Sipping frothy tropical drinks on a beach, free from the rat race. Sounds amazing, right? It also may sound impossible – on your own, but even more with two people, accounting for two different approaches to money, two different spending styles, two people’s wants and needs. But it IS achievable. Let’s talk about how you and your significant other can achieve financial independence as a couple – from budgeting and investing to retirement.
What does your financial independence look like?
Financial independence is the holy grail for many couples – early retirement, a second home, global adventures, and all the time in the world. However, those images are all vague – what does it look like for each of you as a couple exactly? Sit down together and build an actual dream goal, designed to suit you two.
Unpack Your Dreams
Imagine yourselves five, ten, twenty years in the future – what does it look like? Are you pursuing creative hobbies? Sitting on a beach? Hiking Mount Everest? Find your common ground, and leave room for each of you to have your own interests, then work from there.
Put A Number On It
Once you have a clear picture of how your financial independence looks, calculate how much it will cost. Dreaming of living in a jungle in Belize? Look up the cost of living in that area. Imagining cruising in retirement? Price the tickets. Make sure you also include healthcare costs, hobbies, and other factors. If you have a family history of chronic conditions, you may need to budget a bit more.Once you have a clear picture of how your financial independence looks, calculate how much it will cost. Dreaming of living in a jungle in Belize? Look up the cost of living in that area. Imagining cruising in retirement? Price the tickets. Make sure you also include healthcare costs, hobbies, and other factors. If you have a family history of chronic conditions, you may need to budget a bit more.
Find Your Starting Point
Before you can start working towards your goal of financial independence, you need to take a hard look at where you are now. This includes your combined income, debt, existing assets, and your current spending habits. There’s no shame here, it’s purely to figure out where you are and what you need to do to reach your goals.
Set SMART Goals
Now that you have a clear picture, it’s time to make a plan. The SMART Goal framework is the best way to do so.
Specific
Your goals should be specific – use the numbers you calculated above for your financial independence goal. Then, set smaller, specific checkpoints. If you want to have one million dollars to retire at sixty, maybe you want to have 500 thousand invested by age 50, or $250,000 at age 40.
Measurable
Keep track of your progress. Whether you use an app, a spreadsheet, or a thermometer picture on the fridge that you color in, knowing where you are in your journey is crucial. And celebrate the small wins – they keep you motivated.
Achievable
Don’t set yourself up for failure with unrealistic goals. Consider your current financial situation, potential savings, and other factors when setting targets.
Relevant
Keep your goals in view, and make sure your steps relate. Don’t spend money on a designer couch if your plan is to move abroad in ten years. Make sure your roadmap actually supports your end goals.
Time-Bound
Procrastination is the enemy of progress. Set deadlines for each goal, whether it’s a month, a year, or even five years. Having a clear timeframe creates a sense of urgency and keeps you accountable.
Communicating Your Dreams
Money is hard to talk about, it’s true. However, open and honest communication about finances is crucial to achieving financial independence together. Navigating finances without that communication is like driving a car with a dirty windshield – you won’t be able to clearly see where you are or where you’re going.
Money Dates
Schedule regular money dates. Stay home, make a nice dinner, open a bottle of wine, and sit down with your bank statements. Discuss income, expenses, goals, and progress. Take turns, don’t interrupt, and most importantly…
Ditch The Blame Game
If one of you has run into financial difficulty, focus on solutions. You’re on the same team and blame does not help you move forward. Focus on supporting and understanding each other, and work together to identify the cause of issues and make a plan for improvement.
Celebrate The Small Stuff
It’s going to feel great when you achieve financial independence. I promise. But that doesn’t mean you can’t celebrate along the way. Put more than expected into savings this month? Celebrate! Pay off debt? Celebrate that too! Acknowledging the small wins will keep you motivated and keep the big picture from being too overwhelming. Make a list of things to do to celebrate wins that don’t involve money.
Embrace Who You Are
They say opposites attract. It’s not always true, but let’s be honest – you and your significant other probably don’t have the exact same approach to money. Whether one of you is a saver and one is a spender, or one prefers savings accounts while the other prefers investing, find common ground and compromise. The goal is to achieve your goals – there are a dozen different ways to get to your financial independence goal!
Bring In An Expert
Sometimes, you may struggle to figure out how to merge your money goals and styles – and that’s okay! It’s hard! Stay open to the idea of hiring a professional to assist you. I work with a lot of couples who are trying to get on the same page about their money, and having an expert advise and guide you can help you find the right path more easily. Worst case, it can give you a common enemy to unite against!