Talking money is hardly romantic, but it’s totally necessary for any serious relationship. Whether you’ve tied the knot, are domestically partnered, or feel pretty sure you’re in it for the long haul — regular money talks are a must.
Not to get all Debbie Downer, but 74% of women are single — never married, divorced, or widowed — when they die. 90% of women manage their own money at some point in their lives. And 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), staying in the loop — even if your partner handles all the finances — is just smart planning.
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 here’s how to get started.
Step 1: Gather your important financial documents
The first step is to calculate your net worth and sketch out a budget, and this requires getting all your proverbial ducks in row: your most recent statements for checking and savings accounts, any debt you’re carrying, and investment accounts.
While you’re at it, if you haven’t seen your insurance policies or a living will, ask your partner to dust those off and bring them to the table as well.
Step 2: Calculate money in, out, saved, and invested.
Hopefully there won’t be any huge surprises here. But if you see you’re spending more than you earn, investing before you pay off high-interest debt, or find yourself left with too little at the end of the month to invest well, it may be time to recalibrate your budget.
See where you can cut down spending so you can pay down debt aggressively, and make sure you’re “paying yourselves first.” This means saving up three to six months’ of expenses in case of an emergency, and investing in a retirement account.
Step 3: Get your goals together, and plan for them.
If you’re not sure what to invest in, start with your retirement. I can’t overstress how important this is for every woman. Think a company 401(k) is enough? Maybe for a guy, but remember: Women outlive men by six to eight years, on average. We also make less than they do (for now), and we take more career breaks.
All of this means we need even more to retire, so contributing more of your income to a low-cost, well-diversified investment portfolio — in addition to your company 401(k) plan — is generally a smart move.
Step 4: Paint your retirement picture
This is where the “dreaming big” happens. When 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? Once you’re clear on what you’re planning for, you can assign a specific number to your goal.
Step 5: Check on your other investments
You may have other investment accounts outside of retirement, and that’s great! But how are your joint assets allocated? If your partner is “in charge” of these accounts, make sure you’re familiar with your investment portfolios and that you’re on the same page with your partner about their risk, their impact, and the amount you’re contributing.
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.
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