It’s no secret that good communication is a cornerstone of any strong marriage. Dishonesty, secrecy or even just being too busy to talk can doom a relationship — particularly when it comes to money. To avoid conflict and promote harmony, you and your spouse should share all aspects of your financial life, including spending, saving, investing and setting goals.
The best time for what could be a difficult conversation about money is before you commit to major life decisions with financial implications. Especially if you’re newly married and have never shared finances before, you may not be fully aware of potential sources of money-related conflict. But however long you’ve been together, there’s no time like the present to discuss your near- to long-term financial goals.
Different spending and saving styles are often a big source of conflict between spouses. This is especially true if one partner makes big purchases without the other’s knowledge. To maximize each person’s independence while minimizing the potential for serious disagreement, consider implementing a spending threshold. For example, any time you want to spend $500 or more, talk it over with your partner first. The amount you designate isn’t the important part — it’s the principle that you’re both in this together.
Be fully open about your financial accounts and earnings, too. You should both understand what you own and what you owe, how much you make and how much you’ve saved. In addition, both partners should have equal access to bank, investment, mortgage and loan account statements.
For some couples, money doesn’t become a contentious issue until they have children. How you’ll spend to raise and educate them can involve big financial decisions. Such discussions can also be emotional, especially if you and your partner have had different childhood and educational experiences.
Do you favor public or private elementary school? An in-state public college or an expensive private or out-of-state university? Will you pick up the full cost of college and graduate school, or should this be your child’s responsibility, at least in part? What special programs, extracurricular activities or overnight camps will your children participate in?
Rather than assume you and your spouse will agree, discuss these issues well before it’s time to begin paying.
Retirement is another potentially fraught topic because it entails making a series of important financial assumptions and decisions. Will you and your spouse retire at the same time? How do you want your retirement to look? Do you both plan to continue working in some capacity? These are all lifestyle questions with big financial assumptions behind them. If you dream of leaving your job early to travel the world, while your spouse wants to earn more wealth to assure a comfortable old age or to leave something to your children, you’ll need to hammer out a compromise.
Once you and your spouse have agreed about how much you need to save for retirement, move that decision from theory to practice by automating as many of your financial decisions as possible. For example, if you both agree to save $2,000 per month, set up an automatic investment plan or retirement plan contribution to ensure this agreement actually takes place.
It’s not enough to have just the occasional financial conversation with your spouse. Schedule regular “meetings†with each other so you can discuss major purchases, review bank statements and insurance coverage, look over investment performance, and adjust savings goals based on shifting priorities. Involve your advisor in any conversation that deals with major financial decisions or when you need an unbiased and informed third party to weigh in.
Financial discussions can lead to conflict between spouses because they call up a lifetime of memories about, and emotions surrounding, money. One way to head off arguments is to take the rational approach. If you’re disagreeing over a major purchase or whether you need to save more to achieve certain goals, try simple math. For example, compare how much larger your nest egg is likely to be when you retire if you save 12% vs. 10% of your current income. If math isn’t your forte, ask your advisor to run numbers for you. Sometimes it takes the cold, hard logic of a spreadsheet to convince both spouses of the best move given their financial situation — or whether they’ll need to tighten their belts to realize their goals.
In the end, simply keeping financial discussions open will go a long way toward keeping a marriage sound, both emotionally and fiscally. Keep discussions regular and fact-based, and don’t shy away from tackling the future. After all, you’re in it together. If you need another perspective, or want help getting an accurate picture, call your advisor and check in.