So, you’re getting married!
You’ve probably talked about where you’ll live, the house you want, whether you’ll have kids and how to manage your in-laws. But have you talked about money? According to research, arguments about money are the leading predictor of divorce. Like it or not, this is a must-have conversation.
Five basic steps for your money conversation –
1) Understand each other’s attitudes to money
We each bring our own attitudes to money, and a lot of it is about how we were brought up.
You might prefer to buy a few high quality items over lots of poorer quality possessions. You might always know how much is in your bank account, or you might spend until it runs out and then switch to the credit card. When your approach differs significantly to your partner’s, there can be problems, and that’s why you both have to talk about it.
Work out what sort of money personality you and your partner each have. If you’re both either spenders or savers, you'll probably find it fairly easy to agree on how you’ll manage your money. If you’re very different, you’ll need to discuss those differences and reach agreement on how they’ll be managed.
For example, your partner might be someone who spends whatever is in the bank account and never checks the balance, whereas you might spend cautiously and always know how much is in there. One solution might be to agree that each pay, a specific amount will go straight to a savings account for something you both want. That way your partner can still spend everything in the account, and you can keep saving.
What’s important is that you talk about it, because habits of a lifetime won’t suddenly change when you both say “I do”.
2) Agree on your goals
What are the things you want for your relationship which come with a price tag?
Is it a house, kids, regular overseas holidays, leisure time or even expensive hobbies? If it’s all of those things, how do you prioritise them?
If you have different priorities, can you agree to compromises for each of you so neither of you ends up resenting future spending decisions and priorities?
3) Audit your current financial situation
List all of you and your partner’s debts and assets, and set goals for where you want to be in a year, two years, five years and so on. Then plan how to get there. You might consolidate debts to make them easier or cheaper to manage, and plan to make set regular payments.
Agreeing on a timeline for when you will achieve certain financial milestones will help you calculate how much you need to spend on clearing debt or building up savings. Put all of your shared financial information and planning in one place so you can both access it whenever you need to.
4) Decide who will manage the finances
There are a few ways to manage this. One person might manage all the accounts and bills, or you might share the jobs between you. If you earn less than your partner you might feel you have less say over your shared finances. That’s not the case.
Make sure you’re both comfortable with this decision and be aware of financial abuse which occurs when one partner controls all the finances and doesn’t allow the other partner access to accounts.
5) Set time aside for money talks
It’s a good idea to let your partner know in advance that you want to have a conversation about how you’ll manage your money as a couple, and to set aside time to do that.
Make sure you focus on the issue – that is, how to manage your finances together – not on your partner, so avoid language that might make your partner feel defensive, like sentences that start with “you always…”. Remember, this is about reaching agreement, not about the rights and wrongs of different approaches to money.
Like anything in a strong relationship, managing money also takes some shared emotional investment. By choosing not to leave it to chance you’re tipping the odds of happily ever after, in your favour.
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