Most couples don’t want to talk about finances, but you should since money is the third leading cause of divorce (after basic incompatibility and infidelity, respectively).
Here are the top five things you can do today so you don’t breakup tomorrow:
1) Open Up: Get naked financially. Yes, if you’ve been following me this last year, you know I’ve talked about this before, but it’s a biggie. Here’s my advice: tell your partner everything when it comes to your finances. That includes your credit score, how much you have, how much you make, and how much you spend. Expose everything, because at the end of the day, you don’t want anything to come out as a surprise after you’ve said “I do.”
When you marry someone, you marry their financial history.
2) Schedule Monthly Meetings: Take the time to discuss your finances every month. Treat it like a CFO (Chief Financial Officer) meeting. Put one person in charge of keeping track of everything and create a budget. You must hold each other accountable and operate on a budget.
3) Have your own money: A lot of couples make the mistake of throwing everything into one account. That can make it difficult because you set up a dynamic where you have to ask permission to purchase something. That can derail a relationship in the end. Just like your personal email, it’s important to have a certain amount of freedom to do whatever you want. This doesn’t mean you don’t trust your partner, it just means you have autonomy and privacy. No one should be micromanaging the other person’s life.
If you’re part of a single income family and your spouse depends on you financially, a certain amount of allocated money to do whatever he/she wants is important. Base this number on your budget and agree on that number.
4) Set Goals Together: Write down your goals every year (now would be a good time since it’s the end of the year and, yes, I will be doing this with my fiancé).
I’d recommend setting up a CFO meeting (refer to #2 above) to discuss your financial dreams. Talk about everything including when you want to retire, whether you want to send your kids to private school, own a vacation home, and/or pay off the mortgage. You should itemize and prioritize all of these goals and objectives. Keep in mind that your spouse’s dreams may differ from your own and that’s okay. One person is going to be more risk averse than the other, but you have to accept this since we are all different.
5) Hire A Professional: If you cannot agree and you’re stuck, hire a counselor, advisor, psychologist, or mediator. For example, what if your partner decides he/she wants to send the kids to private school and you don’t? Or, what if one person maxes out the credit card every month, and the other is trying to save for a house? Now you’re stuck and you need help. I would hire a professional who can help you get to common ground.
Think of it like hiring a coach. If you want to be better at something, like tennis or yoga, you take lessons. Much like not cutting your own hair and finding a hair stylist, when it comes to financial issues, you should seek the help of a professional. It will ultimately help you get to where you want to be, and fan that financial flame.
–Luis Strohmeier, CFP®, CLU®, ChFC®, CDFA®, ADFA, RICP®, AFC®