Money continues to be one of the top issues that couples argue about.1 While research has determined that talking with a spouse or partner about finances can actually increase relationship satisfaction, many couples are still hesitant to have these conversations.2
Since money can be tied to emotion more than many people realize, having discussions about finances today can pave a smoother road to tomorrow. The benefits are many: helping to establish shared financial goals and a collective road map to navigate the years ahead, identifying potential differences between partners that can then be addressed, and mitigating some of the future issues that can lead to financial disagreement.
Do you talk about finances with your partner? If you are looking to engage in a discussion, here are six questions to help start the dialogue:
- What does money mean to you? While this may appear to be a strange question at first glance, the intention is to form an understanding of each person’s perceptions about money by allowing individuals to interpret what money means to them. Often, people do not realize that others may see money in a different light than how they perceive it. Some may view it as a means of safety and protection; others may consider it as a means to access the fun things in life; and, still others may see it as an obligation to share with those less fortunate. Understanding what money means to each individual is a good starting point when beginning the conversation about finances.
- What are your future financial goals? Having an understanding of what your partner hopes to achieve with their money can help couples to plan ahead. This may include discussing high-level goals, such as taking care of family, eliminating debt or reaching financial independence. Or, it may involve sharing deeper objectives, such as supporting a higher education, having children or purchasing a home or property. One exercise that can help couples to think together about their financial future is to create “wish lists” independently and then compare these lists to see which items match up and which ones don't. Even if future goals aren’t completely aligned, there should be a certain set of shared goals that reflect both individuals’ values and wants. Then, money decisions can be less about being “good or bad,” and more focused on "does this get us closer to our shared goals?"
- How would you spend a windfall? While a sudden windfall may be an unlikely scenario (but one we can all fantasize about!), sharing perspectives on how you would individually manage a situation in which you received a large sum of money may provide insight on your financial personalities. This may also form the basis for a discussion about the things you would prioritize if you were to have surplus funds, and – more importantly – how you might handle this situation together.
- What are your current liabilities? This can be a difficult question for some to answer, but it is an important one to be transparent about. If you or your partner have existing financial debts, it may highlight the need to create a plan to pay these down as you work together to achieve your shared goals. If your partner is not completely direct in answering this question, or perhaps appears not overly concerned about existing debts, it may be a red flag. In some cases, there have been situations in which one person hides these liabilities from the onset of a relationship. Having open and honest discussions today can help to prevent future surprises. Consider sharing credit scores or credit reports. While your financial history can impact your ability to qualify for a mortgage or other credit in the future, planning ahead can help to address these potential challenges.
- What is your vision for your financial responsibilities? Consider the importance of discussing the financial responsibilities that you will share with your partner, as well as the roles each person is expected to take. This may include deciding who will be responsible for paying certain bills, tracking expenses, managing a budget and investing excess funds to grow them for the future. In any partnership, you should also determine how you will manage your money as a couple – such as with joint or separate accounts, as one example. Regardless of how you manage your finances, understanding each other’s financial roles can help to prevent misunderstanding or conflict in the future.
- What did you learn about money growing up? For many of us, our first lessons in life came from watching our parents. While we may not always adopt similar behaviours to our family, understanding how family members dealt with money issues may shed some light on why we handle money in a certain way. This can provide insight into any financial habits that you or your partner may bring to the relationship, such as if your partner is a free-spender or extremely frugal. Sometimes these habits may need to be addressed; in other instances, having this insight may allow for a degree of compassion when controversial financial decisions are made.
Do We Need a Prenuptial Agreement?
If you are entering into marriage, a prenuptial agreement may be a consideration. This is a legal contract that sets the terms for property and debt brought into the marriage in the event of future separation or divorce.3 A prenuptial agreement is often an uncomfortable topic to broach with a partner, so careful planning for this conversation is recommended. However, consider that a prenuptial agreement can help to encourage open communication and build trust from the start of a marriage. It can also help to mitigate the potential stress and disagreement that may arise in the unfortunate event of a separation. This may be especially important for those who enter a marriage with significant assets, or those who have children from a prior relationship. Not every couple will need a prenuptial agreement, but it may be a valuable planning tool to address all potential scenarios down the road.
It’s Never Too Early (Or Too Late!)
These are just a handful of questions that can provide a basis for discussion with your partner about money and finances. While having these conversations can be most beneficial when first starting a serious relationship, they may be valuable at any time – even in an established relationship. As with many financial situations, planning ahead can pay dividends down the road. It can help to create a shared set of financial goals, achieve alignment from the onset and form a road map for the future – all of which can help to boost the happiness in your relationship and improve your financial outcomes.
3. The laws regarding prenuptial agreements vary by province, so please seek advice as it relates to your province of residence.