Life partners need to be on the same page about money We all know couples who fight about money. In fact, you may personally be in a relationship where money is a source of tension.
It’s no mystery why this kind of conflict is so common – money fuels our ability to care for ourselves and our dependents. Managing this requires discipline and a plan, but often couples don’t see what that means. When long-term committed partners share their money but not the same values and habits around money, it’s apt for friction. Fortunately, as with most things, clear and open communication can help. Here are four questions to facilitate an honest and productive conversation with your spouse or partner about money.
No. 1 — How are costs managed?
If you’re soon married or living together, you’ll need to decide how your money will be combined (joint checking and savings accounts or separate accounts) and who will be responsible for each household’s expenses. If you’ve been together for a while, your primary focus is to make sure you’re living within your means and are transparent about all financial matters. Both parties can feel comfortable with the amount you borrow or make large purchases.
No. 2 — What are today’s financial priorities?
These may change from time to time, but it is important for couples to discuss frequently what is important to them. For example, young couples may want to determine whether they should set aside money for a down payment on a home. Some may want to prioritize vacation spending. Later in life, couples need to think about how they plan to spend their time (and money) in retirement. These are issues that should be discussed frequently to ensure there are no surprises.
No. 3 — What are your long-term goals?
These tend to change based on your age and may change to some extent over the course of your life. As a young couple, setting aside money for higher education (your own or your children’s) may be one of your priorities. While retirement may be a long way off, the sooner you start saving for that goal, the better. Older people may focus primarily on retirement and the disposition of their assets. Sitting down with a financial advisor can be beneficial regardless of your age. An advisor will gather input from both parties and create a plan to guide your long-term financial decision-making.
No. 4 — Are the proper documents in place?
For couples who plan to get married, there may be reasons to consider a prenuptial agreement. It spells out how property will be divided in the event of a divorce. Most importantly, it limits litigation costs in the event of a divorce, as the parties have agreed in advance on how property will be divided. For older couples, making sure estate documents are in place is important. The issues are more complex in the case of blended families, as the distribution of wealth can be more sensitive. In either case, it is important to seek proper legal guidance.
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When it comes to money, communication is key, especially since it can be a very emotional topic. That’s why it’s important to talk about it regularly. For couples, limiting financial surprises — however long[1]Whether it’s permanent debt or big purchases – building a healthy, team-oriented approach to budgeting and money management can go a long way.
Bronwyn L. Martin is a financial advisor and chartered financial consultant with Martin’s Financial Consulting Group, a financial wealth advisory practice of Ameriprise Financial Services LLC. Kennett Square and Havre de Grace, MD. He specializes in fee-based financial planning and wealth management strategies and has been in practice for over 22 years To contact her: www.ameripriseadvisors.com/bronwyn.x.martin.
