Heaven or Heartache: 7 Things About Money Couples Should Discuss
The divorce rate in the United States of America is a staggering fifty percent.
Can you guess what the number one reason for divorce in our country is? Maybe I made this one too easy for you. You guessed it; the number one reason for divorce in the United States of America is a lack of communication.
In a close second comes the topic of money.
As financial professionals, we dedicate our lives to making sure that you are secure in your financial situation and that your family is on track towards both short and long term goals. As I look into the eyes of the people that I serve, it’s important that they both understand each others outlook on money, because in many circumstances the affects and consequences that stem from these beliefs are shared.
Although I’m not a relationship expert, talking about money could help avoid heartache and set the expectations for successful money matters within your relationship.
Below are seven things regarding money that you and your partner should discuss:
- Personal Debt: It’s almost inevitable nowadays that you are going to have some sort of debt. Whether it’s your mortgage, student loans or consumer debt, couples have more success when these debts are transparent and not seen as a surprise. Make sure that you are able to discuss individual and personal debts and work towards aggressively paying them off.
- Long Term Goals: Happily ever after is a long time isn’t it? Fulfilling the ‘happily ever after’ mantra requires a happy plan that both parties can agree on. What does your partner want in retirement? Perhaps he wants to travel to play golf on every major course? Maybe she’d like to open a small boutique or go on a major vacation every year? Understanding your long-term goals could assist in creating the right plan.
- Education: Did your parents help you pay for your college education? Did your partner pay her own way through school? When you start a family, it’s important to know exactly how you want to approach tuition expenses for your children. Will you pay for all, some, or none of your child’s education? As the cost of education has risen substantially over the last two decades, these are important questions to discuss with your partner.
- Insurance: This is a touchy subject. No ones wants to think about losing their significant other. The thought alone gives most people goose bumps. Yet, with all of the expenses that you both share, it is sometimes very difficult for one person to maintain the lifestyle that they were accustomed to without the additional support. Talking about life insurance and conducting a needs’ analysis may be necessary.
- Spending: ‘Do not save what is left after spending, but spend what is left after saving,’ in this quote Warren Buffet reminds us how important it is to monitor exactly where your money is going. Understanding how you and your partner spend money could help pinpoint needs versus wants. A budget could help you find a healthy balance between both.
- Taxes: We all know that taxes are tricky. Your tax situation can be affected dramatically when you are married. If you are filling jointly, you have to consider the income and assets of your significant other amongst other things. Make sure that you sit down with a tax professional to help you navigate your tax circumstance.
- Wills & Trusts: When it comes to money matters, there are usually three things that couples are trying to achieve. These are building, sustaining, and harvesting the wealth that they have accumulated over the course of the years. The facet that often gets overlooked is the successful transfer of wealth from generation to generation. A will or trust could help with the transfer of wealth in a tax efficient manner.
My hope is that you have a long, healthy, and happy union. Speaking about these things with each other and with a financial professional could help you ease or prevent future financial heartache.
Dasarte Yarnway is the CEO and Head of Advisory of Berknell Financial Group, a full service registered independent advisory firm that specializes in helping clients reach their objectives in the areas of Retirement, Investments, Insurance, Tax and Estate Planning
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