It comes as no surprise, but disagreements over money are often cited to be one of the top reasons behind a relationship breakdown. Further, it can be easy for couples to put off having such an important conversation.
By scheduling distraction-free meetings, you can create space for you and your partner to work on completing the items in the first section below. We recommend regularly reviewing these items as needed to maintain a common understanding of your financial situation.
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Get clear on your budget.
Review the finances that are currently available between you both, as well as expected income and expenses.
Disclose any debt or credit issues.
Without this discussion, larger purchases may fall on an unsuspecting partner’s shoulders when they do not have the means to pay for it, and this can create resentment.
Talk about your goals.
Where do you see yourselves in five, ten, twenty years? Where would you like to retire? Do you want to have a family? Your answers will reveal (roughly) how much money you will need over time.
Discuss how your incomes will be used to pay living costs.
Some couples decide that the higher income earner will contribute a higher percentage toward all living costs, whereas other couples might decide that it makes more sense to be solely responsible for specific costs. The most important thing here is to decide who will cover what.
Delegate responsibilities.
Examine your personal strengths and decide who would be best for jobs like paying bills on time, updating the monthly budget, tracking investment progress, and monitoring your debt repayment progress. Without this step, payments can get missed, debt and interest can collect, and goals can feel impossible.
Agree on a personal monthly allowance.
Doing this helps you both maintain a sense of personal financial freedom AND avoid financial disagreements.
Discuss any larger purchases you may be thinking of buying.
Is it a “need” or a “want” item? Can you afford it? Are there more affordable options that you can explore together? This will help you guard against impulse buys, and remain realistic in the lifestyle you are building together.
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When you and your partner have completed the above tasks, consider the next big step, which is to open a joint account(s). While a joint account may not appeal to all couples, it certainly increases your financial transparency and can help keep both of you honest.
If/when you are ready to open a joint account, we urge you to connect with a trustworthy Certified Financial Planner (CFP®), who will:
(a) suggest account options and build you a personalized financial plan based on things like your financial goals, income, expenses, lifestyle, risk tolerance and more;
(b) have the necessary tools and professional relationships to help you build the net worth required to support the life you want;
(c) meet with you regularly to review your finances, make adjustments to your plan if needed, and help keep you and your partner accountable to your goals.
Finally, statistics show that average households who worked with a financial planner for 15+ years earned 2.3 times the assets than an average “comparable” household who did not*, so we will repeat ourselves: we urge you to connect with a trustworthy CFP® to complete your financial plan. Our team is happy to help you get started. For assistance, please contact us.
* More on the Value of Financial Advisors, Claude Montmarquette, Alexandre Prud’Homme, CIRANO 2020