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How to Plan Your Financial Future

Lesson 2 of 18

The Getting Financially Naked Playbook

Erin Lowry/Broke Millennial

How to Plan Your Financial Future

Erin Lowry/Broke Millennial

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Lesson Info

2. The Getting Financially Naked Playbook

Lesson Info

The Getting Financially Naked Playbook

There are two levels, in my opinion, of getting financially naked. The first one is this 101 level. You're casually dating, so you're gonna be talking about things like who pays for dates, how much are we spending on gifts, maybe birthdays, Christmas, the holiday season, how lavish are our dates, what kind of lifestyle are we leading together? And I will tell you that asking these questions of a person really does start to give you some context clues about their relationship to money. Now, you get to the 201 level, when you realize this is either someone I could marry or somebody that I could spend a good chunk of my life with. So it's time for full frontal financial nudity. And here's how we're gonna get there. Step one is preparing yourself. So I want you to take time to even physically write down what it is that you wanna talk about with your partner. What do you wanna discuss? And also, what is that you wanna be sharing? And then I want you to pick a location. Preferably at home, h...

opefully without any roommates around or parents, depending on your living situation. Please don't do this at a restaurant! Because let me tell you sometimes first at bat with getting financially naked doesn't always go perfectly. Tempers can rise, people can get a little heated, and if you're in a very public place, that just makes it all the more uncomfortable. So make this as comfortable as possible with one another. You're at home, maybe you get a six pack of your favorite beer, maybe you open a bottle of wine, if that's what you're into, totally fine, just make it a calm, relaxing evening. The next thing you wanna do is set a time. So let me tell you, the first time that I got financially naked, it was very, I won't say not tactful. I turned to my now husband, and I said, "How much student loan debt do you have?" Just, out of nowhere, didn't give him any context, and kinda blindsided him. And one, if you do that to somebody, they may immediately get defensive because it could sound accusatory depending on your tone. I also don't think I probably had the best tone when I asked that first time. But the other reason is you want to give that person the opportunity to go through the same step one process you did. They need to be able to think about what they wanna ask of you, and also determine what they wanna share this first time that you're going through the process of getting financially naked. Because, remember, this is an evolving situation. You don't have to just talk about every little thing the very first time you open up this conversation. It's something you can ease into. But make sure you let your partner know, hey, at seven o'clock next Saturday, I wanna sit down at home and have a conversation about our finances. You may even let them know ahead of time the kind of questions that you wanna ask so they have the opportunity to reflect about whether or not they feel comfortable answering that yet and if they wanna know the same of you. Next is to ready your poker face. This one is crucial through the process of getting financially naked because think about it this way. If you were to get physically naked in front of another human being, and they laughed at you or made a face or snickered or did anything else that made you uncomfortable, you're probably not going to get naked in front of that person again. Well, same thing when it comes to money. This is a hugely intimate thing for a lot of us. We've talked time and time again throughout this boot camp how taboo money still is in our culture and our society and how many of us don't like to talk about it. So the idea of bearing it all to somebody else and feeling that perhaps you're gonna get judged by that person, especially if you've made financial mistakes in your past, maybe you're still dealing with them today or trying to get over it, or carrying debt. You don't wanna say something and then see them go, huh! So, please prepare your poker face. Next, how do you actually start this conversation? That's always the number one question. I get it's important, I get that I should do it, but how? How do I actually open it up when we're sitting there in front of each other about to get financially naked? Well, it's not in the way that I did, where you just out of the blue ask a question about debt. One of the options is this awkward and honest start, where you say to your partner, I know this is an important next step. I feel a little awkward and uncomfortable about it, how do you feel? Breaking the ice, just admitting that this can be tense. And maybe you both feel great about it and that's wonderful, but typically not exactly how people feel. The other option, one of my favorite strategies, is this idea of sharing goals, and you almost kind of back door the conversation, if you will. You start by saying something like, what's one of your financial goals? Or, what's something you wanna achieve in the next five years? Your partner might tell you, maybe that's I wanna be able to take a trip to Europe. And you say, well, what's standing in your way? And that's usually the opportunity to talk about something like debt or anything like that. So it's goal sharing, it starts off with a positive, but then you can have a conversation about why that might be difficult to achieve or what is impeding your ability to reach that goal. So what is it exactly that you need to share with one another? I said full frontal financial nudity, and I mean it. I think you need to be sharing absolutely everything with a person that you wanna be sharing your life with. Now, does that mean right away, the first at bat in this conversation? No, you don't have to do this the very first time. But if you are going to commit yourselves to each other, especially legally, these are all things that you're going to wanna know. Including how much you each earn, the types of debt you have, is it auto loans, student loans, mortgage, credit card debt, and how much exists? I highly recommend sharing your credit reports and scores with one another. It gives you a sense of somebody's financial history and credit health. Your savings and investments, what you have now, as well as your financial goals. Where are we looking to go towards in the future? And financial goals is a biggie too, because it really also helps determine financial compatibility. Are you two really on similar timelines or do you have very different ideas of not only how money works, but the kind of life that you wanna be living in the future. Thinking about things like what does the next 10 years look like for me? Do I wanna always rent or do I wanna own? What part of the country do I wanna live in? Do I wanna have kids? Those are all financial conversations! Not just lifestyle conversations. As well as, what does retirement look like for me? Do I wanna live in a house in a particular part of the country for the rest of my life? Do I wanna be traveling around? Do I wanna be able to retire younger? Do I wanna work until a traditional retirement age? These are all key things that you want to know about your partner. And finally, go back to the very first segment of this entire boot camp, and talk about sharing your financial baggage. And the reason that this is such a critical part of getting financially naked with one another is because it gives you insight as to why your partner might behave the way he or she does about money. And it gives them insight about you. You can start to understand why there might be a compulsive spending pattern or why they are so dogmatically focused on saving. Maybe there's a conversation about a past history of financial abuse, so your partner feels very strongly about always having his or her own emergency savings fund that's separate from you that you have no access to. That's something that you need to be able to talk about. There's a lot that you can start to unearth when you begin to share your financial baggage. So I encourage you to go through that questionnaire we did at the very beginning of this boot camp with one another and talk about things like your first money memory. How does it make you feel? How did your parents talk to you about money? How did you learn about money? And just see if you can start to identify patterns about why you behave the way you do today. Next step, you wanna learn if you're going to have a team or an individual mindset together. And this is