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If you’ve been in a relationship awhile, you’ve probably talked about nearly everything under the sun with your significant other. You likely have an intimate understanding of their eating habits, daily routines, family situation, friend groups, careers, and hobbies.
Most of us think we know our partner better than anyone in the world, but often we’re surprisingly in the dark about our partner’s financial background. (Just listen to Ramit Sethi’s podcast for a glimpse into how everyday couples are managing money. Some of these conversations are bananas.) And one of the primary reasons is that many people are unsure about how to begin to talk about money with their partners.
This post breaks down difficult financial conversations into digestible parts to enable you and your partner to go from the great financial unknown to setting specific, achievable goals.
How to talk about finances with your significant other in a healthy, productive way
It’s easier than you think. But you’ve probably put this conversation off because it can be uncomfortable. The following questions make it simple and straightforward to talk money, allowing you to form a strong foundation for your financial relationship.
Important! These discussions do not need to happen (nor should they happen) all on the same day or even in the same month. Often, these conversations build over time until talking about money is a normal part of your life together. Try to make it fun and comfortable, going at whatever pace feels right for you.
Conversation #1: Go back to where your money mindsets began.
The answers to these questions often get at the root of why someone is open or avoidant when it comes to money conversations. If you were raised in a household where mom and dad did the family budget every Sunday and you were part of it, then you’re probably far more open than someone who never saw their parents talk about money but heard them arguing in hushed whispers behind closed doors.
This does not necessarily need to be a sit-down conversation, and you can gain the information over time. The following questions will help paint a picture of whether your partner has positive or negative feelings about money and whether they are open or closed when discussing finances. Hopefully, these starters will lead to storytelling about each partner’s childhood, which will allow you to get to know each other better. What could be better than that?
- What is your first memory of money?
- Did you receive an allowance growing up?
- Did you ever save up for a big purchase as a child?
- Do you remember your family talking about money when you were young?
- What types of messages do you remember hearing as a kid? (We don’t talk about money, we work hard for every penny, a penny saved is a penny earned, etc.)
- Did your parents manage the finances together, or did that job often go to one parent?
Conversation #2: Determine why money is important to you as an individual and as a couple.
As you look towards a future with the person you love, it’s essential to understand that whether we like it or not, money will drive many decisions in our lives. How much money we have or don’t and how we manage it will determine the types of lives we’ll lead, where we’ll live, the places we’ll be able to explore, and ultimately, the kind of retirement we’ll have.
This money conversation is a little more fun and digs into your values separately and together. It will expose the underlying principles on which you’ve each built your financial foundation. As a result, it’s the perfect opportunity to discuss how you dream of your financial life together.
- Why is having money important to you?
- Do you need a certain amount of money in the bank in cash to feel safe and secure?
- Would a certain amount of money grant you the freedom to pursue dreams you may otherwise not?
- What is the first thing you do with money received from a paycheck? (Save it, Invest it, Spend it, Pay down debt)
- How do you feel about having debt? (Is there a certain interest rate on a debt that makes you comfortable not aggressively paying it off?)
- Why is money important to us as a couple?
- What do we want to be able to do with our money? (One of my favorite financial experts, Ramit Sethi, would call this defining your “rich life.” The most important point is to think bigger than what you have today. Sure, being able to put the credit cards on auto-pay would be amazing, but dare to dream bigger and think about what kind of freedom you’d be able to pursue beyond day-to-day financial management.)
Conversation #3: Lay it all on the line.
This money conversation for couples is the one most people dread and probably what comes to mind when you think about having “the money talk.” This is the time to pull together your deepest, darkest financial secrets and bring them to light. You may need to gather a pay stub, log into your forgotten 401(k) account, or dust off the mail from your credit card company that’s been in the corner for months. Below is an outline of the areas in which you can each break down your financial accounts to make it easier to understand and compare.
Going into this section, the most important thing is to keep it judgment-free. This is not the time for criticism or figuring out how to “fix” what you’ve uncovered. This is simply a data-gathering exercise where you’re listing your income, expenses, debt, savings, and investments.
- Income – Monthly (or an average if commission-based)
- Include income from your 9-5 but also from any side hustles you may have, like babysitting, dog walking, or freelance writing.
- Expenses – Monthly
- Include rent/mortgage, bills, utilities, transportation, groceries, pet expenses, eating out, gifts, charitable contributions, etc.
- Expenses – Annual
- Consider annual insurance payments for car, home, disability or life insurance, taxes for home or car, homeowner’s association fees, etc.
- Include any outstanding debt you may have across credit cards, automobile loans, mortgages, student loans, etc.
- Savings – Emergency Fund
- This money is socked away for a rainy day and will likely be readily available in a high-yield savings account. Check out this post for more information on emergency funds and why you need one.
- Savings – Other
- You may have these savings earmarked for a vacation fund, new car fund, wedding fund, etc.
- Investments – Retirement
- List any investments here that you contribute to or have in the past, which you can access without penalty after a certain age, like a 401(k), 457, Roth IRA, or IRA.
- Investments – Other
- Include Health Savings Accounts (HSAs), stocks, index funds, or any other investments that are not retirement-specific savings vehicles.
*I included Health Savings Account (HSA) in the Investments section as I generally view it as an investment vehicle. If you use your HSA for regular medical expenses throughout the year, this can move to the Savings – Other section.
Conversation #4: Determine how you want to approach your finances together and define your financial relationship rules.
You’ve already figured out how much debt you’re carrying as a couple and the low down on saving and investing. It’s time now to determine how to move forward with this information. This is most applicable to those in serious relationships or married couples. If you are still in the dating phase, you may not be thinking about combining finances. For you, right now, it’s essential to determine if there is anything that came out in Step 3 that is going to be something worth tackling together when the time comes. Depending on the revelations in Step 3, some of the questions below may be unnecessary.
