Facing Financial Reality: Important Money Topics for Couples
These Five Conversations Can Strengthen Your Relationship and Your FinancesKathy Longo, CFP®, CAP®, CDFA® Monday, 15 March 2021
When you’re sharing your life with someone else, communication and compromise are paramount to the health of your relationship. While this can apply to many topics, it is certainly true when it comes to financial matters – especially since money disagreements are a leading cause of divorce in the United States.
Financial discussions can feel awkward, and many couples practice avoidance. However, facing financial reality together is an important step in achieving your individual and joint financial and life goals. Below, we’ll discuss five money conversations all couples should have.
1. Assets and Liabilities
This is one of the most foundational money discussions you can have with your spouse or partner. Ideally, it’s best to have it early on, but it’s never too late to lay all your cards on the table – or to revisit the topic if circumstances have changed. Discuss your individual and joint assets and liabilities and where they fall on the family balance sheet.
If you’re one of the 53 percent of Americans keeping money secrets from your spouse, like a secret credit card, this conversation offers an opportunity to come clean, too.
2. Income and Expenses
You and your partner should know how much each of you is earning, how much you’re saving, and why you’ve each chosen that savings amount. If one or both of you aren’t saving enough, then it’s time to put a strategy in place to drive down your monthly expenses.
3. Credit Scores
In addition to the assets and liabilities each of you brings into your relationship, your credit score is an important consideration. In my experience, I’ve seen couples with significant assets, good income, and a healthy ability to save end up with poor credit scores because they don’t keep up with monthly payments or because one person brought a lot of debt into the relationship. As a result, their credit scores take a hit, which is unfortunate because low credit scores can impact your ability to achieve your financial goals. Even if you don’t manage the household finances, know the credit scores for your partner and yourself. They can unveil existing financial issues that need to be cleared up before the two of you can move forward with your joint financial future.
You can check your credit score annually for free here, and many credit card companies also offer a credit score as part of your cardmember benefits.
SEE ALSO: Do You Know Your Partner’s Money Story?
4. Money Roles
Every couple has their own system for managing money and there is no one right way to do it. The key is to develop a system early on in your relationship so there’s no question about who manages the finances and how they’re managed. In addition to talking to your spouse about the important details listed here previously, it’s crucial to have conversations about money management.
To get started, discuss these questions:
- How will you handle credit card debt? Are you both comfortable carrying some amount of debt, or will you pay the card off each month?
- How will you manage large purchases? Will you make a rule to talk with one another about any purchases greater than, say, $500?
- Will you deposit your paychecks into one shared account, or will you keep your accounts separate? Will you blend these strategies and have separate personal accounts, but a joint account for household expenses?
- Who will pay the day-to-day bills?
- Who will manage your investments?
In addition to these questions, try to think of anything specific to your unique circumstances, too, and add it to the conversation. There is great value in making these types of decisions together, and you should revisit the conversation quarterly for the best results. (Check out my podcast episode, Money Roles & Rules, for more on this topic.)
5. Your Financial Future
When you’ve taken time to discuss where you both stand financially and what roles you will play in the management of household finances, the next step is to sit down with your spouse and agree on a financial future. While money is the premise for this discussion, your financial future is about more than just dollars and cents. It’s a much deeper conversation about how you’re going to achieve the shared vision you have for your lives.
Some people want to retire and travel. Many couples need to have a financial plan in place that includes children in the present or the future. Others want to take a mid-career break and join the Peace Corps for a few years. Whatever it is that you want, communicate it openly and honestly to your partner. Planning a financial future together means taking what you know of your past, your present, and what you desire of your future and setting a foundation for a life vision. Once you do that, you can take actionable steps to achieve that vision.
Final Thoughts on Money Topics for Couples – And an Important Tip
Conversations about money aren’t easy, but you need to discuss each of the above topics in order to achieve your goals. Before you sit down to discuss financial topics with your spouse or partner, pick the right space and timing. Having the right environment and being mentally and emotionally prepared for money discussions will help you avoid high emotions and disagreements and lead to a more productive outcome.
You and your spouse may disagree on one or more money matters, and each of you will likely have to compromise in one area or another. However, openly discussing both your points of agreement and disagreement will strengthen your financial foundation – and your relationship.
About the Author
Kathy Longo brings over 25 years of expertise and experience to Flourish Wealth Management. Kathy is wholly dedicated to improving the life of each client and finds joy in making complex matters simple and easy to understand. She excels at asking the right questions, uncovering new possibilities and implementing the most advantageous strategies for success. Playing such a pivotal role in her clients’ lives remains an honor and a privilege. After earning a degree in Financial Planning and Counseling from Purdue University, she began her career at a small firm in Palatine, Illinois where she worked directly with clients while learning to build a viable, client-centric business. Over the years, she gained extensive knowledge and wisdom working as a wealth manager, financial planner, firm manager and business owner at notable, various sized companies in both Chicago and Minneapolis.