Published in: Banks | July 10, 2019
Are You and Your Partner on the Same Page About Money?
By: Lyle Daly
Open communication about money can make your relationship a success -- in more ways than one.
Image source: Getty Images.
Finances probably aren’t any couple’s first choice of things to talk about. After all, money is a common source of strife in relationships, and even just broaching the subject can feel awkward if it’s not something you typically discuss.
But whether you like it or not, being open about your finances is vital for a strong relationship. It will make you and your partner less likely to argue about money, and you’ll be able to work towards your financial goals together.
How can you and your partner ensure that you’re on the same page about money? There are three stages to it: disclosing your respective financial situations, deciding how you’ll manage your finances, and setting money goals as a couple.
Getting serious about money with your partner
In the early stages of your relationship, you and your partner probably won’t get too in-depth about your finances. Once you know that your relationship is serious, then it will be time to have a more thorough discussion about money.
This conversation often takes place when a couple moves in together, although it could happen anytime you and your partner decide you’re planning a life together. Regardless, you’ll both want to discuss your:
- Credit scores
The point here is to be open about your respective financial situations so there aren’t any unwelcome surprises later.
You don’t necessarily need to tell each other your exact incomes and debt figures, but you should have a solid idea of where you stand in terms of money. After all, you’ll need this information to figure out how you’re going to make financial decisions and set goals.
Managing money as a couple
Next, you and your partner will need to decide how you’re going to manage your finances.
This starts by deciding whether you’ll combine your finances or keep them separate. Either option can work, so it depends on which you prefer and which will be more convenient.
If you decide not to combine your finances, then you’ll also need to discuss how you’re going to divide expenses. Splitting everything down the middle is a popular choice, or you could elect to divide expenses based on your respective incomes.
You should also figure out a price threshold where you’ll notify each other before making purchases. Considering 82% of people in relationships have argued over a purchase, you can head off a lot of potential fights by clarifying at what price you’ll either give your partner advance notice or make the spending decision together. We’ve found that on average:
- Men wanted advance notice about purchases of $261 or more and women about purchases of $227 or more.
- Men wanted to make joint decisions about purchases of $498 or more and women about purchases of $427 or more.
Setting financial goals with your significant other
After disclosing your financial situations and figuring out how you’ll collectively manage money, all that’s left is to set your financial goals as a couple. Common examples include:
- Paying off debt
- Saving up to buy a car
- Saving enough for a down payment on a home
- Being able to retire together at a certain age
Of course, your goals will depend heavily on where you’re at financially. If one or both of you has credit card debt, then that would probably be the best place to start. Once that is under control, you could move on to other goals.
For long-term financial goals, you should break them down into smaller chunks that will keep you and your partner on the right track. Let’s say that you want to save $75,000 in the next five years for a down payment on a home. That would equate to $1,250 per month, or $15,000 per year.
It’s a good idea to decide on exactly how much each of you will contribute towards your goals and to check in with each other regularly to ensure that you’re both making steady progress. For savings goals, you could also open a shared bank account that you use exclusively for that purpose.
Moving ahead financially together
It’s a big step to go from being completely on your own financially to discussing money with your partner, but it can pay off for both of you in the future. You’ll significantly reduce the likelihood of relationship issues caused by money, and you’ll be able to achieve financial dreams more quickly because you’ll be working together with your combined incomes.
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