Dollars and Sense
Talking about money with your partner can be uncomfortable, especially if you don’t see eye to eye on how to handle problems, or if you’re coming into the situation with vastly different financial backgrounds.
And, according to a Kansas State University study, financial arguments are the leading predictor of whether a marriage will end in divorce. So, talking about your finances before it gets to the point of argument really can be one of the best routes to take.
That said, it’s a good idea to power through the awkwardness and make time to really have a conversation about your finances.
"It can be hard for couples to start the money conversation, but it is extremely important in building your finances and avoiding fights,” Patty Cathey, an investment advisor with Smart Retirement Plan in Denver, said. “A good way to get the ball rolling is to schedule a specific time to sit down and talk. Then make a monthly or bi-monthly appointment on your calendars to talk numbers and make sure you and your partner are on the same page. Treat it like a business meeting — no canceling if you just don't feel like it."
Financial arguments are the leading predictor of whether a marriage will end in divorce.
Dr. Gretchen Kubacky, a psychologist in Los Angeles, also stressed the importance of coming prepared to these conversations, even in the most basic ways.
“Do it when you’re well rested, well hydrated, and properly fed,” Kubacky said. “If you are not taking care of these basics, you’re setting yourself up for irritability and fights when you talk about money.”
Here are a few other fundamentals you should keep in mind when talking about finances with the one you love most:
Whether you’ve got squeaky-clean finances or you’re still paying on an auto loan you took out in college, it’s important to be upfront with your partner about your financial situation.
“I cannot stress this enough: Be honest,” Cathey said. “Millions of people are keeping financial secrets from their partners, including hiding purchases or even having a secret bank account or credit card. This is financial infidelity, and it can damage a relationship by creating a loss of trust and feelings of betrayal.”
Set Goals Together
When you sit down to talk, it can help to know what financial goals you’d like to discuss so you can get on the same page and find a compromise that you’re both happy with.
“Saving for a down payment on a home may require you to forgo the exotic honeymoon you were dreaming of, or you may decide to put the house off for a year or two so you can create an amazing memory,” said Anna Colton, an executive with the online discount brokerage service Merrill Edge. “Either decision is fine as long as you both agree it's what you want and how you will pay for it. If you don't discuss that ahead of time, one of you may be disappointed.”
While saving for a specific item or event is a good goal to set together, improving or building your credit may also be a good goal to work on achieving. If you’re both new to the world of credit, you may want to consider different credit cards that can help you build your credit. Doing so could help you reach other goals - like buying a house - as having a good credit score will help you qualify for better terms and conditions on a mortgage.
Understand Where Your Partner Is Coming From
Sarah Schewitz, a psychologist in Los Angeles, said one of the best ways to garner an understanding of where your significant other is coming from is by talking about your “money personalities.” She says most people fall into one of four categories — the hoarder (saves all the money), the spender, the avoider, and the monk (thinks money is the root of all evil).
“Once you know which money personality you and your partner ascribe to, you can begin to empathize with each other and understand where the other is coming from,” Schewitz said. And if you are polar opposites when it comes to money, that’s OK.
“Opposite money personalities can actually complement each other,” Schewitz said. “Savers keep spenders out of the poor house, while spenders encourage savers to enjoy the fruits of their labor now and then. Getting to the point where both money personalities contribute to a balanced approach requires compromise and communication but is definitely possible.”
Think of the Fun Stuff
“Negotiate reasonable amounts of ‘play money’ for each party,” Kubacky said. She said this can include “money that can be spent on lattes, shoes, comic books” or whatever else you enjoy. She also said this should be the money you can spend “without having to be accountable to the other person,” as this gives the couple a sense of freedom without breaking the budget.
After you’ve put in all the work, it’s a good idea to acknowledge your successes.
"When you reach a goal, like a savings milestone or wiping out debt, reward yourself as a couple,” Cathey said. “Plan a date night. It doesn't have to be expensive or fancy; it can be as simple as a cup of coffee, or a bottle of wine at home. It's important to share these moments to stay on track and give you time to communicate as a couple."