After work yesterday, I walked upstairs to our little office room and found my husband squirrelling away on a spreadsheet. He was creating safe withdrawal predictions based on index funds since 1990.
Mr YFG is a peculiar person. But I know his enthusiasm is the reason one day in the near future work will be optional for us. He is the only reason I’m interested in Financial Independence (FI). I wouldn’t have found it on my own. With this in mind, I wanted to share how Mr YFG got me involved.
The first thing to say is you and your partner don’t both necessarily have to be in the same frame of mind. It depends what you want out of FI. If the idea is that you’re both free of work, then you’ll probably both need to be on board.
Finances are probably one of the most important and oft-neglected items couples should talk about. If you aren’t even talking about finances yet then a discussion about a FI lifestyle change will be going too far.
But here’s my top tips anyway.
1: Show and tell
One of my common questions to Mr YFG every time I come home from work is what he’s read or seen that day that’s interesting. I want him to tell me about his day.
He’ll usually start on some spiel about the government or some study he read. Last week it was life expectancy. But more often than not, he will send me a link on WhatsApp to an interesting blog post he read.
He did this with Mr Money Mustache and Early Retirement Extreme. And that’s how I initially got interested. He let me read them in my own time. He asked whether I liked the post. What I thought. When I had a question, he engaged and explained how we could do the same, and what it would look like for us.
Before 2014, early retirement for me was age 55. I assumed that anyone for whom work was optional had a lot of money or had some help. I was resigned to the fact I would work until I was at least 55. The concept of Financial Independence was alien to me. But once I looked at other people who had rejected a traditional working life, I wanted some of the action.
2: Translate it into real life
Once I had read the blogs, I started asking my husband about the figures. The difficulty for me was that the FI figure seemed too insurmountable for me: we need more than a million pounds? W.T.F.
I couldn’t get on board with the idea that I cut our spending on coffees and clothes and then miraculously end up a millionaire.
I was too busy buying things to make up for my stressful day job, and treat myself to make the 60/70 hour weeks worth it. I’d resigned myself to this being my choice as I had so much invested (I had trained for 6 years at that point). The idea of retiring early was so alien.
3: Simple math
He input my wages, savings rate and our current net worth and then showed me the number of years until I would hit FI. Back then it was in the region of 10-15 years if I remember rightly. He had a rough idea of expenses and he put that in.
Mr YFG then pulled the levers (savings rate up, expenses down, wages up) by incremental amounts and showed me the huge difference it made.
He drew diagrams to show me how compounding worked, and how much your pounds saved today equates into years in the future. With each move of the lever, he showed me how my mandatory working life was dropping down. That’s what got me hooked.
The key was that he put FI in context. It’s easy to read a few articles.
But to see it with your own figures, and to see a realistic projection, is invaluable.
He showed me, with pictures and diagrams, how I could change my financial decisions now. How I could end up being able to freely choose whether I work or not. He showed me how close he was to FI (at that point) and what he started with. The penny dropped.
I doubt this would have happened if he just tried to explain it to me.
I didn’t change overnight, but my values did. Once you plant the seed of the idea, starting the journey is important.
5: Tracking expenses
In 2011, when we moved in together as a couple, Mr YFG started an expenses spreadsheet. He used it to track our bills and rent, and it started out as a purely functional thing. He also added in his expenses and income and tracked these.
It wasn’t until 2014 he convinced me to track mine too. I was spending all my salary and going into my overdraft. I didn’t know where my money went. After we had chatted about FI, I complained to him that the FI figure was impossible. He explained that to get a realistic FI projection I needed to track my expenses.
At the end of the month, Mr YFG asked me to login with him to my credit card and current account and we went through the transactions. This was the only way he was going to accurately work out my savings rate and where my salary was going.
Not gonna lie, this was very difficult to do.
It took me a while to agree to log my expenses. I was always honest with my husband (then boyfriend). Seeing what I spent in detail – the raw data – was literally like sharing my deepest darkest secrets. I was defensive and worried that he would think less of me for spending so much on things he would never dream of purchasing. Subscriptions, clothes, £150 at SpaceNK etc.
It was airing my financial laundry. Being honest I didn’t want to look too close.
6: No judgement
But he never judged. This is so important for getting a partner on board: don’t judge them. For the FI-minded partner, some decisions may not make sense. The instinct is to say “what were you thinking?!”
But please try not to judge. What was obvious to Mr YFG at the time was not obvious to me.
Mr YFG would log in to my accounts and copy and paste the numbers, and show me a totalling spreadsheet. After a few months, some material patterns started to show, and seeing the numbers made me realise where I was wasting my money. Mr YFG didn’t use that term; I did. Seeing the numbers (£600 a month on clothing and accessories) made you think: what have I got to show for it? It helps you put things in perspective.
When I share this story about showing him my expenses, there are generally two groups of opinions:
The first says that if you trust each other, you shouldn’t need to account to each other for your expenses.
The second says that if you trust each other you should bare all, and have complete transparency in where your money is going.
The problem is a point missed: it’s not about trust. It’s purely about optimising your financial life, and working out where your money goes is the first step on the financial freedom ladder. For any couple on the FI journey, it’s an essential part of your relationship.
Since then, Mr YFG has logged in and downloaded my statements, and can see everything I buy.
Top tip: buy surprise gifts in cash.