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Don’t Let Holiday Spending Ruin Your Relationship

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David Maxfield, Holiday Spending

With David Maxfield, Consultant to Fortune 500 companies, and VP of Research at VitalSmarts.com, Author of Crucial Accountability, Influencer, and Change Anything

Along with tidings of comfort and joy, the holidays often bring unwelcome stress over holiday spending. How do we avoid blowing it all by Black Friday…and how can we talk to our spouse or partner in a way that doesn’t end up in rancor and discord?

The author of three New York Times Bestsellers, Crucial Accountability, Influencer, and Change Anything, consultant to Fortune 500 companies, and VP of Research at VitalSmarts.com, David Maxfield unwraps the secret to talking about holiday finances, staying on financial track, and maintaining your holiday cheer.

The holiday money pit

Money is a strange bedfellow; having the “money talk” with our loved ones, whether it’s our children, aging parents, or our partners, propels us into emotional territory where the stakes are often quite high. It just strikes a raw nerve with most people.

When it comes to agreeing on a budget for holiday spending, David refers to research that reveals the three ways people are most inclined to react:

  1. Change the subject and avoid the conversation.
  2. Lie about what things cost.
  3. Hide the items altogether.

And over half the people in the survey admitted to spending $500 or more over what they had agreed upon with their spouse. It’s easy to see that serious conflicts could arise.

Coming to terms instead of coming to blows

So how should you go about avoiding a conflict over this? David says the first thing is to start early, perhaps as early as before Thanksgiving—sit down, come up with a budget, and establish financial ground rules.

After that happens, if one partner goes off the rails, it’s critical for the health of the relationship to discover why the overspending has occurred. If he or she has rented a storage unit to hide the purchases or continually lies about it, then the focus comes down to one of trust, which is a much bigger issue.

Whether it’s spending for the holidays or any other time of the year, acknowledging the emotional component of talking about money within a relationship is important. You have to be able to approach your partner without him or her becoming defensive, which is not easy in what David refers to as our “very low accountability culture.” In general, we’re averse to speaking up and being confrontational and instead prefer to shift the responsibility in another direction for fear of being attacked in response.

The “minimax theory” to the rescue

A proven successful strategy widely used by psychologists is the “minimax theory” (which has also been applied in negotiating sessions with unions and management) where each party comes up with the worst scenarios that could possibility happen, takes those off the table, and then works backwards to get at the heart of the matter. This puts both parties at ease and clears the way for a reasonable solution.

Salute the flag before you talk

David’s approach is one he took away from his military experience:  “Always salute the flag before you disagree with your commanding officer.” By “saluting the flag”—either metaphorically or in reality—you signal that you respect the other person and that you’re on the same side. By communicating this respect and mutual purpose, you allow the other party to communicate without becoming defensive or self-protective.

Using this technique can also turn the conversation about holiday spending into a positive plan for the future. If you agree to a specific amount that leaves extra money for a family vacation, a much-desired purchase, or any attractive plan for the future, it’s as though you set boundaries down as a team in order to enjoy some aspect of life in the future.

Instead of one partner making the rules and the other one grinding teeth to play along, each partner is an architect of the plan, and holiday spending can be part of this joyous season.


Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital.  Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions.  Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances.  The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.

Read The Entire Transcript Here

Steve Pomeranz: David Maxfield is the author of three New York Times Bestsellers: Crucial Accountability, Influencer, and Change Anything.  Today we’re talking about how to unwrap the secret to talking about holiday finances, all in our effort to help you get and stay on financial track.  Welcome to the show, David.

David Maxfield: Well, thank you, Steve.

Steve Pomeranz: Survey reveals that eight out of ten people blow their budget on Black Friday and yet 56% struggle to just talk about spending with their spouse or partner.  Why is there this disconnect?

David Maxfield:   Well, because it’s an emotional subject, and people hate to confront each other and hold each other accountable.  They would rather do almost anything else.

Steve Pomeranz: Money is a strange bedfellow.  Families don’t talk about money with their kids, older children don’t talk about money with their aging parents.  What is it about money that makes us all so uptight, I wonder?

