It’s time to have ~the talk.~ With your partner, with your friends, with your kids, with your parents … everyone. No, we don’t mean the birds and the bees — people actually tend to be more comfortable having that convo. We mean the money talk. Because this particular societal taboo is keeping us from earning, saving, and investing more. Next up: Here’s a toolkit of helpful info and conversation starters to help you have the talk with the person you plan to spend the rest of your life with.
Talking money isn’t exactly romantic, but it’s totally necessary for any serious relationship. Whether you’re engaged, married, or domestically partnered — or just feel pretty sure you’re in it for the long haul — regular money talks are a must.
A few stats about marriage and money:
74% of women are single — either never married, divorced, or widowed — when they die.
Nearly three-quarters of women who outsource the management of their money to male partners find themselves with a negative financial surprise after divorce or widowhood.
One study found that women’s household income falls 41% after a divorce and 37% after a spouse dies. (Men’s income also falls after they lose a partner, but by way less — close to half.)
Looks pretty clear that for women (especially women in relationships with men), taking an active part in your shared finances is just smart planning. But it’s also good for your relationship. Another study found that 78% percent of couples who talk about money every week say they’re happy, but only 60% of couples who talk about money every few months — and half of couples who talk money less often — said the same thing.
So have those talks. We’ve rounded up a few to have with your spouse (or betrothed, or domestic partner, etc), plus some tips and tools for making them as easy and helpful as possible.
Planning for a wedding
If you’re like a lot of couples, this is the first big expense that you pay for together. And by “big expense,” we’re talking over $30,000 on average (although more and more people are saying “lol, no thanks.”) So after you’ve finished toasting your future together, take the time to get clear on your wedding budget.
Some things to decide: Will you be paying for the wedding on your own, or are you fortunate to have family members willing and able to help with the bill? If you have help, how much? What’s the max you’re willing to spend together, and is that a realistic number for you? (Credit card debt isn’t exactly the best way to start off your marriage, if you can help it.) If you need to save for the wedding, how much will you need to set aside each month to get to your goal?
The sooner you plan it all out, the sooner you can start tackling your first money goal as a team.
Talking about prenups and postnups
What they are and how they help
A prenup (short for “prenuptial agreement”) is a legal agreement between you and your spouse that you sign before you get married. It dictates how you’ll divide up your assets if you get divorced. If you already got married without putting a prenup in place, you can sign a postnup, which is pretty much the same thing except for the timing.
They’re useful because there’s no one-size-fits-all solution for dividing up your finances in the event of divorce. That can get particularly dicey if one person went into the marriage with a lot more assets (or debt) than the other, if one person owns a business, for example. These legal docs let you decide all those things ahead of time to help make a divorce — if it ever needs to happen — smoother and fairer for you both.
We can’t tell you exactly what you should do, because we aren’t lawyers* (and we’re also not you). We can tell you that even just talking about prenups and postnups can be difficult, because nobody wants to admit that they might become one of the roughly 50% of couples who end up getting divorced … especially when you’re planning your wedding. But a prenup or postnup is really just a thorough look at what might happen in your financial future, which can be a great and healthy beginning.
How to bring up the prenup / postnup
This is the kind of thing you want to frame as a mutually beneficial collaboration (because it is), not a demand (because obviously). Make it a joint effort — where you both contribute to the drafting process — right from the start. After all, it takes two to tango … and un-tango.
If you aren’t married yet
One option is to make the prenup part of the conversation where you go over your individual finances together. After all, if you’re going to marry them, it’s good to get an understanding of one another’s net worth (total assets and total debt), credit score, etc. And since a prenup is, by design, meant to help protect both of you, it can just feel good to have fairness legally woven in.
Or maybe you do this as part of your wedding prep process. Like so:
“I read online that it might be good for us to both make a list of all the legal things we want to be on the same page about before the wedding. Then we can figure out if we need to spend time with an attorney on some contingency plans.”
Things you might include on that list: Do we want to compare our wills (if we have them) and change anything? Where do we land on a prenup? Do we need to update the beneficiary info on our insurance and investment accounts, or are we good with who they are now? Take time to make your lists independently, and then share them with each other in a few days.
If you’re already married
A postnup can be part of a broader estate planning conversation where you create or update things like your will and your power of attorney. It’s good to do that regularly anyway, of course; the people who are (or should be) listed in those docs might change any time, like if people get married, have babies, or pass away. While you’re talking about unhappy but necessary legal docs, should you consider a postnup, too?
Having regular money check-ins
Like we mentioned, managing your money together is key to a financially happy marriage. And you can’t do that without regular money check-ins — maybe monthly. Here’s what those should cover.
The state of your (financial) union
First, look at how your accounts are doing. Grab your most recent statements for checking and savings accounts, any debt you’re carrying, and investment accounts (joint and separate). Scan through them together to make sure nothing seems off and that there aren’t any errors.
And at least once a year, pull out your will and insurance policies, too. See if they need updating.
Your joint budget
If you don’t have a joint budget yet, now’s a great time to build one. Here’s an in-depth guide to getting it done. It doesn’t have to be super detailed if that’s not your style, but the point is to make sure you’re not spending more than you earn, and that the way you’re spending together is OK with both of you.
