Money Discussions – Introduction

Why is it important to have money discussions with partners?

Although completely accurate statistics are impossible to obtain, the general consensus is that finances can be the breaking point of many relationships.

In fact, according to one survey data from Wealth of Geeks and Credit.com indicates almost a quarter of Americans – 24% – said they’d broken up with someone over finances.

If you have met your special someone, and you think that the relationship is getting serious, perhaps even getting married or entering into a civil partnership, having some discussions about finances is critical to you both being on the same page.

Financial topics can be really challenging to discuss. In a Wells Fargo survey, 44% of people stated that financial topics were the hardest to discuss with others.

This blog attempts to break down the five questions that I believe everyone needs to ask their partner. Note that everyone is different, so there may be different wordings that may work for each person, and money discussions have to be had in the right settings and moments.

#Money Discussion 1: Are you a spender or a saver? What do you value enough to spend money on?

The first part of the question is important because two people who share different values on spending and saving, can very quickly encounter issues. This question is definitely something that can be asked in a light-hearted manner near the beginning of the dating process. If you are already in a relationship, it is likely that you have figured this out already. However, the second part of the question is more important.

Some people want to buy into the latest fashion treads, or the latest technology. Some people are into cars or watches. Some people will shell out ridiculous amounts of money on a designer handbag or sunglasses. Once you have heard their answer, it is worth asking why they value these particular items.

Mentality and Money

Nothing here should initially prevent you from pursuing someone romantically, but be aware that if someone pursues multiple luxury goods then it can quickly become an issue. Note of course that it also depends on what ratio of their take-home pay is spent on these goods. For instance, Bill Gates can buy an island and it does not stretch his budget, but if someone on a £50,000 salary finances a £15,000 Rolex, there will be hell to pay.

This question also gives you a little insight into the kind of person you are dating. For instance, when I hear that a woman highly values spending on a family or annual holiday, I think that this reveals a person with some wisdom, as downtime and new experiences are important for growth and fulfilment. However, if someone wants luxury and branded goods, with little concern for quality, then it can reveal a somewhat superficial nature.

Charlie Munger, the great investor stated, “The world is not driven by greed; it’s driven by envy. (source)” Perhaps one of the most dangerous reasons why people are driven to spend is to keep up with the crowd and maintain appearances. Addictions are also a very important influence on people’s lives, so when people’s spending is driven by addiction, this can be a very bad sign in any relationship and be a red flag.

#Money Discussion 2: Where do you see yourself in 5 years’ time financially?

The importance of having a vision in financial discussions cannot be overstated, as it serves as the guiding force that shapes actions and decisions. Vision provides a sense of purpose and direction, acting as a roadmap for achieving financial success. While action is crucial, it is the vision that gives meaning to those actions, preventing individuals from treading forward aimlessly.

For young individuals, especially those early in their careers, it’s understandable that they may need time to explore and understand their professional standing before formulating a concrete plan. However, even in these early stages, having a broad vision for their financial future can help set the tone for their actions and decisions. This might involve thinking about long-term career goals, lifestyle aspirations, and the financial milestones they aim to achieve.

Monthly Audits

It is always worth sitting down each month together to build a picture of the predictable monthly expenses that you have each month. This practice will also help give you a good idea of how your future financial life has and will evolve.

In cases where someone finds themselves in serious financial difficulties, seeking guidance from external sources, such as financial advisors or coaches, can provide valuable insights and help create a vision for financial recovery. A clear vision becomes a beacon of hope and motivation, driving the individual towards specific goals and away from financial turmoil.

The gender aspect highlighted, particularly in the context of a straight man, emphasises the traditional role of men as providers and leaders in a relationship. Having a clear vision is seen as a manifestation of stability and security, traits that are often valued in a partnership. A man with a plan not only demonstrates a sense of responsibility but also provides reassurance to his partner about the direction and stability of the relationship.

Evolving Visions

It’s crucial to recognise that having a vision does not mean having every detail figured out. Instead, it involves having a general sense of where one is headed and being open to adapting the vision as circumstances change. Relationships benefit from shared goals and a mutual understanding of the future, allowing both partners to contribute to the vision and work together towards common objectives.

In summary, a clear vision in financial discussions is the cornerstone of success. It provides a sense of purpose, direction, and security, serving as a foundation for informed decision-making and coordinated efforts toward shared goals. Whether in personal finance or relationships, having a vision sets the stage for a fulfilling and purposeful journey.

#Money Discussion 3: When and how do you plan to retire?

Discussing retirement with your partner is a crucial conversation that involves more than just financial planning. It delves into the realms of personal goals, lifestyle preferences, and shared visions for the future.

“We have a retirement crisis in America today not from a lack of money, but from a lack of vision.”

