The Five-Year Squeeze

September 27, 2016

The Five-Year Squeeze

I have a theory (Yay for everyone and their theories!), and it has a name: The Five-Year Squeeze.

We’ve all heard of the Seven-Year Itch, right? Well, the Five-Year Squeeze is that point in marriage when you start to feel — and wake up to — your financial reality.

This, of course, does not apply to every marriage, but in my extremely scientific and detailed research of asking friends and clients, it’s somewhere around that five-year mark that the average couple feels the impact of their financial choices.

Years One to Five of Marriage

The first five years of marriage seem to go something like this: big wedding; financed honeymoon or vacation to some island in the Caribbean; a leased or financed car; a raise at work (woohoo!); an upgrade in apartment in celebration of said raise; a baby; a mortgage; another leased or financed car; panic.

There may also be a career change or a decision to shift to a single-income household in there somewhere. Does this sound familiar?

For the fortunate couple who has at least one financially-minded party, the Five-Year Squeeze is probably avoided, but for the rest of us, the Five-Year Squeeze serves as a wake-up call to the fact that making financial decisions in the absence of a plan or goals will only get us into trouble.

Why Five Years?

While five years may seem like a long time, it isn’t. When we make a single financial decision, we may not feel the effects of that decision immediately. We also may not feel the entire impact of that decision until it’s within the context of other decisions.

Celebrating a $2000 raise with an upgrade to a more expensive apartment may seem innocuous, but when that second car lease is added to the mix, or the desire to stay at home instead of paying for childcare kicks in, suddenly the weight of that decision is felt.

When each decision is made in a vacuum, we set ourselves up for having to deal with a big mess later on. Somehow it takes about five years to feel the compound consequences of our decisions.

Avoiding the Five-Year Squeeze

If you are reading this and you have not felt the Five-Year Squeeze yet, great! The antidote is to be intentional in your decisions. And to work together with your spouse. And to set goals.

As Yogi Berra put it, “If you don’t know where you are going, you’ll end up someplace else.” The Five-Year Squeeze is easily avoided by establishing where you want to go financially as a couple — and establishing your “why.”

If you desire to retire early or fund your children’s college education, then those goals will dictate whether you lease a car or opt to pay cash for one and live within your means. You may be tempted to go in a particular direction, but keeping your “why” in mind will color your final decision.

Warn Others

I firmly believe one of the reasons we experience mistakes and challenges is for the benefit of others. Whether it’s for the benefit of our own offspring or the benefit of others we may have the opportunity to influence, our history and our experience serve as lessons.

If you have experienced the Five-Year Squeeze and have successfully moved past it, share your story with that young engaged or newly-married couple you know. Prevention is better than cure so, telling your tale just might help them avoid the mistakes you made.

Would love your thoughts. If married, how far into your marriage did you start to feel a financial squeeze? Do you agree with the Five-Year Squeeze theory?

The Five-Year Squeeze is that point in marriage when you start to feel — and wake up to — your financial reality.