6 moves to create financial harmony
Mikey Rox | Contributing Writer
Relationships are hard enough work as it is. Throw money problems into the mix and you have a recipe for disaster. It doesn’t have to go down like that though. By working together, you and your partner can set and achieve financial goals that will see you both through to a content and (hopefully) prosperous future together.
To set up that path to success, consider these tips on how to create financial harmony with money moves you can make right now:
• Openly discuss finances
Money is a difficult subject for couples to discuss, especially when you each have your own established spending and saving habits, for better or worse. Once you hit the future-planning stage of your relationship, however, it’s crucial to sit down and talk numbers — your individual salaries, credit scores and what you want to build together as a unit.
Nathan Wade, managing editor of WealthFit Money, agrees. He advocates for opening up about money early on to ensure you’re both on the same page financially as your partnership progresses.
“Although it may be an uncomfortable topic, it will lead to a more prosperous future and relationship for you both,” he says. “It will be much easier to create financial goals if you’re both aligned on both debt-to-income ratios and savings. As a couple, you’ll also need to discuss whether or not you’d like to have a separate or joint account. There are both pros and cons to both, and it’s important to consider all variables before coming to a decision.
“Both parties should be fully transparent with their financial goals, and boundaries should be respected and enforced.”
• Make time to talk about money
The money conversation you had at the beginning of your relationship is not a one-and-done event. Because cash flow changes constantly based on a variety of factors — like your job, unexpected expenses, and inflation, for example — you’ll need to revisit the topic with your partner frequently. Keeping the lines of communication open regarding your finances as a couple will help ward off resentments and nip bad habits in the bud before they become problematic.
Family finance expert Andrea Woroch suggests setting up monthly dates to discuss any financial issues or frustrations you may be experiencing yourself or with your other half.
“This will make your conversations much more productive,” she says. “This is also a good time to review your finances, investments and talk about goals, both short-term and long-term goals. Do you want to travel more? Do you want to send your kids to private school or public school? What will retirement look like? These are all important items you need to talk about regularly as goals can change.”
• Review your credit together
Credit scores can be a contentious part of a relationship, especially if one partner has worked hard to build a respectable standing, and the other has squandered it by making poor financial decisions their whole life. It doesn’t have to be a deal-breaker though.
Knowing your scores will prepare you for the process of securing loans should you need them and what interest rates you might be paying. This is also a great time to start building low scores up. There are actions you can take immediately, like reducing debt with on time, more-than-the-minimum payments to outstanding balances, catching up on past-due accounts and putting a moratorium on opening new accounts for the foreseeable future.
If you’re the partner with a better understanding of finances and credit, use that knowledge to help get your significant other back on track. It’ll benefit you both in the long run. While there are no “joint FICO scores” for married couples, lenders will indeed take both of your credit scores into account. Each individual’s credit score also can be affected in a situation where you have a joint credit card, and it wasn’t paid in time; in this instance both credit scores would be negatively affected.
• Decide on a household budget
Establishing a budget gives you and your partner a chance to discuss which expenses are important and which ones you can live without. This exercise will also help you pinpoint where you’re currently wasting money and how you can cut back so you can spend more on what brings each of you happiness.
“Setting spending rules allows you both to talk openly about your expenses and gives each of you a chance to weigh in on big purchase decisions, too,” Woroch says. “This means you discuss any purchase over a set dollar amount, depending on your financial situation.
“Consider using a budgeting app made specifically to help couples manage their money together. There are many options, such as Mint or HoneyFi, that will help you both stay abreast of what’s happening as money comes in and goes out.”
• Prepare for the unexpected
Not only is it crucial to have emergency savings set aside to avoid taking on debt that can lead to crippling financial woes — as well as cause tension in your relationship — but life insurance is incredibly important, especially if you have children.
No one wants to think about death, but life insurance can help cover debts and reduce mortgage payments, pay for your kids’ college educations, cover funeral arrangements and make your family’s lives easier overall. Even if one partner stays home with the kids, life insurance can be used to cover the cost of childcare that will be needed if something happens to him or her. You can find a life insurance calculator at Ladder Insurance and set up a plan within five minutes without having to deal with an agent or face annual policy fees.
Another step you may want to take to prepare for emergencies is to create a Legacy Binder together, which explains how you want money spent or saved and how to access bills and accounts in the event of a tragedy.
• Hire a financial coach
Hiring a financial coach will cost you some money, but when you do the math based on your own financial situation, you may find the cost-to-benefit ratio worth it.
“A coach can help [partners] discover the goals that they want to work on together and guide them along the way to make sure they are reaching them,” says Holly Grosvenor, personal finance coach at Microstuff.com. “In some cases, when it comes to very strong behaviors like compulsive spending or ADHD, a financial therapist can help as well.”
Try to always keep in mind, too, that financial hardships, if you experience them during the course of your relationship — and you likely will — don’t have to last forever. Money mistakes are fixable if you’re both committed to turning the situation around. Assess the situation, create a plan of attack, and rebuild whatever has taken a hit — together.
Mikey Rox is an award-winning journalist and LGBT lifestyle expert whose work has been published in more than 100 outlets across the world. He’s currently nomading across the country in his van, seeking queer excitement everywhere he roams. Connect with Mikey on Instagram @mikeyroxtravels