Every year on Valentine’s Day, a good number of couples who have been dating for some time decide this is the time to commit to a life together. Marriage is, for many people, a wonderful thing: a source of love, support and companionship for the rest of their lives. However, the statistics show that for several of these couples, something parts them earlier than “until death”. There have been several studies done about the reasons why couples choose to end their commitments, and a full discussion of that is beyond the scope of this article. As a financial advisor, however, I have seen my share of marital disagreements, as well as things that have strengthened a marriage and others that seemed to weaken it. In this article, I would like to give my advice to people looking to tie the knot, today and in the future: talk about your finances with each other, do it early and do it often.
Budgeting and Planning
In a previous article on this blog, I discussed how all financial decisions are really life decisions. How you make your money and what you spend it on determines your family’s security and quality of life. There’s a term for what I’ve just described: it’s called a budget. Many families shy away from creating one, either because they feel it’s too boring or too restrictive, and even those who do make one tend to view it as their partner trying to restrict their spending. This is a terrible way to look at a budget! Creating – or reviewing – a budget as a family is a great time to have a conversation about money; more specifically, about how each partner views their spending and the value they place on each item. It’s an opportunity to talk about the kinds of activities you’d like to do, and the projects you’d like to put money towards together, like saving up to buy your first home, to go on a vacation, for your children’s education… or even for retirement!
Perhaps most importantly, it’s an opportunity to catch and adjust trends in your spending before they become a problem. For instance, you may realise that you are eating out at restaurants very often, and decide together that you could replace those expensive activities with a romantic home-cooked meal or picnic. At the same time, it gives both of you the opportunity to discuss tradeoffs. For instance, you may decide that those restaurant outings are something you both want, and instead decide to cut back on some other activity to make sure you can still enjoy your favorite steakhouse together. Budgeting doesn’t have to be about telling each other what you can’t do, but with only a limited amount of money available, you need to choose how it will be spent wisely.
One of the most often-cited reasons for the breakdown of relationships is a lack of communication. Making those decisions and compromises together is a great exercise that strengthens your relationship through communication. While sitting down together to look over numbers and calculating a budget may not sound like the most romantic thing a couple could do, try looking at it another way: what could be MORE romantic than two people planning out their life together, setting goals and determining which challenges they will face as a couple, as well as how they will overcome them?
Unfortunately, for many couples this “unromantic” image of financial discussions is not the main reason they don’t have them. Our society, which tends to view the topic of finances as a taboo and private matter, makes talking about the family finances difficult for some. Add to that a general lack of financial literacy and education, and you have a perfect storm: something you both don’t fully understand and don’t really want to talk about. As difficult as it can be, though, it is important to discuss financial issues with your partner and handle your finances as a family. It may be uncomfortable at first, as you may not be used to such conversations, but over time it becomes natural and very worthwhile.
A Financial Advisor’s Role
Despite knowing all these things, many couples still feel uncomfortable having the conversation about money, either because they don’t know where to start or aren’t sure how to make sense of what they’re doing in the first place. That’s where a financial advisor can be a huge help! As an impartial third party, a professional financial advisor or planner can help you have this conversation, keep it positive and on the right track, clarify your situation and ask the right kinds of questions that will help with your planning. Best of all, with a professional sitting there with you, you have someone who can answer any questions you have and guide you to better manage your finances together. This will lead to less stress and less arguing in the couple, as everyone will understand the situation and be on the same page.
The choice to be together for the long run is a rewarding one, but there will be many obstacles along the way. Open communication, and setting goals and priorities together are great ways to help build a stronger sense of partnership in the couple; and planning your finances together is an excellent way to do this. With the help of a trusted financial advisor to answer questions and guide you, you’ll be well-equipped to have this discussion. Your relationship – and your future family – will thank you for it!