Six Tips for Successful Financial Partnerships
“Stop! In the name of love, before you break my heart,” The Supremes sing in “Stop! In the Name of Love.” We know they weren’t alluding to the pitfalls couples face when they grapple over money issues, but our own experience tells us that money plus love can lead into minefields that we’d rather avoid.
Let’s recognize the obvious - financial matters are an important part of any couple’s relationship. Face them head on.
For some, this will be second nature. For others, it’s a challenge. Here are six tips to make the challenge easier -
- Set goals. One’s a spender, they are concerned with living in the moment, have an always-expanding list of toys, trips, restaurants to try. One’s a saver, they think ahead to the future, want to grow their emergency fund, and strive to max out their 401k contributions. Does that sound familiar?
It’s too late to have “the talk” after you have put a big purchase on your credit card. So, sit down and have a money date periodically. Talk about your goals and write them down. Without goals, you won’t know where you are headed.
Share your feelings and (this is important) actively listen to the other’s viewpoint. Compromise may be required but agreeing on common goals will allow you to move forward in a unified fashion.
- All for one and one for all. Commitment is about unity, but not the absorption of oneself into the collective whole. Some interests won’t be perfectly aligned. The same can be said about overseeing our finances.
A joint checking account and joint credit card are perfect for joint expenses, but separate accounts for separate interests are a promising idea too. When you set your goals, establish boundaries regarding spending and saving patterns.
- Money secrets are a no-no. It’s ok not to disclose the secret handshake you learned from your college fraternity or sorority. It’s not ok to keep money secrets hidden from your partner.
Major secrets may be a symptom of bigger problems that can threaten the stability of your relationship. Don’t destroy trust that may take years to rebuild.
- Who manages the monthly bills? It’s a good idea to put as much as possible on autopay. It’s not a set and forget, but you don’t want to get caught flat-footed with overdue bills or late charges that may slip through the cracks and ding your credit report.
Therefore, who takes care of the bills? It may make sense for one person to be in charge so there’s no confusion, and regular payments aren’t missed.
But checking in monthly or bi-monthly is an effective way to keep both individuals on the same page. Check-ins also allow you to make any adjustments, as a couple, towards your goals.
- What comes first, the chicken or the egg? It’s the age old but unanswerable question. Should we go in the direction of retirement savings or college savings?
Having children means putting your kids before yourself more times than you’ll ever be able to count. But when it comes to saving for retirement or college for your kids, put yourself at the front of the line. Keep this in mind: if you don’t fund your retirement, who will? The burden could fall on your kids.
- Stash away cash for an emergency. Did you know that just 39% of Americans have $1,000 to handle an emergency? The rest would have to use a credit card or borrow to cover an unexpected need. We make sure our clients have ample reserves, but sadly, that’s not the case for all Americans.
Money is a difficult topic. We truly understand that. Treat each other with respect and actively listen when you set goals. Goals provide you with a roadmap, and they can reinforce the bond you have towards each other.