Teaching spouse about fire

[mcampbell]

So I semi FIREd to Thailand with about 60k a year at 4% withdraw rate. My wife is naturally frugal growing up here. She regularly doesn't think we are rich cause I don't buy any flashy things, rich people here have BMWs and Private appointments for Chanel bags. I'm worried if I ever pass away she will have no idea how to manage more money then she would have seen in multiple lifetimes. How do you teach your spouse how to manage index funds and proper draw downs? I'm a bit worried talking about it to much as she might think we are rich, and disrupt our real frugal lifestyle


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[aceyou]

Every relationship is different, but I'd think that it'd be important for both spouses to know approximately how much wealth they had.  My wife runs the short term finances, like making sure bills are on autopay, etc, but I run the long-term investments.  Here's what I do:

- Each year at the end of the year I make a summary of all the different accounts where we have money and how much is in each account. 
- In our safe I have the institutions, usernames, passwords, and any other pertinent info so she knows how to access each of these accounts. 
- At the end of the year I give an overview of how much we spent, saved and how much we gained in wealth due to gains on our investments.  I also outline a basic gameplan for saving and spending goals for the upcoming year. 
 
This let's her know where we are at, and it gives her an opportunity to ask questions and give her two cents on changes she'd like to make to the plan.  This reinforces the fact that we are getting wealthy fast BECAUSE we only spend about 50% of our income, and that this will allow us to get out of the race far faster than most. 

Maybe something similar could happen between you and your wife.  Maybe don't open the whole thing up to her right way, but be like "hey, in the case of something major, I'd feel comfortable knowing that you understand the basics of our finances.  Explain how your goal is for you to live as comfortable lifestyle as possible, while ensuring that we don't HAVE to work again, and that we will even be able to spend a bit more each year for the rest of your lives.  Maybe focus first on those kind of concepts, and then start fleshing out numbers as it becomes clear that she understands that having 1.5 million dollars doesn't mean you can spend 1.5 million dollars:) 

Good luck and props to you for you for thinking about this.  Your wife will appreciate this tremendously down the road, and it'll be good for you too. 

[steveo]

Don't tell her a thing. Every so often state geez we are tight with money at the moment.

[former player]

I'd usually say talk to her about it - there is the "get your spouse on board" thread in Ask a Mustachian, which you would need to adapt to "let's continue to be frugal so that eg we have security in old age and enough money for our kids to study at university in the USA if they want".

If you do die before her without talking about it and she then finds out about the money, she may feel you have been deceiving her all these years.  Which you won't care about, but might be bad for your kids and how they think about money.

The alternative is to keep quiet about it and set up a professional trustee to handle the money after you are dead.

[Abe Froman]

I agree with former player.

A true fan of JLCollinsNH.com - he shared a simple parable that goes as follows....(from his website)

Two close boyhood friends grow up and go their separate ways.  One becomes a humble monk, the other a rich and powerful minister to the king.

Years later they meet.  As they catch up, the minister (in his fine robes) takes pity on the thin, shabby monk.  Seeking to help, he says:

“You know, if you could learn to cater to the king you wouldn’t have to live on rice and beans.”

To which the monk replies:

“If you could learn to live on rice and beans you wouldn’t have to cater to the king.”



http://jlcollinsnh.com/2011/06/02/the-monk-and-the-minister/

[mcampbell]

I'd usually say talk to her about it - there is the "get your spouse on board" thread in Ask a Mustachian, which you would need to adapt to "let's continue to be frugal so that eg we have security in old age and enough money for our kids to study at university in the USA if they want".

If you do die before her without talking about it and she then finds out about the money, she may feel you have been deceiving her all these years.  Which you won't care about, but might be bad for your kids and how they think about money.

The alternative is to keep quiet about it and set up a professional trustee to handle the money after you are dead.

Technically she knows cause it was in our prenup. However cause I act poor like Steveo mentioned, she doesn't actively think we are rich. I've created an environment where we feel comfortable but, she doesn't have to think about it.

[mcampbell]

I'd usually say talk to her about it - there is the "get your spouse on board" thread in Ask a Mustachian, which you would need to adapt to "let's continue to be frugal so that eg we have security in old age and enough money for our kids to study at university in the USA if they want".

