Jack Johnson, a hockey player for our local NHL team, made national news this week by declaring bankruptcy. Long story short, it seems he trusted his parents to manage his money and they took advantage of him. Although making around $20 million in his career, at age 27, he has about $15 million in debt and less than $50,000 in assets. Hopefully Jack will have learned one of the most important lessons of life: Money Management is a Partnership.
One of the best “eureka moments” I ever had was when I realized that nobody cares as much about my stuff as I do. It doesn’t matter how much I pay them; without an ownership interest, they just don’t. That is why I believe, and thousands of articles have been written suggesting (for example: this one and this one), that you must be involved in your own money management. I would go one step further, and say that managing your money must be a partnership.
Obviously, if you are in a coupled relationship, your partner should be your money management partner. But what if, like Jack (above), you are single? Or, what if you are a couple, but have never managed money before? You must seek out an experienced partner - but it must be a partner, not someone that simply takes over. Your money management partner could be a professional, or, as Mr. PFL and I did, your own independent research can be your partner. There is a wealth of information available, but you must be committed to finding it and understanding it. If you have an adviser, they cannot simply be the leader; they must be a partner. You must take responsibility for your own money. It is yours.
I’m not suggesting that each person needs to know everything down to the last penny; delegating some money management responsibilities can make a lot of sense. In our own situation, for example, Mr. PFL pays for the recurring household bills from his paychecks (mortgage, gas, electric) and I’m responsible for keeping us fed, clothed and traveling. I honestly don’t know how much we pay for electric, but I do know that Mr. PFL always has plenty of money in his checking account (I have access to his bank accounts if I want to check); we’ve never received disconnect or foreclosure notices; and I don’t have to worry about it. Mr. PFL also downloads all of our accounts into personal financial management software so I can get an overview any time.
We do discuss major financial decisions. We are both willing and able to do research before making a major financial decision. We decide on major financial decisions together. We both have an equal voice, a partnership. This partnership has allowed us to take risks, but also to avoid any major trouble. The sum of whole is greater than the parts. Neither of us, individually, would be where we are today without the other. While we have reached out to experts for information, we have the final say. Because no one else cares as much about our money as we do.