- How do we deal with the discrepancy between our incomes (if applicable)? Should the partner making more money share a more significant burden of monthly bills? Do we want to split expenses down the middle?
- Where will we keep shared financial documents?
- How will we approach large purchases, and what amount of money can we spend without consulting the other person?
- How comfortable are we with our current debt? Should we aggressively pay off debt before we start saving toward other goals? Do we want to continue to pay debt individually, or, if married or in a committed relationship, should we put money toward debt together?
- Do we want the money management to be led mainly by one partner, or would we rather this be a shared responsibility?
- What’s the best time for a monthly (or weekly, quarterly, etc.) meeting to discuss finances?
- What kind of savings rate do we want to have?
- Do we want to manage finances ourselves, or would we be more comfortable finding a financial planner?
- How do we want to manage taxes as a couple?
- How do we want to talk to our kids about our family finances?
- Do we want to work off a monthly budget or spending plan?
Overspending and disagreements over large purposes are among the biggest sources of tension for recent divorcees who identified money issues as the number one reason for divorce, according to a study by debt.com. Aligning on financial priorities, being transparent about finances, and creating a spending plan can help safeguard against these types of disagreements.
Conversation #5: Create a shared vision of your future.
At this point, you’re on the same page about emotions, your current situation, and the rules of your financial relationship. It’s now time to plan the things you dreamed about during Step 2. The most important takeaway to come from your conversation in Step 2 is determining what you, as a couple, will prioritize. For example, you might care less about having fancy cars, but sharing meaningful experiences as a family is super important. Now is the time to turn those dreams into reality by setting a plan in motion.
- Do we want to take vacations? If yes, how frequently? Where do we want to go, and how much do we need to save each month or year to make this a reality?
- Where do we see ourselves living? How much are we comfortable spending on housing expenses as a percentage of our overall income?
- What kinds of career changes are in store for us in the future? Will we need extra cash in savings to allow that to happen?
- What is the ideal situation for retirement? At what age do we want to retire? Do we still want to work during retirement, whether full or part-time?
- Do we want to contribute to our children’s future by way of a college savings plan? If yes, how much would we like to help them, and how much will we need to save annually to make that happen? (This is a fantastic thing to think about if your children are very young or if you haven’t had them yet. A college cost calculator can help you better understand how much you’ll need to save.)
What’s next? Define clear financial goals and actionable next steps.
Once you have the above five money conversations with your partner, you’re ready to come up with goals based on your shared vision. Then, we’ll work toward getting specific on how you’ll achieve them.
Come up with a robust goals list, then choose the top priorities.
First, set the clock for 10 minutes and do a brainstorming session on your financial goals. No goal is too big or too bold. Just list whatever comes to mind. Your list might look something like this:
- Have $20,000 in savings
- Finally be able to take the kids to Disney World
- Own a beach house in Florida
- Increase our income so one partner can stay home when our kids are young
- Have absolute debt freedom within five years
Remember, no goal is too out there for this exercise! Once your list is full, go through and star the 3-5 goals that are most meaningful. Next, I’ll help you turn those broad goals into actionable next steps.
Make your goals SMART.
If you’ve done goal setting before, you may be familiar with the idea of a SMART goal. That’s a goal that’s specific, measurable, achievable, relevant, and time-bound. With these in mind, we’ll take goals from vague to specific, like the example below.
Vague goal: “We’re going to take the kids to Disney World.”
Better goal: “We’re going to take a family trip to Disney World next spring.”
Solid goal: “We’re going to Disney World for five days next May, which will cost us approximately $5000 that we’ll have saved up front.”
Go through this process with anywhere from 2-5 financial goals that you want to work toward together, and be sure you make them as specific as possible. My husband and I constantly talk about how we’d “love to go to Italy.” But because we don’t put guardrails around it and turn it into an actionable goal, guess what? We still don’t have anything on the calendar. Don’t be like us; get specific.
Outline actionable next steps for each goal.
For each goal you’ve outlined, it’s time to get real about how you’ll make it real. Whether you’re building your emergency fund to 3-6 months of living expenses or saving toward a family vacation, understanding where that money will come from is crucial.
Using our example above, let’s say there are ten months until your Disney World vacation that’s going to cost $5,000, so you’ll need an extra $500 a month to make it real. Now is the time to look at your spending and get specific about where the money will come from and also where you’re going to stash it for safekeeping.
Vague plan: “We’re going to set aside an extra $500 per month.”
Better plan: “We’re going to save $500 per month by cutting back on eating out and picking up a side hustle.”
Solid plan: “We’re going to save $500 per month toward our goal in a high-yield savings account. The $500 will come from cutting $200 per month in eating out, $200 per month from a freelance writing side hustle, and $100 per month thanks to my husband’s recent promotion. We’ll set up an auto-draft to pull the money from our checking account when we get paid on the 1st and move it to our high-yield savings.”
Now go get after it!
I understand it can be extremely anxiety-inducing to think about exposing your feelings and financial portfolio, even to someone you love. Remember that by revealing your own vulnerabilities, you give others, including your significant other, permission to do the same. I hope that these conversation starters allow you to work towards viable solutions for any issues that arise and help make you stronger as a couple.
Did you have any of these money conversations with your partner? Let me know how it went in the comments.
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Disclaimer: The above is my own opinion and is for informational and educational purposes only. The views expressed above are completely my own and are not intended to be a substitute for investment or financial advice from an actual professional human. While I might have some great ideas, seek a duly licensed professional for any financial or investment advice.