Money can make or break a relationship. Money is a very personal, sensitive, and emotional subject for most folks. The fact is that most people do not have any discussion about money before getting into a relationship. Even most married couples do not do a good job at discussing personal finances with each other. 

If you desire to have a successful relationship with your significant other, it’s essential that you both be on the same page regarding money and personal finances.

In this MoneyTalk, we will talk about some of the ways you can deal with money matters when in a relationship:

 

1. Communicate regularly about money with your partner

Money is often a sensitive subject, but it’s important to communicate regularly with your partner about your finances. This means being open and honest about your income, debts, expenses, and financial goals. By doing so, you can avoid misunderstandings and disagreements down the road. You may also want to consider setting up a regular “Money Date” to discuss your finances and ensure you’re both on the same page. for this “Money Date”, you both should arrive with an agenda and points to discuss related to your income, spending, savings and investments.

 

2. Freely share your thoughts about money and finances

Open and honest communication is key to a healthy relationship. When you’re transparent about your money goals with your spouse, it can help eliminate any feelings of jealousy or resentment down the road. You can start by asking these questions:

• What are our priorities when it comes to spending and saving?
• How do we feel about debt?
• Do we want to purchase a home?
• How much should we save for kids’ education?
• How much should we invest in the stock market?

 

3. Talk about your short-term and long-term financial goals

Do you want to save for a down payment on a house? Are you hoping to retire early? These are just a couple of examples of the financial goals you and your spouse may have. By discussing your financial goals with each other, you can develop a plan to achieve them together. Along with having this discussion, you need to come up with a plan to achieve your short-term and long-term financial goals. These conversations and plans can help you stay motivated and on track while also providing a sense of financial security and stability.

 

4. Divide financial responsibilities

In many relationships, one person tends to oversee the finances. However, it’s important to divide up financial responsibilities so that both partners are involved in decision-making. This can help you avoid arguments about money and ensure that your needs are being met. You may also want to consider setting up a joint checking account or having a joint credit card. These steps can help you both stay on top of your finances and help track where your money is going.

5. Create a joint budget

Setting up monthly budgets is another way of tracking spending and managing the household finances. Budgets will help you make informed decisions about your money. Working together to create a budget is one of the best ways to financially get on the same page. If you’re not sure where to start, there are plenty of budgeting apps such as MoneyPatrol which can help create, track and manage your budgets. You should create budgets for your spending on food, groceries, entertainment, utility bills, rent payments, etc. Once you have a monthly budget in place, stick to it and review it regularly to ensure you both are staying within those budgets.   

6. Set up a joint Savings account

A joint savings account can be a great way to manage your finances as a couple. You can use this account for short-term or long-term goals, such as saving for a vacation, a down payment on a house, or retirement. You can each contribute to the account regularly, and you’ll both have access to the funds when you need them. Plus, having a joint account can help you stay accountable and make it easy track your financial goals. When you talk about savings, discuss how you’ll use the account and how you’ll access the funds.

7. Save and invest for kids’ education

If you have kids or plan to have kids, you and your partner should plan about how much money you both can save and invest for your kids’ future. The cost of education, especially a college education, has been increasing every year. You should both consider investing in a 529 plan or putting money into eligible savings bonds. These are tax-friendly investments, and you would not have to pay taxes when you withdraw money for college tuition payments. The earlier you start investing the more money you would have saved by the time your kids are ready to go to college.

8. Make a Debt Repayment Plan

If you and your spouse have debt, such as credit card loans or student loans, developing a repayment plan is important. This can help you focus on paying off your debt while also freeing up funds for other financial goals. You may want to consider consolidating your debt into one loan, which can often get you a lower interest rate, and simplify your monthly payments. You can also investigate balance transfer credit cards or getting low-interest personal loans to help you pay off your debt. This is important to discuss as a couple to decide what’s best for your financial situation.

9. Build An Emergency Fund

An emergency fund is a crucial part of any financial plan. You should use this account for unexpected expenses, such as a job loss, medical bills, or car repair. having an emergency fund in place lets you avoid using credit cards or taking out loans when unexpected expenses arise. Aim to save at least 3-6 months of living expenses in your emergency fund so that you’re prepared for anything. You must discuss how much money will be kept in the account and how the funds will be used if an emergency does arise. You can’t rely on one partner’s income to cover expenses if either one of you is laid off or have unexpected medical bills. So, it’s important to have funds kept aside for such life situations.

10. Have a Retirement Plan

You and your spouse need to be on the same page regarding retirement planning. Do you want to retire as soon as possible? Do you want to wait a few more years? How much money do you need to have saved? How much money would you need so that you both can survive on your retirement savings without having the need to work? How much are you both currently contributing to 401k accounts or how much would you both receive in social security benefits? What is your investment strategy? These are all critical questions that need to be discussed and decided upon. As you grow older and closer to retirement age, it becomes even increasingly important to have a plan.

Let’s summarize what we have discussed in this MoneyTalk. We discussed 10 key things you should do to deal with money matters when in a relationship:

1. Communicate regularly with your partner about money

2. Freely share your thoughts about money and finances

3. Talk about your short-term and long-term financial goals

4. Divide financial responsibilities

5. Create a joint budget

6. Set up a joint Savings account

7. Save and invest for kids’ education

8. Make a debt repayment plan

9. Build an emergency fund

10. Have a retirement plan

 

As we discussed earlier, if you’re married or are in a serious relationship, It is very important to be transparent about money. When you’re both aware of your income, debts, and expenses, it can help reduce arguments about money and make it easier to work towards your financial goals. Having a “money talk” with your partner is crucial for your success as a couple and to have a healthy financial future for both of you. And most importantly, having a better relationship with money while you are in a relationship with your partner is critical to achieving your financial goals.