Deal with emotional issues around money before emotion becomes the issue

A few weeks ago, I met with Tom, a past client I hadn’t seen in almost five years. I was about to ask how things had been going when he cut me short: “I guess you heard about me and Gabby.” 

When I looked vague, he went on: “We split up. After almost 40 years of marriage, I couldn’t take the way she was spending my hard-earned money or the lifestyle she wanted to live … so I left.”  

I wish this was an unusual story, but it’s not. You’ve probably heard the adage: “There are two times in life when one is most likely to get a divorce: in the first five years of marriage and in the first five years of retirement.” 

Tom had retired two years before. As he tells it, he saw retirement as a time to get back to his roots. He wanted to grow blueberries on a plot of land, have a large vegetable garden, fish for his food and become more self-sufficient. He had visions of Green Acres — of making a life for himself and Gabby in a small and comfortable earth-friendly home, saving their money and donating to those less fortunate. 

Gabby, however, had other plans. After many years of sacrificing for the business, she wanted to use their acquired wealth to travel the world and build a palatial home suitable for lavish parties and formal entertaining. She got her way with the house, and within 18 months, Tom found himself wandering the six thousand square-foot architectural masterpiece feeling lonely and out of step with his wife’s plans for the future. 

After hearing his side of the story, I gently asked Tom if he and Gabby had ever discussed how they were going to spend their wealth when they sold the business. Not surprisingly, he admitted they hadn’t. He just assumed she was on the same track as he was. 

Money can be liberating and enslaving. It can alleviate some problems — and create a whole lot more! An important aspect of both business and personal planning is to explore your values concerning money, and the values of your spouse and/or business partners. If done early enough, families and partnerships can often avoid the heartache associated with misaligned expectations and the clash of values and strongly held beliefs. 

For many business owners and their families, discussions around money — how much you need and how much you will spend and save — can be very stressful. 

I’ve developed a list of questions designed to give you the opportunity to think about and discuss some of the important aspects of managing your financial decisions and financial affairs. 

I encourage you to include your spouse, and possibly your children, in this discussion as they will both influence your decisions and be affected by your actions. This is also an opportunity to discuss your values concerning wealth and financial management — often the greatest source of conflict in business and family relationships. 

Thinking about your answers to these questions can be a revealing exercise. It’s an excellent opportunity to identify some shared values and some areas for potential conflict. 

• How much money do you believe you need today to retire comfortably and care for your family?
• How much money do you believe you will need in 20 years to retire comfortably and care for your family?
• How much money do you believe your family should maintain in your savings account?
• Who do you believe is responsible for ensuring your family has a savings account — for putting money in the account and maintaining the desired balance?
• If you have children, do you expect them to work during high school to pay for non-essentials?
• Do you expect your children to work during college to pay for their education?  
• At what age do you think your children should be financially self-sufficient?  
• What’s your strategy if they’re not?
• Do you believe it is more important to pay off any major debts (such as your home mortgage) or to put money away for the future?  
• If another family member (such as an in-law or cousin) needed financial assistance, what would you do? How would you handle such a situation?
• What is your belief regarding charitable giving? If you were to receive a lump sum from the sale of your business, would you allocate any of it to a charitable or nonprofit organization? How would you decide which organization?  
• When you imagine leaving your current business, how do you envision spending your time? If it is your spouse who is leaving a business, what do you expect he or she to do with the next phase of life?

This is just the start of an important conversation. Our decisions surrounding money, how we make it, save it, spend it or invest it are based on our values, and our values strongly drive our emotions and behavior. 

It’s easier to deal with these emotional issues before the emotions become the issue, so start talking now.