Dave Ramsey

Here are some of the key reasons why asking your partner about their retirement plans is essential:

• Understanding your partner’s retirement plans helps both of you align your visions for the future. It’s an opportunity to ensure that your aspirations and goals are in harmony. Discussing whether you want to retire together or if one of you plans to continue working can avoid potential conflicts down the road.
• Retirement often comes with financial considerations. Knowing when your partner plans to retire allows you to jointly plan your financial future. This includes saving for retirement, investment strategies, and determining a comfortable lifestyle post-retirement. Open communication about financial expectations can prevent misunderstandings and foster a sense of financial security.
• Retirement isn’t just about financial readiness; it’s also about health and well-being. Discussing retirement plans includes considerations for health, potential healthcare costs, and the kind of lifestyle you both envision during retirement. Understanding each other’s health goals can help plan for the necessary healthcare provisions.
• The conversation about retirement can shed light on your perspectives on work-life balance. Some individuals may prefer to retire early and enjoy leisure, while others might want to continue working for personal fulfilment. Discussing these preferences ensures that both partners feel heard and that compromises can be made if needed.
• Knowing each other’s retirement plans allows you to anticipate potential challenges. For instance, if one partner plans to retire early while the other wishes to continue working, there may be adjustments needed in terms of lifestyle, social activities, and time spent together. Addressing these challenges proactively can strengthen your relationship.
• Retirement often comes with changes in daily routines and responsibilities. Discussing your plans allows you to distribute responsibilities and make necessary adjustments. This can include household chores, caregiving responsibilities, and other aspects of daily life that might be impacted by retirement.

If you do not take time to consider retirement and how it might happen, it could doom your future.

#Money Discussion 4: What are your Future Career Plans and Income Goals?

The discussion about future career plans and income goals is a pivotal aspect of building a strong and transparent financial partnership. While it’s true that an ideal partnership transcends financial considerations, acknowledging the importance of income and career planning is a realistic approach to nurturing a stable and supportive relationship.

Addressing future career plans and income goals is not about placing undue emphasis on financial success but rather about creating a shared understanding of each other’s aspirations and expectations. Open and honest communication in this regard is crucial. This involves discussing not only the current financial situation but also the anticipated trajectory of one’s career and income over time.

Having these conversations about money demonstrates a level of intentionality and foresight in approaching life decisions together. It reflects a commitment to shared goals and a mutual understanding of the financial aspects that underpin those goals. This transparency fosters trust and reassures your partner that you are both on the same page when it comes to the financial aspects of your future.

It’s important to acknowledge that life is unpredictable, and there may be times when the exact direction is unclear or when challenges such as joblessness arise. In such instances, forming a vision for how things can develop becomes crucial. This doesn’t necessarily mean having a rigid plan for every scenario, but rather a shared understanding of how both partners can adapt and support each other during challenging times.

Sharing Commitments

By discussing potential challenges and uncertainties, you’re not only preparing for the future but also instilling hope in your partner. Knowing that you are both actively engaged in shaping a vision for the future, even in the face of uncertainty, can provide a sense of security. It’s a shared commitment to facing challenges together and finding solutions collaboratively.

In essence, the discussion about future career plans and income goals is a proactive and empowering step in building a resilient partnership. It lays the groundwork for mutual support, understanding, and adaptability in the face of life’s uncertainties. Through these conversations, you cultivate an environment where both partners feel secure and confident in facing whatever the future may hold.

#Money Discussion 5: What debts do you have?

Now this is a bit more of a personal question, but it really matters. Transparent communication about existing debts and financial liabilities forms the bedrock of a strong financial partnership. It’s paramount for both individuals in a relationship to openly discuss and disclose details about any outstanding financial obligations. This includes comprehensive insights into student loans, credit card debt, mortgages, or any other loans currently in play.

By sharing this information, both partners gain a comprehensive understanding of the financial landscape they are navigating together. It is not merely a matter of disclosure but a collaborative effort to comprehend the implications of these financial commitments on their joint financial future.

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This transparency allows for an informed discussion about creating a plan to manage and pay off debts collectively. Conversations around interest rates, repayment strategies, and timelines for debt reduction ensure that both partners are actively involved in the financial decision-making process.

This level of openness not only fosters trust but also lays the groundwork for a unified approach to financial responsibilities and goals. Moreover, it enables couples to assess the impact of existing debts on future expenses and investments, facilitating strategic decision-making aligned with their shared vision for financial success.

In essence, discussing and managing existing debts together is a proactive step towards building a resilient and collaborative financial partnership.

Credit Scores

When you start your conversations about money and debt, it will usually become clear that one partner has a superior credit score to the other.

If someone is much better at handling finances generally and can get better access to deals at superior interest rates, then it can be a good idea to share credit. By this I mean that it is possible to take out a joint credit card.

Each partner will still maintain their individual scores, but both of you will be able to accrue benefits. You should only merge this aspects of your finances when you have complete trust in each other.

Conclusion: Money Discussions are Challenging but Necessary

You might note that most of these money questions are forward-looking rather than questions that deal with the present. This should actually give everyone a little comfort. We always want our partners to progress as individuals, and forming financial goals and habits together can really propel your life forward.

Engaging in money discussions, though challenging, offers significant rewards in strengthening relationships. These conversations, often difficult due to their sensitive nature, foster deeper intimacy and understanding between partners. By openly sharing financial histories and goals, couples build transparency, trust, and a united front in facing challenges.

In essence, the difficulty of money talks becomes a catalyst for personal and relational development, making them essential and immensely rewarding in building a resilient partnership. At MoneyMeetsLife, we believe that transparency about money matters is one of the keys to opening doors to opportunity and opening your hearts to more fulfilling relationships.