How Couples Actually Talk About Money | Making a Millionaire

25:55I don't know, but maybe some insight onto how we're operating. We kind of use our credit card throughout the month for whatever it is. I mean, like we went out to a nice dinner last night, arguably should or shouldn't have, whatever. It was a great experience. Well, let me ask this because I want to ask Andy the question. Are y 'all actually coming up short on activity fees or stuff? Or is it just because he's complaining about things that it feels like you're short? I want to— No, and that's not a cut on it. I'm just trying to make sure. Like are you trying to show up with money that's not there?

26:28Nathan, I'm not trying to get on to your back. I'm trying to make sure. but I just want to know how Indy feels. Are you trying to show to things and there's not money to pay for it or are you just meeting opposition when you say, hey, I want to do this. He's like, no, no, we can't do that. We need to be. I don't sit down with him often enough and do finances like I should. Do y 'all do an annual net worth statement? I mean, I know we just showed you one. Do y 'all do one? I do. I actually do it pretty much every month. Do you sit down once a year at least and go over the state of how you guys are doing financially?

26:58We're changing throughout time, right? We're getting a lot better at it. Y 'all have a sit down once a year? But generally, I pull her in and I trap her into financial conversations. This doesn't sound good. This is supposed to be romantic. This is supposed to be a fun thing, not an accountability meeting, an intervention. It is getting better. Our conversations are much more fun. Are they fun or is it more like an intervention? They were more like an intervention, for sure. Come sit over here. Let me tell you what we did last month. Yeah. Yeah, it's one of those like, you're in a good mood. And I'm like, oh God.

27:34They were definitely more like an intervention for sure. And that's where that conflict, I felt trapped. I immediately got defensive and that's where we started going at it. Now I have a better understanding and I can sit down with him because I'm not good at math anyway. So I'm like, you can do it and tell me. So I know now that I can't do that. I need to sit down with him and we need to work on it. So now they're a little bit better, but we do have financial conversations often. more than once a year, probably a couple of times a week. We're very communicative. Like we, we talk a lot about it, but the question still stands.

28:07Like where, where do we come at it with, you know, whenever I bring up, I want to do this. I want to, it, it does come with worry on, on his part. Is it actually not happening? Like, is there any activity fees that haven't happened for the, for the kids yet? For the, for a long time. Yeah. We did have some extra money here recently and I was able to, like right before we came here, actually, we were able to put them, sign them up for a gymnastics class and an art class. So they are able to do those now. But the question is like, are we going to be able to do it continuously? With my own spouse, I have on purpose structured it, not because I have a mean or trying to keep things away from my wife.

28:48I mean, I'll do anything in the world, but who knows? Believe me, I'm not the boss in the house. But just being the budgeter and the planner is that if there's extra money, I will tend to auto-allocate money so that essentially there's less money left over. So it creates, like I said, forced scarcity. I'm trying to keep – Might be what we're doing with the cars. I think that's – I essentially saw as like, oh, we are over – Game recognized game. We're putting in our budget bigger numbers so that it creates a smaller end. And then you're using that as a tool for communication that sometimes, and it's fine as long as that tool for communication is a positive thing.

29:26But if it's creating it where it creates this scarcity that now creates some emotional reaction with an indie, you can see how this turns negative. And that's why I asked the question, are we actually doing without? Or is it just because there's a tone or negativity to the communications that it's working against what you're trying to build? When you guys sit down and have your financial conversation, and this comes from my experience. With my wife, when we first started out, I was a spreadsheet guy. And I'd walk her through the spreadsheet, and I'd walk her through all the money that was spent last month.

29:58And I'd say, hey, did you do this? It was always these questions. Hey, did you spend this here? Hey, did you spend this here? Hey, did you spend this? And I knew the answer to the question because obviously I saw the credit card statement, right? And it kind of went that way. Hey, why did you? Why did you? Why did you? Why did you? Our entire relationship shifted where we started having conversations around, before we look at what we spent last month, I said, hey, this next month, what are the things that are important to you? This next six months, what are the things that are important to you?

30:25This next year, what are the things that are important to you? Because when you as a couple can come together and list out your goals, and you may say, hey, my goal is, we wanna go on one big trip a year. We wanna go on one big trip a year. Or maybe it was, hey, we wanna travel every two months and we wanna go to a different place. if you guys can arrive at what the actual plan is, because what I'm hearing is a little bit of nebulous. Well, I just want to do, I want to travel. I want to do more. I want to do more. What I'm not hearing is like a goal isn't actually a goal unless you apply some metrics to it that would be somewhat measurable, right?

