Talking Money with Your Partner

Talking Money with Your Partner

21 May 2014

It can be an awkward conversation, but it’s important to have the money talk

My husband and I have so many random things in common it’s nothing short of cosmic.... but money is not one of them. Following a career as a financial advisor, Excel is one of my best friends; I like to log my weekly expenses to keep track of my money and I create projections months in advance to know what I need save for, whether it’s a holiday, car payment, or a special birthday gift. My husband, on the other hand, has a more relaxed, laissez-faire approach of “spend it and it will come back... inshallah.” While everything else about our personalities seems to align perfectly, our attitudes towards money could not be more opposite. So I knew when we got engaged that we needed to have the “money chat.”

We both quickly realized that talking about money is not all dirhams and bank accounts, it’s about a deeper look at beliefs and behavioural patterns built over years of living separate lives before we even met. Do we start saving for our future children’s college funds before we even have them? How many international holidays a year can we actually afford? Does planning ruin spontaneity in our relationship? Does money talk have to be a romance killjoy?

It turns out that opening up on the subject of money can bring you closer and, according to experts, reduce the chances of splitting up in the future. One third of couples who fight over money once a week will likely face a breakup over financial struggles in the future, according to a study in 2009 completed by Utah State University out of 2,800 couples surveyed in 1987.

So, where do you start? VIVA turned to MoneyZen, a blog by Harvard and Oxford-educated Manisha Thakor about wealth management. In a column on her website, she discusses ways to get financially intimate with your partner.

Demands on your cash
While it takes just two to tango, the party can grow larger pretty fast! From children to dependent elderly parents to charitable giving and clothing/entertainment budgets (Louboutin treat, anyone?), expect many demands on your income and his. Illustrating your respective priorities can help stave off future disagreements and disappointments. (Oh, and those kids? A USDA study projects they’ll cost just north of $300,000, each, adjusted for inflation.)

Your income
Yes, some people get married without ever knowing how much their spouse earns. It’s not to say that you can’t keep your money separate—many happy couples do—but if you are going to live together, a full disclosure of earnings, retirement accounts, and other assets is in order. This clearly isn’t a first (or a fifth) date topic. However, if you think you’ve found ‘The One’, this is data you absolutely need before committing to a lifetime together. (Take bonus points for calculating the earning potential in your chosen fields.)

Your financial personality Are you a saver or a spender? Turns out financial opposites often attract and, sadly, often experience unhappy marriages. But it’s not a fait accompli. When you’re willing to talk about and compromise on spending goals, you can balance your respective financial needs. Be aware, though, that men and women can see basic facts differently. One wealth management study found that 73 percent of women said they were jointly responsible for finances with their partners. Men? Only 45 percent said money was an equal concern.

Retirement plans
If you have no idea how long you expect to work, it’s time to grapple with this question; it will have tremendous impact on your savings rates, major purchases, where you send your children to school and decide to live.  Plans to retire at 50 differ greatly from 65.
If you’re determined to stop working early, you’re probably willing to bypass most extravagances along the way. But how will that sit with your beloved?
You may believe these topics will ruin the bliss of romance, but I think you’ll be pleasantly surprised. Money talks may not be romantic, but honesty and agreement build trust—and THAT preserves Cupid’s promise.