David Maxfield: Well, we’ll say a crucial conversation is whenever you’ve got high stakes and a disagreement and emotions get involved.  When emotions start to kick in, we need to be at our very best and yet we’re acting at our very worst.  It’s that old “fight or flight” sort of syndrome that we move to.

Steve Pomeranz: I think you’re right about that.  Plus, I don’t think people have the verbal tools to help them have a smart, reasonable money discussion.  It is tied up with emotion.  Go ahead.

David Maxfield: Yeah, I completely agree.  In fact, we found in our study that people are much more likely to do three things: Change the subject or avoid it entirely.  Second is hide what things cost and what’s been spent, or actually hide the purchases themselves.  Now, I guess around the holiday season, maybe there’s an excuse for hiding things, like wrapping them in paper, but that’s not the typical excuse.

Steve Pomeranz: Those seem like actions of someone who’s got a serious addiction problem.  You’re hiding things.  You’re not talking about it.  You’re laying a direction, or misdirecting.  What else do the people do to avoid this?

David Maxfield: Those sound like they would have a serious problem, but that’s actually, half of the people in our survey said that they are spending $500 or more over what they and their spouse have agreed to spend.  It’s pretty high.  A third of our subjects say they’ve ended up in serious conflict with a spouse or family member over this holiday overspending.

Steve Pomeranz: I guess they would use separate accounts to make a purchase, too.  It occurs to me that there’s a certain amount of adolescent behavior here, or even younger than adolescent.  You do something bad and you hide it.  You don’t admit to it.  I guess the idea is, “Hey, guys.  Let’s learn how to be grownups when it comes to money.”

David Maxfield: Yeah.  How do we talk about it?  I think that’s the core of what I think I want to be able to share with people, is what are some rules of thumb, and then what are some alternatives so you can have a fun holiday without overspending?

Steve Pomeranz: Good.  How do you do it?

David Maxfield: I’d say start early.  Don’t wait until the last minute and then sort of drop a frugality bomb Christmas day.  Instead, try to have the conversation early; I’d say before Thanksgiving, at least.  Sit down and talk about what is it that you want to spend over the holidays?  What’s your budget?  And involve the person in the budget.  The first hint is to start early.

Steve Pomeranz: If your spouse suddenly announces that they bought a Tesla, maybe you should have had the “limits to what we’re going to spend” conversation before.

David Maxfield: Yeah.  Exactly.  Now, a second one that I’ll put in here is, solve the right problem.  Is the problem that the person is spending more than is in the budget or more than promised to you?  Or is it …?  I mean, if you discover your loved one has rented a storage unit to hide this stuff, then you’re not talking about overspending.  You’re talking about trust in the relationship.  Focus in on what’s the right problem.  Is it trust?  Is it the budget?  Is it they got a Tesla instead of a Corvette?  What’s the exact problem here?

Steve Pomeranz: I think if it comes down to the topic of trust, that is a way, way bigger issue and that’s one very good reason I can see that this discussion will not occur because you’re opening up a huge can of worms then.

David Maxfield: Yeah.  Let me suggest that the way human beings are built, we always sort of expect the worst.  It’s like we catastrophize.  We imagine, “What’s the worst that could happen when my spouse opens his or her mouth?  The worst is that they don’t trust me.  They think I’ve betrayed them.” We don’t want to have that conversation because we know the other person is going to assume the worst.

Steve Pomeranz: Exactly.  I’m an investment advisor, and I have this “worsification” conversation with clients sometimes, and that is, “All right, so you’re very, very frightened about the market or whatever.  Let’s take it.  What’s the worst that can happen?  Let’s actually go there and quantify it, and you’ll see that the way things are really structured, it’s not going to be as bad as you’re imagining.  You’re not going to be begging for food somewhere because we just don’t structure portfolios that way.” This idea of looking at the worst case and kind of working backward I think is pretty valuable.

