Approaching Finances with a New Partner
Money can be a sensitive and emotional topic. It’s something that is typically viewed as private and only a select few people may have the “inside scoop” about your financial picture. So, at what point in a new relationship do you choose to let your significant other know more about your finances, such as your salary, bank accounts, loans, and/or anything else that’s money-related? Are you just getting started in your financial lives? Or are you both of you coming from past relationships with financial experiences that make the idea of talking about it feel difficult? Whatever your situation is, know that 73% of married or Americans living together have tension due to money decisions.1 Communication is very important!
If you’re hoping to bring up the topic of money in your new relationship but aren’t sure where to start, here is some advice we want to share based on our experiencing in planning.
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Having open communication. You may think this is a no brainer but you would be surprised that couples don’t talk about certain subjects until they have to (i.e. not talking about finances until looking to move in together or not talking about parenting styles until you’re expecting). Trying to understand someone’s thoughts and feelings ahead of a major decision can help make sure they align with yours. In the case that they don’t match what you envision, work together to try and find a common ground so they aren’t major sticking points in the future.
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The elephant in the room: debt. This is something to talk about early on in a relationship, especially if you’re hoping to combine finances or trying to buy a home. Try not to judge if your partner has debt, but rather be supportive on how to help them tackle it. Remember, eliminating debt will help your financial future as a couple and get you one step towards your financial goals.
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How to handle finances: combined or separate? The answer may depend a lot on if this is a first serious relationship or not, but also an indicator of trust and transparency. There is a study that shows married couples with joint bank accounts are more satisfied than married couples who keep their accounts separate.2 The key is making sure both partners feel they’re paying their fair share and continue having open communication so there isn’t a feeling of resentment over time or secrecy around your partner’s finances.
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Protect your financial future. If you and your significant other (married or not), recently bought a house together, now is the time to get life insurance to cover the mortgage. If you already have life insurance, make sure to review your beneficiaries and update it to your partner. We never want to think of worst-case scenarios but ensuring your loved one is taken care of if, God forbid, something happens to either one of you.
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Review your goals for the future. People change over time and so may your financial goals. Continue being open with your partner on what your hopes are long-term to make sure they continue aligning (such as retirement plans, life style, traveling, etc).
Although it can be scary starting a conversation with your partner centered around money, it’s an important topic worth bringing up as it could make or break a relationship over time. If you’re not sure how to start, consider asking you partner if they’re comfortable talking about finances (you may be surprised by their response!) or consider going to a professional that could help facilitate that conversation.
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Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Great Valley Advisor Group and Haas Financial Group are separate entities. This is not intended to be used as tax or legal advice. Please consult a tax or legal professional for specific information and advice.
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