, or they’re in retirement and they divorce. My first thought is, well, you lose that job security. What does retirement look like for both of you? Maybe you don’t agree on that anymore, but I would have to imagine that those financial stressors are more prevalent than they ever were, because you don’t have that job security of that monthly income that most likely you may not be get let go anytime soon and all of a sudden, it’s lost. And now you have to decide, what are we really spending our money on and what that picture looks like. What should that look like for clients? How should they prepare for those conversations or prepare for that phase in their life where, “Hey, we’ve been working all of our lives and that security’s gone”?
Dr. Sonya: Yes, of course your mind goes first to finances, and my mind goes there too, but I don’t think that’s really the bigger issue at hand. If you would ask a financial therapist, it seems to be the bigger issue is couples never had that conversation about what retirement means. And I know that you do this as a financial planner, and it’s huge part of financial planning, but I don’t know that the average couple thinks about what is it that retirement means. Does it mean sitting around doing nothing? Perhaps they had kids early on in their relationships, so they’ve always had somebody else or something else to place their focus on. Now they have 24 hours of the day together.
Jack: Yes, I always like to ask, when clients come in, and they’re retired, “How’s retirement going?” They will say, Oh, it’s going great. Well why is it going great? You know, really dive in to understand what’s going on. What are they doing with their time? Are they actually really enjoying retirement? Things like that. But it’s such an interesting time in their lives where I feel like you have this abundance time or a bunch of free time on your hands and maybe more free time to bicker with each other about finances or something.
Dr. Sonya: It is a scary thought to have the finite resources at your hands and if you haven’t established your values before then, like really established what your values are, it makes it really hard to decide how to spend those finite resources. I may have had in my mind all along that we’re going to leave a bunch of money to this foundation that I’m really passionate about and that’s never crossed your mind and for some reason we never had this conversation. Of course stress is going to increase pretty substantially, so let’s have those conversations early on in the relationship. Why? I mean there’s no reason even if I don’t have the financial resources at this point in my life, if that’s something that’s important to me, let’s go ahead and talk about it.
Jack: Yes, definitely. I have one last thought before we wrap things up here. We’ve been talking a lot about what those conversations look like between couples outside of the financial planning relationship. Maybe if they’re not getting those conversations that they want or one partner’s trying to get at. What can they be doing within the meeting with the financial planner maybe to bring those to topic, and kind of get the importance of the discussion that it is to them, get that across the table to their spouse without causing a big blow up?
Dr. Sonya: You know, it’s always good just basic communication practice to start sentences with “I” and really be inquisitive in your question. So phrasing the question to your financial planner, “I wonder what it would be like if” and then bring in the conversation. So for me, “I wonder what it would be like if my husband had different philanthropic goals than I did” and maybe you already know that he does have different goals, but just phrase it more inquisitively and, and not with, “Oh he has different goals or you have different goals” and be more, “what does this mean to you” and “why are you worried about,” or “why are you excited about it” and phrase it in terms of what you are feeling. And if you are anxious about something, just phrase it that way. “I’m anxious about what it will be like in retirement and what our finances may look like and if I’m going to be able to achieve this particular goal of mine.” And just being inquisitive. And I think your financial planner will definitely jump on board with that. And if you phrase it, “I wonder what it would be like if my partner had these thoughts” it opens the door wide open for “Oh well what do you think about that?”
Jack: That’s great. I think of a couple of weeks ago we were meeting with a two freshly retired clients, so they’re about six months into their retirement and super excited about it. And this first couple of six months, the husband in this case has been perfectly okay with retirement, and he’s loving retirement, and he has no worries. But then for the wife, finances have just been stressing her out a lot. And you’re in that first kind of calendar year where you’re really trying to fine tune, you know, what do distributions look like each month? And she’s scared to ask for more. And then, you know, are we going to run out of money? It was interesting to see how they were just on two different levels of being comfortable with their finances and that third-party financial planner being able to step in and kind of bring them back around together and understand each other’s side. And we can continue to do that while they’re in the office. But again, I think the importance, as you’ve mentioned, is communication outside of the office as well.
Dr. Sonya: Absolutely. I think for the majority of the listeners, I would be willing to bet that they have a relationship with their advisor that’s comfortable and that they could feel like they could have these conversations. So just be an honest and open in and recognizing that your advisor’s going to support you and try to find the solution, I think is really key.
Jack: I can guarantee you advisors have seen similar scenarios throughout their career as a financial planner.
Dr. Sonya: Absolutely.
Jack: So this has been wonderful information, Dr Lutter. I truly appreciate it. If you could just sum up today’s conversation, what are the most important takeaways that our listeners can take from this conversation?
Dr. Sonya: Money doesn’t have to be scary. The conversation about money doesn’t have to be scary. We’re kind of trained as young people to not talk about money, and that makes it extremely difficult. When I form a relationship, and I’ve been told don’t talk about money, but then here’s this person I’m supposed to share everything with and be completely comfortable with and not have secrets. So it’s a real big switch to start having those conversations. So just recognizing it’s uncomfortable for both people, but somebody’s got to start the conversation and it’s got to continue throughout the life cycle.
Jack: I couldn’t have said it any better. Now before we end, we ask all of our guests this one question, what is the worst financial decision you have ever made?
Dr. Sonya: That’s a tough one to end on, and this is how you’re going to remember me as my worst financial decision.
Jack: No, not at all.
Dr. Sonya: One could say it was marrying a partner who had a quarter million dollars in debt, but I would say that’s actually been the best decision that I’ve made.
Jack: So, maybe the question should be instead of what’s the worst financial decision you’ve ever made, what’s the best recovery from the worst financial decision you’ve ever made? That kind of ties into you.
Dr. Sonya: Yes.
Jack: If you go back to your original one, you said $250,000 in student loan debt, but you’re recovered from it and have a fantastic relationship.
Dr. Sonya: We do. We figured out how to make that debt work for us and how we can repay it and just delay some of our other bigger financial plans.
Jack: Well, again, thank you Dr. Lutter for taking the time out of your busy week to sit down with us. I truly appreciate it and hopefully we’ll be able to get you back on the show.
Dr. Sonya: Thanks, Jack.
Jack: I want to thank all of our listeners for tuning into another episode of Your Life, Simplified. If you have a topic that you’d love to hear on this podcast, please email us at [email protected] We know that your time is extremely valuable, and we hope you find this podcast worthwhile.
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