Finances & Feelings: Common Financial Conflicts and Tips for Getting Unstuck

[00:00:00] Aja Evans If everybody understands Hey, this is what we're driving toward. These are our goals. How are we going to accomplish it? I feel like we're in this together. We are a team trying to accomplish it, it just feels so much better.

[00:00:14] Jennifer Borget I'm excited to bring you this bonus episode of A Better Way to Money. We're approaching our conversation a bit differently today. I'm joined here by financial therapist and licensed mental health counselor Aja Evans and Lauren Yoder, a VP of product management at Northwestern Mutual. And we're going to get some emotional and financial therapy today. We're going to cover two real financial pain points people encounter around money, places where emotions really can run hot. Lauren and Aja will help us understand where these conflicts come from and why they're so common, and they'll give us tips for navigating them productively.

For more planning resources to help with key money conversations, visit NorthwesternMutual.com/podcast or listen to more episodes from season one or two of A Better Way to Money.

All right, let's dig in. Aja, Lauren, welcome. I'm so excited to unpack these tough financial situations with you today, because you know, there are so many questions that people have and a lot of common things that we hear from people. But first, before we jump into that, I'd love for you to just tell our listeners a little bit about who you are. Aja, can you start?

[00:01:22] Aja Evans Absolutely. Thank you for having me. I'm so excited to be here. So, my name is Aja Evans. I'm a licensed mental health counselor and financial therapist. I'm so excited to talk about what that even means. What is a financial therapist? Because I know for some people that's a new term. A financial therapist really is somebody who is taking the time to explore your relationship to money, how you think, how you feel and how you behave financially. When does this come up? How have your past experiences really impacted what you're doing with your money today? I'm really diving into people's emotions behaviorally, for me, because my background is in mental health, but there are other people who are coaches or financial providers who are also certified financial therapists, and they're doing this work as well.

[00:02:09] Jennifer Borget Hey, yeah, I can't wait to hear more about what a financial therapist is. I think it's something that sounds very useful probably for a lot of people, including myself. All right, Lauren, what about you? Can you tell us a little bit about yourself?

[00:02:19] Lauren Yoder Yeah, I'd be happy to. So, my background is in financial planning. I'm a certified financial planner. My whole career, I've been motivated by really helping the general public own and manage their finances. There's so much to unpack here and learn for individuals. In my current role at Northwestern Mutual, I own and manage digital product management, specifically over our financial planning tools. We're responsible for building those out. These tools are ones that our advisors use at Northwestern Mutual to help deliver financial security to all of our clients.

[00:02:54] Jennifer Borget Awesome. Well, I'm really excited to hear from both of you, especially coming from these different points of view, and tips that you can give people. We're really going to be digging into the nitty-gritty of those emotions that financial conversations can carry for people. Money can just be really hard to talk about, especially if you have kids, and it can be really hard to find dedicated time to work through these conversations with your whole family.

All right, now what I have here are two situations Northwestern Mutual financial advisors commonly see when they're meeting with clients about their financial plans. I'm going to give them to you; are you ready for the first one?

[00:03:28] Aja Evans Ready.

[00:03:28] Jennifer Borget My partner and I just welcomed our second child, and we're feeling the financial burn that comes with raising kids, from daycare, doctor appointments, new clothes and a bigger grocery bill. Our monthly budget looks much different than it did before we had kids. Not only is it hard to get the budget under control, but we know we're not meeting our savings goals, and we can't seem to agree. My parents paid for college, so I think we should save for our kids' education, but my partner paid their own way and doesn't think we need to cover that for our kids. I think it's important to expose our kids to activities and vacations early on, but my partner thinks we should be saving more for a down payment on a bigger house.

We're so busy and have so little time to concentrate on our finances, but we know we need to get things under control. Where do we start? All right, Aja, can you help unpack what's going on here? I know this is a big question, but it's really common. Why is it so hard to take action when also feeling overwhelmed at the same time?

