Money isn’t the most romantic topic to discuss with your significant other, but avoiding the topic altogether or concealing financial information can lead to resentment and decidedly unromantic outcomes. In fact, a 2016 study by the National Endowment for Financial Education showed 75 percent of couples that concealed financial information from one another saw negative consequences in the relationship, with 13 percent of those couples divorcing or separating.
“Couples may argue about kids, chores and annoying habits, but arguments about money are fraught with emotions and can make or break a relationship,” says Kathy Kraeblen, a senior wealth strategist with PNC Wealth Management. However, discussing financial needs, goals and habits can help couples better understand each other’s motivations and can ease some of the tension surrounding finances.
If you and your partner haven’t had the “money talk” yet (or if it has been a while since you last tackled the topic), consider this advice to help steer the conversation:
A simple way to start talking about money is to ask your partner about their family’s spending habits when they were growing up. For example, did their family spend a lot of money or were they frugal? Did they hear family members argue about money? Discussing early observations can help you approach the topic of your current spending habits.
This also is a good time to talk about any fears you have about money. Did you or your partner grow up fearing money would “run out” and carry that fear into your spending today? Are you worried about day-to-day expenses, or are you focused on long-term concerns, like retirement? Understanding the emotions surrounding money can help steer you toward specific topics you need to address.
If asking about fears and family history feels uncomfortable, consider taking separate money personality quizzes. When you’re done, share your results and compare answers on questions that are most important to you.
The most important part of a “money talk” with your partner is understanding each person’s full financial picture. “The first step is to lay all debts on the table, including the total amount owed on student loans, mortgages, auto loans, credit cards, and so on,” says Chris George, senior vice president and regional manager for PNC Bank in Wilmington, N.C.
Next, discuss average monthly expenses and compare budgets. If you don’t have a budget, start tracking how you spend your money for the next few weeks. Once you have that information, share it with your partner.
“I can’t emphasize enough how important it is to disclose everything up front,” says Kraeblen. “You don’t want to have financial secrets in a relationship or marriage.”
Now that you know where you both stand financially, think about how you want to share your money.
“Your lives are combined, so to an extent your finances are too,” says George. Whether you keep separate accounts, share savings account but keep separate spending accounts, or combine all of your money, you still have shared expenses like housing, utilities and groceries to consider.
“Not all partners can contribute equally to household finances, and that’s okay. But the administration of money is something where you should come together. This isn’t about who earns or owns what money – it’s about making decisions and plans as a couple that will benefit both of you, and then sticking to them,” says George.
But no matter how you handle the day-to-day spending and administrative aspect of your finances, both partners should communicate and understand the big picture of household finances. Kraeblen recommends that both partners attend meetings with financial advisors so everyone is aware of all assets, investments and insurance.
Talk to each other about your financial goals. Do you want to retire early and travel the world? Or are you focused on saving a down payment for your first home? Understanding your collective financial goals will help you create a budget you can stick to and can serve as a baseline when you consider spending money.
“A good financial plan will be based on your current situation as well as your shared goals for the future. It’s extremely important to think ahead,” says George. “Keep in mind that your lives will change and your financial situation likely will change as well, so you should revisit your budget and talk about goals often. When you check in, assess whether you’re making progress or need to reevaluate your strategy.”
Start your financial plan with a budget. Your budget will cover fixed expenses, like home and debt payments, as well as variable expenses such as food, gas and entertainment. You want to keep your rent or mortgage payment, as well as total debt, at a comfortable level so you can add money to your savings each month. Establishing a consistent savings habit will help you build an emergency fund, save for a major purchase as well as invest in your retirement. Review your budget periodically with your financial goals in mind and make adjustments as needed.
To help maintain a sense of independence in your financial relationship without deviating from your shared plan, it can help to designate a certain amount of “fun money” that each person can spend, no questions asked. This can allow partners to indulge in their favorite products or activities without disrupting your shared finances.
“No matter what, remember that it’s normal for this conversation to feel uncomfortable,” says Kraeblen. “As a society, we don’t talk about money very often, so it can feel like a taboo subject. However, this topic is too important to your relationship to ignore.”
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