Series 3 Episode 5 – Carl Richards on Having Difficult Financial Conversations with your Partner

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Carl Richards is one of the reasons why I’m in the financial profession, and one of the reasons why I’m very interested and fascinated in behavioural finance. Why do we do make silly mistakes as human beings? Because it’s just human nature, right? One of the subjects that is really close to my heart is around how we have difficult conversations about money with our partners. So Carl is going to share some tips around how we can have better conversations about money. Carl is a certified financial planner, lives in New Zealand, and is the author of the book The One Page Financial Plan, and The Behavior Gap; an incredible book which I would highly recommend to any of you that are interested in this subject.

Hi Carl, great to have you. This topic is really fascinating. So often we focus as a profession on educating people on financial products. But actually, if you don’t combine that with understanding how we behave with money, then it’s pointless.

Yeah. I think the huge problem that nobody seems to want to talk about is that we are the problem, right? You spend a bunch of time figuring out what personal finance tools to use, what budgeting app, what investments to pick, what insurance to use? What tax management, which bank account will give you the highest ceiling we’re running around kind of hacking at the branch. But the truth is we’d be better placed by analysing gaps in our own behaviour and saying, well, it turns out I’m the one that needs to change. I don’t need to define a better investment. I don’t need to find a better task management tool. I need to be aware of how I’m spending.

We don’t have humans with investment problems. We have investments with human problems. That’s the drill sergeant version of it. The empathetic version of it is; it’s what it means to be human. We’re just wired that way. It’s what keeps us alive as a species. We can dive into those specific behaviours that we want to, but then there’s behaviours that kept us alive as a species. They serve us really well except when it comes to money. So it’s okay, we all do it, but can we be real for a minute and understand that it’s not the investment that’s the problem. It’s not your credit card that’s the problem. It’s not your app that’s the problem. It’s you and I, and let’s build from there. The whole personal finance space doesn’t seem to get any better as we get more information. It’s not helping, right? It just gives people more places to hide poor behaviour.

Are there any human biases that help us with money? We talk about negative human biases, but are there any human biases that work in our favour?

That’s a really good question. I don’t think anybody’s ever asked me that question. The only thing that comes to mind is that what makes us uniquely human is to be able to step back and view our own behaviour. Jim Collins wrote Good to Great, among a bunch of other fantastic books, and he talked in an interview once about how he used to carry around a little notebook. He wrote on the cover The Bug Called Jim, and he would treat himself as a bug that he was watching. He would notice things about himself and be like oh, isn’t that interesting? Look, the bug called Jim, he gets angry when he doesn’t eat. That’s really interesting.

I think that ability of ours to say, wow, isn’t that interesting? I just spent £xxx on a new pair of shoes. Personally, I’m interested in just that part, not the next thing we tend to do, which is say isn’t that dumb, wasn’t that stupid, or I can’t believe I did that. Getting rid of the shame or the judgement and just noticing what we’re doing with money. I don’t know that that’s necessarily a behavioural bias, but it is something that humans can do. We can learn to observe our behaviour as a researcher. We can treat our own behaviour from the perspective of a third party researcher. I have a belief that simply noticing that behaviour leads to behaviour change without behaviour change being the goal. Letting go of shame or blame and just noticing how I behave with this thing called money and particularly how I feel in my body. I think that’s a uniquely human thing.

That’s so interesting. What you’re saying is to pause and notice how you feel. I’m about to spend a hundred pounds. How am I feeling in my body? Is there a physical cue when it comes to spending money?

This is one of my favourite subjects right now. I think the solution is just simply to let go of shame and blame. I think that’s got to be the first rule. Especially if you’re going to have a conversation with a spouse or partner, you both have to put on your no shame or blame hats. That doesn’t mean no guilt or no responsibility. It just means no shame and blame, and there’s big difference.

The the next thing is just noticing. I’m not even saying trying to change the behaviour. Let go of that goal, because it comes with shame and blame, and just notice. I think we embody so much. We’ve underestimated the impact of feeling our way through decisions and we’ve underestimated, the wisdom of the body. There’s crazy resources shows that 70% of the signals going up and down our nervous system are coming from the body to the mind. I think just noticing an activity we’re engaged in, and you can do this before or after, it doesn’t really matter. Just bring awareness to it, and notice how we feel about it. Things will start to show up; was that as satisfying as I thought? Did I enjoy that? Remember the goal is not to spend necessarily less. The goal, at least my goal, is to spend more on the stuff that brings me happiness and pleasure and security and less on the stuff that I don’t really care about.