[00:04:29] Aja Evans First, it sounds like you're right—like there's a lot of overwhelm. You went through a major life transition. You added another member of the family. This is amazing. Congratulations. But with that comes more responsibility and more financial burden, if you will. Good things, but you have to be responsible for another person. And that can be really hard, especially given how old they are, whether they're young and they're little, and are you sleeping enough? I have been there. I also have two kids. So it is a journey. But we're going to hold your hand while we go through it.

First I would say to relax. I want you to pause. I want you to breathe. I want you to take a nap if you can. I want you to work out, go outside, talk to a friend, something else to just reduce the stress. And now we can talk about your money. So, what is coming up? It sounds like you and your partner need to align on what your financial goals are. It sounds like you want to save for college. You might want to be buying a home. You also want to save more just in general. There's a lot going on, and we cannot tackle this all at the same time.

So, how do you two align on a “money date”? I want you two to feel as calm as you can so you can come together and align and prioritize what your financial goals are. So that could be Hey, we do want to get a bigger house, but I also want to save for college for the kids. How can we do this? What can this look like? And then figure out a way that you don't have to feel like you need to do all of it immediately. That is what's going to really add to overwhelm if you're feeling like you need to do all of this stuff yesterday, and you're feeling really behind. Getting on the same page together is going to be really, really important so that you can move forward with the steps that you're going to take in your financial plan.

[00:06:11] Lauren Yoder Another idea is to potentially bring a financial planner into that money date conversation. (Nothing says “date” more than with your spouse and a financial planner, right?) It's really a finite, set amount of time that helps you keep on track and in focus of what your goals and priorities are. And they may actually help you resolve some of those differences if you reach any sort of stalemate.

[00:06:33] Aja Evans I couldn't agree more with that. I think a lot of times people don't realize that you might need the extra support. You might need to say, Hey, this just doesn't feel like it's working for us. And it doesn't mean that we aren't working; it means that our money plan currently is not working. What do we need? Who do we need to bring in that might be able to support us so that we can go through this together and feel better?

[00:06:55] Jennifer Borget Yeah. Sometimes you hit those roadblocks, and you're like, I don't know what we're supposed to do here. I haven't been here before. I mean, that was something that my husband and I were dealing with when we got married. We were so young. And it was like, Okay, we don't know how to do this. And there are people who know more than we do who can help you with that.

[00:07:13] Aja Evans Totally. Also, I want to add that I think a lot of times people just assume other people are doing it “right” (in quotes) and that they know exactly what they're doing. And I say this as somebody who—it is literally my job to talk to people and to talk to couples about how you navigate this and what's coming up. And I still had trouble when me and my husband were joining our finances. I was like, Oh goodness, my whole check is going into this joint account. This is a change for me. This is hard. Even though we were both aligned, I still had a period of getting used to it and just adapting to the discomfort of the new system.

So, I want to just give it that shout-out to people to say, Hey, it might feel uncomfortable in the beginning. It's because it's new. And as long as you two are really communicating and understanding that you're coming from two different money stories ... I don't think we talk about money in depth in that way enough, especially with couples, to say, Oh, I didn't know this is why it felt so important for you to upgrade our home and to be in a bigger home. And this is coming from part of your story. Oh, I didn't realize why it was so important for you to want to pay for college. I get it now. So I can give grace to you as my partner, somebody I love that wants to build a life together, knowing that this is really important for you. And I understand why now.

[00:08:34] Lauren Yoder In fact, even when you meet with an advisor or really start to put the effort into a financial plan, this is not a one-day solution. This is not “all your problems get resolved immediately.” Similar to how when you work on maybe wellness goals, losing weight, it's not a one-time thing and all your problems are solved. You don't go to the gym that one time and all of a sudden you've hit all your targets. I think of it very similarly.

The priorities are important because it helps you determine in what order you're going to tackle them. And just having a plan in place, even if you're not solving for everything today, is something that really helps people feel that peace of mind. Okay, I know I'm not paying off my debt tonight, but I have a plan in place for how I'm going to get there eventually. I know I'm not going to have all the education savings done for my kids next week, but I know I'm going to start saving in the next six months, and I feel better even if I'm not taking immediate action on any of those things right now.

