I work with people across the relationship spectrum — from those married for decades to the newly divorced or widowed, and even those entering singlehood. I've witnessed how easy it is to get swept up in romance or the day-to-day momentum of a relationship. But amidst the whirlwind of love and life, it's crucial to take steps to protect yourself financially and pursue combined goals as a team.
In this article, I will share practical advice on achieving financial harmony with your partner.
1. Know Each Other's Financial Views — Past and Present
Here are some questions to ask each other about financial history and fears. They will give you a good understanding of the “why” behind the decisions they make.
- Have you ever faced any financial hardships? How about financial victories you’re proud of?
- What are your biggest fears or concerns regarding money management?
- What was your family's approach to finances?
- Is there an aspect of financial management (like investments, savings, debt) that you find particularly intimidating or confusing?
- Was there a moment when your perspective on money drastically changed?
Also, here are some questions to ask each other about the current financial situation and goals.
- What specific financial goals are you working towards right now, and what strategies are you employing to achieve them?
- What's one financial habit you're currently trying to change, and what motivated this?
- How do you prioritize different financial goals, such as retirement, travel, or emergency funds?
- Long term, would you rather have joint or separate finances?
- Do you track your spending or have a budgeting system?
2. Create a Financial Game Plan Together Without Losing Sight of Your Own Financial Goals
Creating a financial plan with your partner that covers both short-term needs and long-term aspirations requires a balanced approach, ensuring individual financial goals are not overlooked. Start by openly discussing your personal and joint financial objectives, while setting clear priorities and timelines. Then, allocate resources accordingly, with separate accounts for individual goals and joint accounts or plans for shared objectives, ensuring both immediate and future needs are met without compromising personal financial ambitions.
3. Have the Prenup or Cohabitation Agreement Talk
Having this conversation is crucial, especially as it transitions to more serious stages like engagement or living together.
It's important to discuss topics like asset division, debt responsibility, and financial obligations in case of a separation. These agreements can also cover future financial plans, such as savings, investments, and retirement. Approaching this conversation with honesty not only helps in safeguarding individual interests but also strengthens the relationship by setting realistic expectations.
4. Take Combining Finances Slow
It's essential to approach the decision to merge finances cautiously because habits and attitudes can deeply impact the relationship's dynamics. Taking it slow allows both partners to fully understand each other's financial perspectives, values, and goals. This gradual process helps build a strong foundation of trust and ensures that both parties are comfortable with the level of shared financial responsibility and exposure.
5. Have Scheduled Check-Ins About Money
Regular financial check-ins with your partner help prevent financial anxiety from creeping into your relationship and will help you stay on track to hit your goals. Setting a consistent schedule, perhaps monthly or quarterly, for these discussions helps keep financial matters separate from your daily connection time, like dinner. In these sessions, cover budgeting, progress towards goals, upcoming expenses, spending, and financial changes — with all your accounts pulled up on screen.
Approach these talks openly and without judgment, allowing space for each partner to express concerns or celebrate achievements.
6. Get Expert Help from a Financial Advisor
Consulting a financial advisor as a couple is key for achieving long-term goals like retirement, education, savings, and investment strategies. An advisor offers expert guidance, aligning both partners' objectives and risk profiles. They provide a customized plan to efficiently reach shared financial goals, ensuring informed decisions in savings maximization, tax optimization, and investments.
Remember, achieving financial harmony is a marathon, not a sprint. It's important to take things slow and be mindful of your financial well-being as you navigate the complexities of your relationship.
If you would like help in pursuing your goals and building a balanced financial roadmap as a couple, contact us at Wealthspring. We would be happy to help.