About the Money Mondays Segments:
Welcome to Money Mondays! In this weekly segment, I will be providing short financial tips and tricks on how to improve your overall financial situation. Learning to be good with your money starts with little bits of knowledge accumulated over time. I’m seeking to help people who are in search of financial independence so that they may achieve their goals. Thank you for reading!
Money Savvy Couple
One of the biggest reason Michele and I have been able to chase our dream of traveling around the country with the kids is due to the fact that we work hard to stay on the same page. This is especially true when it comes to money. For most couples, getting on the same page about money can be very hard (including us). You may be on completely different pages, but I can’t stress the importance of making sure you are working together. After all, money problems is the leading predictor of divorce.
How do you get on the same page?
The short answer: start talking about money!
Discussing money is a HUGE taboo in life. A University College London study showed that people are much more likely to discuss their sex lives than to chat about their income. In many surveys, money has been found to be more taboo than even discussing religion and politics. The culture dates back to the aristocratic wealthy who would just measure wealth by the number and scale of assets a family owned, and it was considered extremely uncouth to ask about financial matters. Over time, it has become such an unspoken taboo that many people don’t even realize that they avoid talking about money.
Not only is this a problem in just normal social interactions, but this taboo works its way over right into your married life. We are very intimate with our partners in so many ways before marriage, but somehow, money evades most discussions. Even after getting married, many spouses are completely unaware of their financial situation. A survey done by Fidelity showed that 43% of the respondents didn’t even know what their partner’s income was. Considering how closely related money problems are with relationship problems, not knowing each other’s finances is a recipe for disaster.
Some tips to help get you on the same page
First off, you need to know each other’s financial assets, liabilities (debts), and income streams. Hopefully this is already on the table. After all, if you are comfortable being intimate with somebody, you should be comfortable laying your finances on the table. I believe that it’s best to look at most of your finances jointly for planning purposes. Michele and I keep all our finances combined. I have seen couples that were successful keeping some of their funds as individual with a majority of their assets viewed together. However you look at it, this will give you a starting point for your discussion.
Once you have this under control, start talking about your money background to open up the conversation. You want to be able to better understand how you both handle money. Start by asking questions. How were your parents with money? How have you been handling your finances in the past? How do you want to handle them going forward? How do you feel about debt? How comfortable are you with taking risks with your money? What do you consider a splurge item? There are plenty more questions to ask, but this should be a good starting point to open up the conversation.
Next, you need to discuss your budget together. This starts with understanding how much you are currently spending. Take a look at last week’s Money Mondays for more insight on tracking your spending. According to a survey by Money Magazine, what is considered “overspending” or “frivolous spending” by one spouse is the top source of money conflict between couples. Michele and I have a rule in place: if one of us wants to spend over a certain amount of money on an item, we have to discuss it together and get confirmation from the other person. Basically, Michele can veto a purchase that I want, and I can veto a purchase she wants. The amount you set has to be comfortable for you as a couple, but I would recommend keeping it under $100.
Lastly, you need to figure out your short term and long term goals. It is ok to have individual financial goals as well a joint ones. The key here is to find enough common ground. If you are on completely different pages, and you cannot find a middle ground, it will probably not work out long term.
Once you have your financial goals written down, make sure you are doing what you need to in order to reach these goals. Do you need to save a certain amount of money every month or ever year? Have your goals changed (as they will likely do over time)? In order to make the most out of these exercises, you need to keep the conversation going and revisit your goals periodically. I would recommend having a conversation with your partner at least annually, but quarterly would be preferable.
What do you think?
How do you feel about discussing financial matters with your partner? Do you think discussing money socially should be such a taboo topic? Do you have any tricks you put into place to keep each other on the same page? Let us know in the comments below!