5.1 C
New York
Friday, February 23, 2024

Why talking about money is crucial in a relationship

Must read

It is common for money to be a source of conflict in relationships, which is why it is not surprising that a recent survey discovered that 23 percent of Americans who are in relationships are keeping a financial secret from their partner.

Avoiding discussions about money or keeping financial secrets can harm your relationship and eventually lead to resentment and mistrust. Learn how to bring up the topic with your partner and see how it can benefit your relationship.

The importance of communicating about finances

Discussing finances is necessary to ensure that both partners have a clear understanding of their financial situation. In many cases, couples share financial goals and bank accounts, and may depend on each other financially.

A survey by Fidelity reveals that 20% of couples cite money as their primary relationship challenge, and 44% admit to arguing about money occasionally.

When communication is taken into account, the numbers change. Among people who claim to communicate effectively about finances, 84% say that money is not the biggest hurdle in their relationship. However, only 59% of those who reported poor communication said the same thing.

Being transparent about your financial goals and concerns can enhance your decision-making process when it comes to discussing debt, retirement savings, or vacation expenses.

In addition, discussing finances can build trust and reduce confusion. It is less likely to have arguments that could have been avoided, such as one related to an unexpected charge on a bank statement, when financial decisions and requirements have been openly discussed.

How to talk about finances in a relationship

We’re usually brought up to believe that money should be kept private. Discussing it might seem inappropriate and lead to feelings of unease or judgment. It could be beneficial to start by acknowledging these concerns and discussing them.

Tara Unverzagt, the founder of South Bay Financial Partners in Torrance, California, suggests starting the conversation by sharing your feelings and emotions related to talking about money before actually discussing the financial aspect. Many people experience fear, shame, or guilt when having these conversations.

Expressing your emotions can make it easier to have a truthful and relaxed conversation.

When discussing finances in a relationship for the first time, it is recommended that both partners share their individual financial situations.

Tim Melia, CFP, MBA, founder of Embolden Financial Planning in Seattle, suggests that creating a net worth statement that reflects both assets and liabilities is crucial for both partners to comprehend their starting point accurately. This is especially important if one partner handles the finances more than the other.

It is recommended that both partners collaborate to have regular money conversations and make decisions together as their finances become more intertwined. Jamie Lima, CFP, CDFA, and founder of Woodson Wealth Management in Ramona, California suggests that creating and adhering to a budget together can help keep these conversations active.

He advises collaborating to develop a budget that considers both your financial objectives and preferences. This will guarantee that both of you have a shared understanding of how to handle your finances.

According to Lima, setting financial goals in addition to a budget can be helpful in maintaining financial communication. These goals can include saving for a down payment on a house or paying off debt, and they can help keep you motivated and focused on your shared future.

If you have many shared bills, expenses, and savings goals, it may be a good idea to think about opening a joint bank account.

Common financial issues to address

Here are some ways to tackle different financial problems within a relationship:

  • Debt management: If you or your partner have debt, it’s a good idea to develop a joint plan to pay it off. You could look into consolidating the debt or seeking advice from a financial planner.
  • Income disparities: Managing finances can become challenging for couples when one partner earns more than the other. It is crucial to have an open discussion about how to divide expenses and handle finances fairly. This helps avoid putting pressure on one partner to overspend beyond their budget.
  • Different attitudes toward spending and saving: It is advisable to have a discussion about compromising if one partner is a spender and the other is a saver. Alternatively, you could keep your finances separate instead of having all of your finances in joint accounts.
  • Planning for the future and financial emergencies: Talk about your financial aspirations in the long run and also consider creating an emergency savings fund together.

Bottom line

Discussions about money within a relationship can be complicated, but it’s important for establishing trust, comprehension, and a stable financial future. Couples who communicate well about finances have fewer arguments regarding the topic and may feel less inclined to hide information from each other. As you get more comfortable discussing finances in your relationship, you can enhance your connection and work toward shared financial objectives.

More articles

Latest article