Money Matters to Discuss With Your Partner
Finances might not make a marriage, but they sure can break one. Consider this: According to the Institute for Divorce Financial Analysis, 22 percent of all divorces are a result of money issues, making it among the top three reasons people cite as their reason to split. What’s more, when talking to married couples about their top stressors, financial woes or disagreements over money management tops the list.
For any married couples already having disagreements over money, engaged people heading to the altar, or even partners who live together and share money and expenses, these numbers should give you pause. They should also get you to seriously consider sitting down with your significant other for a frank discussion about your current financial picture, any problems you’re having, potential solutions and how you see yourself moving forward.
The following is a list of several questions to ask or discussions to have, whatever your relationship status. If your union is important to you and you are looking forward to a long and happy future together, it would be prudent to take note.
- What is your money philosophy? Are you both spenders or savers? Are you interested in investing or not? Is retirement saving a priority? Should either of you have to check in with the other before spending a certain amount of money? These are general questions or topic points to get you started talking about money. Theoretically any question you have about how your partner makes and spends money should be addressed.
- Saving and spending habits. Does your partner prefer eating out often over home-cooked meals? Do you like to sock away a set amount of money each paycheck? Are big purchases planned out ahead of time? Is an emergency fund a priority, and, if so, how much money should be allotted? Any of these seemingly small issues can turn into major arguments if they’re not discussed and agreed upon beforehand.
- Discuss and craft a budget. This might seem obvious considering all the money issues that can arise, but making and following a budget each month is critical. Both parties should contribute to the creation of the budget and each person should be accountable to the other for where the money goes.
- Credit cards and credit reports. It’s important to know what each of you owe, to whom, how your credit score ranks, etc. If scores are low, agree on a plan to raise them. This is an area where you don’t want any surprises, since you’ll both be responsible for debts once you’ve merged your money and your partner’s good or bad credit score will be reflected in any joint debt you take out.
- What are your spending priorities? This relates to major issues. For instance, if you have kids (or are planning to have them), do you want to send them to private school or will public education do? Will you rent long-term or are you planning on buying a home and, if so, what’s the timeline? Are there elderly parents to care for? You don’t have to quibble over every dollar spent, but when it comes to big-ticket items or long-term expenses, it’s best to have an idea of your partner’s expectations and plans to pay.
- Will you have joint or separate accounts? This might be a touchy subject for some, but the decision to combine accounts or keep them separate might help some couples solve some spending and saving problems. While a joint account might help some couples stay on the same page, financially speaking, separate accounts may help each partner evaluate their unique spending and saving habits, which is important information to have if you’re trying to create a workable budget.
- Come clean about spending obligations. If you’re hiding debt from your partner, it’s time to own up to it. Without doing so, you risk one or both of you spending money you don’t have, simply because you’re unaware of your total financial output. This can only lead to more debt or to bills going unpaid.
- Set goals. If you’re planning a future together or are well on your way, you need to have shared goals regarding your money. Think retirement, college tuition, a dream vacation or paying off your mortgage. All these are solid goals to work toward, but you’ll find these dreams will stay that just that, dreams, if you don’t work with your partner to reach them together.
- Wills. Couples in a committed relationship, particularly those that involve children, should have a will drawn up. Conversations centered around creating a will should be honest and nothing should be held back. Unfortunately, none of us knows when we’ll die so it’s important that we protect our children, our spouse and, yes, our assets, when we’re gone.
A long and happy partnership is about so much more than finances, but money always matters. If you find you need additional help contact us here team at American Credit Foundation.
We can help you have the conversations you need to ensure a fruitful future.