I’m glad you said that. So often people think getting better with money is about budgeting. I hate the word budget in itself, because budgeting just insinuates restricting yourself. Why would we want to restrict our money? This is money we’ve worked hard for. It’s about creating a spending plan in line with your values. A spending plan that’s going to create you financial happiness and well-being. One of the things that I’ve come up with when coaching women is that we talk about the emotions around money. So things like shame and guilt, and also some positive emotions to do with money too. But often these emotions comes from like childhood. At a physical and emotional level and how do you stop those past messages from interfering with how you feel about money in your present?

I spent a lot of time thinking about that exact question. So, I notice a feeling. How do I change it? My experience is notice it and not trying to change it. I think what you do instead is just realise a couple things. You’re not responsible and you’re not to blame for the quality or lack thereof of your own thinking. There’s no way you can control all of your thinking. So I think the way to deal with that is to just simply notice. Especially if it’s interaction with a spouse or a partner, buy yourself a little time. If you’re in the middle of the conversation, my favourite trick to buy myself a little time is just to say, “oh, that’s interesting, tell me more”. My wife asked me a financial question recently, and I knew I was feeling quite tired, so I knew to be on guard for any reaction. I remember thinking that’s interesting. Give yourself space. That’s the short answer.

The fact that you’re willing to start having this conversation or even the fact that you’re even considering it, puts you ahead of the bulk of people in the world.

Carl Richards

When you’re tired is definitely not a good time to be talking about money. Are there any other particular times that we need to be aware of when you want to talk about money with your partner?

Yeah. I think there’s some real clear ground rules, and I think you should discuss these ground rules and have them maybe written down somewhere.

One of them should be really clear; pay attention to energy levels. Don’t talk when you’re in the basement – I like to think of it as like when you’re in the basement energetically. Basement level thinking will not produce good results and there’s just no way that it’s going to work. When you’re in the basement, you feel defensive. And it’s funny, one way to know if you’re in the basement is if you’re feeling defensive. The very nature of your responses will tell you if you’re in the basement at first, that’s the way to know. Later, you can start to realise, oh, I recognise that feeling I’m in now. Being in the basement could be because you’ve had a stressful day at work. It could be you’re tired, you could feel sick. And let’s give each other permission.

My wife is great at this; she notices when I’m in the basement and won’t get into discussions with me about money. But we can also give each other the heads up once we get better at recognising these feelings. So number one, pay attention to energy levels. You’ll probably need to be really careful and set aside some time. Ron Lieber, my editor at New York Times, has a day they’ve set aside either quarterly or annually. They go away maybe for a night, and agree that they’re going to spend an hour and a half and deal with all of their financial stuff from that month or that quarter.

What would you do if your partner just is not interested at all and doesn’t want to talk about money?

Yeah, that’s normal. It happens all the time for, so first of all, know that you’re not alone in that. That happens all the time, and there doesn’t seem to be a gender breakdown of that. I probably get the question more from women than I do from men, but I don’t think that’s because men are less willing to necessarily talk about it. I think it’s because women are more willing to ask questions than men. So I get that question a lot. And I think the way to deal with it is gently. The fact that you’re willing to start having this conversation or even the fact that you’re even considering it, puts you ahead of the bulk of people in the world.

So first, just give yourself permission to be gentle. This is a long game. It could be that it’s a short game for you; like, if something doesn’t change, we’re in big trouble. That’s a different deal. Go find professional help. Get in marriage counselling or relationship counselling and have somebody else who can mediate that problem. Like if it’s at that point, go do that. Get a mediator and somebody who has permission to call you both out on that stuff. A neutral party that will get in your face a bit. But assuming that this is a long game, it’s been going on a while, give yourself permission to be gentle.

So here’s a couple conversation tricks; The budget’s blown again, every we talk about it, we fight. Okay. Don’t talk about that yet. Could you just say “Hey, I was listening to a podcast and they were having this conversation around money. I was curious, what’s your first memory of money? Or what was money like in your house?” If there’s an answer, just say, “Oh, that’s really interesting. Thanks. What do you think about the cricket match?” Just move on, without showing your enthusiasm or making a big deal of it. You just had a successful conversation about money without getting into a fight.

Then build on it. “Hey, you know, the other day you told me that around your house money was like this. That’s really fascinating. How did that make you feel? Oh ok, I see”. Just do it slowly. Because if somebody gets upset and shuts down because you bring up money, it’s not about the money. It’s about a bigger story that’s sitting behind the money. You can’t touch it until you unpack that story a little bit.

Amazing. Fabulous tip.