[00:09:38] Aja Evans I would also add the part of celebrating your wins. I completely agree with what you're saying, Lauren, in terms of Hey, you don't have to do it all right now, but celebrate the fact that you are doing something, that you have made the plan, that you are taking the steps no matter how small they are. Even if it's Hey, we saved an extra hundred dollars this month, that is worthy of celebration because that will also keep you motivated while you are moving through the whole plan. And it could be anything, whether it's paying off debt or saving for a home or college education. These are all really big deals, right? There's a lot of money involved. So celebrating your wins as you're doing that can really help you stay motivated.

[00:10:22] Jennifer Borget All right, thanks. These are some great insights. I think there's some really good takeaways here that can be helpful in getting on the same page financially.

Let's move on to our next scenario. Here it is. When we got married, we decided to combine our finances. We've agreed to really focus on saving for a down payment on our first home together, but our savings are not building as quickly as we'd like. When we sat down to look at our monthly spending, I realized my partner was carrying debt that I didn't know about. How are we supposed to make progress on saving when we have to pay down debt? And what else might I not know about?

Now, this is an interesting question, and it's more common than you think. In fact, a survey from Bankrate found that 42 percent of U.S. adults who are married or living with a partner said they've kept a financial secret from their significant other. Aja, I know you've talked a lot about financial infidelity. Can you help us understand where this comes from?

[00:11:12] Aja Evans I will always say it's hard because money is hard, right? Emotions can be really hard. Being vulnerable can really be difficult for some people. So it's important to recognize that this is just kind of uncomfortable, and that's okay. It doesn't mean we avoid it. It means we need to communicate a little bit more around this. And financial infidelity is a huge one.

What financial infidelity is is having a deeper, honest conversation about all the parts of your money life. It doesn't mean that each person, if you're a couple, needs to know exactly what's in the account and needs to have access to the account. I really want you guys to do what feels right for you as a couple and as a family, but I also want to make sure that there's honest communication and transparency. And that's when we start to butt up against Hey, you hid this from me, or I didn't know that this was going on, or did you lie? Did you not share this? Was this a lie of omission? And that is when trust can really start to break down.

That's really when you share an “I statement.” That's when it comes from “How do we communicate in the best way?” I felt really insecure about it. I felt I was too vulnerable. I'm embarrassed. I have a lot of guilt. I have a lot of shame. And these are a lot of the emotions that my clients come to me and share. This is definitely coming from all of my experience, that guilt and shame and being vulnerable and feeling like I could, I should have managed my money better. I can't believe I'm at this point. So that we're shifting away from Oh my God, I was lying; this is why it felt really difficult for me to be honest. This is why it felt so shameful for me to be honest. Now, what can we do to make sure that we are remaining in communication consistently and being transparent? And that's when we romanticize our money during a money date to just say, Okay, how can we talk about this more regularly?

[00:13:07] Lauren Yoder One of the things that I noticed as a success within even this example is the idea that they have had some conversations around goals and things that they want to achieve together, which is a really good step. It feels like the intent is there. What I might suggest from a more practical and tactical standpoint when it comes to financial planning is going back to what I would refer to as the “cleaning out the closet” phase of your finances, which is really getting it out there with a financial planner.

One of the very first steps is going to be creating financial statements. The reason this is important is because it gets everything out there. It's a really nice view of all of your finances across the board. And it's really hard to keep things hidden or bury them for anyone, really.

The first financial statement that would be created is a cash flow statement. That just looks at everything you have incoming from a cash flow standpoint: your income, your salary, all of those pieces. And it takes a look at everything outgoing. So, any of your expenses, any of those bills that you're paying, any debt payments that you're making, those would all be captured there. An advisor can look at that, and take a really honest and clean look at that—again, an objective third party to help see if there's any discrepancies there.

