Financial decisions are difficult enough on your own. But they can get even harder when you bring a significant other into the mix. After all, you both are coming from different life experiences and may have very different (often deep-seated) views on money, including how it should be spent and whether it should be saved.
Not surprisingly, money is a common cause of stress in relationships and, if left unaddressed, it can start impacting more things than just your bank account. Research consistently shows that financial problems and disagreements over money is a leading cause of divorce.
Considering how personal, and therefore complicated, each partner’s relationship with money can be, navigating money conversations can be tricky.
A great first step is to understand that financial decision-making as a couple may not come naturally, and that’s completely fine. These conversations take practice. What follows are a few strategies to try and ideas to keep in mind when making financial decisions with your partner.
8 Tips for Making Financial Decisions as a Couple
Just having a conversation about money with your significant other can be fraught. Coming to an agreement on how to manage your money is often even harder. Fortunately, these eight strategies can help.
1. Start Early
You don’t need to come into a first date armed with 20 questions about a person’s financial life. On the other hand, it may not be smart to wait until you’re married to talk about money either.
At the beginning stages, you might start with easy money topics, like who pays for dinner and whether or not you enjoy your jobs. With comfort and practice, you can begin to discuss weightier topics like debt and future financial goals.
The very fact that marriages are dissolving because of arguments over money makes the case for why it is so important to have these conversations early (and often). Not only are you able to practice without the stress of needing to take immediate action, but you can get a feel for how your partner navigates money decisions.
And if you find that you are with someone who holds wildly different values about money, it can be a good idea to address these issues before making any further commitments to this person.
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2. Make a Date to Talk
Your instincts might tell you to dive headfirst into a big money talk in order to get it the heck out of the way. But this may not be your best strategy. Instead of bringing up the topic of money out of the blue, you might give your partner some notice.
No one is their best self when they feel caught off guard. A conversation about a tough financial decision will likely be more productive when there are two calm, prepared people at the table.
You might simply set a time to talk about the financial decision at hand. Or, you might want to make it into a “real” date and treat yourself to a coffee at the local shop or pick up your favorite take-out dinner.
No matter how you do it, the most important thing is that you have a designated time for the talk. This strategy can be applied to discussing one particular financial decision, or you can utilize it on a regular basis.
Recommended: How to Budget As a Couple and Why It’s Important
3. Write It Out
Sometimes, it’s simply hard to communicate how you feel. This is especially true for topics that affect us deeply and in confusing ways, like money. If you and your partner are people that like to put their feelings down in writing, consider writing each other a letter prior to your financial “date.”
In your letter, you might include some background on how you were raised to think about money, your money stressors, and your financial goals. Focus the letter on yourself and from where your financial beliefs stem.
Not only will this help your partner understand where you are coming from, but it can also provide you with some very useful introspection about money and your system of values.
Recommended: How Marriage Can Affect Your Student Loan Payments
4. Be Prepared to Listen
When making financial decisions, your main objective should not be to explain your point of view. To have a truly productive conversation, you must be committed to listening, too. This is good practice in all conversations with your partner and loved ones, but especially when talking about financial decisions.
Here’s the thing about making financial decisions: It’s rarely black and white and, generally, there is no right and no wrong. Being open to listening often translates into being open to learning.
Not only is your partner’s perspective important, but you might even be able to learn something from them. We’re all learning as we go anyway, and by listening, you have a chance to learn and evolve as a couple.
Recommended: Financial Planning Tips for Newlyweds
5. Be Communicative
One key to having a productive and healthy conversation regarding a financial decision with your partner is to communicate your feelings, thoughts, and fears. Something that seems obvious to you may not be obvious to them, so give your partner the benefit of explaining yourself in a calm and thorough way.
When you communicate, try to stick with talking about how you feel regarding a matter and avoid making declarations about what your partner has done in the past or what you’re hoping that they will do in the future.
Making comments about how a person is spending can quickly turn accusatory, putting them on the defensive. Even when having tough conversations, do your best to remove judgment from the equation.
