For a long time, I wanted to write about such a hard topic: How to convince your partner to join forces with you on the journey to financial independence.
I mean, is there any other way?
I find it hard to believe there is a relationship in which, when things get more serious (ie living together, kids etc) money management happens in silos. As more and more decisions are taken in common in a household, I think it would be a nightmare trying to agree on everything if you don’t share the same financial path.
Taking shared decisions in a relationship or marriage is hard by itself, let alone when throwing money into the equation. So I believe it’s crucial to try and settle how we handle our finances as early as possible.
I made that mistake of not planning for it which led to frustration, some unnecessary arguments and disappointment until we sorted it out in the end. That’s why I want to prevent other people from making the same mistakes! Now our life together is much much happier.
In the beginning, my money is my money, your money is your money may work for some. But after a while, you realise that big purchases, for example buying a house require some cooperation. That’s because people have different needs plus not all incomes are equal in a family.
Explaining clearly what the destination is
Before going any further I want everyone to understand what money is. Money is a tool for future spending. It’s a way for our future or present selves to buy a limited number of goods in an unlimited pool of options.
And here’s why things get tricky. Financial independence is really a movement the core of which is to prioritize buying your freedom first. It teaches you that you can defer some spending now, in order to buy your time instead.
I have read hundreds of articles on FIRE, extreme retirement, call it what you want but it all boils down to this: Buying your freedom first before buying anything else. How? By saving, investing and pursuing financial greatness by staying the course through good and bad times.
This way you stop worrying about money problems since all your basic needs are covered by your passive income. You are eventually left with plenty of options with what to do with your time. Maybe you keep working because you love your job, maybe you don’t. Maybe you pursue hobbies, volunteering or charity. Or start a side business you always wanted to do.
This is how I was wrong trying to sell the FI product to my other half. I was being mindful with spending but was failing to explain what I really wanted to achieve. So I believe the first milestone in trying to convince your partner about financial independence is to agree on some shared goals.
My goal is to achieve this state of not worrying about money bills as early as possible. I mean, who wouldn’t want that? Raising kids would also become much easier. The usual office stories are that both parents work and one needs to work from home some days because the nanny cannot be present.
Now imagine that not one, but two parents are present to raise a kid. How much difference would it make to their education as well as your happiness from spending valuable time with them?
I believe having the option of not working sometimes is an easy base to agree upon.
Talking your partner through the financial independence mechanics
It’s important not to go all-in with overwhelming numbers when trying to convince your partner in the beginning. But when he/she is ready then prepare to give some answers to the “I’m up for it, tell me how!” questions.
This is not an easy task. That in order to reach that goal you need to try hard. To change your mentality and the whole conventional way of living.
By conventional, I mean the classic middle-class way of thinking: Saving 10% of your income, inflating your lifestyle when you get a pay rise, buying stuff you cannot afford on cards, buying a luxury car etc.
This is why explaining what money is should come first.
Money is a tool that can generate money for you. Wealth comes from putting money to work when you are not. This statement feels like it’s coming from the world’s laziest person but I can assure you, it’s about having options not about quitting working.
Rich Dad Poor Dad explains the money tool better than anyone, with property investing. I recommend reading that book to every person who wants to understand how to use money as a tool for financial freedom. Like the rich are doing it.
Saving 10% won’t cut it for investment returns which lead to financial independence. Thinking unconventionally is the trickiest bit. You need to save 50% of your income or try to earn more or lower your expenses. But equally important to start investing so you benefit from the money your money can generate. That’s the hard truth.
Life optimisation can play a huge role in lowering your expenses without sacrificing happiness. Get a cheaper gas & electricity bill, start walking/cycling more instead of paying for commuting, swap food delivery for home cooking, buy a used car etc.
The best lifehack for us is taking advantage of geographical arbitrage. Basically, we want to move back to our home country, Greece at some point, which happens to be a cheaper one compared to London. I mean, you don’t have to look hard to find a cheaper place than London 🙂 Essentially we will speed up our FI date by simply targeting half of our expenses without giving up on lifestyle.
As always, you can also earn more. Earning more, however, won’t help if you suffer from lifestyle inflation. Suffering from lifestyle inflation can make things worse by pampering you to a more expensive lifestyle which will require a higher passive income to sustain.
A rough rule of thumb is that you need 25x times your annual expenses in invested assets in order to cover them and not run out of money. Are your annual expenses around the 40,000 mark? You’ll need 1,000,000 invested in the markets. The number may look big but if you do the math, you will see anyone can do it.
Expect a bumpy ride!
Expect friction when having those discussions. Trying to explain that maybe 50% of the things you already own did not deliver the level of happiness you expected to get is a big hit to our ego. Can money buy happiness?
Self-criticism is underrated here so let that sink for a while. Mrs Foxy and I had many conversations, the whole story was not a 2-hour discussion over Friday night dinner.
It was a gradual move to a better path, that of financial freedom.
We faced psychological obstacles on the way as well. Actually, that’s an important one. Mrs Foxy was not always feeling “she’s worth it” as if she didn’t work as hard as I did for it. Although I do contribute more money to our investment pot – mainly because I happened to work in a more profitable sector here in the UK – it’s not always about money in life. She contributes by keeping me sane and we both help each other to stay the course.
Start small and track your finances
You know the quote: A journey of a thousand miles begins with a single step.
If you start with a big bang you’re probably going to quit soon. That’s why it’s important to take small actions and gradually replace bad habits with good ones.
Once you have agreed with your partner this is the journey you want to follow, take some action. Save some more money and invest it.
Show the power of compound interest, your dividends statements, your money from rental properties etc. It will soon feel you get money “for free” and will get you both pumped up and motivated to keep going.
We review our path every 3 months or so, without looking at our investments every week. Then we get some excitement and life moves on.
The above version can be as extreme as you want it depending on what you want to achieve. Financial freedom for you may be to work part-time and generate some cash without a stressful Monday-Friday 9-5 job.
Could be to have the option to walk out of a useless boss argument without worrying much about losing your job because you cannot pay the bills. Which is why some FI enthusiasts call this having enough “F*ck you money” in your bank account.
But it should never be miserable. If you think that sacrificing the now and being miserable for 10 years will make a couple happy once you hit financial independence you are in for a surprise. It’s about understanding happiness and optimizing your life and your spending to be happy now AND later.
However you call it, it’s a path worth following with someone on your side.