where I'll kinda bring it back to my own situation, when we were getting financially naked. Because you need to identify is it your debt and my debt, or is it our debt? Now, obviously, this can be a very evolving situation. If you're casually dating, it should be yours and mine. If you're getting serious, maybe before you actually get married, you wanna have a conversation about helping each other, that's completely up to you. But for me, we didn't tip into the our debt territory until after we were actually legally married to one another. But the problem is, sometimes you tackle this thing like an ownership mentality. And that's one thing that I noticed. When we started to talk about our hypothetical future as a married couple, my husband really did feel like his student loan debt was his debt, his problem, that he was bringing into the relationship. He had this strong sense that he was almost burdening me by bringing it into our marriage. And I said, well, I wanna be able to help pay it down because we're a team now. We're married, our financial lives are intertwined, and the fact that it impacts you does ultimately impact me as well. So, I should be financially helping get rid of this. And he at first, was a little bit resistant to that idea, because again, he felt like it was his, and he had responsibility to handle it. So we had to come up with a way to create a game plan so that we could compromise, communicate, and both come up with a way that we felt comfortable. So one of things that you start with is determining your goals, both as a partnership and as individuals. And even if you are married, you still should be having individual financial goals. Not every single thing needs to be totally a partnership in the sense of, for instance, maybe you have an individual career goal where you want your salary to go. That's not necessarily linked to your partner. So you wanna make sure that you're both having these individual goal settings and share them! Be accountability buddies with one another. You also wanna be deciding who pays which bills, how to budget, see where salaries are going, and what is your financial priority together? This is something that is going to shift over time. It might shift within the first couple months of you actually originally setting these goals. But you wanna make sure that this is an open conversation. Now, some of the time, particularly in this idea of who pays the bills, how do we budget, what's our priorities, you might find that one person in the partnership is much more interested than the other. I hear from a lot of couples where it's like, well, I just handle all the bills because he or she isn't interested in doing it. If that's the strategy that you have, that's okay, however I would always encourage you to make sure that your partner has the information at their disposal. 'Cause if something were to ever happen to you, they need to be able to know all the information, where the bank accounts are, the investment accounts, all the passwords, how to pay the bills, how much is owed, because you don't want them to be in a scenario of having to grieve you or take care of you, and you might be in a situation where you can't be paying them off and then they're also frantically trying to figure that out. So create some sort of document in your house. Print it out, put it in a lockbox, or whatever it is that you need to do to make sure that everybody has this information in case something happens to one of you. And again, as I mentioned earlier, it needs to be a flexible, evolving process because life's going to change, things are going to happen. So priorities will shift, even who pays which bills could easily be shifting over the course of your relationship. And then it's time to implement your game plan. So to come back to this idea of the ownership mentality, what we decided to do was have my husband's income, Peach's income, he was gonna have some of it go towards retirement and his emergency savings fund, that's now our emergency savings fund that we're building together. And then the remainder goes towards debt repayment. So the money that comes out of his salary goes towards paying off the debt and my salary handles our day to day bills and our savings and investing goals. So I feel like I am contributing in helping him pay it off because I'm handling kind of the day to day part with my salary and he still gets to feel some of that ownership mentality 'cause the money that he earns and brings into our relationship is going towards aggressively paying down his student loans. So that's a way that we kind of compromised so that we still could honor this idea of the ownership mentality but also honor the fact that I felt like I wanted to get rid of it quickly, and I can only do that if I'm here and I'm helping as well. And whatever you do, it needs to be tailored to you specifically as a couple. I'm not saying this is the end all, be all way of doing things, I'm just saying it's what ended up working best for us. And then you need to have a routine check-in. It can be once a quarter, couple times a year. I personally like once a month when you're starting out because it really gives you an opportunity to continue to touch base with one another, see how you're progressing towards your goals as a couple as well as individuals. It does not need to be a long, drawn out conversation, it can just be a quick 10 minute meeting where you check in on the accounts, you just touch base about your budget, make sure that you guys aren't over spending. The other reason that it's important is because depending on how you're deciding to bank as a couple, if you're doing two separate accounts, maybe you're doing joint, maybe you're doing a hybrid, you wanna make sure that the right hand knows what the left hand is doing. It becomes very easy if you're not 100% joint to have one person spending a bit more and the other person not realizing it and then you can easily blow your budget, frankly, on accident. So that's another reason the routine check in can be very helpful, especially as you just start to foundationally be building your financial life together. Before I move on to red flags, does anybody have any questions about the play book or their own experiences that they might wanna share about how they addressed this conversation or questions? Yes. So what, how do you usually start the monthly meeting, and like, what does that look like? What kind of points do you go through or I dunno. What's a way to make it a little bit more fun rather than just like a business meeting? Well, depending on what you enjoy as a couple, the fun part could be food or alcohol and bringing that to the meeting. Or having a really nice dinner and then casually having the conversation as opposed to, I'll be honest, because I'm a money nerd, we definitely break out a spread sheet and go through it. But that's because it's something that's actually joyful for me, I enjoy doing that. But you don't have to be that prescriptive about it. It definitely can just be more of a touching base. You could pull up the accounts real quick ahead of time and just kind of quickly glance at the numbers. But it could just be a conversation where you're just checking in with one another, maybe over a meal, maybe just at the last day of every month, whatever you want it to be. If you do have debt repayment goals, it is actually pretty encouraging to have a spreadsheet part of the component because then you can be checking and seeing like, hey, we knocked a grand off of our debt this month, like, let's get excited! Updating the total balance, let's keep going. That's really motivational. So I would say just kinda depends on what sparks you and gets the two of you excited. I like the idea of having a consistent time every month. So maybe it's the last day of every month, you check in that night or maybe it's the fourth Friday or whatever you wanna do, but having that kind of timeline, it does ensure that it becomes habitual and it's something that you guys always do instead of, well yeah, we forgot to check in last month. I would just share with regard to language and speaking about this, not with regard to finances directly, but in the past, specifically regarding cleaning communal houses, changing the role of who calls the meeting or calls the house cleaning can help to change who seems to be vilified in the situation consistently. So if you have an alternating enforcer, so to speak, that was who was the boss of the house, is like, oh, you didn't do your job! It's not the same person over and over again. So maybe, Paulette, switching who calls the meeting could help to add some fun, who knows. Like, hey, my turn, we gotta talk money, let's go. Yeah, I really like that, that's a great idea.

