Month: April 2023

Part One: Conversations Couples Should Have About Money

For many, money is a source of stress, conflict, and fights within their relationship. In fact, studies show that money issues are the second-biggest cause of divorce among American couples, second only to infidelity. Yikes! That’s a daunting statistic. 

Luckily, your finances don’t have to be a source of strife–talking about money and solving problems together can actually enhance the strength of your relationship. Conversations about money with your spouse or partner can strengthen your connection and deepen your relationship.  

Don’t believe me?

That same survey found that 94% of respondents who say they have a “great” marriage discuss their money dreams with their spouse, compared to only 4% of respondents who say their marriage is “okay” or “in crisis.”

How Can You “Jump Start” The Financial Conversation In Your Relationship?

I’ve spent the last 15 years talking with clients about the intersection of their relationships and their money. In that time, I’ve developed an approach that enables couples to learn about each other, build a financial system, and improve it over time. And the best part? It only takes three unique conversations. 

In this blog series, I’m going to share with you the best way to hold those conversations, what to cover, and how to structure them, as well as how to deal with the emotions they bring to the surface. We’ll also talk about why it’s important to have these discussions and go over some broader issues around when to merge finances and when to remain independent. Are you ready to start talking? Let’s go.  

Why Have Conversations About Money? 

Your financial goals shouldn’t just be about how much you accumulate. Ultimately, if you design them correctly, achieving your financial goals will help you live the life you want while making the impact you seek. For example, one or both of you could want to take a sabbatical, change careers, start a business, join or start a non-profit organization, see your families more, spend more time with your own family, etc.

Having a partner with the same goals makes you much likelier to achieve them. And, if those of us in relationships are doing it right, working on finances with a partner can lead to stronger relationships. Ideally, your relationship helps you succeed at achieving your life/financial goals, and your financial progress helps your relationship. It’s a delightful virtuous cycle. 

Who Is In The Conversation?

Some people don’t like to think or talk about money. Others enjoy discussing their finances and don’t find it stressful. 

Many people can discuss financial topics only when they feel supported and calm. Others like to hash issues out through dialogue that can feel a little like an argument. 

Some people love to daydream about the future. Others get nervous thinking past next Friday. 

The point is that people are different, and your partner may not approach financial topics the same way you do. Actually, they probably don’t. 

Even the closest couples have different interest levels and conversational styles when it comes to talking about money. That’s great! It’d be super boring and probably stagnating to be in a relationship with someone just like you. It could be that one person is organized, follows through reliably, and has an interest in financial matters. Perhaps the other one prefers to help the household in other ways, or to take the lead on other important family projects. 

One of the nice things about being in a relationship is that, since different people are good at and prefer different things, we can often work it out so that we do more of the helpful things we enjoy and fewer of the ones we especially don’t like. The key is to know who is in the room and figure out the best way for both of you to have a good, productive, and bonding conversation.

So think about your partner – the way they communicate and how they feel about money – as you plan for these three conversations. In this blog post, I’m digging into Conversation #1. Subsequent blogs will cover Conversations #2 and #3. It works best if you approach them in order, and it will become clear why.

Onward!

Conversation #1: The Foundation

Before you talk about how to divide up bills or other practical details, go deeper to build a strong foundation through an emotionally rich conversation. In other words, save the nuts and bolts for later! 

The key thing in this initial conversation is to really listen to each other. That means you can’t just wait for your turn to talk. Be interested! You are about to learn some important stuff about your partner’s triggers. What you find out could unlock a whole new level you can achieve as a partner. The things you hear are likely to be very significant. Your partner might not even know how important the themes they raise are, and may even, themself, discover some important truths in the process. 

Set aside time (about 90 minutes – could be more, could be less!) where you won’t be disturbed. Put your phones away–really, put them away. It is crucial to make sure no one is hungry or tired. Remember to take care that both people are sharing and being heard well. Begin by outlining your hopes for the conversation. I have included some prompts I often use when facilitating this conversation. You can use these, create your own (let me know what you come up with!), or try freeform (but beware it is a lot harder that way):

• What is your first memory of money?
• What did you learn about money in your family growing up?
• When your parent(s) (or other adults in your household) worried about money, what did they worry about?
  • If you think they didn’t worry about money, explore why the conflict was hidden instead of revealed. It’s possible they never worried, but that is very, very unusual. 
• If people in your family fought about money (most people do), what were some of the fights about? 
• When you are anxious about money things, what’s the anxiety all about? What do you worry about?
• What financial aspirations do you have? Are there specific things you want to have or specific things that you want to do? 

