Divergent Risk Tolerances – Strategies for Couples

As couples develop shared financial goals, visions, and strategies, one important consideration is whether they have significant differences in risk tolerance. Investing outside of one another’s level of comfort, with respect to financial risks, can lead to conflict. Navigating joint financial decisions when attitudes toward risk vary, although not uncommon, can be quite challenging.

If you and your spouse have different comfort with risk, try these strategies:

Understand Your Risk Profiles

Start by having open and honest conversations about your attitudes toward risk. Describe your investment preferences and individual financial goals. When possible, share the way your backgrounds influence your perception of risk. Listen intently to and respect one another’s thoughts.

Find Common Ground

Discover the places where your visions intersect. Define financial goals that motivate you both. Is there overlap in your thinking about buying a home, paying for your children’s education, or saving for retirement? Focus on these shared objectives and learn to work as a team. Start by tackling those items that, due to timelines and available resources, have a necessary return on investment and, as a result, a built in risk capacity.

Be Willing to Compromise

Recognize that give and take is an essential part of any partnership. To meet in the middle, you both might need to stretch you comfort zones a little. This may require patience.

Someone might have to accept that the other’s ability to sleep soundly matters more than grabbing an opportunity or the potential for higher returns. Approaching financial decisions with an open mind and a willingness to compromise can lead to mutually satisfying solutions.

Learn to Accommodate Differences

Rather than trying to find middle ground, you could consider adopting an approach that honors and caters to both risk profiles. This may involve holding a combination of very low and very high-risk investments, with little in the middle. The strategy might work better if individual preferences are segregated into two different accounts, with each partner only monitoring the one that lines up with their tolerance level.

Set Clear Boundaries

Establish mutually agreed upon guidelines for making financial decisions that accommodate each others willingness to accept risk. Determine how much risk you’ll take on, individually and collectively. Choose a method that can be used whenever you’re evaluating investment options and opportunities. Decide, in advance, what circumstances warrant consulting the other prior to entering financial commitments.

Start a Book Club

Continue to educate yourselves about finance, investment, and risk. Choose a book you’d both be interested in reading, then come together every few chapters to discuss your thoughts.

Alternatively, snuggle up and listen to a podcast. Or, book a financial retreat.

Remember These Risk Realities

When investing, risk is inevitable and cannot be eliminated entirely.
Greater risk doesn’t inherently lead to greater reward.
Financial goals can be achieved in ways that respect both partners’ tolerance of and willingness to accept risk.

Seek Help

Consulting a professional might be helpful, particularly if you feel you’ve reached an impasse. A wealth coach or financial therapist can provide alternate perspectives, help you navigate differences, explore aspects of your money mindset, and/or develop a financial plan that’s within both of your comfort zones.

Creative Solutions

Candid communication, respect, and the genuine desire to understand one another’s ideas will go a long way toward identifying mutually acceptable solutions.

Finding innovative ways to facilitate financial collaboration helps build a solid foundation for long-term financial stability and success.

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