Oh wait, we do. Or at least a joint account, if we’re planning to spend the rest of our lives with our partner! Pearl Mathias brings you tips about how to work through the dreaded yet inevitable conversation about finances
Remember those unnerving conversations you had to have to define your relationship back in the day? You may be glad that they’re over, but don’t heave a sigh of relief just yet, because at some point, you’re going to have to talk about money. Yes, you’re going to have to face the dreaded financial conversation that we would all prefer to run away from. We’re sure you’ve had the occasional chat about money, but when your relationship begins to get more serious — whether you’re engaged or have decided to live together — your individual decisions (especially financial ones) are going to begin to affect each other. Don’t panic though. The conversation can be awkward, but it doesn’t have to be as painful as you’re imagining it to be. And, as clichéd as this may sound, it will bring you closer. Read on for a couple of tips about how to get the discussion started and prevent it from turning into an emotional battle.
Talk about your goals: Ask your partner about their plans five or ten years down the line and talk about where you see yourselves. You could be planning to have a baby, looking to move into a new home or have noticed a gradual increase in credit card bills. It’s important to let your partner know about these things without making them feel as though you’re accusing them or that you think they’re bad with finances — even if they are!
Look at the numbers without judgement: You may have already tried to have the conversation about spending adequately, but it has fallen on deaf ears. Don’t lose your cool when you sit down to talk about it. Listen attentively to the reasons in order to come up with better financial goals for the future.
You’re on the same team: Now that you’ve laid your cards (money) on the table, it’s important to address the areas where you are over-spending. Make individual lists of things you would both like to work towards — for example, to be debt-free or to retire early — and find common ground. If nothing coincides, find an area that you are both willing to work towards; that should be your area of focus, financially.
Make a plan and work toward it: Spend some time together, figuring out how you plan to work on your individual spending. This could include cutting down on personal splurges or limiting your visits to Starbucks. You should both agree to compromise in order to achieve your financial goals.
Don’t shy away from bringing it up: Once you have it all planned out, don’t sweep these conversations under the rug until your next financial crisis arises. Every once in a while, decide to sit down and have a normal conversation about the expenses that won’t upset or annoy either of you.
QUESTIONS WORTH A MLLION BUCKS
We know that love bears all things, but when you discover that your partner has been hiding a closet full of financial skeletons, things could get a little uncomfortable. Here are a couple of questions you should ask your partner in order to secure your financial future.
Do you have large debts?
It’s important to get a clear picture of your partner’s debt load, so that you have an idea of your future financial situation. Also, ask about their plans to pay them off.
Do we want to combine accounts?
Although this is a hot-button issue for couples and the answer depends on what you’re comfortable with, the time to decide is now! Plan things in advance — will you have separate accounts, a joint account, or a combination of the two?
Practically, most decisions that couples make relate to money in one way or another. So, it’s high time you had the conversation and when you do, here a couple of things Mehrab Irani, the general manager of investments with Tata Investment Corporation Limited, and author of two bestselling books, is saying you should be on the same page about.
Earning: This is when you discuss what you want from your career, whether you plan to have children, and if so, who will take care of them.
Budgeting: Mehrab says, “This is another important aspect because the amount of money you earn is irrelevant if people don’t budget for themselves. If you keep buying things that you don’t need, you will have to sell the things that you do!”
Spending: You need to decide what your (financial) priorities are — whether you want to send your children to private schools, travel together or save for retirement.
Accounting: It’s important to find out how you want to divide the financial tasks in your relationship. For example, who will keep track of the money flowing in and out of your accounts?
Saving and investing: Figure out whether you are ‘spenders’ or ‘savers’, what you are saving for and what you spend on. Also, do you both want to put that money in the market. It’s important to share your views on how to invest, if you do consider doing it at all. “The earning partner has to be insured with a higher amount for the safety of the non-earning partner. People should not combine investments with insurance and insurance should always be pure term policy,” Mehrab says.
Build wealth: Talk about how to make your money grow, how much would you collectively need to retire comfortably or put your kids through college? It’s important to discuss what’s on your mind when it comes to spending this saved money.