Also, it’s best not to assume that just because you have explained something to your partner once, that they understand what you mean and where you are coming from. Don’t lose your cool if you have to remind your partner what’s important or a priority to you, especially if your priorities don’t align on this particular issue.
Recommended: Common Money Fights
6. Crunch the Numbers
Sometimes, the numbers help guide financial decision-making within a relationship. It can be worth taking the time to figure out exactly how each financial decision would play out over the short and long term.
By breaking big costs down into monthly numbers, you and your partner can see on paper what is possible (and what isn’t). The exercise may provide a new perspective altogether or, at the very least, get you on the same page regarding the different options with your money.
If you feel at a loss for what you should be focusing on or how to accomplish your goals, you may want to hire a financial expert, such as a credentialed financial planner. Some financial guidance from a person skilled in financial planning could be just what a couple needs to step up their money game.
If you’re in a partnership, you already know that compromise is the name of the game. The good news is that with money, compromising is not only possible but often ideal. For example, you do not have to pick just one savings goal to work on at a time. Financial decisions don’t have to be “one or the other.”
Also, know that there is no perfect formula for how a couple makes financial decisions. Just because your best friend and her spouse divide their finances in a certain way or prioritize certain money goals over others doesn’t mean that you have to do it this way. Part of compromise with your partner is abandoning the idea that your partnership should work like anyone else’s.
8. Put Plans Into Action
Once you’ve hashed out your money goals and fears with your honey, and made some key financial decisions together, it’s a good idea to come up with an actionable plan to make your shared goals a reality.
If you’ve decided that you want to purchase a home in two years, for example, figure out how much of a downpayment you’ll need and, then, how much money you need to siphon into savings each month to reach your goal. You might then set up an automatic transfer from your checking account(s) and into your joint savings account each month.
A fringe benefit of making financial decisions as a couple is that you have a built-in accountability buddy to make sure you follow through on your plan and don’t spend that savings on something else.
Smart Money Decisions Couples Make
Here’s a look at some smart money moves you may want to make as a couple:
• Opening joint accounts While some couples prefer to keep all of their money separate, having a joint bank account (or two) can simplify your finances and make it easier to work towards your shared goals.
• Labeling your savings Having separate savings accounts for separate goals (even giving them labels, like a “downpayment” or “vacation” account) can help you stay on track and reach your goals sooner. Some savings accounts have a sub-savings account feature, which allows you to split funds in one primary savings account into separate categories.
• Automate your savings It can be smart to set up recurring automated transfers from your checking account(s) to your savings and investment accounts based on your goals.
• Increase your emergency reserve Your emergency fund should be large enough to cover living expenses — for both of you and any dependents — for anywhere from a few months to a year, depending on your situation.
Recommended: Survey Says: Couples That Pool Finances Are Happier
Talking about money with your partner isn’t always easy, but having honest discussions about your financial situation and goals is critical. This can help you find common ground, make important financial decisions as a couple, and come up with a plan that can make your shared goals and dreams a reality.
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Should married couples make financial decisions together?
Even if you don’t merge all of your money, it can be a good idea to work together on some key financial decisions that will impact both of your futures. Making financial decisions together can have multiple benefits, including increased closeness and trust, less conflict over money, and better financial outcomes.
How should money be split in a relationship?
There are several methods couples can use when managing money and covering their living expenses. One option is to merge all or some of your funds in a joint bank account and use it to pay for shared expenses. Another is to keep separate accounts, but each make equal payments towards shared expenses.
A third approach you might consider is to split bills proportionally based on each partner’s income. So if one partner makes 70% of the total household income, they would then cover 70% of shared expenses, while the other partner would pay for 30%.
What are financial red flags in a relationship?
Financial red flags are money issues that are either currently causing problems in a relationship or have the potential to do so in the future. While they are not necessarily deal-breakers, they are harbingers of future relationship and financial strain. If you notice any of the following six signs, it’s important to deal with them promptly, ideally before your life is too intertwined with your partner’s.
• Unwillingness to discuss money
• Excessive credit card or other debt
• Flaunting their wealth
• Severe frugality
• Using money to manipulate or shame
• Keeping secrets or telling lies about money
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