David Maxfield: Yes.  Well, in fact, that’s been a proven successful strategy by psychologists.  They’ll sometimes call it the minimax theory.  I’ve used it when we’re helping unions and management negotiate.  Have each group think through, “What’s the worst that the other group could impose on us?” Come up with the worst, and then sit down and say, “You know, we’re going to take those evil scenarios off the table.  We can guarantee in writing we won’t do those things.  Now let’s talk about the heart of the matter.” I think couples can do that, too.

Steve Pomeranz: My guest is David Maxwell.  He’s the author of three New York Times Bestsellers, Crucial Accountability, Influencer, and Change Anything.  He’s a sought-after speaker, a consultant to Fortune 500 companies and the like, and also Vice President of Research at VitalSmarts.  We’re unwrapping the secret to talking about holiday finances.  David, I want to spend a minute talking about how you talk to each other because there’s a certain amount of skill when you’re confronting a spouse, a partner, whatever.  You have to say things just right because a person can get very defensive.

David Maxfield: Absolutely.  In fact, not just with your spouse.  Our culture, in general, tends to be a very low accountability culture.  In fact, people will say …  I’ve worked with police departments that say, “I think neighbors would rather call the police than call their neighbor to complain about a garbage can.” We’re very averse to speaking up, and, so by the time we do speak up, we’re often carrying such a burden of anger and frustration that it comes across as an attack.  I’ll sometimes say, “You know, if you’re disagreeing with me and your lips are moving, I’m going to feel like you’re attacking me.” What can you do?  What’s a skill to say, “This is not an attack”?

A phrase I remember comes from the military, that works for me.  It’s, “Always salute the flag before you disagree with your commanding officer.” Kind of makes a lot of sense.  When you try and think about, “What does it mean to salute the flag?” It means two very different things.  One thing it means is, show respect for the person.  If it’s your partner, show love for the person.  Show, “I care about you.  I love you.  I love who you are.  I love your point of view.” The second thing it means to salute the flag is it reminds the person that you serve under the same flag, that you both want ultimately the same thing.  You’re on the same side of this thing.  “I want what you want.” If you can communicate respect, and we call it “mutual purpose,” that we want the same thing, that’s how you diffuse it from an attack.  You can summarize it by saying, “Communicate with love and respect.” It’s pretty simple.

Steve Pomeranz: When we moved into a new house, we’re both decorators.  Not decorators, but how we decorate our home is very important.  We came up with some guidelines for art in particular.  We said, “Any shared space, either person can say no.  A no is a no, and it’s not personal.” Then we allocated our own private space to each other.  “This is my space.  This is your space.  Your bedroom.  Your guest room.  Whatever you want to do.” Not your bedroom, but your one room that each of us may have separate.  “You can do anything you want there.  Nobody has an opinion on what can happen in that space, but in the joint space, a no is a no, and it’s not personal.” I can tell you, that has really, really helped.

David Maxfield: I can imagine it will.  That takes me to sort of where I want to go, I think, for the essence of this conversation, is to make holiday spending part of a positive financial plan.  This is not going to be news to you, right?  Involve your family, your spouse, particularly, but as many of your kids as you feel comfortable with, in creating a financial plan that includes budgeting and spending, that looks towards a positive future.  A positive future would include things like specific expenditures like your next car, family vacation, sports summer camps, and by the way, holiday spending gifts.  The more that others can see where the money comes from and where it goes, and the more they feel like they have a role in deciding how to spend it, in your case, where to spend it in a house, the more they’ll feel like they’re part of the plan, rather than feeling like it’s being imposed on them.

Steve Pomeranz: Again, it’s this idea of saluting the flag first, which is a way of saying, “Hey, we’re in this together.  This is really about us.  Our future also is important here, so let’s keep things together, thinking together, then, of course, let’s discuss it.  Let’s be willing to be wrong and to accept the challenge.  Finally, it’s just not personal.  It’s about thinking about the future.”

My guest David Maxfield is with me.  We’re discussing unwrapping the secret to talking about holiday finances.  David, thank you so much for sharing with us today.

David Maxfield:   Thank you.