You spend too much money on video games.
Your partner didn’t tell you about their credit card debt and student loans.
You want to go on vacation; your partner wants to buy a new car.
Sound familiar? Disagreements between romantic partners are often about finances. In fact, according to a 2018 survey, 44% of married couples said that they had argued about money within the year.
Worrying and arguing about money can be stressful, strain your relationship, and even cause resentment, but it doesn’t have to be that way. You can prevent that tension from developing by having open and candid conversations with each other.
Why Are Money Conversations Important?
Sitting down and crunching numbers with your partner may not sound like an exciting way to spend an evening. But it can be an excellent way to bond, compromise, and work together to accomplish your goals.
Whether you just moved in together or have been married for years, here are seven money conversations you should have with your partner:
1. Existing debt
Before you can create a financial plan or roadmap for your future, you have to figure out your current situation. With your partner, discuss all of that debt that you have. Include debt that you incurred together as a couple and any debt you may have from before you got together.
Many couples are unaware of just how much debt they have. If that’s the case for you, you and your partner can look up your credit reports for free at AnnualCreditReport.com. Your credit reports will list all of the credit cards, student loans, car loans, and medical debt that’s under your names.
2. Splitting bills and accounts
Every couple manages their expenses differently. Some people opt for joint accounts, while others keep separate checking accounts or savings accounts. If you split your bills, you might decide that the bills are divided equally, regardless of your incomes. Or, you may decide to divide the bills proportionally based on your salaries.
There’s no one right way to manage your finances as a couple. However, talking frankly about how you want to handle your money and bills can avoid surprises and hurt feelings later on.
If you do choose to combine your accounts, be sure to work with a reputable bank. You can even take your planning a step further by getting to know your local banker, so they can help support your financial goals.
3. Spending money
When you develop a monthly budget, it’s a good idea to set aside some money for extras. You can use the money allocated for your personal spending on non-essential purchases like shoes, games, or a night out with friends.
Deciding how much you each have for non-essentials can help rein in excess spending. By knowing exactly how much you can spend each month, you can budget accordingly and avoid any fights about wasting cash on unnecessary things.
4. Expectations for children
Whether or not you decide to have children is a huge decision. How you’ll handle money with children is an important discussion to have, too.
If you have children or want to have children later on, make sure you discuss your expectations with your partner. Here are some questions to ask your significant other:
- Should we pay our child an allowance for chores?
- If we pay an allowance, how much should we pay? Does it increase with age?
- Will we help our children pay for college, or will they be expected to pay for school themselves?
- Will we expect our child to get a job in high school? Or do we want them to focus solely on their schoolwork?
- Are we willing to co-sign our child’s application for a car loan or apartment lease?
5. Financial priorities
When talking about money with your partner, make sure your priorities align. Homeownership, travel, paying off debt — they’re all potential priorities that can conflict with one another, so work together to see which goal you should focus on first.
6. Retirement goals
While many people assume they’ll continue working well into their 60’s before they retire, more and more people are striving for early retirement. If that’s a focus for you and your partner, talk about what age you’d like to retire, what you want your retirement to look like, and what sacrifices you need to make now to accomplish those goals.
For example, you may need to open and contribute to individual retirement accounts (IRAs) in addition to an employer-sponsored retirement plan to have enough money saved for your retirement, which could mean that you have to reduce your spending in other areas.
7. Emergency plans
While it may sound morbid, discussing your plans and desires if an emergency happens is critical. For example:
- Could you pay the rent or mortgage on your own if something happened to your partner?
- Does your partner have a will? Do you?
- In a worst-case scenario where you both pass away, who do you want to take care of your children?
A Few More Topics to Consider
If you haven’t discussed these subjects before, make sure you cover the following topics:
- Life insurance: It’s important for you and your partner to discuss what types of insurance you really need. If either of you don’t have life insurance, it may be a good idea to apply for a policy. Life insurance can give you some financial relief if your partner passes away, allowing you to maintain your lifestyle and provide for your children, if necessary. In the case where you both pass away, life insurance can ensure your children or other dependents are cared for, as well. Advance healthcare directive: Also known as living wills, advance healthcare directives authorize someone to make decisions about your medical care if you’re unable to do so. You may have different ideas about what kind of medical measures and procedures are reasonable, so be clear about what life-sustaining measures you both do or don’t want.
- Will: As a couple, you should develop a will. Even if you don’t think you have enough assets to make a will worthwhile, a will can prevent family strife, help protect against elder abuse, and allow your heirs to receive their inheritance faster. You can designate who you want to receive certain items; for example, you can state that your grandmother’s beautiful china set should go to your niece or that a sibling should inherit your house.
- Funeral plans: People have very different ideas of how their lives should be celebrated. While some people want religious funerals or in-ground burials, other people may want a secular service — or no service at all — and cremation. It may be tough to talk about these things with your partner, but it’s a good idea to discuss them now so you can honor their wishes.
- Documents: Create a safe space for essential documents like your passports, birth certificates, will, and life insurance policy information. You and your partner should know where those documents are stored and how to access them in an emergency.
Managing your money
When you’re in a relationship, money can cause a lot of stress and arguments. However, open and regular communication can prevent that from happening and keeps you working together as a team. Set up regular dates to review your spending and budgets, discuss your goals, and talk about how you want to handle your money so that you’re always on the same page.
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Information contained in this blog is for educational and informational purposes only. Nothing contained in this blog should be construed as legal or tax advice. An attorney or tax advisor should be consulted for advice on specific issues.