We often inherit the worries of our parent(s), or other people who cared for or had an impact on us as kids. Those worries probably didn’t help our elders much, and now, since our situations are very different, they almost surely won’t help us. 

During this conversation, many people begin to recognize for the first time how their own anxieties are inherited and have little or nothing to do with their own situation. If this all seems a little “woo woo” or emotional – it is! 

If you don’t understand the emotional basis for your money fears, you’ll have a lot of unnecessary fights. Plus, these conversations tend to be super interesting. If you find emotional conversations are new, just remember that the key is to be interested, make space, and care. If you ever notice that you (or your partner) are beginning to feel frustrated, defensive, or uncomfortable, make sure that you resolve that first since couples usually make progress when they are both feeling safe and comfortable.  

Concluding the Conversation

Ultimately, this foundational conversation should help you to feel safe with one another – even if there isn’t a clear path forward to establishing aligned financial goals. That will come with time. Your initial goal is to understand where your partner is coming from, and to feel heard as an equal member of the money conversation in your partnership. 

In our second post, we’re covering Conversations 2 & 3 that you should have with your partner, and how to navigate the “nuts and bolts” of setting up a financial life that supports your partnership.

You should always consult a financial, tax, or legal professional familiar about your unique circumstances before making any financial decisions. This material is intended for educational purposes only. Nothing in this material constitutes a solicitation for the sale or purchase of any securities. Any mentioned rates of return are historical or hypothetical in nature and are not a guarantee of future returns. Past performance does not guarantee future performance. Future returns may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions, and security positions, when sold, may be worth less or more than their original cost.

It’s tax season and everywhere we look there are pieces about clever tax strategies. Those are about personal tax strategies. But what about societal tax strategies? 

Our current tax system is broken. For instance, the investigative news outlet ProPublica revealed that:

The 25 richest people in the United States paid a “true” tax rate of just 3.4 percent, on average. Three of the five richest people in the country—multibillionaires Jeff Bezos, Warren Buffett, and Elon Musk—paid even less.

As ProPublica explains, many of those billionaires use a set of loopholes with a buy, borrow, die strategy that allows them to spend millions of dollars (or more) per year, but show almost no income and therefore pay a vanishingly low income tax rate. Then, on the other side of the spectrum, those who have lower incomes or come from disadvantaged backgrounds, may pay more than their fair share because they don’t have the tools, resources, or professional assistance to minimize their taxes. This inequitable system is detrimental to many who are trying to get ahead, and I find it deeply unjust. 

Imagine a country where everyone paid their fair share, where the safety net was well funded so unemployment wouldn’t ruin a financial life, where teachers were paid commensurate with their importance, where buses and subways came often, where public universities were thriving, where parks were beautiful, and where healthcare was high-quality, patient-oriented, and accessible to all. 

If our tax system was fairer, we could live in that world!

So how do we get there?

Don’t like tax loopholes? Do something about it!

Systemic problems require systemic change. Quietly skipping loopholes may make one feel good, but doesn’t change the reality much. If we want to make real change, I think we have to work collectively. Thankfully, there are many organizations working hard on this issue and we can support their work in many ways, but especially financially.

Perhaps you just got a tax refund or you realized you are wealthier than average but pay a lower tax rate. Regardless, send a check! But where can you send it? 

13 organizations that can use your tax refund to fight for a just tax system

To help our clients and friends learn about organizations worth supporting, I spoke with some national practitioners with decades of experience working on these issues and building power. Based on their insights and my own, I assembled this list of organizations that you might add to your list for consideration. Perhaps you’ll identify a few additional ones that make sense. 

Americans for Tax Fairness

The Americans for Tax Fairness group is comprised of over 425 organizations at a state and federal level who are committed to making sustainable, balanced, and equitable decisions about the federal budget and tax system. They focus on educating the American public and mobilizing volunteers and donors to influence policymakers to “support comprehensive, progressive tax reform.” To learn more about Americans for Tax Fairness, click here.

Center on Budget and Policy Priorities

The Center on Budget and Policy Priorities is a leader in tax policy work at the federal and state levels and is a major positive influence in this area. They are nonpartisan, and focus on advancing federal and state budget policies that prioritize equitable financial and tax structures regardless of:

• Income
• Race
• Ethnicity
• Sexual orientation
• Gender identity
• ZIP code
• Immigration status
• Disability status

To learn more about the Center on Budget and Policy Priorities, click here.

Citizens for Tax Justice

Citizens for Tax Justice often works in tandem with ITEP at the federal and state level to fight for tax justice as a means to creating social, economic, racial, climate, and gender justice. Their three stated goals are to:

1. Create a more progressive federal tax system.
2. Enhance tax policies that alleviate poverty and address the racial wealth gap.
3. Upend regressive state tax systems. 

