Talking about money might not sound as exciting as planning your next vacation, but it’s one of the most crucial conversations you’ll ever have as a couple. Financial issues are often cited as one of the leading causes of stress in relationships, yet many couples avoid this conversation until it’s too late. The good news? It doesn’t have to be that way! Here’s how to get started on the right foot.
How do you start a financial conversation?
Starting a financial conversation can feel a bit like taking an ice bath – uncomfortable at first, but ultimately refreshing and worth the payoff you get. Begin your conversation by setting a positive tone. Instead of diving into the nitty-gritty of who earns or spends what, approach this as a shared goal. This conversation isn’t just about numbers—it’s about your future together and building one that has a solid financial foundation.
Here are my top tips as a financial expert to get started:
- Timing is everything! Choose a relaxed setting, like a quiet dinner at home. Avoid starting this conversation after a stressful day or when you’re pressed for time.
- Frame It Positively: Start with something like, “I’m excited about our future together and want to make sure we’re on the same page about our goals and finances.” How you view this will set the tone for how your partner will too.
- Be Honest and Open: Lay your cards on the table—literally and figuratively. Discuss your financial situation openly, including debts, savings, and any concerns.
Remember, this is just the beginning of an ongoing conversation. Like any good series, you’ll have sequels. The key thing to remember is to approach the conversation with positivity and openness so you set the right tone.
How should couples talk about finances?
Once you’ve broken the ice, it’s time to dive deeper. Effective communication about finances is key to avoiding misunderstandings and fostering trust. From working with people from all corners of the world, here’s what I have discovered is key to keeping the conversation productive:
- Listen as Much as You Talk: As the saying goes, you have two ears and one mouth for a reason! Understand your partner’s financial habits and history. Were they raised to save every penny, or did they grow up in a spend-first household?
- Set Joint Goals: Aligning your goals will help you both stay motivated, whether it’s saving for a house, a vacation, or paying off debt. You want to grow in the same direction in your marriage as you do in your finances.
- Stay Respectful and Non-Judgmental: It’s easy to point fingers, but keep them on your lap. Everyone has different financial habits, comes from a different background, and harbors different money beliefs. The goal is to find a middle ground that works for both of you.
A great example of this is Beyoncé and Jay-Z. They are both powerhouse earners, but they likely had to have some serious money conversations to ensure they were aligned financially, especially considering their individual empires. By all accounts, they seem to have a strong partnership that includes respect for each other’s financial acumen.
When should couples start talking about money?
The short answer? Sooner than you might think. A survey by TD Ameritrade found that nearly 40% of couples don’t discuss finances before moving in together, but experts, including myself, recommend starting the conversation much earlier – at least by the time you start talking about a long-term commitment and certainly before any major life changes, like moving in together or getting engaged.
Moving forward after your first financial talk, use life events (i.e., getting a new job or moving homes) to revisit your joint financial situation and goals. Think about Rachel and Ross from Friends. While they were great at other parts of their relationship, discussing finances wasn’t always their strong suit, leading to misunderstandings. Learn from their fictional mistakes so you don’t have to put your relationship on a break!
How do you split finances as a couple?
Deciding how to split finances can be tricky, but it doesn’t have to be. The key is finding a system that works for both of you. Here are a few common methods:
- Proportional Split: Contribute to joint expenses based on your respective incomes. For example, if one person earns 60% of the household income, they pay 60% of the bills.
- 50/50 Split: Split everything down the middle, regardless of income. This is common in relationships where both partners earn similar amounts.
- Joint Account for Shared Expenses: Many couples opt to pool their resources into a joint account for shared expenses while keeping individual accounts for personal spending. This is also sometimes referred to as a hybrid method.
Take a cue from Kristen Bell and Dax Shepard. They’ve talked openly about how they keep things fair by contributing proportionally to their income differences, ensuring that both feel valued and respected. Ultimately, there’s no one-size-fits-all approach to splitting finances, so find a method that feels right for both of you.
What’s the 50/30/20 rule?
The 50/30/20 rule is a simple budgeting technique that can help couples manage their finances together. Here’s how it works:
- 50% Needs: Half of your post-tax income should go toward essentials like housing, utilities, groceries, and transportation.
- 30% Wants: Allocate 30% to non-essentials like dining out, entertainment, and vacations.
- 20% Savings/Debt Repayment: The remaining 20% should be put towards savings or paying down debt.
I find this method to be a great way for couples to ensure they’re living within their means while still enjoying life and saving for the future. Imagine if Monica and Chandler had used the 50/30/20 rule. They could have avoided some of the stress when combining their lives and finances, balancing fun with responsibility.
What’s the 80/20 rule of life balance?
Another frequently cited rule is the 80/20 rule, also known as the Pareto Principle, which suggests that 80% of the results come from 20% of the effort. This can be applied to many aspects of life, but let’s take a look at how it applies to your finances. Firstly, focus on the big wins. Instead of stressing over every small purchase, focus on the big financial decisions with the most impact. Secondly, automate savings. This makes saving easier by automating contributions to your savings or retirement accounts. In the context of relationships, the 80/20 rule can also apply to balancing work and personal life. Prioritize the activities and habits that strengthen your relationship.
Why getting a prenup matters
Some people have their first financial conversation during the prenup process. The prenup process requires folks to share finances with each other in order to comply with the financial disclosure requirement for prenups. This entails literally writing down the values of all of each person’s assets, debts, income, and potential inheritances and attaching them to the prenup. Obviously, this opens the doors for a major financial conversation because you’re sharing the nitty-gritty details of your financial landscape.
In addition, when getting a prenup, you have to decide on certain marital goals and make sure you’re aligned (no, prenups are not always about divorce). In your prenup, you can include clauses regarding whether or not you will have joint bank accounts while married and who will contribute to such accounts. It is super important to discuss and decide before walking down the aisle to ensure you’re both aligned on marital finances.
Additional tips for successful financial conversations
Having worked in this space for over a decade, here are some extra tools to help you in your relationship when discussing financial matters.
- Set Regular Check-Ins: Make financial discussions a regular part of your relationship. Set a monthly or quarterly money date to review your budget and goals.
- Educate Yourself Together: Attend a financial workshop or read a personal finance book together. Learning together can make the process less intimidating. I host a regular investing workshop here.
- Seek Professional Advice: If you’re struggling to find common ground, consider speaking with a financial advisor who can offer an objective perspective or enroll in a training program together. Check out this resource to get started.
Even the most successful people, like John Legend and Chrissy Teigen, have likely had to navigate financial conversations while building their families and careers. Regular communication and mutual understanding have helped them maintain a strong partnership, and they can do the same for you.
Conclusion on first financial conversations with your partner
Having your first financial conversation as a couple might seem daunting, but it’s a crucial step in building a strong, healthy relationship. Approach it with openness, honesty, and a willingness to listen, and you’ll set the foundation for a successful financial future together. And remember, just like any great romance, your financial story will have its ups and downs – what matters is how you navigate them together.
Laura Tynan is the founder of The Witch of Wall Street, a personal finance and investing community, where women are shown how to manage, multiply and manifest money, using simple strategies. Laura holds a BSc Hons in Finance, is a Chartered Accountant, and is certified in EFT Tapping, Breathwork, and RRT. She has been recognized by the Financial Times as a Top 20 Future Female Leader and by Yahoo! Finance as a Global Champion of Women in Business. She is a multi-award-winning speaker who has spoken at, and been featured in, Forbes. Laura hosts The Witch of Wall Street podcast and is the author of the personal finance and investing book for women, by the same name, which is available now on Amazon.
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