How to Improve Your Relationships with Financial Empathy

If we are honest, we all want to improve our relationships, especially in personal finance. We have an idea of what the perfect relationship may be. It could be someone you know personally or from a favorite television show or movie. It’s important to remember that what you see in others may be the ‘highlight reel’ of their lives, the parts they want others to see. Reality might be a less rosy picture. As to those characters you connect to on-screen, they, along with their stories, were created by writers for our entertainment and are probably entirely fictitious.

        To obtain the kind of relationships and financial success you want, you need to focus on yourself, your money beliefs, and those of your partner - not the fictitious representations of people across the airwaves. Examine the emotions and stories that developed from your earliest memories of money. Understanding each other’s money history is part of financial empathy, and working on financial goals is pivotal to your future financial (and marital) success.

         Through financial empathy, you can find common ground, enjoy open communication, and develop shared goals with your partner. This, in turn, lends itself to achieving your savings goals and building the financial future of your dreams together.

How to Improve Your Financial Empathy

         To develop financial empathy as a couple, you must first start by individually looking at how you relate to money and what helped form those ideas. Understanding how your family system worked and your first money memories clarify how you each feel about money. Did you come from a home where there seemed to be money issues? Was there a fear of not having food on the table or a roof over your head? Or was your home one where there was enough, where you never lacked for anything and received what you wanted without question? Perhaps your family worked with financial professionals, and your partner did not.  Can you see how, as individuals, your understanding and expectations of money may be different based on how you each grew up?

         When you form a partnership and home together, a suitcase of money stories, emotions, financial secrets and expectations comes along with you. You each unpack them, putting them in the closet. Maybe in that back corner. Out of sight, out of mind, yes, but still very much a part of that new relationship you have, whether you can see “that baggage” or not. At first, you may not even recognize that your stories may differ. Or you ignore them. After all, differences are not a big deal until they are. Until you start talking about things way bigger than that new pair of designer shoes your partner just bought or whether you can go out to dinner together again (for the umpteenth time this month).

        When the discussion turns to, say, owning a home, whether one of you should stay home to care for the kids, or when to retire, the hidden stories are moved to the front of that closet, and you find out if those stories are different or possibly similar—at least so long as you’re willing to actually look at the stories. 

        I want to introduce you to a couple of types of empathy. They are cognitive empathy and emotional empathy. Cognitive empathy is an ability to understand another persons emotions and thoughts while emotional empathy is the ability to feel another persons feelings. Sometimes, we have a lack of empathy because we have not taken the time to get comfortable with perspectives different from our own. Our level of empathy can also be attributed to the experience of receiving empathy from others. An empathetic relationship is one in which we feel known and accepted for who we are without judgment. This is especially rare when it comes to our money matters where we haven't experienced loving eye contact and open conversations. 

        The role of financial empathy has become so important in financial services that the Journal of Financial Planning regularly publishes articles on financial empathy, and the Financial Planner Board of Standards Inc. has now required a new CERTIFIED FINANCIAL PLANNER™ to study the psychology of financial planning. Your money mindset as a couple about building trust around common goals and financial health will determine the outcome of your personal finances. 

Your Successful Path to Your Shared Financial Dreams Is Honest Communication

         If you haven’t already done so, now is the time to take a deeper look at these emotions, stories, and beliefs about money and fully understand how they affect each of you and your relationship. Yes, before developing your spending plan, building your emotional intelligence will take you a long way. Exploring your personal experiences with money and understanding the other person's perspective will lead to healthier financial conversations. This will guide your understanding of your partner's perspective and your own, leading to more financial empathy. Ideally, you have already begun the process, but the good news is it’s never too late if you haven’t. This is where you may need to go beyond financial advisors and work with a Financial Therapist who can guide you through effective communication and bring clarity to what you and your partner feel and understand about money. Strong relationships create space for overcoming financial difficulties and put team members around them to help them develop the best way for their particular financial situation. 

         As you listen to what your partner says, don’t just hear it but truly listen. Active listening involves putting yourself in their shoes to try to see it from their perspective. The first step is starting with reading body language and facial expressions to understand your partner's emotional states. You must learn to understand why they feel as they do. You may not agree with them because you had different experiences in your family system, but the key is to understand why they feel as they do.

          Financial empathy is reached when you can reflect back to your partner the experience they’ve had with money and when they feel heard. Now, with your shared empathy, you can begin to talk about those important financial decisions, such as when and where to retire, how much you want to work, etc., and begin to create the life you want to lead together.

Finding the Magic and Joy in Your Relationship Again

         As a Financial Therapist, I have worked with couples who have lost the joy and wonder around their money. They’ve allowed the possibilities of what their financial resources can do for them to cease to exist. When you each remember that individually you have an economic history, and stories that impact your life, you find financial empathy, you can move forward. There will be a renewed financial intimacy so you can create shared goals and dreams for your future and find the magic and joy in your relationship.

         That rosy relationship you seek can be yours if you take the time and do the work. By listening and understanding your partner's stories, beliefs, and emotions about money, you can develop the financial empathy and intimacy needed to create shared goals for your future. What could be better than finding the magic and joy in your relationship again? 

       Ready for 1 on 1 support? Then Therapy Informed Financial Planning is for the two of you. I invite you to schedule your free 30-minute discovery call today.

Wishing You Healthy Love and Money,

Ed Coambs

MBA, MA, MS, CFP®, CFT-I™, LMFT

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