31:00If I were to ask you, all right, right now, if you could just choose, you know how much income you guys have, how much would you want to spend traveling a year? Not how much would he want? Because I'm going to ask him in a second too how much would you want to spend. I just want to see how far off the numbers are. I would say roughly around like$5 ,000. $5 ,000 a year traveling. Traveling is expensive. I think$5 ,000 is roughly about a good spot. My answer is$2 ,500. $2 ,500. You like to camp. I love camping. Yes. I absolutely like to camp. I haven't been camping before. Do you know which one of you is right?

31:35Yes, and it's both of us. Yeah, neither of you are right. That's what you have to kind of arrive at the conclusion of is, okay, there is a world in which we could spend$5 ,000 a year traveling. Is that what we both want to do collectively? There's also an answer we spend$2 ,500. Is that what we both want? And you have to list out all the other goals. Well, we also want to like not be paying on these cars for the next five to six years. Hey, we also want to be financially independent. You have to arrange those goals. But what it sounds like is you kind of guys have sort of these like abstract, oh, I want to, hey, one of our goals, we want our kids to do gymnastics.

32:12Okay, great. We know exactly what gymnastics season is and when that starts. Like we can, that's a thing. And so my wife and I, we used to live in this like nebulous travel thing. And so last year we started this great exercise. Very beginning of the year in January, right after we do our net worth meeting, I say, hey, what travel do you want to do this year? What do I do with the kids? What do I do with just me and you? What do I do with friends? and we go ahead and list all that out. And the decisions we make from a financial standpoint for the rest of the year are working towards those goals.

32:39And I think you guys can do the exact same thing, but what you've not done is listed all the goals in the order of priority. Because all I've heard from you right now is, I want future and I want present. But if I were to ask you, hey, do you not want future? You'd be like, no, no, I do. I do want, and I say, hey, do you want present? Oh yeah, yeah, no. So you guys want the same things, but you're not on the same page about how much to allocate and what timeline to allocate those dollars on. And that's what's missing from the financial conversation. There is something outside of y 'all's two goals that needs to be kind of respected.

33:10And that's, we talk about the financial order of operations. We know your burn rate is about$5 ,900 a month. Right at 6 ,000. Your emergency, you currently have about right under$16 ,000. I was trying to figure out now, your job, you told you got the golden ticket. What's the likelihood you could lose your job? Completely lose it and severed. It's pretty low. Yeah, because you're in the work for the military. And you even got this golden ticket. So now, look, I will tell you something that works against you is that there's only one income in your household. So typically that leans itself more to the six months, but the security leads it more towards the three months.

33:45So it's very personalized when you're trying to figure out what is my emergency reserves. But if we were just trying to figure out lean for the conversation tool of how do we move forward, three months could be in the conversation. Three months of$6 ,000 is$18 ,000. We're only$2 ,000 off from a fully funded emergency fund. That's close. Now we get to balance out future goal, present goal, and how those two come together. And it's fun because we get to put numbers to these things too. And that's what I like is that y 'all are on the cusp of these things could work together. They really could. I mean, y 'all are so close to doing the hard work.

34:27It's just more of communication tools and getting on the same page and using the tool of the power. If you're the planner and you're the one that's running the household, those are two both important things. They just need to kind of learn to respect and mutually coexist with each other. This golden ticket while you're in college, this is only a short-term thing. What happens to your career after you graduate college? I will become a commission officer and the pay increases. And your pay bumps. Pay is going up. So we need to kind of, now we even, and I hate to add complexity, but this is, y 'all need to kind of, when you're doing your planning as a couple, you look at these next few years while you're in college as one intermittent goals.

35:07And then you need to look beyond that and have a plan for what happens after that. And then y 'all figure out, okay, while we're in this season, because three, four years will go so quick. Maybe our travel goals are a little bit less, but we also use this as a carrot that, hey, when we get over here, because me and my wife, I told my wife if we could save like I wanted to, when we hit 40, it was going to be a different world. And that kind of was the motivation. Now, I didn't make us live miser lifestyles. But it was understanding that things would change when we reached this goal certain. And that was motivation that was used as a communication tool.

35:41And now you travel differently at this age than you did when you were in your 20s. Y 'all could do the same thing. So maybe you go celebrate with a Disney trip or a$5 ,000 or$6 ,000 trip upon graduation. But maybe while we're in this lower income but awesome life, because it sounds like y 'all get to spend a lot of time together. You get a premium on the time. We treat that premium of time as something where we don't have to spend as much on the vacations because we're making so many memories. So I think the question that I have is, is it enough? Because there is an amount that I'm saving. Sure.

36:14And so I don't know how— What's that number? Do you know the number off the top of your head? How much are you saving? Yeah, so it's$6.60 per month going into TSP. There was some funds into a Roth IRA that wasn't scheduled. It wasn't repetitive. We had a little bit of extra money, and it's something that I kind of stowed away just in the moment while we had some extra change. So that's not necessarily consistent. So that's what I'm putting away right now. Right now we got$92 ,000 that you guys currently have saved and invested, right? So that's going to be our present value. We're going to save$660 every month.

