No, not marriage. Money. Some couples have trouble discussing money, not because they don’t do it, but because of how they do it. Whether you’re a comfortable, well-established couple or new lovebirds, you might appreciate some tips to keep your financial conversations calm and strategic, instead of emotional and reactive.
Unpack Your Baggage
Attitudes about money are deeply ingrained from childhood onward. As with other traits, opposites often attract, so it’s no surprise that financial issues can cause contention in relationships. But if you can each describe what money means to you personally, you’ll both gain valuable insight. The purpose of this conversation isn’t to decide who is right or wrong, or to persuade the other person to change. The objective is for each person to understand the other person’s perspective so you can decide how best to move forward. If you haven’t unpacked that emotional baggage yet, take time to do so soon.
Once attitudes are out in the open, get specific. Discuss what each of you earns and how much you owe. Both partners should understand the details of your finances—including each other’s assets and debts. Debt ranks high among the reasons why couples fight, so if either one of you has a serious amount of debt, discuss your plan for eliminating it. Then spell out or re-visit your joint financial goals, prioritize them, and estimate how much you’ll need to reach them. Taking this business-like approach can help avoid trouble down the road.
Spending is another sore spot for many couples. Sometimes one partner is singled out as the “spender,” but that may be a matter of perception. For example, one partner may handle the household’s daily expenses, while the other purchases large items like cars or electronics.
Still, if one of you wants to save every extra dollar and the other wants to spend every cent, you’ll simply have to compromise. Choose a realistic amount to put toward your goals, and then set aside some money to spend on yourselves. “Spenders” are more likely to stick with a savings plan that doesn’t leave them feeling deprived, while “savers” may learn that there is enough money left at the end of the month to spend on something fun.
Investing may also require negotiation, because it’s hard to change how someone feels about risk. If one person is an aggressive investor while the other wants to preserve principal at all costs, finding an investment mix acceptable to both could be a challenge. Ask your financial professional for an objective assessment, but if you can’t reach a compromise you may want to consider separate investment portfolios. The conservative partner can stick with fixed-income and cash investments, while the partner who’s comfortable with risk can concentrate on equity investments.
Specialize, but Cross-Train
You’ve reviewed your attitudes and goals, your spending and investments. Now examine who’s doing what on a day-to-day basis—paying bills, tracking spending, and so forth. You may each specialize in certain tasks, but make sure both of you are able to take over if necessary. And be sure to share information so that you both know the account numbers, passwords, and whatever else is necessary to locate and secure your assets in an emergency.
As your relationship evolves, so do your finances. Continue talking and updating your plans and goals. Sit down together regularly to review your budgets, investments, and objectives. Frequent communication about money, when it’s clear and supportive, will help you identify and solve minor problems before they become major. That’s a sound financial goal for any couple.