12 Money Topics You Need to Discuss with Your Spouse
May 23, 2024
Critical Money Conversations to Have with Your Spouse
In any romantic partnership, finances play a crucial role in shaping the future. A mutual understanding of financial matters can strengthen your relationship, reduce conflicts, and help achieve common goals. Here’s a comprehensive guide on the essential financial topics every couple (especially newlywed couples) needs to discuss to ensure a harmonious and financially secure relationship.
1. Commit to Open Financial Communication
Effective communication is paramount for financial harmony. Discussing money openly and regularly can prevent misunderstandings and conflicts in a marriage. Key aspects of financial communication include:
Honesty and Transparency: Be open about your financial habits, concerns, and aspirations. Transparency builds trust and understanding.
Compromise: Understand that you may have different financial priorities and perspectives. Work together to find compromises that satisfy both partners.
2. Examine Beliefs, History, and Attitudes Towards Money
Before you get into the nitty-gritty of dollars and cents, discussing your emotional connection to money will be helpful. Most people believe finances should be emotion-free, but the truth is that our personal history and feelings toward money affect us more than we may think. Talking about your money paradigm will provide understanding and compassion for your spouse as you proceed with your financial discussions.
Reflect on Childhood Experiences: Consider how your parents or guardians managed money. Reflect on the messages they conveyed about money, whether explicitly or implicitly. Did they discuss financial matters openly, or was it a taboo topic? Recall significant financial events from your childhood. How did these experiences make you feel? For instance, did your family struggle with money, or were they well-off? How did these situations impact your sense of security or self-worth?
Identify Emotional Triggers: Talk about how you feel in different financial situations, such as receiving a bill, making a large purchase, or discussing money with others. For example, do you feel stressed whenever you check your bank account, or do you experience guilt after shopping sprees?
Point of View: Ask yourself what beliefs you hold about money. Common beliefs might include "Money is the root of all evil," "I’ll never have enough money," or "Money equals success."
Origins of Beliefs: Explore where these beliefs come from. Did you adopt them from your family, culture, or personal experiences? Understanding the origin can help in addressing any irrational or harmful beliefs.
3. Spending Habits
We've found that in many relationships, there’s a spender and a saver. Both personality types come with challenges but also great strengths that are needful in a healthy financial relationship. Understanding each other’s money habits and the emotions behind them can lead to deeper understanding. You both may spend and save at different times, but what is your natural default? Are you the money manager who pays the bills and plans for the future, or the free spirit who lives life to the fullest now? Discuss and recognize how each other’s strengths and points of view are valuable. Exploring your spending habits will help you find a solid middle ground.
Saver: Why is saving money important to you? What is the driving value or fear behind your decision to save? What are you working toward? What do you think will happen if your spending gets out of control? Do you feel comfortable taking financial risks? What emotions do you struggle with after you’ve spent money? Explain your strengths as a saver. Explore the challenges of being a saver.
Spender: Why is the freedom to spend money important to you? What does it feel like to have money to spend on something you value? How do you feel after you’ve spent too much money or gone into debt? Do you feel comfortable taking financial risks? What do you fear will happen if your spending is restricted? Explain your strengths as a spender. Explore the challenges of being a spender.
Decision Analysis: Reflect on major financial decisions you’ve made, such as buying a home, taking out loans, or choosing a career path. What emotions influenced these decisions? Were they driven by fear, excitement, necessity, or societal pressure?
Consequences: Consider the outcomes of these decisions. Did they lead to financial stability or stress? Understanding the impact of your choices can provide insight into your relationship with money and your spending habits.
4. Current Financial Situation
Now that you’re committed to open financial communication and you’ve worked to understand each other’s emotional journey with money, it’s time to jump in. Understanding where your finances are right now is the first step.
Income: Share your sources of income and the amount you each earn.
Debts: List all debts, including student loans, credit card debt, mortgages, car loans, and personal loans. Understanding your combined debt situation is essential for financial planning.
Assets: Take inventory of all assets, such as savings, investments, properties, and valuable possessions.
Credit Scores: Check and discuss your credit scores and histories.
5. Financial Goals and Priorities
Once you’ve got a solid understanding of where you are, you can work together to set some common financial goals about where you want to be. Setting goals together will help align your financial decisions and priorities. Discuss both short-term and long-term goals, such as:
Major Purchases: Plans for buying a house, car, or other significant expenditures.
Retirement Planning: Discuss setting up retirement accounts and deciding how much to save for the future.
Travel and Leisure: Budgeting for vacations or special occasions.
Emergency Fund: How much should you save for emergencies?
Set Priorities: Decide together which goals are most important and create a plan and timeline for achieving them. Remember to celebrate milestones along the way.
6. Account Management
The next step is to decide how you, as a couple, want to manage your money.
Joint vs. Separate Accounts: Discuss whether to have joint accounts, separate accounts, or a combination of both. We recommend joint accounts for simplifying bill payments and savings and providing complete transparency but understand that couples may choose separate accounts to maintain financial independence.
Contribution Agreements: If maintaining separate accounts, discuss how you will contribute to joint expenses. Will it be proportional to income, or will a different arrangement exist?
Financial Independence: Even if you choose to combine your finances, maintaining some level of economic independence and having personal spending money can provide each of you the freedom and permission to invest in yourself, your personal care, your hobbies, or just splurge a little.
