This is a repost of an article we wrote for Forbes, originally published on April 3, 2019.
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For many people, talking about money is one of the last things they want to do. When you’re single, it’s relatively easy to keep track of your own finances and financial goals, without having to discuss, plan and compromise together with a partner.
However, when you’re in a relationship, it’s important to maintain an open dialogue about shared finances and goals, and in fact, that dialogue can lead to stronger investment decisions as well. Misalignment around financial goals can often lead to friction that could put both the investments and the relationship at risk.
In a recent Honeyfi survey of 500 millennial couples, the majority of couples (71%) reported feeling stressed, overwhelmed, nervous, frustrated and/or confused about saving for financial goals with their significant other. This financial stress can often bleed into other areas of the relationship and put a strain on potential investment decisions as well.
On the other end of the spectrum, couples who were “very aligned” on finances and investing were twice as likely to report being extremely happy in their relationship and 59% less likely to fight about money at least once a month.
When it comes to investing in real estate together, getting aligned with your spouse on investing goals is a must. Just as misalignment on financial goals can cause tension in the relationship, misalignment on investing goals and investing strategy can lead to dissonance as well, especially for the larger and more long-term investments that you tend to find in real estate.
Of course, we all want to be aligned with our spouses on financial and investing goals, but it’s often easier said than done. Each person develops a different relationship with money over the course of their life due to various experiences, including their own family’s notions about money, the neighborhoods where they grew up, friends they had and more.
Because of this, each person has a different risk tolerance when it comes to money, and those risk tolerances in a relationship might not always align. Often, one person in the relationship tends to be more risk-averse than the other, and this can lead to disagreements on whether and how to invest shared savings.
But, believe it or not, this can actually be a huge advantage to your long-term investing strategy and growth. Let me say that again: Disagreeing with your spouse on investing strategy can be an advantage.
Think about it this way. If you tend to be risk-averse, and you were making all the investing decisions on your own, you might see a ground-up development deal and turn it down before ever giving it any serious consideration. Because you’re focused on all the risks, you might miss out on all the potential rewards on the backend.
On the flip side, if you tend to be more open to risk, you might come across a long-shot opportunity and take it without fully understanding all the potential risks, which could lead to unexpected losses down the road.
That’s why it can be so valuable to have an investing partner whose viewpoints differ from yours, even just slightly. Talking through the pros, cons, risks and rewards of each deal can help you find and create stronger investment opportunities and will make you both more comfortable and committed to the deal when you finally decide to pull the trigger.
This is why it’s so important to have regular and ongoing conversations, not just about real estate investment opportunities, but also about your long-term financial goals. To make it fun, plan financial date nights. Get some treats and a couple glasses of wine, and dream about your future together.
Before you break out the spreadsheets and the budgets, focus on your shared vision of the future. Where do you envision yourselves in five years? What are some pain points in your life today that you wish you could change? What does the ideal retirement look like for you?
Having a shared vision will put all the potential real estate deals and investment decisions into context, as you’ll both be aiming toward the same end goal.
If your spouse is more risk-averse than you are, be sure to give them plenty of time to do their own research and get comfortable with the real estate investing ideas and strategies you’re proposing.
Share blog posts, books and podcasts that you’ve found to be especially helpful in your learning journey, so your spouse can hear from other experts and start to build their own understanding and perspectives about real estate investing.
Real estate investing can be intimidating for those who have never done it, so be sure to give your spouse ample time to get comfortable with the idea. Be patient when they express doubts and ask questions, provide resources when appropriate and find ways to learn together.
Then, when you’re both ready to take the plunge, start with a low-risk real estate investment so you can test the waters. Once the cash flow starts coming in, your spouse will likely be much more willing to continue investing and to try other, potentially more aggressive, real estate investment strategies.
Overall, when embarking on a real estate investing journey with your significant other, remember that you’re in it together. Because real estate investments tend to be more sizable and longer-term than other types of investments, it’s important to talk through and gain alignment on investing strategy and investing goals from the outset.
Ultimately, by having these investing and financial conversations consistently and frequently, you are deepening your relationship, building a shared vision and increasing the chances that you’ll realize the financial and life goals you each have. Along the way, remember to dream about your future together, take risks together, support each other and of course, to have some fun as well.