36:52This assumes no pay raises, no increases, no bumps in pay, no changes in income, no new employment, no additional savings. Just do what you're doing. Rate of return, you want to do 8 %? Yeah, we can do 8%. I mean, we could get really crazy, and we could have done like 9.1 % if we were doing our age-based type stuff, but we can do 8%. And when did your pension start? 41, 42? At the age of 41. So we're just going to say for our number of periods, let's do 41 minus 29. That's 12 years times 12. That's 144 months. So if we just look at what you're on track to have in terms of an investment portfolio, when the pension starts,$400 ,000.

37:31All right. So here's my question for you. $400 ,000, which you're on track for when you get to pension age, right? Your pension is going to be like$50 ,000 a year. Correct. If I just take$50 ,000 a year of a pension bid, and I'm just going to use a 4 % withdrawal rate because it's a real easy, simple way to do math, and I take$50 ,000 divided by.04, that's$1.25 million. Okay. Okay. By the way, do you realize, typically, like when you do a 4%, that's like a 30-year withdrawal period. Your pension's worth more than that. Worth way more than that. Because you're getting this in your 40s. The likelihood of how much this pension is worth, this is the most conservative assumption we can use.

38:15It's 1.2. It's probably worth a lot more than that because we're beyond 30 years on your life expectancy. But in the context of what life is going to be like, and I'm assuming that's in today's dollars, right? Sure. Yeah, I'm assuming today's dollars. I think my question is what sort of lifestyle adjustments are there going to be? You're not going to be retired. Do you really think you're going to retire? You either go stay in the military or you go do something else. And you're actually even taking a step even further than I even want you to go, just yet thinking about lifestyle. What I just want to draw your attention to is at 41 years old, you're going to have a pension that's the equivalent, conservatively, of$1.2 million.

38:54Then across your TSP and your other investment assets, assuming no additional savings outside of what you're doing right now, you're going to have another 400. that's$1.65 million, theoretically, of assets at 41. And what's our guardrails in it? Three times? Three times. So if you took 1.6 divided by three? 533 ,000. Are you going to be making$533 ,000 a year? No, you're going to be making... You're going to be... You're way ahead of schedule. You're out ahead of the curve. You know, when we ask the curve, are you behind the curve, ahead of the curve, right where you need to be? You're going to be way out ahead of the curve.

39:29This hopefully is taking pressure off of let's not feel so much pressure against the present. Does that mean that I could lower the amount that I'm putting into this? Look, I don't want you – because here's – you know our aspirational goal is to get you to 25 % savings rate. You don't need to do 25 % because your government – the government is putting probably over 10 % of your pay into this pension. Do you agree, disagree? It's 5%. I think. Oh, a pension. Okay, sure. They're putting, no, that's just what they're putting in the TSP. Right. The pension, they're funding. Because I worked in government for a little bit for most governments with pensions, pensions with people retiring in their 60s.

40:12We usually have funding formulas where you put in 6 % and your employer puts in 8 % to 11%. So for the government to fund this for you getting in your 40s, they're putting in more than 10 % of your pay. So there's 10 % right off of the 25 % already. You just said something to the effect of they're also giving you a TSP matching, right, a 5%. Truthfully, calculation-wise, you're already funding 25%, even with 10%. I do like if there's any extra money because your favorite savings account is going to be your Roth account. I would love for both of you all to have Roth accounts, but they don't have to be fully maxed out every year.

40:48But the key thing that he said there is if there's extra money. If there's extra. And what you have to do is you have to have the goal conversation first to then discern if there's extra money. Because what we just showed you is based on what you're doing right now, without changing anything, you're on a fantastic path. At age 40, if you have a$400 ,000 portfolio, we know that a wealth multiplier for a four-year-old is seven. So just that$400 ,000 you've built up is well in its way to be worth almost$3 million by the time you retire, assuming that you don't add anything to it, don't take anything away from it, just let that sit there and grow.

41:19So there's no van by the river that you're worried about like Nana that you're worried about. I mean, seriously, that's not you. That's the shadow that's hanging with you, but you're not doing any of those things. Having anxiety around, oh my goodness, we're spending too much, and oh my goodness, we don't have any money to do the things we should care about, is not fun. No. And what you can do, you can overcome that by actually having a plan of action. knowing what goals you're going to find and what you're gonna save and knowing that, hey, when saving is enough, that's okay. And when spending is enough, that's okay.

41:58You guys have to arrive at what makes the most sense for the family. And then once you do that, you put the plan in place and then you can breathe easy because you have the resources and the ability to do all the things that you guys are laying out. What you have to do is make sure that you both are equally believing that, hey, we're doing the things we're supposed to be doing, both from a future standpoint as well as from a present standpoint. Okay. You guys are wonderful. Thanks so much for coming out with us today. Thank you guys so much. Yes, we appreciate you. Awesome opportunity. Bo, how awesome was that?

