Financial Intimacy: How To Talk About Money With Your Partner
It’s inherently uncomfortable to talk about money with your partner, especially if you’ve never done it before. However, despite how uncomfortable awkward it may feel, discussing money matters is critical in a relationship. The way you and your partner handle money (both individually and jointly) can have a significant impact on things you might want to accomplish together in the future, such as buying a house, starting a family, or simply staying afloat financially.
Having an honest, open discussion about money can be the first step to a happy life together. And in case you haven’t done so, this love month is the perfect reminder for that as it can strengthen your bond together.
Why do you need to talk about money?
It’s hard to talk about money. This is because the way a person deals with money can indicate a lot of things about them. “People’s pasts deeply affect, and continue to influence, their financial presents and futures,” explains Dr. Jackie Black, author of “Couples and Money: Cracking the Code to Ending the #1 Conflict in Marriage”.
In other words, your life experiences shape your money philosophy. For example, somebody who grew up with a fixed allowance might be used to making budgets, while someone who came from a more affluent family might view spending less strictly. A difference like this might seem minor. But if not dealt with from the beginning, a couple with these different philosophies can get into frequent disagreements, and put a strain on the relationship.
Two individuals aren’t going to have the exact same views about money. But just because you and your partner might handle money differently doesn’t mean your relationship is doomed. When you discuss money early on, and in an open, honest manner, you can handle these difficulties, and you’ll start off your partnership on strong financial footing.
When should you talk about money?
We’ve emphasized the importance of having the money talk early, but we’re not saying you should have it after three dates. Instead, increase the scope of money talks as the relationship gets more serious. If you’re just going out for dinner, you don’t have to tell him your credit history, but you might discuss how to deal with restaurant bills. If you’re discussing signing a lease together or getting engaged, then take some time for the money talk.
If you’re already in a marriage or another long-term partnership, you should talk about money regularly, to make sure you’re both on track with the financial goals you’ve set, and to address any overspending or other problems that may crop up. We’ll talk about this more later.
How do you talk about money?
If you don’t know how to start a conversation about your present financial situation and your future, here’s how you can warm it up.
1. Figure out your own money philosophy first.
Before you start crunching numbers and making budgets, think about your own views on money. Richard Russo of NerdWallet suggests writing out your money philosophy in two sentences, and share it with your partner.
Here are some examples:
“I’ve been afraid of debt for a long time and feel compelled to pay off debts quickly. My parents taught me to not dig a hole I can’t climb out of, and I’ve always been that way.”
“I always make sure to have money in an emergency fund. I always try to save at least 5% of my salary towards for my big ticket financial goals.”
By comparing your money philosophies, you can see if they’re compatible with or complementary to each other. If there are any major discrepancies, now is the time to discuss them and come to an agreement about how to handle these differences.
However, heed this advice from Marvin Fausto, an investment expert who has served as Senior Vice President and Chief Investment Officer of Trust & Investment Group at BDO Unibank, on ANC’s On The Money. “If you’re not ready to let go of your spending habits, let go of the way you buy things left and right, then maybe you’re not ready [for marriage]. But if you are already willing to sacrifice just a little bit of that for the benefit of the marriage, then you will slowly get into the groove, into the idea of getting married.”
2. Discuss your financial goals
Write down your goals and plan how much money you’d need to achieve them. Maybe you want to pay off all your debt. Perhaps you want to save together for a big expense, like a vacation, a car, or homeownership. You might want kids. And you might want to send these kids to good schools. Whatever your financial goals are, they’re going to require planning and money. Set some short-term and long-term goals with your partner so you can work together to achieve them.
3. Layout your assets and debts
Every relationship expert underlines the importance of honesty; this importance extends to money issues. Couples should be forthright with each other about their financial situation. Lay everything about your financial life out for your partner. Some issues you need to cover include:
- Savings — individuals usually have their own savings accounts, especially if they’ve been working for a while. Partners should let each other know how much they have saved up.
- Debts — this is the least comfortable topic, but it’s incredibly important. If you have any student loans, car loans, credit card debts, or any other debts, don’t hide it from your partner — this can only cause more trouble down the road. Once you’ve laid it out, form a debt repayment plan to show your partner that you are willing to work for your shared financial security. If you’re not the one with debt, don’t be afraid of your partner’s: instead, help them with a strategy to get out of debt. Be supportive of each other.
- Other obligations — are one or both of you expected to support other relatives financially? Or perhaps you have other obligations not covered above. Talk about how these can affect your financial situation as a couple.
This is a tricky part of the money conversation. The key is no judgment: this is an opportunity for a discussion, not an argument. As Suze Orman says, “blame doesn’t help your balance sheet. To address any money problem, you need to work together to come up with a game plan.”
4. Plan your financial future together as a couple
Now that you understand your partner’s money philosophy, goals, and financial situation (and vice versa), you can put your heads together and plan for your financial future. Here are some actions you could take:
- Agree on how to deal with outstanding debt — should each be responsible for their own debts acquired before marriage, or do you want to work at it together?
- Come up with a system on how to handle both your incomes — whether this means having all your money in a joint account, keeping them completely separate, or having one account for shared expenses but keeping individual accounts for each of you.
- Set up a budget (and stick to it) — so that each of you knows where the money goes, and how long until you meet your goals.
- Start a saving plan for your shared goals — such as retirement, or that new house, or that new baby.
5. Make this a regular discussion
Nobody wants to talk about money all the time. Instead, concentrate all your serious money talk in one monthly meeting. This talk doesn’t have to be very long; set aside about an hour each month. You use this time to pay all your bills, go over your budget, and talk about any major financial decisions you’ve made over the past month. You can also use this time to check up on how you’re doing with your financial goals, and adjust them if there are any major changes in your situation.
6. Do something fun before and after
Talking about money isn’t even remotely fun; it can feel like a chore, but it doesn’t have to feel like a burden. Make it something to look forward to: have a nice dinner beforehand, enjoy a glass of wine together during the talk, and go out for a good movie afterward.
Strong partnerships are built on trust. Talking about money with your partner is one of the best ways to build this trust, and although it may be awkward at first, it provides both of your financial security and ultimately strengthens your relationship.
This article was first published in September 3, 2014 and has been updated for freshness, accuracy and comprehensiveness.