How to Talk About Finances with Your Spouse or Partner
Wanting a happy relationship or marriage is completely natural, but what can you do to ensure it will stay that way when talking about finances? You have to be proactive when it comes to talking about finances with your spouse or partner. You can’t just “expect” it to happen. I found a great article online entitled, “How to Talk About Money with Your Spouse,” written by Carl Richards, a certified financial planner located in Park City Utah and also the director of investor education at BAM Advisor Services.
Richards has found himself in many client meetings where it becomes evident that the couples were having their first discussion on big decisions at that moment. Decisions included kids’ education, saving, and retirement. Without fail, either one or both individuals are surprised by their partner’s opinion on a topic. Richards says, “It seems obvious that the more conversations you have about money before you have to make major financial decisions, the happier you’ll be in your relationship.” These rules apply to both personal and professional relationships.
Richards then talked about five other things that can make a difference in your relationship when it comes to talking about money:
1. Set a spending threshold. Often times, the biggest arguments arise from surprises. One of the easiest ways to start an argument is if one spouse makes a big purchase without telling the other. A way to prevent this from happening is to set a predetermined limit. Depending on your budget, the limit can be as little as $50 or as much as $500. The main point is that you are discussing the predetermined amount with your spouse and making decisions together – leaving no room for surprise purchases.
2. Talk about education. Richards says that one of the most common disagreements between couples revolves around their children’s education. One parent may say, “I supported myself and paid for my school. It’s better for our kids if they do that, too.” The other wants to pay for the best school the kids can attend, no matter the price. There is no right or wrong here, but rather a rather large and important decision that needs to be discussed and decided upon by both partners in the relationship. It should be talked about and decided before the first child is a senior in high school and sending out applications.
3. Decide where to live. Deciding where you want to live can definitely be an emotional decision. One person may want to own a home, while the other wants to rent. When making this decision together, it needs to be an honest conversation about expectations on both sides and what is best for you as a couple and as a family. Richards emphasizes that couples should NOT view their home as an investment! Couples should buy a house for reasons that aren’t connected to selling it again in a year. Otherwise you could be headed down a road that leads to a future of frustration.
4. Talk about vacations. Since vacations can cost a lot of month, it is very important to talk through vacation expectations with your spouse. You need to be honest with each other about a budget that makes sense for travel and fits in with your other financial obligations.
5. Review your retirement expectations. Talk about what your retirement goals are. Some are content with working for 40 years and then saying they are done, while others are wanting to work just long enough to then be able to do something that’s less stressful but more fulfilling.
So with all of these ideas, you are probably wondering how you should get started? Each month set aside a specific time and place to talk. By setting aside time, you can prepare together and know what to expect. You may still have disagreements here and there, but it less likely that emotion will take over and things will be blown out of proportion.
Another great idea is to have a “no shame, no blame” rule. Many discussions surrounding money can end in heated arguments. By giving both individuals permission to have these discussions with no shame or blame, there is less room for heated discussions. You will be “talking” through your problems and taking responsibility for your actions, rather than blaming or shaming. Commit yourselves to learning from your mistakes and moving forward.
Next, be sure to write your decisions down so you can track your progress. One of the benefits of having monthly meetings is that you can assess how you are doing. Determine if you have made progress. If not, what can you do to make it happen next month? The list is a great way to manage your monthly conversations and hold each other accountable.
Finally, be sure to automate your decisions. If decide it’s important to save $100 a month for education, make it happen. Contact your financial institution and have the amount automatically transferred each month to your savings account.
Remember that talking about money with your spouse or business partner does not have to be a scary or stressful affair! The stress is actually reduced when understanding what each person in the relationship expects. Communication is key when it comes to talking about finances with your spouse or partner.
This post was inspired by Genworth Financial. All opinions expressed in this post are 100% mine. For more information about marriage and finances, visit the Genworth Financial website.