Discussing finances with your significant other might seem daunting and can even lead to disagreement, particularly if you both have diverging perspectives on managing money. Therefore, experts in finance recommend couples to have frequent, candid discussions about financial matters and resolve any outstanding issues promptly. It’s ill-advised to put off these conversations until a financial calamity ensues!
A recent survey by AICPA involving 1,157 American adults living with a partner revealed that 73% had experienced relationship strains over financial decisions, with 26% experiencing it monthly. Additionally, 40% reported a reasonable likelihood of ending a relationship owing to fiscal untruthfulness. Another study by TD Ameritrade revealed that finance-related disagreements ended the marriages of 41% and 29% of divorced Generation X and Baby Boomers, respectively. These statistics underscore the importance of having financial discussions before marriage to evade falling into such predicaments.
But how can you broach this topic smoothly without sparking a heated argument? Here are some practical tips.
1. BE HONEST
Honesty is crucial in any thriving relationship. Be straightforward about your current financial status. Discuss debts, whether they stem from credit cards or student loans, and express your individual views on money and shared financial objectives.
2. SCHEDULE REGULAR TALKS
Inform your partner about your intent to have money discussions. Decide on a mutually agreed time and venue free from distractions. Dedicate about an hour to these fruitful discussions.
3. PREPARE YOUR THOUGHTS
Plan ahead on the topics to talk about. These could include fundamental aspects like budgeting, saving, sharing living costs, and any particular concerns needing resolution or change.
4. CREATE FINANCIAL GOALS
It’s vital for everyone, single or attached, to outline financial objectives. These goals offer guidance in financial decision-making and provide a structure for your expenditure plan. Always ensure your financial goals are aligned and remain flexible in case circumstances change.
Questions to ponder upon with your partner: What are our priorities? How soon do we wish to achieve these objectives?
5. ATTACH MONETARY VALUES TO YOUR GOALS
Now, you can begin discussing the actual costs. For instance, how much would a month’s holiday in Europe cost? How much should we save for a house in our preferred locality?
6. CREATE A SAVINGS PLAN
Design a feasible savings plan with your partner. If you’re saving up for a vacation, a house, or any other dream, calculate how much to allocate monthly and the timeframe needed to achieve your goal.
7. BUILD A BUDGET
Construct a shared monthly budget, accounting for all expenses and your new savings target. If you opt for a comprehensive budget, begin tracking your each monthly outlay and earnings over the next quarter to get a clear financial picture.
8. BE CLEAR ON MONEY MANAGEMENT
If you haven’t begun sharing certain expenses, it’s now a suitable moment to discuss this. For cohabiting couples, it’s logical to divide basic costs like rent and groceries. You need to decide how to distribute costs fairly based on individual earnings. Remember, no matter how you jointly manage your finances, it’s crucial to maintain at least one credit card under your name, establishing your separate credit history.
9. SEEK PROFESSIONAL HELP
A financial advisor can help both partners devise shared financial goals, budgets, and priorities and suggest effective joint money management strategies. They can assist in formulating a plan that maximizes your strengths and lays a robust financial foundation for your mutual future.
In closing, initiating a dialogue about money matters with your partner might seem tough, but it’s a necessary discussion. Being secretive about your financial issues compounds problems. Regularly revisiting this conversation is crucial, especially as relationships grow more serious and considerations about shared accounts or expenses arise. Your first discussion on finances may feel uncomfortable, but consistent effort improves proficiency.