The second one is your balance sheet. This is a really nice look at your net worth. It takes a look at your assets and your liabilities. So, do you have any assets of value, like a home or a car or things like that? And it compares against your debt and your debt balances, and it gives you a really nice starting point of where you are in net worth.

Just these two components, before you even get to what you're achieving or how you're going to do it, lay out and paint a really nice foundation of what your current situation is that you're dealing with. Now we know what our priorities are. We've talked about those together. Let's figure out how to work toward those together, knowing where we're starting from and having a really nice, clean view of that. And it takes a little bit of the emotion out of it as well.

[00:15:13] Jennifer Borget When is a good time when you're in a relationship to maybe talk about how much debt you have or some of your goals or things like that?

[00:15:21] Aja Evans I would definitely say when you realize that you're getting serious. I always tell singles and individuals as well as couples when I'm working together, There are two things that you need to make sure that you have conversations about, preferably before you get married, but at any point it's going to be really important. And that's going to be children and money. I want to make sure that you two are both on the same page. You both are really clear about what you want, expectations, lifestyle, how you want to live together. And that's a really exciting time to dream, and to get excited about what the two of you can create together. But I would say the earlier the better, but it's okay if you haven't. Now is a great time to start as well.

If everybody understands Hey, this is what we're driving toward. These are our goals. How are we going to accomplish it? I feel like we're in this together. We are a team trying to accomplish it, it just feels so much better, and it helps you both feel comfortable.

[00:16:17] Jennifer Borget Lauren, when do you usually see people coming to meet with you? What stage of the relationship is that usually?

[00:16:24] Lauren Yoder Generally when they're approaching a major life event, so wedding planning would be a really good example, or right after they get married. They want to start thinking of the future together. I agree with Aja that the earlier the better. (Is a credit score too much to put on dating profile?) Those conversations are so important. And you can kind of get a sense of them, even if you're not talking about your specific salary or what it is. You can sense people's motivation or the way that they think about money much earlier on. So even if it may feel a little uncomfortable, I think there are ways to get a sense of that really early.

[00:17:07] Aja Evans I think a lot of times people totally make the assumption that everybody knows what they're doing with their finances and are talking about it all the time, and they're just doing it better. And I want to let you know that is not the case. You are not alone. There are a ton of people who feel like, Hey, I want to understand myself better. I want to understand my relationship with money better. I want to understand my partner and our relationship and talk about it more frequently. So if this is something that you two—or just individually you're working on, I want you to know that you're definitely not the only one. Most people are kind of trying to navigate what this means for them as well.

[00:17:42] Lauren Yoder Where I've seen a lot of peace or calmness when it comes to finances is people that have established long-term healthy habits: those ongoing conversations but also the ongoing check-ins with their financial planners. They view it as a lifetime relationship, not so much as an episodic thing where This thing happened to me. Now I'm feeling stressed. I need to go seek out some help. The more that we can establish or put it in our routine or create those habits, and just make it a part of our lives, the more prepared we are for upcoming changes, the more resilient we are to changes in our finances, and the better prepared we are as opposed to reacting to them after they happen.

[00:18:28] Jennifer Borget Financial planning isn't something you do alone. Doing it well involves real conversations with your loved ones and a financial advisor. Getting your values and goals out in the open can help you make better money decisions that get you to where you want to go. But it all starts with the conversation.

If you like what you heard today, please subscribe and leave us a rating and review. You can also visit NorthwesternMutual.com/podcast to explore additional planning resources and past episodes designed to help you find A Better Way to Money.

Northwestern Mutual is the marketing name for the Northwestern Mutual Life Insurance Company, NM, and its subsidiaries, Milwaukee, WI.

Not all Northwestern Mutual representatives are advisors. Only representatives with advisor in their title or who otherwise disclose their status as an advisor of Northwestern Mutual Wealth Management Company and NMWMC are credentialed as NMWMC representatives to provide advisory services.

Aja Evans is not affiliated with Northwestern Mutual, and the views expressed by Aja Evans do not necessarily represent those of Northwestern Mutual or its subsidiaries.