Butting heads on money issues is one conflict many married couples face. Here are some tips to make the conversation go smoothly.
Some couples would rather completely avoid the topic of money than risk an argument. Others choose to have tough money conversations which often end in large disagreements. In fact, it has been estimated that money issues are the driving force in a staggering 90 percent of divorces.
Following are some practical tips for approaching your spouse or life partner about this emotionally charged issue:
Recognize Your Money Personality
Do you track every expense or let statements pile up unopened for weeks at a time? When it comes to investing, how adverse are you to taking risks? How different is your money personality from your partner? It is important to note that typically, women are more conservative investors than men, with an average balance in a 401(k) at $14,000 less than a man’s, according to the National Center for Women and Retirement Research.
Be Honest with Yourself
Before you can be honest about money with your partner, you must be clear about how you feel. If you have more assets than your partner, you may feel resentment if his or her spending habits are not as disciplined as yours. Or if you have always been independent, it may be hard for you to be “taken care of” financially.
Find a Neutral Time
A good time to talk about your money personality, negotiate your finances, or create a plan with a spouse may not be right after a spouse has charged up a storm on a credit card. Instead, find a time to have a relaxed conversation about money and your finances when you are not in a financial crisis or upset about a particular money-related issue.
Share your Past and Future Expectations
To gain further insight into your partner’s approach and views on money, volunteer your own feelings about money and it may encourage your partner to do the same. Try to talk about how your parents deal with money and how you have dealt with sharing money in past relationships. Also, share your specific fears and your hopes about your financial future.
Nobody’s born knowing how to handle money and some take longer to learn than others. He or she may need to ask the same question several times before comprehending the answer. Fear, intimidation, and lack of confidence can interfere with a partner’s ability to understand. Consider attending a financial seminar or investment club meeting together to open up conversations about money and encourage learning in partnership.
Fund the Big Picture
While couples can agree on long-term goals, they can also get lost in the day-to-day struggle and end up losing their focus. First, figure out the big picture – for example, when and how you wish to retire and how much you’d like to contribute to children’s education. Then set up automatic contributions to retirement plans and other funds to support these goals as well as your fixed monthly expenses. It is amazing how much stress is relieved when your major expenses are automated and you are committed to funding your future.
Set Up Some Ground Rules
For example, begin with an open view of your starting point by sharing your financial history and putting all debts and assets out in the open for discussion. Review your credit histories at Experian.com or Transunion.com. Track spending together by keeping an accurate budget for at least a few months. Also, designate a bill payer as one of you is likely to be better at day-to-day management of the household expenses, but be sure to keep the other person informed and involved. Be sure to keep at least one credit card separate to maintain a separate credit history. If you divorce or your spouse dies, it will be difficult or impossible to get a mortgage, loan, or credit card without it. Furthermore, each of you should have some agreed-upon amount of “no questions asked” money to spend as you like.
Plan for the Worst
Spouses who fail to at least learn the details of their families’ financial situation can be vulnerable to fraud, mismanagement, and costly confusion in the event of death or divorce. There are several organizers on the market that if properly used can help your spouse or other family members find important documents and keep track of financial information.
Consider working together with a qualified financial advisor who can help both of you define your goals and lay out a strategy to help meet them. The Atlanta Wealth Management Firm of Benedetti, Gucer & Associates can help you put together a comprehensive financial plan for your family. Simply knowing whether or not you are on track for your most important financial goals (like Retirement or College Funding), can significantly reduce the financial stress that couples deal with on a daily basis.
Mark the calendar and plan a date to sit down with your spouse or significant other and discuss your financial future.
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