5 money conversations to have in a relationship
Money is an important topic that couples tend to avoid discussing—and it’s also the number one issue most couples fight over. While you don’t need to lay out your five-year financial plan to every person you meet on the street, it’s a crucial step in a relationship. Having appropriate discussions about money, your budget, or your spending habits are a few ways you can ensure you and your spouse or partner are on the same page financially. Below are five money conversations you need to have at some point in your relationship:
1. How you’ll tackle debt
According to a study by Ramsey Solutions, nearly two-thirds of marriages start off in debt, and 86% of couples married for five years or less start marriage in the red. That’s already a rocky start considering nearly 50% of marriages end in divorce. Discussing debt with your significant other or spouse should be one of your first major money conversations. That includes talking about credit cards, student loan debt, or even taking out a mortgage.
Couples need to be on the same page when they take on debt. Some questions to start the conversation can include:
- Do you use a credit card for emergencies? Or, do you put all your purchases on your card to rack up points?
- Do you carry a balance on your credit card? Or, do you pay your statement in full each month?
- Do you have any student loan debt? If so, how much, and how do you plan to pay it off?
- Should depreciating assets (like cars) be financed, leased, or paid with cash?
2. Creating (and maintaining) a budget
Having a budget is one of the most basic finance necessities—but few people actually create (and stick with) one. Budgeting isn’t a fun task, but it’s necessary to understand your financial situation. Even if one of you makes more money, you should jointly decide how your funds are allocated.
The first thing you’ll need to figure out is what bills need to be paid each month (and how you’ll pay them) and whether you’ll open a checking account for expenses or keep individual accounts. Another thing you’ll want to address is what purchases need to be discussed in advance.
There’s also no right or wrong way to allocate your money. For example, if you both have a passion for traveling, you can make that one of your priorities for saving—and maybe allocate less spending money toward clothes. Or, if you both are foodies, you can have a generous dining-out budget and spend less elsewhere.
3. How you’ll work out wage differences
You and your partner probably won’t make the same amount of money, and that’s okay. But, it’s necessary to know where any gaps will be filled based on who makes what. Regardless, you both should feel like you have equal control over finances.
It’s also vital to discuss how finances were modeled to you while growing up and how that impacted you: who made the most money, and who controlled the finances? How did that make you feel? You should also consider each other’s feelings: how can you ensure that both of your financial contributions feel valued, regardless of earning power?
4. Your attitudes on saving versus spending
One person in a relationship is the saver, and the other is the spender. Another money conversation you need to have is examining your attitudes on saving versus spending to avoid any surprises down the road. If you feel like it’s impossible to start saving, you still need to set money aside—even if it’s a small amount.
Consider establishing an emergency fund to have the recommended three to six months’ worth of expenses in case one of you experiences job loss or an illness. You’ll also need to determine how much of your income you should set aside. If you don’t have an account to set aside your emergency savings, consider opening a joint savings account.
5. How you’ll meet financial goals
As individuals, you may have your own goals you want to achieve, both personally and financially. However, it’s just as necessary to have goals you’re working towards as a couple. You may want to save for a down payment on a house or a wedding. Or, you may want to start a family or launch your own business. Whatever your goal is, discuss it and determine what it will take to achieve it. If you’re not aligned with each other, it may hinder your ability to meet those goals.
Another life event to save for is retirement. One of you may have an employer-sponsored 401K, and the other may not have started saving for retirement at all. A financial advisor could help determine your needs and develop a course of action. At Georgia’s Own, you can meet with a financial advisor at no cost and no obligation to discuss your retirement plans.
Whether you’re newlyweds or have been married for some time, it’s never too early (or too late) to begin financial planning. The more you both communicate with each other, the better off you’ll be—and avoid any financial stress. If you can tackle this, then you can handle anything that life throws your way.