Gayle Evezich — In my work with couples getting ready to share their lives and finances, we go through a 3 step process to prepare them to successfully manage their money as a couple. This process starts with the couple really getting to know each other’s money history and what emotional baggage they carry about money. We then get to the nitty gritty bit of fully sharing all their finances — the good, the bad and the ugly. We end with a plan on how they’ll work together to establish their goals and day to day money management.
If you are approaching shared finances with your significant other, do yourselves a favor and go through the following steps first:
Step 1: Understand your and your partner’s money emotions:
Money evokes incredibly strong emotions in most people so it’s no wonder so many of us avoid talking about it. Our feelings about money are formed from our family, our own experiences, and to some extent, messages we receive from society. We bring these emotions into relationships which can cause problems unless you both understand them.
As a couple, it’s incredibly important to be able to have money conversations without the anxiety or stress that many people already have about money. In this step, the couple is assigned a casual conversation to learn about each other, from a money history perspective. The idea here is that through a relaxed conversation, each person can learn about the other’s feelings about finances. For example, if one person graduated during the 2008 Great Recession and didn’t find a job for 2 years, they may have strong emotions about savings and protecting assets.
Here’s a fun list of questions to get you started on the conversation:
- Did your family have a budget? How did you feel about it?
- Did your parents fight about money? Did they struggle with money?
- Have you been affected by a recession (2008, current)? What was/is your experience?
- How do you make financial decisions?
- If you won $1 million today, what would you do with the money?
- If I lost $100 on something and didn’t tell you, would you be upset with me? How about $1,000?
- What scares you about money? What makes you feel secure?
- Do you enjoy paying bills and balancing your budget?
- What would it take for you to feel happy about money?
- What does having money mean to you?
Step 2: Communicate openly and honestly:
As with every other part of your relationship, honesty is a critical component in healthy communication about money. This step requires a full disclosure of all financial data including credit reports, debt, savings, and budgets.
No matter how bad the data might be, this is the person you trust with your heart so you should (ideally!) be able to trust them with your financial data. Break out your credit reports, credit card statements, retirement statements, bank statements, and any other financial statements or information and share them with your sweetie.
Step 3: How will you work together?
Once you understand your own and your partner’s money emotions, and all the finances have been disclosed, you’re now ready to decide how you want to manage your money as a couple.
Will you share all your money, split it, or have some other arrangement. It doesn’t really matter as long as it works for both of you. To make things easier, assign tasks based on strengths. Who will pay the bills, manage the accounts and/or care for your investments? Figure out these items now so you can tackle the big items like setting your financial goals and building a budget to support them.
None of this is rocket science but it’s stuff many people forget to do. This is foundational work that will make money management as a couple much easier and less stressful.
Damian is the lead Financial Concierge on Your Money Line, the financial help line serving all Pete the Planner® Financial Wellness clients. Damian is a CERTIFIED FINANCIAL PLANNER™ professional and loves answering your money questions. Despite sharing a last name and sense of humor, Damian and Pete are not related.