Class Description

Short on time? This class is available HERE as a Fast Class, exclusively for Creator Pass subscribers. 

According to the experts, millennials won’t be able to retire until they’re about 75 years old, and that’s if they’re lucky! And some data shows that three-quarters of Americans are not ready for retirement at all. No question about it, people of all ages and backgrounds are woefully unprepared for their golden years.

Most of us are too busy worrying about our current debts and daily costs of living to even think about retirement. But Erin Lowry shows you that putting just a small amount aside each month as early as possible will yield great results. She’ll give you solid advice about how to avoid excessive fees, costly financial instruments, and shady financial advisors.

Erin will also address how to talk about money with the important people in your life, especially those with whom you’ll be sharing your finances. It’s the best way to determine your financial compatibility and help you achieve your financial dreams.

In this class, you’ll learn how to:

  • Make compound interest work for you so you can retire at a reasonable age.
  • Find the right retirement account for your specific needs.
  • Figure out your level of risk tolerance and time horizon.
  • Choose an honest, helpful financial planner or advisor to help you reach your goals.
  • Navigate awkward conversations about money and feel less vulnerable.
  • Decide if you want to work as a team to achieve your financial goals.
  • Identify red flags about people’s financial habits and lives.

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Chris Sundell

Amazing course!! Great instructor! Everything that's essential is covered. This has been the kick starter to my new year. Thank you!