You’ve been dating for a while now and you’re starting to be filled with excitement about taking the relationship to the next level.
You think about your future together.
But then you are faced with the dreaded, “money talk” with your partner.
Well, you’re not alone. In all the fun and emotion of dating, money conversations often get left out. This is because talking about money doesn’t seem romantic.
However, the reality is that if your relationship is to move to the next level, and even last till death do you part, you will be making money decisions together. Finding out if you are compatible when it comes to how you handle your daily money decisions could be a deal-maker or a deal-breaker.
In a 2014 survey, conducted by the Austin Institute, they found that of the top reasons for divorce, 24% of couples divorced due to financial priorities and spending patterns.
Another study conducted by CDFA identified the three leading causes of divorce as follows: "basic incompatibility" (43%), "infidelity" (28%), and "money issues" (22%). "Emotional and/or physical abuse" lagged far behind (5.8%).
Before getting married, being honest with your significant other about money issues can prevent stress and suffering for both of you. Opening up a conversation about money issues with your partner can be challenging, especially if it was taboo before your upcoming engagement.
So, to make The Money Talk less tense, but more productive here's a rundown of topics to discuss with your significant other.
It would be wise to inform your partner about any outstanding debt you accumulated before marriage.
You should lay all of your debts out on the table, including:
The total amount of debt you and your partner have may affect how much you should spend on your wedding and the timing of any other short-term goals you may have, like getting married or starting a family.
You could decide to share a credit card as a married couple so that you can both make large purchases.
However, it's critical to respect each other's comfort levels with the charges you have on the card at any one moment. It could cause conflict if one individual willingly takes on more debt than the other is comfortable with.
Therefore, when working with mutual funds, remember to compromise! A threshold for spending money should always be agreed upon before making a transaction.
Joint accounts are a gray area in couples’ finances. Attitudes toward sharing finances or joining accounts also have generational ramifications. Studies show that Millennials are less likely to share finances or operate a joint account with their partners than Baby Boomers.
Some couples share checking and savings accounts, while others only have one or the other, and some couples keep their money entirely separate. Whatever works for you and your partner is what matters.
To avoid making assumptions based on what you would want, be sure to discuss with your spouse what they would be satisfied with. After all, you know what they say about assumptions...
Knowing each other's credit scores will be beneficial later on when you need to take out a loan to buy a major item, like a house.
The burden of attempting to handle that enormous debt with terrible credit will likely be substantially reduced if you both know to postpone making that expensive purchase until you both can repair your credit.
Your relationship may have more to do with "opposites attract" than just being an introvert and an extrovert.
A relationship might also be impacted by the buyer and spender's personality. For any potential joint accounts that you and your spouse may have, it is crucial to understand each other's spending preferences.
By agreeing on what can be charged on that account, you can avoid future disputes over unclear charges and expenses.
Talking about your views on money helps to prevent any surprises with your spouse - finance-wise.
You have to iron out these issues with your partner.
Knowing your partner's money philosophy helps you identify their money personality and prepares you for the unexpected.
The secret to handling your finances together is coming to an understanding on a balance. First, it's a good idea to sit down and chat in-depth with your partner about your larger future goals to ensure that you are both on the same page.
The next step is identifying your household's necessities, including items like:
It boils down to needs vs. wants when determining how much to spend on these.
The most essential thing is to always be honest with one another about any personal debt so that it can be dealt with as part of your preparation; otherwise, it will place you both in a tough situation later on.
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