I'm on FIRE, how do I get my Wife on board?

[texasJeff1]

Team,
I just joined the MMM Community, but I have been a fan of FIRE for some time. 
My wife and I have been married for nearly three years, but she is new/skeptical of the FIRE/MMM lifestyle.  We are VERY fortunate, in that we make a great income between us and we managed to save a nice chunk of money each month.  However, due to my wife's upbringing, she was never taught the benefit of investing.  Her and her family have always hoarded money in savings accounts, living a life of zero risk and zero reward.  Anytime she there is a risk of losing money, she is extremely against it.

With that said, she's a reasonable, intelligent, forward-looking person who just has a cultural roadblock when it comes to investing.  What steps can I take to get her onboard and show her the value of investing in order to retire in the next 15 years.

Here is our breakdown...

My salary - $140k
Hers - $120K
We save roughly $7k per month after all our expenses, $175k in savings account

Targeting 2,500,000 in 12 years (age 52).

I want her to be on board and excited, how do I accomplish this?

Best,

TexasJeff

[DadJokes]

https://jlcollinsnh.com/2012/04/19/stocks-part-ii-the-market-always-goes-up/

The market, over time, always goes up. There have been dozens of corrections/drops in the last century. There have been wars, 9/11, the Great Depression, 2008, and more. Despite all of that, the market has risen at a greater rate than any other asset class over the last century.

I'd recommend reading that entire blog series and getting her to at least read the linked one.

[Wolfpack Mustachian]

It sounds like you don't need help on savings but instead on investing and potentially on pulling the plug eventually. The pulling the plug on the jobs part can definitely be put on hold, IMO, as it will be far down the road. The investing part and fear of losing money is a tough one as it's extremely emotionally based. We all are, in general, more afraid of losing than happy for winning. One thing that could possibly help mitigate this is to talk to compare your cost of living with what you have saved in a bank account. At $175k and your savings rate, you have enough money to live off of for months if not years. I'd try to focus on that as your security. Get a number she's comfortable with and keep that in savings. Then try to invest some of the rest if not most/all of it as it comes in. Show her information on how the stock market's returns are significantly higher than savings accounts for money that you're leaving in for the long haul.

Finally, definitely keep in mind that you guys being on the same page from a frugal standpoint is a HUGE step ahead of some people who come here with these questions. It's a great benefit, so don't get discouraged.

[Laura33]

Sounds like you need to help her re-frame what she means by "risk."  She is so focused on losing money in one fell swoop that she is guaranteeing that she loses money to inflation every year.  I would couple the education on the market (the jlcollins link) with education on inflation and the illusion of safety. 

Perhaps use the rule of 72 to illustrate -- e.g., if prices go up by around 4%/yr on average (which is pretty close to the historical rate -- this past decade has been a real aberration), then your savings will lose half its value every couple of decades.  OTOH, if you invest in the market and get a 7%-ish return (well below the historic average), then your investments will double in value every decade.  So you have $175K in savings now -- let's round to $180K for math.  If you keep it in the bank, then that will be worth about $90K when you're 60.  OTOH, if you invest it and get that 7% return on average, then just that money alone will be worth $720K when you're 60.  That is a factor of eight -- instead of losing half your value every 20 years, you are quadrupling it.  And even if you calculate that after inflation (so 7% return - 4% inflation = 3% "real" return), your money is still going to double every 24 years -- so you're still talking about having almost twice as much buying power vs. half as much. 

But all of that works only if she is persuaded by math.  And from her resistance to date, it sounds like she is not.  So in reality, you may need to help her understand more about the stock market itself.  It sounds so esoteric and complex, but at heart, every share of stock is buying a piece of a real company; so it's not gambling, like betting whether red or black is going to hit next, but rather buying a right to receive a piece of all future profits of a real live business.  Maybe you can do like people do with kids and get her to buy some shares of real companies that she knows and likes, just to get her feet wet and get used to the idea? 

[former player]

How does your wife feel about investing in property?  I mean, ideally low-cost index funds are the way to go, but if she is happier putting money into physical assets then looking at investing in income-producing property (rental houses or commercial, or farm land) could be a reasonable alternative and more culturally in line with what she is comfortable with.

The other thing is: because you are saving so much between you, it might be worth seeing if your wife would be happy putting just some of that 7k a month into investments.  Given your salaries I'm guessing you are paying a lot of tax, so showing your wife the tax-advantages of retirement savings could be helpful - because of the initial boost from lower taxes there's a big buffer before any investment losses bring retirement accounts down to where they would have been in any case without the tax-advantaged investing.

A final thought might be to split your savings, put your "half", or part of it into investment and her half into savings, and let time show the difference.

[socaso]

You save a good bit of money every month. It is not at all unreasonable to say that you want to start putting half the monthly savings into investments. Start by saying half and figure she may negotiate you down but don't take anything less than $1000 a month. Then you can share your progress with her and eventually she may become excited about it and want to do more. She may not, though. It's very hard to overcome your childhood programming about money.

You just need to gently but firmly tell her this is something you are going to do. The two of you have a big safety net and there's no reason not to branch you. You both contribute a huge amount financially, if you want to do something different you ought to be able to try it.

[Loren Ver]

No specific advice, but in the blog ournextlife.com the main author talks about going from high conservative to investing and how she chooses to mitigate risk so she can be confident.  Might be helpful for framing the conversation with your wife and get you closer to the same page on some middle ground.

Loren

[Buffaloski Boris]

I agree with your wife.

Put yourself in her shoes. She’s financially conservative or so it seems, and now her husband comes up to her with this wild-eyed scheme to quit work. Is this what she wants? Or is she motivated by something else? Also, what we seem to find even amongst financially successful is that it’s the savings more than the investment strategy that matters. Given your very robust savings to date, seems to me like y’all have the important part down.

I happen to be married to a very conservative woman and I will tell you this: she looks at investments much more holistically than I do. You might try to see it through her eyes. She doesn’t like economic risk. Great! Your joint investments should be very low risk. But risk also includes some inflation risks, so maybe that’s some small area where you might be persuasive. You might also want to look hard at expenditures that save you money in the future. Like owning your home free and clear. Or if you own your home outright, installing insulation or adding solar to save money down the line. Are babies in the cards? If so, bankrolling their future education using some of those savings might be a good idea.

There is more than one way to skin a cat.

[ericrugiero]

It would make sense to keep a very healthy emergency fund to make her feel safe.  If she has $100,000 in the bank that should easily cover over a year of spending or a major emergency.  Then you can look at investing the surplus into something that will grow.  Good index funds that buy the total stock market are pretty safe over the long run as long as you don't sell during the dips.  Maybe mix in some bonds just to increase the safety or add some REIT's to get some real estate. 

Make sure she understands that money that isn't making anything is really losing value due to inflation.  Spend some time looking at the effects of compound interest and how big a difference there is in 2% interest vs 8% over 20 years. 

Also, research the best place to put your cash.  2% interest in a CD, money market or high interest savings account is a lot better than 0.2% you could easily get.