Yep, you must talk about money
…and no, I’m not talking about on the first date! Or second, for that matter.
But it absolutely must be discussed in the “ we in a serious relationship” or “are we heading for a long-term commitment” phase. I know…uncomfortable?
For most, it is. But don’t avoid it. Or think you know.
You do need to know.
Because here’s the bottom line---it’s the 3rd largest cause of break-ups after “incompatibility” and “infidelity”. As a dating coach, of course I don't give financial advice--but I see what not talking about money can do.
Yes, financial issues can be a major stressor in relationships. According to the American Institute of CPAs, 73% of married or cohabiting Americans experience relationship tension due to money decisions. And, money tensions can escalate quickly---and who needs these types of problems at this stage in our lives?
More people feel comfortable talking about religion or politics than personal financial matters. And, as we amass more wealth, it becomes a crucial conversation. Maybe think back to when you were in your 20s and early 30s getting married---talking about your wealth (or lack thereof) was simple. Didn’t we all seem to know how much money all of our friends made? Yes, we were starting out.
When I first got married at 30 (it lasted 24 years), I was hanging on by a financial thread. I’d started a company (It’s Just Lunch Dating) and every penny I earned went directly back into the company’s growth. The man I married was a partner at a law firm making big bucks for a 32-year-old back then. We had a transparent conversation about money. This was easy: I had none. He had some. We worked it like this: we each had our own checking/savings accounts (lol, savings were zero for me), and then a joint account we contributed an agreed-upon amount each month. Our only caveat on spending was anything over $1,000 that both parties had to live with and look at-- a lamp, a piece of art, a chair---both of us had to agree on.
Little money, simple financial decisions. After all, 20s-40s are typically people’s acquisition stages—condos, homes, nicer cars, perhaps a second home, a boat. Moving up the financial ladder.
Back to the 2020s. Having more money than less is definitely a “plus” on the dating market.
Unfortunately, the exact thing that can be attractive to so many can also cause the end of a relationship. Many lack the communication skills necessary to navigate financial disagreements in their marriage….or maybe they can communicate beautifully on all else but when it comes to money it gets …uncomfortable.
So, what do you do? Go naked on finances? Share the last 7 years of tax returns? Do an IRS audit?
No, there’s some easier ways to get through this very important conversation.
(Read at the end some good questions to ask to get this discussion rolling).
So, here are my tips:
1. The specific times you want to have the financial talks are: before you move in together, when starting a serious relationship, and prior to marriage (oh, you must!). No, this is not a first month of dating discussion---though by then you will probably start to get a picture of your partner's spending habits. But, remember, I always say everyone tends to be on best behavior the first month or two of dating---so this may not give you a clear picture.
2. This isn’t a “By the way, let’s talk about money” talk. No. It’s an important discussion and many people will leave it until the 11th hour. Again, no. Simply tell your partner in a gracious manner you’d like to sit down for an hour or two and talk about the dreaded topic—money. No, this isn’t a time to discuss where to live or what amazing vacation is on the docket—but just how you intend to handle money as a couple. Must you show financial statements? Probably not.
Mike, a 58 years old client of mine, is quite a successful business executive, who travels much for his work and thus accumulates those lovely airline miles and hotel points. Before his marriage to Lana, a retired creative director at an ad agency now focusing on her painting, she brought up how to navigate day-to-day spending in their relationship as her earnings were minimal at this point but had other assets. Outcome: They decided to live in Lana’s home, (it had no mortgage), split monthly expenses like HOA, utilities, etc. and on their two big trips each year—this year is Sri Lanka and Norway—Mike would take care of the flights and hotels with his points.
3. Be honest. If you have debt or years of alimony still to pay, share this with your partner. You may be madly in love and ready to commit, but transparency is the best policy. Don’t hide things.
Lizette, 51,a sales executive, loves to shop. From shoes at Bergdorf’s to anything from Amazon, her home is delivery central—on a daily basis. Chris, 56, a CPA, has zero interest in shopping. Early in their relationship, to hide her shopping sprees (which yes, she could afford), she set up a UPS Store box to receive her packages and sneak them in their home at night when Chris was not around. Of course, you guessed the ending—Chris found out---and not that he cared what she purchased—but he was upset that she felt the need to hide this from him. It was a trust/transparency issue to him and he didn’t understand the need for secrecy. Yes, they worked it out and while Liz continues to shop---packages now come to their home. No more Chris wondering what else she may be hiding.
4. Who gets the money?This is just reality as we age. If you plan to leave your estate to children, others or even your new spouse, handle this responsibly and prior to LIT (living together) or marriage have these documents done:a. A notarized willb. A pre-nuptial agreement or post-nuptial agreement if assets are high value (hey, I’m not an attorney or estate planner so talk to an expert on this one!)c. Trusts, life insurance, living wills and directivesYou want to make this easy for your children/partner so there are no unanswered questions
So, this is a personal business I am in, right? You and your love life! So perhaps I tend to share too much but this is me: My dad passed away recently and he was amazingly organized (beside being an amazing man). Each of his six children received a yearly email letter over the past 5 years from my dad detailing where his assets were, amounts, etc.…making it very easy for my brother to handle the estate. And, in each letter he told each of us how much he loved us too.
Basically, don’t underestimate the importance of discussing finances in your dating life. Engaging in conversations about money—early and frequently—can actually strengthen your relationship. Research shows that couples who openly discuss their financial situations tend to report higher levels of happiness compared to those who avoid the topic. And who wouldn’t want to kick off a relationship on a positive note?
*Here are the promised questions to get the discussion going---of course, each one is not appropriate for every couple, so pick and choose----
Are you more of a spender or a saver?
Do you keep a monthly budget?
What is your annual income?
How much money do you typically spend each month?
How do you typically spend your disposable income?
What's the most money you've ever spent at one time?
Do you feel it's important to ask for my permission before making a large purchase?
Which expenses would you cut to reduce your total spending?
Would you prefer to split utilities and other expenses equally or according to our income?
Should we open a joint bank account or keep our money separate?
What would you do if you received lottery winnings, an inheritance or any other unexpected windfall?
Debt and credit questions
In a relationship, each partner's debt and credit scores can have an impact on their shared financial future. To better understand how your partner navigates the world of credit, begin with these questions.
What are your credit scores?
How many credit cards do you have?
Do you know the outstanding balance of each of your credit cards?
How much debt do you currently have?
Do you owe money to friends or family?
Have you ever filed for bankruptcy?
Children and family questions
Family-related finance topics can be intimidating, but they're particularly critical if you plan to maintain a healthy long-term relationship.
Do you owe alimony or child support to a previous partner?
Do you plan to pursue secondary or post-secondary education for yourself — either now or in the future?
Would you lend money to a friend or relative in need?
Do you plan to support your parents or other relatives as they age?
Did your parents teach you any important lessons about money?
Retirement and investing questions
If you and your partner hope to spend your golden years together, you'll also need to make sure you agree on your expectations leading up to and during retirement.
How do you hope to spend your retirement?
Where are you hoping to retire?
What is your ideal retirement age?
*Last section courtesy of Equifax.
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