Managing your finances when you’re in a serious long term relationship can be difficult. In fact, about 1 in 5 Canadian marriages end in divorce and what is the number one reason? Money. Although talking about your money situation may not be the sexiest topic, it’s a vital one to have if you plan on staying with your partner in the long run. Here are some steps you can take to keep your relationship strong and your finances in check.
1. Communicate, Communicate, and Communicate!
The key to any successful relationship is communication. It is important to learn about your partner’s values and attitudes toward money. This discussion will include questions about the past, present and future.
• Questions about the past may include how was money dealt with when you were growing up? Were your parents savers or spenders? The way we were raised in regards to money has a huge impact on our attitude towards money.
• Questions about the present reveal your current money habits. Do you live pay cheque to paycheque? What debts & assets do you have? What is your current net worth? And finally,
• Questions about the future give insight about your future goals together. Are you planning on buying a house? Having children? Taking a vacation every year? Retiring at 65?
These discussions will help you to better understand your partner and where they are coming from. It’s important to remain calm and nonjudgmental so that an honest and open discussion can take place.
2. Make a Plan, Set Goals and Build a Budget
There is not a one size fits all financial plan for every couple. Depending on your situation you may keep your accounts completely separated, have your own accounts plus a joint account or just have one account for the both of you. No matter what you decide, talk about your expectations and make some boundaries. A few questions to think about are:
• What will we do if someone asks us for a loan?
• How much money is acceptable to spend without consulting the other person?
• Who is responsible for paying the bills? The mortgage? The credit cards?
Set some financial goals for yourselves and discuss how you will reach them. Do you want to build an emergency fund or save for a vacation? How much money is needed and how will we reach those goals?
Lastly, track your spending and make a budget. Although it takes time and effort, building a budget and sticking to it can keep your wallet full and potentially save your marriage relationship so it is totally worth it!
3. Check in and Have Conversations Regularly
Don’t forget to check in with each other once in a while. If the system you’re using is not working for you, figure out why and make the necessary changes. Also, take time to celebrate your successes when you’ve reached one of your financial goals and support each other. Remember that you are equal partners and both people should be involved in the finances.
As you can see, the key to having a healthy relationship and successful joint finances is honesty and open, regular communication. If you’re having trouble having these discussions, I highly recommend reading a book called Crucial Conversations. Good luck, lovers!