“The money talk” doesn’t have to be an ultimate test of love that you and your partner must pass before marriage.
If you and your partner can calmly discuss money issues and come to a solution, it is a sign of maturity in the relationship. After you both have touched on the issues above, it's time to get practical. Here's a list of things you can do.
Gather all important financial documents like current statements for your checking and savings accounts, debt, investment accounts, and insurance policies. This will help in evaluating your net worth and creating a financial plan.
Calculate all your money - saved, spent, invested, then create a budget.
If you see any of these issues come up, you'll need to recalibrate your budget.
See where you can cut down spending so you can pay down debt aggressively, and make sure you’re “paying yourself first.” This means saving up 3-to-6 months of expenses in case of an emergency and investing in a retirement account.
Another thing future-oriented couples could do jointly is to create a financial plan.
This will allow you to set specific goals and calculate the time needed to reach them. You may spend money and save money while still working toward your long-term goals, for instance, by setting monthly short-term goals.
To make sure that you and your partner are both staying on track with spending and saving, it is a good idea to plan regular budget discussions.
This allows you to:
Regular open communication will also build trust and help you avoid issues that may cause problems in the future. Studies show that couples that share finances are more transparent in their communication.
So apart from planning your financial future together, you get to have a more fulfilling relationship with your partner.
Life throws curveballs now and then. We can't control everything in our life, but we can surely control how we react to it.
So having a little extra money set aside for unforeseen expenses is a good idea. Create an emergency fund to give you some buffer against life's curveballs. You don't need to start with a huge amount. Small amounts like $100 monthly is a reasonable beginning point, if you can, keep adding to it.
One way to beat the rat race is by investing.
While working for money, you can also make your money work for you. It's much faster to beat the rat race if you are in a team. Discuss investment ideas with your partner. Investing in stocks, starting a business, buying real estate, etc.
After all, you are not only safeguarding your future but that of your kids too. If it works, the more financially savvy person can handle the investments or if need be seek the services of a financial expert.
Remember that there will come a time when you both would have to leave the labor market. As such, planning for retirement should make it into the checklist of your financial plans.
Have a definite plan for your retirement.
Planning for the kids does not start and end with college plans.
You can discuss how to set up a trust, a will or how your estate would be handled after you both are gone. It is a tough conversation to have with your partner as no one wants to think of death, but it is inevitable.
As such, leaving this area of your finances unattended can have severe consequences for your kids.
After you've had 'The Money Talk,' it's time to get some plans together. Going over these partner financial topics and coming up with a plan together will not only strengthen your portfolio, but also your relationship.
Make sure you are a team when it comes to planning a budget, talking about retirement and setting financial goals - it will pay off in down the road!
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