Let’s acknowledge the reality: Discussing finances can be a mood-dampener for couples and a significant source of stress. Nevertheless, money’s impact on a partnership is far-reaching, spanning from the initial stages to the very end. Who covers the expenses of the first date? How are bills shared? What is your debt situation? How will we manage retirement? Any one of these discussions, while essential, can induce discomfort.
Mitigating the discomfort associated with financial discussions can be achieved through various strategies. One approach is to infuse an element of enjoyment into these conversations by engaging in shared activities while talking, as advised by Denise Hughes, a financial coach and the author of “Earn, Save, Spend, Give: 4 Things to Do with Your Money and How to Make It All Work.
I believe that when it comes to discussing finances, it’s important to introduce an element of lightness and maintain an open-minded approach, tailored to the unique dynamics of each couple,” she suggests. “This may involve going out for a pleasant dinner or preparing a special meal at home while engaging in a conversation about their aspirations for the upcoming year.”
She adds, “My husband and I have a tradition of embarking on a hike at the onset of every January to deliberate our financial objectives. As we revel in the beauty of nature, we contemplate necessary household tasks, dream of vacation destinations, and exchange thoughts.”
Doesn’t that sound delightful? Whether you opt for a mountaintop discussion or a cozy meal at home, whether you’re six months into a relationship or sixteen years into marriage, the following are some questions Hughes recommends you consider.
Surprisingly, many couples inhabit a realm of ambiguity or even concealment when it comes to their finances. Thus, posing the question ‘where are we?’ necessitates a keen, open-eyed awareness,” remarks Hughes.
Data stemming from the National Survey of Families and Households, encompassing 4,500 households, has revealed that financial disputes represent the most significant predictor of divorce. Therefore, the initial discomfort of discussing financial matters is a worthwhile investment in preventing a tumultuous future. For couples in the early stages of commitment, this entails the disclosure of income, savings, and debt. For more established couples, the focus may shift towards evaluating bills, expenses, and formulating strategies to align with their financial goals.
The question of whether our financial needs are being met is a pivotal one for couples to ponder. If an initial conversation reveals deviations from spending or savings objectives, Hughes recommends embarking on a one- to two-month journey of meticulously tracking all financial expenditures as a couple.
Examine these expenses without judgment to gain insights into the flow of your finances,” she advises. “Analyze both the inflow and outflow of funds.” Subsequently, raise pertinent questions: What drives our spending in these areas? What underlying psychological needs are being fulfilled through these expenditures?
Although it might sound emotionally driven, Hughes argues that if certain expenses fail to “nourish the couple,” they may need to be reconsidered. While some expenditures, such as utility bills, might not evoke a sense of joy akin to Marie Kondo’s philosophy, they are non-negotiable. Yet, what about funds allocated for double dinner dates with friends? Perhaps reallocating that time and expenditure for quality couple outings is worthwhile. After all, it’s less likely that additional wine bottles or extra desserts will find their way into the bill when it’s just the two of you.
Given that life’s priorities evolve over time, often influenced by major life events such as the arrival of children, it’s crucial, according to Hughes, to pinpoint your foremost objective. This provides a clear focal point for your financial decisions, whether it involves debt reduction, vehicle replacement, or college savings.
“Some couples may declare, ‘Our primary focus is funding our children’s private education,’ while others might emphasize, ‘This year, our primary objective is an unforgettable vacation,'” Hughes explains. “Yet another couple may resolve to build substantial savings due to unforeseen expenses causing debt last year.” In essence, aligning on a common objective ensures a shared direction and harmony in financial decision-making.
Investigating the origins of one’s financial beliefs and values is an enlightening endeavor applicable to various stages of a relationship. Hughes envisions it as an opportunity for “two individuals to share their personal money narratives: What their financial upbringing was like, their current perspectives on money, and the significance it holds in their lives.”
It’s plausible that either you or your partner hails from a family where money was a perpetual source of concern, or perhaps one was raised by a spendthrift mother or a grandfather who stashed cash under the mattress. “Everyone possesses a unique money narrative that has both positively and negatively influenced their life,” Hughes observes. By connecting these narratives, a deeper comprehension can be attained, shedding light on why, for example, an extravagant back-to-school shopping spree might evoke anxiety in your partner.
Hughes draws a parallel between discussions about sex and money, emphasizing their equal significance in a relationship and the potential for associated feelings of shame. “Be it a substantial credit card debt or insufficient savings, whatever the concern, we all contend with financial matters,” Hughes remarks.
She recommends addressing these confessions with an attitude of inquisitiveness and empathy rather than criticism and condemnation, recognizing that neither party can make progress or rectify the issue if an open and comfortable dialogue is not established.
Determining the nature of financial contribution in a relationship is an essential consideration. With few exceptions, disparities in income between partners are common, which naturally results in variations in financial contributions to the household. According to Hughes, it’s fundamentally a matter of equitable division and devising a system that aligns with your comfort levels.
Would a joint checking account be designated for fixed expenses like the mortgage and car payments? Alternatively, would it be more preferable to allocate a portion of your earnings to a personal account, affording a degree of financial autonomy without sharing every minor expense with your partner?
As Hughes stresses, the precise allocation of financial responsibilities within the relationship is of secondary concern. What truly matters is that both partners possess a comprehensive understanding of their financial affairs. “Contribution can take numerous forms,” she emphasizes. Through open and constructive dialogues, couples can ensure financial stability and maintain a harmonious financial outlook.