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WHAT I’M THINKING ABOUT: Couples tackling money with intentionality
Let’s kick off the summer with an uplifting quiz question: What area of disagreement between spouses is the best predictor of divorce? Sex, right? Nope. Or perhaps in-laws? Sorry, no. The answer is disagreements over finances.
Money implicates our deepest values, hopes, and fears. It serves as a proxy for status and success, and it often drives our sense of self-worth. It’s no surprise that disagreements over money have profound implications for our relationships.
For couples, the cornerstone of financial health is not how much you make, how much you spend, or how much you’ve saved — it’s how you communicate about and relate to money as a team. And in this article we’ll be walking through the essentials of healthy communication about money.
Just Do It
The first step — and the most important — is to get going and decide to start discussing your finances. Go ahead, send your partner this article right now and propose your inaugural money date. Two keys:
Schedule it. Money dates don’t happen by accident. (Money disagreements do, which is why intentional, structured dates are all the more important.) Pick a date on your calendar, and set it to recur every week, month, or quarter (more on frequency below).
Get a positive vibe. Pick a time and place that’ll bring out the best in both of you and set you up for a constructive, purposeful conversation. Perhaps that’s over coffee at Starbucks, or at a restaurant over dinner, or on your couch with a glass of wine. (And put those phones away!)
Set the Ground Rules
You’re going to disagree, conflict, and even fight over money. The key is to have healthy arguments and to fight fairly. When it comes to working through your finances, agree to stick to some basic ground rules:
Transparency and honesty: At all times, be transparent and honest about finances. There are no secret accounts or spending habits.
You’re a team: As a couple, your lives and emotions are intertwined. The way you approach your finances should reflect this relational intimacy. You are a team and must work together to identify and achieve your shared goals.
No shame, no blame: Today you start fresh. Forgive yourself, forgive your teammate, and move on from past and future mistakes.
Ours, not yours and mine: View your wealth as “ours,” not “yours” and “mine.” You’re committing your lives to each other, and seeing your wealth as joint will foster unity both financially and relationally. Don’t keep score over who earns more or does more at home. While your roles may be different, you’re equal partners working towards the same goals.
Be willing to compromise: You may not always agree, but you can always compromise. Compromise breaks impasses and helps couples move forward to their shared goals.
Commit to communicate: Be open to talking about money, regardless of how difficult or uncomfortable it is. Commit to improving your communication with each other, and it will only get easier.
Initial Money Dates: Put the Building Blocks in Place
Before you come together, spend some time individually reflecting on what drives your decisions and emotions around money. Then share and discuss these things together. This will help build team unity and understanding.
For your first couple meetings, focus on taking stock of your financial world. The more awareness you have over your finances, the more control you’ll exercise over your money. Ensure the below three building blocks are in place and, if not, tackle them in order.
Net worth statement: Map out what you own and what you owe. You can set this up through Mint, on a spreadsheet, or on the back of a napkin. (I personally recommend a spreadsheet.)
Financial goals: Your financial goals dictate how you earn, spend, save, and give away your money. The first three are always paying off high-interest debt, developing an emergency savings fund, and starting to save for retirement. See here for our rundown on setting financial goals (along with our goals-tracking spreadsheet).
A cash flow plan (or budget): A cash flow plan or budget is your big-picture annual plan for what money is coming in and where that money is going. It doesn’t have to be complicated, but it does have to exist. Everything you need to develop one is here.
This trifecta of financial building blocks forms the basis of your family’s financial plan and will grow and change as life happens.
Regular Money Dates
Once you’ve got the building blocks under your belts, you’ll transition to regular check-ins on your finances. Weekly money dates may be helpful when you’re first getting started (or in periods of change or financial stress), but otherwise monthly or even quarterly meetings should be sufficient. Check in on these items:
Financial goals: Are you on track to reach your top goals? Are each of you taking the appropriate actions to ensure you get there? Are your lifestyle and use of money reflecting the prioritization of these goals?
Spending awareness: Are you spending in alignment with your budget? If not, what’s gone wrong and what needs to change? (See here for guidance on how to stick to your budget.)
To dos: Keep a running to-do list of actions each of you need to take (like setting up recurring transfers for savings, spending less on eating out over the next month, or checking life insurance beneficiary designations). Keep each other accountable to make sure they get done.
Take an Annual Money Retreat
Once every year, spend time reviewing the prior twelve months and planning for the year ahead. Specifically, you’ll update your net worth statement, revisit your financial goals, and set the cash flow plan (or budget) for the coming year. But more broadly, you’ll take a big-picture look at your lives and imagine what’s possible.
It’s hard to find the time to do this and often this important investment in your financial lives gets put off. Why not make a weekend out of it with an annual money retreat? Couples who take this approach report wildly successful (and fun) weekends. Get away from the normal distractions and stressors and give yourselves the time and space to think clearly, dream big, and have long uninterrupted conversations about where you are and where you want to be headed. Aside from the financial benefits you’ll gain from this dedicated time, it’s wise to invest in the overall health of your relationship, and a few nights away is a great way to do this! If you can’t swing several nights away right now, make a staycation of out it by blocking out a couple of nights and planning some fun activities to break up the money talks.
Need More Support?
Sometimes, you just need a little help. If tackling your financial world as a couple is proving thorny, here are suggestions for ongoing accountability and support.
MERGE. Our online course is specifically designed to help couples create a joint plan for their money and equip them to reach their shared goals.
Talk to other couples. Find people you can speak with openly and honestly and encourage each other in your journeys.
Hire a counselor. To really improve your relationship with money and communication with each other, invest in a professional therapist. Ask a friend for a recommendation or, if you’re in NYC, email us and we’ll send you a recommendation.
Hire an advisor. I recommend using the find-an-advisor tools through XY Planning Network and NAPFA. This will help address your practical needs around managing your money wisely and identify specific goals to work towards.
What I’m Reading
Playing Catch-Up in the Game of Life.’ Millennials Approach Middle Age in Crisis
By Janet Adamy and Paul Overberg, The Wall Street Journal
We previously looked out how today’s harshly efficient socio-economic landscape has left Millennials financially insecure and burned out, and now here’s some sobering data in the same vein:
Hobbled by the financial crisis and recession that struck as they began their working life, Americans born between 1981 and 1996 have failed to match every other generation of young adults born since the Great Depression. They have less wealth, less property, lower marriage rates and fewer children, according to new data that compare generations at similar ages.
With global economic indicators looking increasingly ominous, now is the time to check in with your finances, exercise some financial discipline, and give yourself some margin. And remember not to panic — we expect downturns and plan for them.
Ask Polly: ‘I Have an Excellent Lifestyle, But What If I Lose It?’
By Heather Havrilesky, The Cut
This reader’s question to the The Cut’s advice columnist is a fascinating case study in the fears we all harbor around money — in this case someone quite affluent. What happens when you’re a well-off family with a darling child in a good school and all the lifestyle comforts your heart desires?
[T]his life is expensive and causing my already ever-anxious mind to spiral out of control. We have big plans, including staying in one of the most expensive cities as our home base, private school, vacations, etc. Plans that we can now afford, thankfully, but it’s not without some careful budgeting and foresight. There’s not a ton of room to maneuver, although we do save for our future. We know we are very, very fortunate, but it seems like this good fortune is making me crazy with the risk of losing it….
[W]hile our salaries are high, we depend on them for our needs, and if one of us loses our job, it would be pretty disastrous. We could, of course, get new ones, but it takes time and there are no guarantees. Recently, I have become seemingly all-consumed by anxiety and am close to just asking my husband to reevaluate our life plans entirely to accommodate something safer (cheaper) in case the worst does happen.