Love and Money - How to Have That Talk

Couples may be hesitant to mention the subject of money to each other, either because it's an uncomfortable subject, or because past attempts at the topic have resulted in getting no where. But as difficult as it may be, it's vital that couples communicate to each other about money. Effective communication about money matters will give you both a clear picture of where you are, and where you want to be. Money issues have done damage to the relationships of others; don't let that happen to you.

Many who are part of a couple don't have a clear understanding of their own financial needs, let alone those of their partner. If two individuals don't know how they plan to achieve their own financial goals, it will be very difficult for them to achieve those goals as a couple. Understanding yourself is the first step, the next step is understanding your partner. Only then, can the two of you begin to communicate about money and negotiate an agreement that works for both of you.

It's important to discuss your finances with your partner as soon as possible, whether you've recently gotten engaged, just plan to live together for the long-term, or even if you have been married for years without having a money talk. Every one should write up their own financial plan; it's your road map to financial security. Those who are part of a couple should have a personal financial plan, as well as a joint financial plan. You must ensure that your personal and joint financial plans are compatible if you want those plans to become reality.

Your financial plan doesn't have to be fancy, and it doesn't have to look like a professional wrote it up for you. But it should be accurate. It should also be realistic; the disappointment of not achieving your goals will only frustrate you, if you design your financial plan under conditions of the highest possible income and lowest possible expenses. Your financial plan should include your net worth, which is your assets minus your liabilities. Your plan should include your budget, which is your income and expenses. It should also include your financial goals; put priority on your needs, but don't overlook your desires.

Many couple's money conversations are limited to "How much did we spend this month?" and "Did we make enough to pay for it all?" But, that's not enough. That's the equivalent of getting in the car with no destination, and driving until you have to fill the gas tank again. You may be going, but you don't know where you're going. Some may make a lifestyle of aimless wandering, but it's not the kind of life most of us want or can live. Without your financial plan, you have no road map.

Let your partner know you want to set aside some time to discuss your finances. It's not a good idea to bring up money matters when the kids are crying or one of you is running out the door to work. It's also not very effective to mention it right after you've received an outrageous joint credit card bill. Try not to put your partner on the defensive. You don't want your partner to feel like they are "in trouble." Your goal is to understand each other's needs and goals, and come to a money management agreement that will help you both achieve your life's dreams.

Make a date out of it. Have that conversation when you can both sit down and relax. Hire a baby-sitter, turn off the television, go out for coffee, or whatever you need to do to have peaceful time alone - no distractions and no interruptions. This is your financial security we're talking about; give it the attention it deserves. Try to keep your money date focused on the business side of your relationship. Avoid letting your emotions get the best of you, and commit to reach an understanding with your partner during your date.

You should both bring your financial plans with you on your date, or bring a notepad and a pencil if you haven't written one yet. Compare your individual financial plans, each write your own, or write one together. Whatever works for you. You may find that one of you actually has no idea what your current expenses are, especially if the other does the monthly bill paying. I once heard from a friend, "I don't know how much our bills are, I just bring home the money. I guess it's enough, because she's not complaining." Compare where you think you are to where you really are; you might be in for quite a surprise.

Also, see where you and your partner stand on your financial goals. Are they in sync? You are likely to have many of the same goals, such as paying off debts, building your dream home, your kid's educations, and a comfortable retirement. It's possible that you may also have some very different goals, such as dreams of opening your own business, paying for your luxury yacht, or traveling the world. It's possible your partner has financial goals you never even knew about, and vice versa. Use this time to hear about what your partner wants to achieve in life, and be sure to honestly state your goals, as well.

What do you both need to do to achieve those goals? Do you need to cut extra spending and save more? Pay your debts off sooner? How much money and time do you need to accomplish what you seek? Figure out the dollar-amount needed to reach those goals. It's much more effective to know the exact amount needed, as well as a timeline, rather than vaguely stating that you just need to save more or spend less. "We need to invest $400 a month for 10 years to build our dream home." or "If we limit monthly entertainment to $100 a month, we can pay $200 more to our credit cards, which will have it paid off in six months."

Compromise is usually necessary; it's rare that a couple has identical financial goals. If you happen to be one of those lucky, rare couples, you should have few problems finding a solution to reach your financial goals. The rest of us will have to be willing to settle on a happy medium that works for both partners. One may have to reduce their frivolous spending so the other can feel more secure about their financial future. Or, one who prefers the safety of government-insured savings may have to allow the other to invest some of their savings in riskier, but potentially higher-paying investments.

You must both respect that you each value your own financial objectives. Neither one of you is right or wrong; you each have priorities of your own. Focus on the facts on the subject; avoid personal attacks, such as, "You spend money faster than I can earn it." or "You're a tight-wad, I don't want to wait until I'm old to enjoy having money." But it's okay, and even helpful, to express your own personal feelings concerning money. Your partner is more likely to understand your reasons for the way you handle money if you communicate your needs, fears, and hopes. Encourage them to share their feelings and viewpoints, also. You will both have an easier time making that sacrifice to compromise when you each understand why you handle your finances the way you do.

Your money date should help you set goals together, figure out how to reach those goals, and draw guidelines for how money matters will be dealt with. Hopefully, you will end the date after coming to an agreement about both of your roles and responsibilities regarding your finances. This is a major accomplishment! Being able to work as a team, coming up with a mutually beneficial plan, and understanding the needs of the other is important, not only to your finances, but to the overall health of your relationship. You might then go on a real date, something fun or romantic, to celebrate your new-found understanding of one another.

However, some may find they just can't resolve an issue in a way that works for both. It will do no good to disagree until you both turn blue. Accomplish what you can, stop where you can't compromise, agree to continue the discussion at a later time, and end the date. Be glad for the issues you did manage to resolve. You may come back to the subject the next day, next month, or even next year. It may take some time for you both to think things out yourself, and then you may come to your next discussion with a fresh outlook or more empathy for each other. A money date that does not accomplish the goal of the couple can be stressful for both. Be sure to go out on a real date afterwards, with no money talk allowed, to lighten the mood and remind yourselves how much you enjoy being together. And after, don't push the issue if you both aren't ready to discuss it.

You may find your relationship strengthened from coming to an agreement about money, if you can learn to give up a little control, communicate well, and negotiate. Many couples who successfully compromise on money issues learn that they balance each other out. Couples can have the best of both worlds when they work together on their finances. One may love to spend, and be allowed to spend within reason, but the other will be sure to step in and speak their mind if they feel their partner is being overly extravagant. The other will be able to sock away investment money, as long as there is still enough left over for a reasonable number of creature comforts. Yes, it is possible to have nice things now and have a secure future. But you must both agree on how you're going to do that.