I guess what I’m pointing at is to know that if you’re fighting about money, it’s not about the money. And if you can find a way to be like, Hey, is there something else going on here? If you can do that, awesome. And then you just remember the third rule, no shame, no blame. No judgement around what you learn. It’s insanely hard for humans, especially in a relationship, to go, Oh wow, really? And just let that sit there for a bit. And then the last rule is the time out rule. Sometimes when some gap in your behaviour gets shown to you, you may not be able to process it gently right then and you may need to say, I hear you. I don’t know what to do with this feeling I’m having right now. I’ll be back. Those take an hour sometimes, or it can take a couple of days.

So it comes down to a bit of practice and patience, doesn’t it? Sometimes there’s so much emotion involved that you just want to react. What you’re saying is just call time out. I need some time to digest what you’ve just told me or, actually I don’t necessarily know if I agree with that. Let me take some time out to collect my thoughts around this and then let’s talk about it again another time.

I think if the words that are going to come out of your mouth are going to be defensive, that is a sign. You shouldn’t speak those words. I used to wonder when I was first working through this stuff, how will I know if I’m in the basement? Well, one way to know if you’re in the basement is the words that come up. And time out doesn’t mean that you’re saying you agree. I think that’s a really important point. What I’m feeling right now is that what I just learned makes me really sad and made me really angry. I’m not sure I agree. I still love you, but I’m not sure I agree.

difficult financial conversations made easy with Carl Richards

I love that. And you could absolutely take that theory and apply it to any conversation. I think you could apply that to any situation when you’re in; just take time out on yourself, give yourself some space. I love the fact that everything that you’ve spoken about is just simple. Sometimes we just over-complicate things.

Your use of the word space I think is really awesome. One way to think about it as time. Another way to think about it as it’s just space, right? Can I just get a little space to figure this out. And also I agree with simple and, one of the things that’s hard with simple is that it shouldn’t be confused with easy. Sometimes we hear these conversations like, oh, that’s so simple. And then we get really surprised when it’s not easy. This stuff is hard and it’s hard because we’re just wired. We come pre-loaded with all sorts of fancy feelings around how we’re supposed to defend ourselves.

Fight or flight.

We’ve got un-wire all that stuff. We don’t have to solve anything. We don’t have to judge anything. And that’s a huge part of the problem often between spouses is one person wants to solve the problem. Don’t, just sit with it. We don’t need to fix things immediately. We don’t need to judge things. Often when we feel the feelings ourselves; oh, I want to go buy some new shoes. We don’t need to say, no, don’t buy new shoes. We could just go home. Isn’t that interesting? I want to buy new shoes. Not even where did that come from? Why am I bad? Instead just, isn’t that interesting? I want to buy new shoes.

One of the things that’s hard with ‘simple’ is that it shouldn’t be confused with easy. Sometimes we hear these conversations like, oh, that’s so simple. And then we get really surprised when it’s not easy.

Carl Richards

It’s interesting how you talk about solution mode. I’ve done a lot of reading around, from a female perspective, hormone cycles and things like that. What’s really interesting is, generally speaking from the work that I’ve read, that men tend to go more into solution mode because of fight or flight. Often I find this with my own husband; the thing I love the most about him is he will always come up with a solution. But it’s also really frustrating because sometimes I don’t want the solution, I just want you to listen. So what you’re saying there is that how we connect as humans is about listening to the stories, listening to the emotions, listening to how we feel, giving ourselves space and time rather than necessarily feeling like we have to come up with a solution. If we could find out what’s going on under the surface, we could open up the doors to so much that could really help each other to have better conversations about money.

Yeah. What do you do when he goes to solve something and that’s not what you want. Have you learned to recognise that?

Normally I’ll just say I’m not looking for the solution right now. I actually want to work out for myself, but can you just listen to me? I just need you to be a little like a sounding board for me right now. Is that okay? And then he’ll tend to listen for about 30 seconds and then he switches off. So I know that the way that his brain works is if I want him to listen to anything, I have to make it in the first five words of my sentence to catch his attention and then I’ve got him for 30 seconds. That’s just how his brain works, and I know him that well, so I recognise that.

Super fascinating. We’re hard-wired; it’s actually a chemical Oxytocin if I’m remembering right. when somebody listens to us, and particularly if they ask us thoughtful follow up questions. I was taught this Ninja trick; I was at a conference and normally I get paid to be the solutions person. People who give advice for a living think that they get paid to provide solutions, but what we really get paid for is clarifying problems. Somebody taught me that.

