In a few months, my partner and I will be returning to home base. We have enjoyed postings in Bangkok, Madrid, Berlin and now Vietnam, indulged in amazing holidays, eaten at spectacular restaurants and basically had a lifestyle that was second-to-none. The problem now is that this move home has made us realize that we have no more than two months' salary saved in our joint bank account – which is virtually nothing. This is causing us both great anxiety, as we now see that we have been a little careless with our impressive salaries abroad and we are concerned that we have not set ourselves up properly for the future. What can we do?
VC
ExpatWomen Girlfriend:
Dear VC,
As Rita Mae Brown once said, "The definition of insanity is doing the same thing over and over and expecting a different result." Congratulations for recognizing that something needs to change in order to achieve the future that you seek for yourselves. There are six key scenarios that couples tend to fall into that move them to the point of frustration or a breakdown in the relationship. In many cases more than one scenario is present. Identify which of the following are true for your relationship:
1. No personalized spending plan at all;
2. No agreed upon, personalized spending plan;
3. No clearly defined short, medium or long-term financial goals;
4. No agreed upon, clearly defined short, medium or long -term financial goals;
5. No structure set up to carry out what's been agreed upon; and/or
6. A lack of commitment on the part of one or both partners to do what it will take to reach the financial future that has been envisioned.
In terms of what you can do now, do not despair – there is a lot you can do to set yourselves up for a bright future. None of these steps are magic fixes, but if you commit to them, they will help you alleviate some of your anxiety and reassure you that you are getting back on track to achieving what you want for the future.
Step 1: Take Responsibility And Be Accountable
You and your partner both need to accept responsibility for the joint spending of the past and realize that you will only change your joint habits if you work together. By encouraging and supporting each other in doing what is needed not only will each of your stress levels be reduced, you'll find that it is that much easier to reach your individual and joint goals.
Step 2: Identify Spending Triggers
Apart from the basic essentials, what has triggered you to spend money in the past? Is it a sense that your income is never-ending and therefore it has never needed to be monitored? Is it due to the influence of your peers? Is it due to habit – for example, you have a weekend routine that starts at the department stores, then moves to your favorite restaurant for lunch, followed by an afternoon or evening of entertainment with friends, at somewhere super-hip and super expensive? Or have you spent money because it has made you feel better?
Step 3: Visualize The Future
Take some time to think about what you most value and/or take enjoyment from in life? What do you most want to have, who do you most want to be, what will your close personal relationships look like, where will you be and what will you be doing one year from now, five years from now and possibly ten years from now?
Step 4: Set Goals
Set goals that help you to create your vision(s) of the future. Goals are the tangible benchmarks that you identify that need to be accomplished to achieve your vision. Goals need to be distinguished from tasks – those actions we need to take to keep our lives running smoothly, like paying the bills, servicing the car – all of the things that do not lead directly to fulfilling our vision for our life. Goals must be attainable, be measurable and have timeframes.
Some examples of financial goals are: (1) I will pay off all credit cards by December 31, 2008; and/or (2) I will set aside $200 per month beginning (date) to build an emergency fund equal to three month's basic living expenses. Brainstorm a list of goals that will get you closer to your vision(s).
Then rank the goals that you have listed, agree on priorities and categorize the priorities by time. For example: Immediate (within the next twelve months); Short-Term (one to seven years); and Long-Term (over seven years away).
Step 5: Create a Spending Plan
Get into the habit of writing down everything that you spend and design a spending plan to support your goals. A spending plan is different from a traditional budget, in that it does not just take last year's expenditure figures, but it sets new figures, based on your new homework, experience and priorities. If an exotic family vacation is a goal for the year and it is to be paid for in addition to your "usual" annual travel expenses, your total estimate for this category will be larger than last year and will require you to "tighten the purse" in other categories. When you fill in figures for the spending plan, you begin with all of the monthly or annual commitments you must fund, then you will move on to the discretionary expenses. By planning out how you envision spending your money BEFORE you actually spend it, you should be able to reduce the frequency of or eliminate those spending triggers that you may have identified in Step 2. The benefit for your relationship is that you will engage in genuine discussions about financial capability and you will be making joint decisions about how to work together to achieve your vision(s) for the future.
Step 6: Review
Track your spending as best you can and review it against the spending plan on a quarterly or six-monthly basis. This will allow you to make adjustments as you move through the calendar year. Review your goals annually to inform your next annual spending plan.
Step 7 Train Your Mind
A NLP (Neuro-Linguistic Programming) Professional might argue that if you train your mind to believe that you are struggling with your finances, then that is exactly what will eventuate. Instead, they would likely suggest that if you train your mind to believe that you are in control of your finances and that you have the power to say 'no' when you previously would have spent money, then that instead will be your outcome. In other words, try training your mind to support you, rather than to drag you down.
Step 8: Get Professional Help
One of your first tasks on arrival at home base should be to find yourselves a reputable financial planner. In addition, you may also find it useful to engage a life coach, either now in your current location or once you arrive home, that can help you clarify your vision of the future, motivate you and support you in taking action. A counselor may also be appropriate, depending on what your triggers for spending money have been in the past. In short, the more help and support you seek, the higher likelihood that you will move forward with your vision of a brighter financial future.
Best wishes, VC!
Written by Andrea Martins & Jennifer A. Patterson, CFP® (US), CIMC™, CIMA®, in consultation with our resident ExpatWomen Girlfriend.
Andrea Martins is the Director and Co-Founder of ExpatWomen.com
Jennifer A. Patterson, CFP® (US), CIMC™, CIMA® is Managing Director of Patterson Partners Ltd., an international wealth management firm that specializes in cross-border financial planning. She is also the author of When Families Cross Borders: A Guide For Internationally Mobile People.
Our ExpatWomen Girlfriend is originally from New Zealand. She has been living abroad as an expatriate since 1996. She has an educational background in Human Resources and Cross Cultural Psychology and has worked with expatriate support issues at the private, corporate and non-profit level. In 2004, she saw a need and established an English speaking hotline in her expat location, offering free mental health support to the growing expatriate population. The hotline provides confidential and anonymous support and information via trained telephone volunteers and is funded through corporate sponsorship. Our ExpatWomen Girlfriend has always been an active member in the various expatriate communities she has lived in, providing cross-cultural awareness training and informal counseling sessions with a particular focus on the 'trailing spouse' and family.
Disclaimer: This column is intended to be of general interest to ExpatWomen.com visitors. Its suggestions and/or inferences are generalizations and do not address the needs of individuals, nor should they be relied upon in any shape or form. Please seek professional advice/counseling/therapy if you genuinely need assistance to talk through issues in your life right now.