Along with working to provide education to the American public, they also work in Washington D.C. towards transformative change in the tax system. Learn more about Citizens for Tax Justice here.

DC Fiscal Policy Institute

The DC Fiscal Policy Institute focuses on shaping racially-just tax systems through data gathering, analytics, and education in Washington DC. Their advocacy efforts promote both the dismantling of racist tax and economic policy at a community and national level, but also building new, equitable systems that support a world where “every citizen, no matter their race or ethnicity, has what they need to live to their fullest.” They focus on six core areas of work:

• Revenue & Budget
• Early Childhood & Pre-K to 12 Education
• Inclusive Economy
• Health Equity
• Affordable Housing & Ending Homelessness
• Income & Poverty

To learn more about the DC Fiscal Policy Institute, click here.

Economic Policy Institute

The Economic Policy Institute “has the most sophisticated analytic capacity in the progressive landscape in terms of understanding macroeconomic impact of tax policy.” They focus on researching and educating American voters and politicians about tax inequity, as well as potential solutions, to achieve a more prosperous economy filled with opportunities for all. To learn more about the Economic Policy Institute, click here.

ITEP (Institute on Taxation and Economic Policy)

ITEP is a non-profit tax policy organization that analyzes tax proposals and provides recommendations that prioritize equitable and sustainable tax systems. Their goal is to create a more equitable, inclusive, and sustainable American economy through rigorous, data-driven analysis and education. When I was working on tax equity campaigns, I found their research and engagement very helpful. 

ITEP works at the state and federal level. To learn more about ITEP, click here.

Jubilee USA Network

Jubilee USA Network is “is the religious coalition on debt relief and international tax evasion.” They believe in prayer and activism to “advance solutions to end poverty and address inequality.” Their primary areas of focus are:

• Debt
• Tax inequity
• Transparency
• Trade policies

To learn more about Jubilee USA Network, click here.

Millionaires for Humanity

Millionaires for Humanity is an international group of multimillionaires who believe in using their wealth and resources to create systemic change to tackle climate change, poverty, and UN Sustainable Development Goals. To learn more about Millionaires for Humanity, click here.

Patriotic Millionaires

The Patriotic Millionaires is an organization that focuses on financial and political equality through:

1. A fair tax system.
2. Livable minimum wage.
3. Equal political representation.

Their stated goal is to work toward a more stable and prosperous America where all citizens have the opportunity to be “authentically engaged in the governance process.” The group is comprised of high net worth individuals who want to work together to build an America that works for (not against) every citizen, and eliminates oppressive systems that make the gap between the ultra wealthy and everyone else that much wider. To learn more about Patriotic Millionaires, click here.

Responsible Wealth

Responsible Wealth is a network of business leaders and investors in the top 5% of wealth or income in the United States who believe in closing tax loopholes for the rich and for corporations. This project is run by United For a Fair Economy. To learn more about Responsible Wealth, click here.

Resource Generation

This group focuses on 18-35 year olds who are in the wealthiest 10% of the US population, and mobilizes them to leverage their resources for philanthropic purposes and to instigate systemic change for an equitable society. They have a “redistribution pledge” that encourages this generation to prioritize the redistribution of wealth to impact social justice campaigns across the country. To learn more about Resource Generation, click here.

The FACT Coalition

The Financial Accountability and Corporate Transparency (FACT) Coalition is an alliance of organizations that work together to create a fair tax system that addresses the challenges and changes of an ever-shifting global economy. Their stated goals are to:

• End the use of anonymous shell companies as vehicles for illicit activity;
• Strengthen, standardize, and enforce anti-money laundering laws;
• Require greater transparency from multinational corporations to promote informed tax policy;
• Ensure that the U.S. constructively engages in global financial transparency initiatives; and
• Eliminate loopholes that allow corporations and individuals to offshore income and avoid paying their fair share of taxes.

To learn more about the FACT Coalition, click here.

The Roosevelt Institute

The Roosevelt Institute is an increasingly influential organization in the areas of corporate power, labor, wages, and race/gender. Their work meaningfully involved taxes but as part of that broader picture. They host several publications, offer a network community and fellowship, and run a think tank that focuses on climate and economic transformation, work power and economic security, race and democracy, corporate power, and macroeconomic analysis. To learn more about The Roosevelt Institute, click here.

How are you working for tax equity?

Have you donated to an organization working toward tax equity recently? How are you supporting tax changes? We want to know! Send me an email at zach@valuesadded.com – I’d love to hear what you have to say.