42:28Man, it was wonderful. Nathan and India, what a lovely couple. And I love how one of the things that they did is even though they weren't completely aligned when they started the conversation, you could tell that they loved each other and they wanted to be aligned and they were very open and reassuring to each other. And I think that's a great step in the right direction, even just to start the process. Well, you can see, I mean, we've been around a lot of healthy relationships. And you can see what was being represented by each of them. When you think about Indy, she was really trying to maximize the moment.

42:58Are we doing the right activities for the kids? Are we building memories? And then you got Nathan over here who's feeling the pressure. And he even carried some baggage with him, worried about his Nana, who essentially was living in a van in a Walmart parking lot. I mean, I can see how this baggage makes him feel like he has to produce, create, and save. I love that we kind of got to build a bridge to kind of bring them together to see how these things that seem disconnected could actually be a United plan for the future. And I think one of the things that maybe he was a little misguided in where he felt like they were.

43:32And so I love that we had the opportunity. We could actually look at the numbers. If you think about the way that they're saving right now, we know he's putting money into his TSPs, He's putting a little over$400 a month into his TSP. He's getting a little over$200 of a match, and they're putting a little bit into the Roth IRA. So they have about$700 a month going into their investment portfolio. Right now, if you look at their investments, they have$92 ,000. Well, if you just take$92 ,000 today, saving about$700 a month, by the time he gets to his first retirement, by the time he gets to military pension eligible, he's going to have a portfolio of like$414 ,000.

44:10So for a couple right there at 40 years old, that's pretty incredible. To them, they're going to be like, yeah, but it could be better. But they're not taking into account the value of that pension. That's right. I mean, because that's the thing. If you take into account at age 41, they're not only going to have$400 ,000 plus, they're going to have a pension that's going to generate a large portion of income. And more than likely, that's the beginning of Act 2.0 for Nathan as well. You think about it, he's going to have pension income of around$50 ,000. Even that portfolio at a 4 % withdrawal rate could generate about$12 ,000 a year.

44:44So you're talking about$62 ,000 of income if they needed to live with that income. But I don't think they're going to live off of it. That's just going to give them the head start as they do start this second chapter. So even though they're going to be A-OK, what's the homework? What's the things they need to be working on? Because I'm already excited they're going to get to see us have this after action report. But what do they need to be working on? Well, the first thing is a little bit of blocking and tackling. They do not yet have a fully funded emergency fund. So they need to figure out, is it three months of living expenses?

45:12Is it six months? Where is that? And they need to work towards funding that so they can make sure nothing throws them off kilter on this great plan that they're on. I agree with that. The other thing that I thought was interesting is they were talking about how that income of about$7 ,300 a month coming in, the burn rate was about$6 ,000. So in my mind, there's like this$1 ,300 gap that was unaccounted for. I'd love for them to figure out how do we account for that. Tighten it up a little bit so we don't have money just slipping out the back. Yeah, and maybe that's a budgeting app. Maybe it's some sort of tracker, something like that, to help them figure out where that money is going.

45:44And then once they know where their money is going, I want them to set a specific and distinct time to have a money date. Here's the thing. It doesn't need to feel like an intervention, like it's felt like. Because it sounds like in the past, Nathan has really made this intense. This needs to feel like a celebration or something they're doing together. So it is fun, not something where you're holding somebody to account. Well, and that way where they both have a voice. Hey, here's what I want for the future. Here's what I want for the present. They can arrive at, okay, well, how do we attack both these goals?

46:12And then what I want them to do is I want them to automate that fun stuff. Those goals they have for the right now, whether it be travel or kids' activities or sports or whatever that thing is, they can do sinking funds, they can do automatic savings, and they can go and check the box knowing that money is going to those things so they can be satisfied. okay, we're saving for the future, we're building for the future, but we're also accounting for today. And if they can get on the same page, I think it'll remove a lot of that anxiety. I absolutely can't wait for them to see this homework list and as well as just to see how this all comes together with including the projections.

46:44Because look, I know for both Nathan and Indy, to be vulnerable and share this type of information is not the easiest thing. I'm just so happy they're united. If we wanted to bring on other guests and people come and they see what we do, but where do people go if they want to be on Making a Millionaire. Yeah, if you'd like to be a guest on Making a Millionaire, go to moneyguide.com slash apply. Or if you want to take advantage of any of our free tools and resources, you can go to moneyguide.com slash resources. Guys, there is absolutely a better way to do money. And we are here day in, day out, trying to share that type of wealth and knowledge.

47:18I'm your host, Brian, joined by Mr. Bo, Money Guy team, out. Making a Millionaire is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners at Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities laws and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through making a millionaire. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice.

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