And how Personal Capital can improve any marriage’s relationship with money
Whenever I hear from married couples, both new and old, I hear the same money arguments over and over. In a recent poll, finances are the leading cause of stress for 35% couples in distressed relationships. Let’s look at how my favorite free tool, Personal Capital, sets a marriage up for financial success.
1. Transparency and Trust
We all know how critical transparency and trust is in marriage. You are no longer two separate people, but one unit working together for the good of the other. Yet I see so many couples clinging to their individual finances, separate budgets, and “allowances” with each other in marriage.
There is always a reason, “He just can’t manage his money right.” “She ruined her credit in college, she’s not ruining mine,” and on and on.
Let’s face it, you are married. You married their strengths, weaknesses, wealth, and poverty. You’re in it together. Whether you choose to keep separate accounts or make them all joint (my preferred option), Personal Capital allows you to have a one-stop shop, a “single source of truth” for your financial situation.
If you feel the need to hide your finances from your wife, what else is she going to think you are hiding? Click To Tweet
2. Clear Vision for the Future
“Begin with the end in mind.” Timeless advice. Yet so often when I ask people about their savings rate, time till retirement, cash flow or asset allocation, they look at me (after they finish yawning), and shrug. So many families drift through life, trying to make it paycheck to paycheck, and occasionally stashing a few hundred away for retirement. This is a recipe for disaster, to become a burden on your children in your future.
Personal Capital’s new Retirement Planner Tool has integrated all of your information, asks a few questions about your future plans, and runs 5,000 monte carlo simulations to project the likelihood of your current savings and investments providing you the retirement of your dreams.
This can be a sobering exercise to go through. But it gives you all the information in front of you and hands you the keys. Within seconds you can tinker with the many levers you have at your finger tips, “What if we could save $200 more per month?” “What if we were more risky with our investments?” “What if Social Security goes away?”
If you are newly married, these discussions aren’t likely on the top of your list. But due to the magic of compounding interest, the sooner you understand your goals, the easier they will be to achieve.
3. Helps manage your cash flow each month
It is so easy to get signed up for services and on-going expenses that seem like a good idea at the time. But do you really need 4 different streaming services, memberships at two gyms, and cable TV with 400 channels when you only have 2 hours a week to watch?
These costs pile up, get paid automatically with the other bills, and often go unnoticed. But with Personal Capital’s Cash Flow monitoring, it will show you where every dollar is going, and whether your family is running a deficit or a surplus every month.
And for the entrepreneurs out there, it also shows where every dollar is coming in from, and allows you to monitor your business’s progress easily, from any device:
4. Allows you to Splurge without Regret
Now that you know where your dollars are coming from and going, you don’t need to ask yourself, “Can I afford this toy?” Couples create strict budgets down to the dime of what spending they can do in each category, but this is so restrictive.
When you manage by cash flow, you accept the variability that life brings. You can make smarter decisions about splurging, without micro-managing every purchase. You accept that in the summer, your travel spending will be larger. Personal Capital keeps it all visible, but doesn’t harass you if one month you outspend your budget in a category.
5. “Did you pay the ____?” is eliminated
Don’t you love the feeling of walking by the kitchen counter and seeing a bill with an outstanding balance due?
Do you approach your wife and ask if she took care of it?
Do you assume the best that she’s already handled it?
Personal Capital has you covered! Their Bills section details every credit card, mortgage, and other bills that you have linked into the system. Every payment will be logged, and you will always be able to keep up with the bills – no marital confrontation required!
6. Demystifies your Investments
Before Personal Capital, assessing our investment portfolio required about 5 hours, an intense Excel workbook, and tons of log in credentials that have all been forgotten.
Let’s face it: 401(k), IRA’s, 529’s for the kiddos, taxable accounts at multiple brokerages, Peer-to-Peer lending accounts… How do you make sense of it all? What is your overall asset allocation? Are you too risky, too conservative?
But now with the “Investment Checkup,” Personal Capital aggregates all your investments, pieces together a holistic investment picture, and provides simple, actionable advice to keep you on track.
7. Helps you Save on Fees, for Free
It is shocking how small expenses in your portfolio will eat up a large chunk of your retirement over time. Personal Capital looks into each of your investments and waves the red flag whenever it sees you paying more than you should in your accounts.
Most investment advisors will charge you between 1% – 2% to manage your money. That seems like a small price to pay for their “expertise,” right? Well let’s look at a $100,000 portfolio that grows at 8% per year. One is managed professionally for 1% per year. One is all index funds, with negligible expense ratios:
It seems like witchcraft, but that’s just how important fees are!
Personal Capital stomps out expense ratios like a rhino stomps out campfires. Click To Tweet
The more money you save on fees, the more you can spend on each other during date nights!
8. Turns your Finances into a Game
With a healthy money relationship, hitting net worth targets, savings goals, and investment returns becomes a game in itself. Personal Capital makes it fun – giving you little tips and tricks along the way. Their blog and professional research articles motivate your progress. You will see the stress around money disappear in your family as you create a single plan, and execute it in lock step.
Personal Capital Belongs in your Toolbox
You can have all the tools at your side, but as research shows, if it isn’t easy to do, you just won’t do it. Personal Capital simplifies the process, is there by your side, and grows with you as your maturity around money grows.
As young parents, it’s nice to know that one thing we will never have to fight about is MONEY! Click To Tweet
Does your family use Personal Capital? If not, sign up free at personalcapital.com. What have you found helps to keep you all on the same page when it comes to money? Let me know below!