So often as a relationship progresses to the next step, marriage or co-habitation, we get caught up in the romantic, feel –good part of it and forget the practical side of things… the finances.
Often a topic that couples avoid discussing in depth, it is necessary to get everything out in the open to avoid tough conversations, fights and disillusion down the road. This article defines seven financial conversations couples should have before they take that next step.
Couples and money: seven financial conversations every couple should have
Communication is key when you’re thinking about how you will manage your money as a couple. Here is a list of seven things that are essential to get out in the open before you take the next step:
1.Your assets and liabilities—Disclosing all of your assets (e.g. savings, property, investments), along with all of your liabilities (e.g. credit card debt, mortgages, car loans, student loans) will help you plan your financial future as a couple. It is difficult to make wise choices together without all of the information on the table. Get started with our helpful Assets and Liabilities Worksheet for Couples.
2.Your credit history—Your individual financial histories will affect your ability to get credit jointly and the financial products that are available to you. It’s important that both of you check your credit reports and discuss any financial problems you’ve had in the past.
3.Your priorities—Are you saving for a down payment on a house? Do you have debt you’d like to pay down? Or maybe you’d like to save for a vacation next year? Sit down and define your financial goals together to ensure you’re both working to achieve the same things.
4.Your financial personality—Are you the type of person who finds it easy to make a budget and stick to it? Or maybe you have a tendency to spend your money whenever you see something you like. Do you have investments? How much risk can you tolerate when you’re investing? Discuss how you each approach your finances so that each partner understands the other’s attitude toward money.
5.Your financial roles—Dealing with financial matters takes work, and it’s important to discuss who is going to do things like pay monthly bills and monitor spending habits. Try to divide tasks equally so that both partners understand and feel involved in managing your finances.
6.Your monthly cash flow—How much money do you each bring home every month after taxes? What monthly obligations (e.g. cell phone bill, debt repayment, rent) do you already have? Knowing this will help you budget as a couple and plan your financial future together.
7.Your current financial arrangements—How are your finances currently organized? Maybe you have a chequing account, a credit card, and a savings account, all at different institutions. As you discuss your financial arrangements, think about how much you’re currently paying in service fees and which institutions offer products that best suit your new needs as a couple. Look at some examples of how couples arrange their finances, and think about what will work best for you.