So I was at a conference and as always happens someone came over and wanted to run a problem past me. I decided I would answer every question with a question. So I just said, oh, that’s fascinating. Tell me more. Oh, that’s interesting. What have you tried? What’s worked? What hasn’t? And about 10 minutes into this, she grabbed my arm and said, oh my gosh, you’ve solved it. Thank you. And left.

We’ve all been through that experience where we leave thinking the person is one of the smartest people I’ve ever talked to and they didn’t say anything! The reason for that is the release of that exact drug Oxytocin. When we talk about ourselves, particularly when somebody is asking us thoughtful questions about ourselves, we release a drug in our brain to like that person. So the Ninja trick is if I want somebody to like me, all I really have to do is ask questions and listen.

I love that, and that’s similar to the coach relationship; you just ask a bunch of questions and you get them to come up with the solution themselves. How much more empowering is that to get that that person to think of the solution themselves rather than you telling them. As financial advisers we’re we’re taught to ask questions about your finances in like a fact finding environment in order to get an answer. But actually what you want to do is explore that relationship and get the person to come up with the solutions themselves by asking great questions.

The problem is not what you think the problem is. The problem is certainly not what what the person you’re talking to is telling you is the problem. So how can you provide a solution when you haven’t even defined the problem yet? And so I think in all of our relationships when it comes to money, like working with a spouse, a partner, a friend, just understanding that the thing is not the thing. And being there for somebody and providing space for people to explore that. Every time you bring up money your spouse reacts like that because nobody has ever given them permission. They feel like that’s unsafe territory because it’s always been unsafe territory. So one of the greatest gifts we can give anybody is just a little bit of space to start treading. And then it becomes like layers of an onion, right? That’s your first memory. And then the onion starts to peel a little bit gently and we start getting deeper and deeper in. It turns out that these things take years and years and years and years to acquire and every layer of it is more and more intense, but also opens you up to more and more opportunities for deeper connection in a more aligned relationship.

Carl, can you leave us with one final story; your favourite money story that you haven’t already shared with us.

What comes to mind is a personal story. Next month, October, is for me 10 years in the New York Times, two books and 15 years of financial planning work, and I still have these really deep embedded stories around money. My wife has a different story and her story. We grew up within a mile of each other; we didn’t know each other, but we grew up by every outward appearance the same socioeconomic class. But my parents were divorced. And for me, I always felt we were going to run out of money any time. My mum was working all these extra hours, trying to keep us in a good neighbourhood with good schools, and around good mentors. So it was always about fear and scarcity. I had memories of utility bills not being paid. My wife’s dad was an entrepreneur and for them money was sort of easy come, easy go. This may not work out. It worked, great. Oh, it didn’t work,we’ll downsize. Like they were just really fluid with it all. For her, it seemed to be more about opportunity and abundance. And so I was doing scarcity thing a couple of months ago.

My income is very lumpy and I bet a lot of your readers too. I’m an entrepreneur on my own, with a couple of my own businesses, it’s very lumpy. And I was projecting. I said, if this continues, 7.8 months from now, we will be out of money. My wife was like, what? And I remember thinking, she was saying you could tell yourself a different story. Then every time you think there’s a cliff, the cliff moves, right? You figure something out between here and the cliff. It happens every time. Like you could start just telling yourself that story. You can start saying, oh, that’s interesting. This month wasn’t awesome. Turns out that’s normal for you. Oh, look, if you look at it over three years it’s been great.

I just remember thinking wait, that’s possible. You’re allowed to have that story. I just think the idea, maybe the takeaway would be; you are living in the feeling of your stories. And we think that feeling is reality and it is not. Let’s think about that story, what’s serving me. And thank it. You’ve served me really well up to this point. I appreciate you fear, it’s really nice that you’ve been here, you’ve saved my life, you’re my friend. I don’t want to kick you in the teeth, but I think you’re going to sit in the back seat now. Come on the trip, but you’re not allowed to drive anymore.

Such a great way to finish the podcast episode. For anybody who hasn’t read any of Carl’s books, The Behavior Gap is spectacular. It really digs deep into the psychology of money. And also Carl you do a weekly email newsletter, how can people subscribe to that?

Just go to and sign up for the weekly newsletter. We work really, really hard making the weekly letter valuable and one of our goals is to send you less. That’s the goal. In fact, internally we think like we want it to take two minutes to read, but we want you to think about it all week.


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The Behavior Gap – Carl Richards

The One Page Financial Plan – Carl Richards

Good to Great – Jim Collins


Catherine Morgan

Catherine Morgan