If you already have a budget, check in on how you did last month. Do you need to make adjustments anywhere? Maybe you aren’t spending your whole grocery budget, or maybe you’re consistently running out. Were there any surprise expenses that you weren’t expecting this time but could plan for in the future? Is there leftover money that you can put toward your goals?
Then look at the month ahead to see if there’s anything special you might want to be ready for. Maybe there are three family birthdays that month, or your annual car insurance will be due, or the December holidays are a few months away and you want to start saving up for gifts.
Your goals, and your plans to hit them
Next, check in on your joint goals. If you’ve never talked about goals, no day like today! You want to first see whether you’re in sync about what those goals are, then make a plan to hit them (if you don’t have one) or check in on how well your plan is progressing (if you do).
Some goal examples: buying a house, paying off high-interest debt, saving up three to six months’ of expenses in case of an emergency, starting a family, replacing your old car, or upping your contributions to your retirement accounts.
No matter where the conversation takes you or what your financial plan looks like, the key here is to talk, keep talking, and ask lots of questions.
Combining your retirement dreams
Here’s where you think big: When (if) you and your partner leave the daily grind for good, where do you want to go? A big Victorian house by a lake? Or do you want to downsize to a condo and travel the world? How will you actually spend your days? Will you stop working entirely?
Dreaming is fun ... but not everyone’s dream is the same. That includes married couples. For example, if your partner wants to move somewhere far away and warm, but you want to move closer to family, that’s tough. It can also be tricky if one of you is older than the other, or you plan to retire at different ages (leaving one person to potentially feel like they’re funding their partner’s retirement).
So it can be good to have a conversation about what the other person’s dream retirement might look like. You might never have even stopped to think hard about this before — if that’s the case, you can build a joint dream from the ground up. But if you each have a vision, now’s the time to uncover any differences and figure out how to reconcile them. In the example above, maybe you decide you’ll compromise by getting small homes in both places and focus on racking up airline miles so you can bounce between them.
Then, once you’re clear on what you’re planning for, you can assign a specific number to your goal and really dig into making it happen financially.
Approaching money convos if one person doesn’t have regular income
Not every married couple has two sources of income. One of you might be a full-time student, or on an extended career break, or a stay-at-home parent. In that case, it can sometimes be easy for that person to feel like the family’s money isn’t really “their” money, and like they need to get permission to use it. Or like they have an “allowance.”
This is not a good feeling to have. It can cause other not-so-nice emotions, like guilt or resentment or feeling trapped. Most people don’t want to make their partner feel that way.
The goal, then, is to approach your money convos intentionally so that it’s clear that your joint money belongs to you both. If you are the one earning, when you build your joint budget, try to avoid phrases like “You can spend $X on groceries” or “I can’t afford for our electricity bill to be so high next month.” And if you’re the one who isn’t earning, remember that the budget belongs to you, too: “There’s that dinner party next weekend, and I’d like to buy a new outfit. Let’s see if we can fit that into the budget.”
We’re big fans of splitting the “fun” money in your budget (basically anything not going toward needs or savings goals) evenly between you, 50-50. You might even get separate spending accounts with your own debit card and transfer that fun money out of your joint account. That way, you both feel in control of your own spending decisions. (Bonus: This also lets you buy your partner special presents without them seeing the transaction on your bank statements.)
Getting involved if you haven’t been
Finally, if you haven’t been involved in the money decisions lately (you wouldn’t be the only one, by far), it might be time to get reinvolved. That doesn’t mean you have to suddenly track the budget and pay the bills yourself, if you don’t want to — there’s only so much everyone can do, so some division of labor is normal. Staying involved and aware (and in sync) is the goal here.
Here’s a possible conversation starter, if you don’t want to suddenly jump into the whole financial feminism thing out of nowhere (although that is also a perfectly good conversation starter, in our opinion):
“I don’t want you to have any headaches if something happens to me, and vice-versa. Can we make a list of our financial accounts — places to look, people to call, and our beneficiary designations?”
“The vacation we just took / are planning to take really has me thinking about how great it will be to retire together someday, and I realized I don’t really know where we stand on that financially yet. Can we sit down and go over where we are, and where we want to be?”
And may you live happily ever after.
Except for the top-notch members of our compliance team, who read through this article to help make sure we’re following all the Security and Exchange Commission’s marketing laws for investment advisors. (Shoutout to the compliance team!) Alas ... they can’t give you prenup advice, either. You’ll have to ask your own attorney for help with your own specific needs.
(And by the way: Just like with any legal agreement, you should each have your own attorney look it over before you sign.)
© 2020 Ellevest, Inc. All Rights Reserved.
All opinions and views expressed by Ellevest are current as of the date of this writing, for informational purposes only, and do not constitute or imply an endorsement of any third party’s products or services.
The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice.
The information provided does not take into account the specific objectives, financial situation or particular needs of any specific person.
Investing entails risk including the possible loss of principal and there is no assurance that the investment will provide positive performance over any period of time.