The Right Way for Couples to Discuss Finances

How, exactly, should married couples discuss money? It’s a delicate subject because most everyone knows that finances are at the root of many divorces. But if you think about it for a minute, that’s all the more reason to find effective, practical ways to discuss the topic. If you can’t talk frankly with the person you intend to spend your life with, then what’s the point?

On the bright side, millions of adults in long-term relationships have discovered excellent ways to communicate about the most delicate of all subjects: money. Here’s a look at some of the top suggestions from relationship counselors on the topic of couples and their finances:

Talk About Money Once a Week

There’s a misconception about how often couples should discuss finances, relationship experts say. It’s not once a year or once per month but every week. It need not be the same day, and the rule is not carved in stone, but the goal is to get in the habit, as a team, of talking about income and outgo on a regular, frequent basis.

Frequent money chats are an ideal way to defuse any misunderstandings and viewpoint disagreements about how to spend, how to save and how to earn. Keep in mind that it’s usually a bad idea to talk while you’re upset about something else. That’s a recipe for interpersonal disaster. Instead, try to agree on a regular time, like Sunday mornings, to spend a half-hour or so going over the previous, and next, week’s money matters.

One sociological study found that married people who used this strategy were happier, stayed together, and reported few disagreements throughout many decades of marriage. Experts say the secret power of weekly talks is in the fact that it builds bridges of communication and teaches couples how to face challenging circumstances together.

Make a Savings Strategy

When two people build a savings strategy together, they both own it, and thus feel more committed to making it work. Anyone who’s ever been on a diet knows the value of having a diet buddy. Another person, in this case, a spouse, can help you through those weak moments that are sure to come along. You also have the job of helping your spouse resist the urge to make off-budget purchases. When a firm savings strategy is in place, you have a much higher chance of success.

What are some of the most effective components of a smart plan for saving money? The following tactics have been used by millions of couples whose goal is to build up monetary reserves for a rainy day:

• Refinance student loans: You achieve three things when you opt to refinance student loans from Earnest. First, you get the benefit of the lower monthly payment on one of the largest debts on the family books. Second, you can usually negotiate a lower interest rate because your credit is better now than when you obtained the original loan. Finally, you may have more time to pay, which means emotional breathing room and peace of mind.
• Bank any gifts you receive: If the parents-in-law gift you cash at holiday time or on birthdays, send it straight to the coffers. Some couples are able to amass several thousand dollars over the years just by holding on the monetary gifts they receive from generous family members.
• Open a college fund: Even if you have no children, open a college fund where you bank. Later, if you decide not to become parents, you can move the money into a retirement account or somewhere else. But if you do make the decision to bring a child into the world, you’ll be all set and won’t have to make an effort to begin putting money away for that inevitable day when your baby heads off to school.
• Contribute a fixed percentage of income toward savings: Together, spouses should agree on a fixed percentage of earnings that will go directly to savings. Some set 10 percent as a default amount, but that can be a mistake. In your early years of a career, when you have no children and few major expenses, it’s possible to set the percentage closer to 25 or 30 percent. Experiment with the numbers and opt for the highest level you can tolerate.

No Secrets, Ever

There’s no place in serious discussions, especially ones about monetary matters, for secrets, lies, intentional misstatements and prevarication of any kind. Experts say that even a small lie can taint the entire relationship and ruin trust that perhaps took years to build up. The bottom line is, to be honest during the weekly talks and everything will be fine. Never be afraid to state your opinion or disagree with your spouse. That’s what candid discussions are all about.

Discuss Major Purchases Before Making Them

What is a major purchase? It’s up to you to decide, but most people say anything that is not an ordinary daily transaction and exceeds $50 fall into the category. Set your own limits with your spouse and be sure to discuss any money spent that is off-budget in nature. Counselors say it’s always better to have a discussion before a purchase than after it. When in doubt, air it out.

Agree on a Long-Term Financial Plan

Monthly budgets, savings percentages, and pre-spending chats are beneficial for everyone. But what about the long-term goals? Do you and your significant other know how you want your finances to look in 30, 40, 50 years or more? Ironing out your retirement goals and other long-term monetary aims is an integral part of the big money picture.

Consider sitting down with your CPA or personal financial planner and having a lengthy talk about all those issues that won’t come up for decades. Try to put a 40-year plan in writing and adjust it as the need arises. A long, working lunch with your CPA is also a good time to ask about estate planning, wills, and trusts. Many young people have no clue about these topics and can benefit greatly by finding out all their options.