Online Financial Planner: Utilize an online money management tool, such as the One Goal Finance App, to keep your money accounted for, your spending categorized, your goals trackable, and your finances transparent and accessible for discussion.
Deciding how you will spend your money is essential for managing day-to-day expenses and ensuring you live within your means. While most of your income will go toward necessities, set an agreed amount aside for having fun.
Monthly Expenses: Categorize and track monthly expenses such as rent or mortgage, utilities, groceries, insurance, and entertainment.
Savings Goals: Decide how much to save each month towards your goals.
Repayment Plans: Discuss strategies for paying off debts. Decide whether to tackle the highest-interest debts first or consolidate loans. Having a clear repayment plan reduces financial stress.
Discretionary Spending: Agree on an amount for personal spending.
Date Night: Plan for the future, but remember also to enjoy life now. Even if it’s simple, a weekly date night can strengthen your bond and bring much happiness to your relationship.
8. Investments and Emergency Planning
Investment Strategies: Discuss your approach to investing, including risk tolerance, types of investments (stocks, bonds, mutual funds), and whether you prefer managing investments yourselves or seeking professional advice.
Emergency Fund: Establish an emergency fund to cover unforeseen expenses like medical emergencies or job loss. Ideally, this should be three to six months’ worth of living expenses.
Insurance: Review your insurance coverage, including health, life, disability, and property insurance. Adequate coverage is crucial for protecting your financial stability.some text
Home and Auto Insurance: Review and update your home and auto insurance policies to meet your family's needs.
Health Insurance: Ensure you have adequate health coverage that meets your family's unique needs. Health insurance provides access to proper medical care and protects against medical emergencies.
Life Insurance: Include life insurance in your plans, particularly if one partner is financially dependent on the other. Though it can be uncomfortable to discuss, the future is uncertain, and being prepared can help ease the financial burden in the event of a death.
Disability Insurance: We all hope our lives and the lives of our loved ones will be long and healthy, but life can throw us unexpected hardships. Consider disability insurance to safeguard against loss of income due to injury or illness.
9. Retirement Planning
Right now, retirement might seem like a lifetime away, which is precisely why you should start preparing now. The more time you have to save, the better prepared you’ll be in the future.
Retirement Goals: Discuss your vision for retirement. When do you want to retire, and what lifestyle do you envision?
Retirement Accounts: Review your retirement savings plans, such as 401(k)s, IRAs, or pensions. Ensure both partners are saving adequately and taking advantage of employer matches if available.
Planning for the future involves more than just retirement savings.
Wills and Trusts: Discuss creating or updating your wills. Consider whether you need a trust and other estate planning tools to ensure your assets are distributed according to your wishes.
Beneficiaries: Review and update beneficiary designations on accounts and insurance policies.
Healthcare Directives: Discuss end-of-life care preferences and establish healthcare proxies or powers of attorney.
Long-Term Care: Plan for potential long-term care needs, including insurance or savings designated for such expenses.
Legacy and Charitable Giving: Decide how you want to leave a legacy and contribute to charitable causes.
11. Handling Financial Challenges
Life is unpredictable, and financial challenges can arise unexpectedly. But there are many resources to help you prepare for and tackle setbacks:
Debt Management: Debt can be a significant stressor in relationships, so it's vital to develop a clear plan for managing and repaying any outstanding debts while avoiding future debt accumulation.some text
Debt Prioritization: Decide which debts to pay off first based on interest rates and terms.
Payment Plans: Set up a structured repayment plan, such as the snowball method (paying off smaller debts first) or the avalanche method (tackling higher-interest debts first).
Consolidation and Refinancing: Consider whether debt consolidation or refinancing options can reduce interest rates and simplify payments.
Debt-Free Date: Set a realistic timeline for becoming debt-free and celebrate milestones along the way.
Seeking Professional Help: Don’t hesitate to seek advice from financial advisors or marriage counselors if financial issues become overwhelming.
12. Financial Education and Growth
Continuous Learning: Commit to ongoing financial education. Attend workshops, read books, or consult with a financial advisor together. Staying informed empowers both partners to make better financial decisions and adapt to changing economic circumstances.
Reassessing and Adapting: Financial circumstances and goals may change over time, so it's essential to reassess your financial situation and adjust your plans accordingly. Factors such as career changes, family dynamics, and economic conditions can influence your financial trajectory.
Regular Check-ins: Schedule regular financial check-ins to review your spending and savings plans and assess progress toward goals. Regularly revisit your financial goals, budgets, and investment strategies to ensure they remain relevant and aligned with your aspirations. This effort keeps both partners engaged and aware of your financial status. And if you turn your money chats into a fun date night, they might become something you both look forward to!
Let’s leave the old cliches about marriage and money in the past. With a commitment to teamwork, open communication, mutual respect, and shared goals, finances will no longer be the number one stressor between couples. Remember, it's not just about the money; it's about building a life together based on trust, understanding, and shared aspirations. Together, you can create a strong relationship and a secure financial future, supporting each other all along the way.
Finding balance between spending & saving with One Goal
One Goal helps the spender and saver get in sync by transforming “yours and mine” into a united ”ours”. This creates a space where spending habits and saving goals happily coexist, merging today's pleasures with tomorrow's plans.
