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By Debra Ohstrom, CFA
There are a lot of statistics around couples and money decisions and each couple has to find the best way to handle the topic of money for their situation and relationship.
40% of couples who live together don’t know how much money their partner makes and it is one of the top subjects that couples argue about. A recent survey found that over 50% of millennial couples combine their money together in joint accounts. This is great for open communication and complete transparency but can also come with challenges.
Spending and saving habits that clash can be a huge stressor in a relationship. Having conversations about common goals and a plan to reach them are key. This way you both are taking actions that align with those goals that you both feel are of the utmost importance.
Many couples, especially those with children tend to divide responsibilities just to be more efficient but not having both partners involved in the finances can have negative consequences.
Having money conversations about spending, saving priorities and the willingness to make some compromises may seem uncomfortable at first but it will create a much healthier and stress free environment down the road.
Couples usually fall into three categories on how they handle their money. They completely combine everything for full transparency, they have some joint accounts for bills and maintain some separate accounts or they keep all accounts separate and divide up the bills. There is no best way to handle money and each couple needs to determine the right way for them. This may even change over time.
Often times, women are good with tracking and budgeting the household finances but don’t get involved with investing. This can be detrimental for a couple when they are trying to achieve goals such as retirement wealth or even saving for a house. A couple can achieve a lot more together a lot faster when they are focused on the same goals. When you write those goals down and understand why you might need to curb spending to get to where you want to be in the long run it doesn’t seem like sacrificing.
If you and your partner are thinking about getting more serious in your relationship and may buy real estate together or get married and haven’t had an in depth discussion around money, here is a suggestion on how to start the conversation.
Let’s sit down and talk about our financial goals so we can make sure we are on the right track to getting there.
What are your biggest financial priorities?
If you want to get a better understanding of your partners attitudes or beliefs around money you can ask:
Did your parents ever talk about money when you were growing up?
How do you feel about Debt?
Everyone has their “thing” that they like to splurge on, what’s yours?
These are just a few suggestions on how to get the conversation started. You may have a better way that is right for you. The most important thing is to start talking.
If you plan on getting married and filing taxes together you both really need to understand what the laws are in your state or town in regards to financial responsibilities when married. This could increase the importance of financial transparency when it comes to debt so you can learn what you may become responsible for.
There are so many emotional aspects around money that showing your partner understanding and compassion can go a long way. It is also very important to be self-aware so you can be honest about some of your own challenges and money fears.
Once you do have that initial conversation and talk about your financial goals together then setting time once a year to review your finances is a great practice to start. Reviewing your insurance levels and costs, reviewing your investment accounts and making adjustments and also reviewing your emergency savings balance are all great ways to get on the path to reaching your goals.
Another tip for getting to your goals is automating deposits into savings and investing accounts to make it easier. Having savings or investing contributions go right from your paycheck or checking account into your savings and investing accounts no matter what the dollar amount is can help you create great habits that you can start small and increase the amount over time.
Getting to your financial goals is a marathon not a sprint. It isn’t really that complicated if you get started as soon as possible even in small amounts and increase those amounts as your income grows. Thinking long term, remembering your priorities and writing it down are all great ways to achieve your financial goals.
I am excited to announce that I am creating a Financial Workbook to help everyone achieve their financial goals in a way that is best for them. This workbook should be available next month on Amazon so stay Tuned to hear more!
Bye For Now!
Debra
Founder and CEO
Build Your Financial Strength
About the Author
Debra has worked in the financial industry for over 27 years at firms such as Merrill Lynch, Morgan Stanley, Citi Private Bank and Allianz Global Investors. She has worked in different roles such as research, asset allocation and account management. She has an MBA in Finance and the Chartered Financial Analyst designation. Debra created her education business, DebraOhstrom.com to help women get the education they need to become confident investors and be in charge of their financial future.
Debra Ohstrom, CFA
Founder | DebraOhstrom.com
Build Your Financial Strength