Today’s post is a guest feature by Michael from SuperMillennial.com! Enjoy!
We’ve all seen the shirts, memes, or images of “couples that run together stay together.” Or “couples that laugh together stay together.” Or my favorite “couples that train together stay together.” Well the new one should be “Couples that talk about money together stay together.”
According to a Edelman Financial Services survey “44 percent of surveyed couples believe money is the root cause of most divorces.While some people say “money isn’t everything,” I personally couldn’t disagree more. I’m not saying you need a million dollars to actually be happy but money factors into to nearly all areas of our lives. If you’re able to manage your money successfully you’ll be able to sleep better, worry less and enjoy your life with family and friend.
If you don’t talk with your partner about money it can put a real strain on the relationship. Usually in the beginning money isn’t really a huge conversation for a new relationship. But as time goes and you become more serious it’s inevitable to talk about money with your significant other. Usually this comes when you begin to start living together or planning for the future. Whenever it comes up schedule some time to have an open conversation about your personal finances. Make sure you’re prepared by grabbing your favorite beer, wine or cocktail and have “the talk” about your financial future.
Here’s the keys to success to having a money conversation with your partner:
- Be Honest: This is the time to be 100% open and in Will Ferrell’s words “This is the trust tree.” You should have a good enough relationship with this person where you feel comfortable sharing these details. If not maybe re-evaluate or slow down the moving in/wedding until you’re both 100% ready. Make sure you have your laptop and any other statements to review with your significant other by identifying the following:
- Income: How much does each person make per year? Is there future bonuses, commissions or raises? Have you made this amount for a while? Figure out what each person is earning as a starting point. Then determine if the person who makes more will be paying more towards mortgage, rent, utilities etc.
- Debt: This can be a touchy subject and one people might lie or get embarrassed about. No one wants to admit how much they owe the government or a credit card company. Put the pride aside and be honest on how much you owe to each individual. List out all debts for both and find out which ones have the highest interest rates. Find ways to cut spending to pay those down, transfer to a 0% interest credit card, or refinance student loans for a lower interest rate.
- Plan: Who will pay the bills? Will one person pay all of them and the other will send the money? Or will both people pay a few bills? It’s not a bad idea to have at least one bill in each person’s name so they can also have a “utility” to provide if you’re planning on moving or finding a new place to rent in the future. Usually renters require payment stubs and/or past bills during the screening process. Make a calendar of when each bill is due, notate who will pay it (or set up auto pay to keep it real simple) & leave it somewhere you’ll both remember.
- Spending: Opposites may attract but when two people are opposites with their finances a lot of problems (or divorce) can happen. If you’re a diligent saver and your partner is a diligent spender? You could see how it’d be frustrating to see your savings are being spent by your partner every month. With apps like Mint or Personal Capital it’s never been easier to track how much you’re spending. These apps allow you to set budgets, see where you’re overspend and track by categories to determine what you’re spending your money on.
- Goals: Everyone probably has a list of financial goals whether they write them down or not. If not then talk about your future and find out what it is you want to save for. Without a reason to save it’s almost inevitable that you’ll live paycheck to paycheck instead of saving towards something you really want. By having similar goals you’re more likely to cut back and save towards mutual goals. Common goals could include:
- Being debt free
- Having an emergency fund of 3-6 months expenses
- Buying a new (used) car
- Taking that vacation you always wanted together
- Saving for a down payment on a house or rental property
- Wedding (don’t waste too much on one day!)
- Pet or Child (both come with expenses)
Once you have the initial conversation make sure to have some sort of follow up or check in. If not you’re more likely to have the conversation when there is a financial problem. Even if it’s five or ten minutes each Sunday it’s better than a future disagreement that could’ve been avoided if it wasn’t held in. Bottom line, relationships are hard enough. Don’t let money be the reason you fight. By constantly communicating and working towards shared financial goals you’ll be set up to continue your life without always worrying about money.
In the comments, tell me how you and your partner talk about money! Are you both on the same page? Who’s the spender and who’s the saver?
About Michael: Michael L. is the creator of Super Millennial. He teaches people how to evaluate their financial situation, simplify money management & learn how to automate their investments to reach their financial goals. Subscribe for his personal finance “Keys To Success” PDF and blog updates HERE.