Thats quite a good idea, create a life plan and sell it to her. Now the education will be the hard part since she doesn't know much about stocks and what not. Did you teach your spouse or give books etc?

[former player]

I'd usually say talk to her about it - there is the "get your spouse on board" thread in Ask a Mustachian, which you would need to adapt to "let's continue to be frugal so that eg we have security in old age and enough money for our kids to study at university in the USA if they want".

Thats quite a good idea, create a life plan and sell it to her. Now the education will be the hard part since she doesn't know much about stocks and what not. Did you teach your spouse or give books etc?

I've avoided the problem altogether by not having a spouse.

[LadyStache in Baja]

My husband grew up on a remote ranch in Mexico without electricity, so I hear you on having a spouse who doesn't know what stocks are.

But he's learning. I talk about it all the time, in a casual fun way, and he's getting it. Honestly, it's a lot like his cattle thing he does on the side. He bought a cow from a friend. The cow lives on free-range land within a larger herd. So it get pregnant. Then that baby got pregnant, and on and on, and now we have about 11 cows.

It's likely you're wife has some experience with this type of investing? With the idea that you don't want to just eat all your cows right now, but rather let them grow into more cows. Or beans, or corn, or whatever?

Anyway, even if she doesn't, I'd stay away from handing out books, unless she asks, or maybe if she really likes reading (my spouse doesn't).

But what I do, is log-in, and show him the graphs on Vanguard. Look! We made $1000 in interest last year! Awesome! Free money!!! Or I'll show him the graph that shows contributions (look, here's how much we put in), and then interest (and here's how much we got for nothing).

He's getting more comfortable with the concept. I didn't make it like a sit-down powerpoint lecture, I just talk about it a lot in a natural way.

[mcampbell]

My husband grew up on a remote ranch in Mexico without electricity, so I hear you on having a spouse who doesn't know what stocks are.

But he's learning. I talk about it all the time, in a casual fun way, and he's getting it. Honestly, it's a lot like his cattle thing he does on the side. He bought a cow from a friend. The cow lives on free-range land within a larger herd. So it get pregnant. Then that baby got pregnant, and on and on, and now we have about 11 cows.

It's likely you're wife has some experience with this type of investing? With the idea that you don't want to just eat all your cows right now, but rather let them grow into more cows. Or beans, or corn, or whatever?

Anyway, even if she doesn't, I'd stay away from handing out books, unless she asks, or maybe if she really likes reading (my spouse doesn't).

But what I do, is log-in, and show him the graphs on Vanguard. Look! We made $1000 in interest last year! Awesome! Free money!!! Or I'll show him the graph that shows contributions (look, here's how much we put in), and then interest (and here's how much we got for nothing).

He's getting more comfortable with the concept. I didn't make it like a sit-down powerpoint lecture, I just talk about it a lot in a natural way.

Wife is well educated from middle class family here ;) I like your cow analogy. However I find most middle class people to be the worst with money, cause they are able to find decent paying jobs. I'm worried about things like market dips and they panic sell, or they help put family members with loans etc. lots of little financial lessons you learn to actually get to a point of FIRE. I would say average person even in America can't manage their budget well enough for this stuff


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[Playing with Fire UK]

I'm a bit worried talking about it to much as she might think we are rich, and disrupt our real frugal lifestyle

If you are genuinely worried about this (and I totally understand it, my spouse can be similar); I'd get a financial advisor and/or estate planner and set it up so that your wife gets a regular income in the event of your death, but doesn't need to manage it. If you have family or friends who can do this for free then great, if not then I think it is worth paying for.

I know this goes against the DIY philosophy, but when my spouse sees the money in our savings account (a modest e-fund), he starts thinking about going shopping. It would be really uncomfortable for him to know that there was money there but he wasn't "allowed" or "supposed" to be spending it. But if he didn't know about the capital, and just saw the income coming in he'd be far happier and more comfortable. I'd also be more comfortable knowing that his parents (giant overspenders) couldn't know that there was a giant pile of money for them to spend.

Have you seen Warren Buffett's plan for his wife? Basically the S&P 500 in Vanguard, take the income you need.