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BIG issue: Small talk

How starting a financial conversation with your partner can help manage one of the weightiest issues in your relationship.

Winter 2014 your$ magazineIs the topic of money the “elephant in the room” in your relationship?

If so, you’re not alone. Many people in committed relationships underestimate the impact financial decisions can have on their partnership, their family, and their financial future. In fact, most couples don’t discuss their finances on a regular basis, which can lead to personal misunderstandings and resentments. Further, it can prevent people from making informed choices about their finances.

Communication is the key to making good financial decisions that will benefit you in the long run. When people’s feelings and concerns are heard, it’s easier to move forward with a concrete plan.

Here’s why you should stop trying to avoid the money issue and start your own financial conversation.

Big cause of conflict

With changing economic times and changes in how we define “family,” we’re contributing more financial baggage than ever to our relationships, including credit card debt, student loans, mortgages, and other investments. This can make things seem overly complicated and hamper the financial conversation.

But even if your baggage is light, the money issue often weighs heavy. For example, a recent Harris Interactive survey found that couples argue more about financial matters than any other topic. For those who argue about money:

  • The most common disagreement was on how to handle unexpected finances.
  • Fifty-eight percent fight over differing opinions of “needs” vs. “wants.”
  • Thirty-two percent argue about not having enough money saved.

Failure to communicate about finances contributes to most of the relationship conflict between couples, according to the survey. In fact, 55% of those married or living with a partner reported that they do not set aside time regularly to talk about their finances.

It’s all about perspective

Money doesn’t have meaning; we assign meaning to money. Our personal relationship with it is forged early in life. Childhood experiences, education, how our parents handled finances, and our financial and social status influence our view about it.

That means we often come into a relationship with different ideas about what money represents and how it should be used. What defines a “good” financial decision depends on a person’s unique values and viewpoint.

If we don’t have serious conversations about money, we won’t understand each other’s perspectives on the topic. And that’s an important first step to take before you can make a plan.

Working with different viewpoints

John Hansen, who teaches high school science at Norwalk-Ontario-Wilton School District, and his wife Karin have differing viewpoints about money. John equates money with security, Karin with support. John explains, “I’m a saver. After I pay the bills, I try to save as much as possible in case something unexpected happens. My spouse views money as a means to purchase things we need or want for our family. Neither viewpoint is wrong. However, we had to figure out how to work with that difference.”

Making a plan

Talking together about money as large expenses come up works well for John and Karin. By having regular discussions, they have set up concrete strategies to deal with their finances while taking their differing attitudes into account. “When we had one bank account and one credit card, we were always asking each other what certain expenses were for and why. This created arguments about how we spent our money. On top of that, we didn’t always know what was purchased on the credit card until the bill came, which left us short on money to pay the bills off completely each month.” 

Instead, having two joint checking accounts and two joint credit cards has helped them become more responsible in how they spend money, according to John. He and Karin sat down and decided which bills each would pay according to income. Each is responsible for making sure the bills get paid. “That gives us a flexible budget, so as long as we cover our obligations, we can spend the remaining money as we choose.”

Sharing financial lessons

John and Karin have four children who are a big part of their financial choices. When buying items for the kids, they often ask them to help pay for some of the cost. “This helps our kids understand the cost of items and place a higher value on them,” says John.

John and Karin’s regular discussions about money have helped them understand their different viewpoints, which has allowed them to better plan how money is spent. “It’s also lessened our conflicts,” he says.

Starting a conversation

Fifty-three year old Brenda Susor, a teacher who specializes in working with English language learners in Appleton, has been married for 10 years. “When I was younger, people called me “moneybags” because I was such a saver and always balanced my checkbook to the penny. As I got older, I loosened up a bit.

Elephant in the room“Once I got married, I decided I had too much on my plate with teaching to deal with the finances, so I left that up to Mike, my husband.” With our busy lives, many people may think that’s a practical thing to do. But over the years, Brenda began to feel increasingly anxious about their finances, and she and Mike never really took time to discuss them. “Money became the elephant in the room,” explains Brenda.

Getting the facts

The money issue began to feel lighter for Brenda after she attended a seminar offered by Member Benefits. It helped her open the door to the conversation she and Mike needed to have. “I attended Member Benefits’ Don’t Be Jack™ financial literacy game this fall. I loved all the great information that was shared that day and it made me wonder about the fees and expenses I was paying on my IRA account as well as the commissions I was paying my financial planner.”

Brenda followed up with a personal consultation for her and Mike. “When we talked to Michelle Slawny (Worksite Benefit Consultant from Member Benefits), I was so worried that we weren’t going to have enough to retire. I was very anxious about it and brought up a lot of ‘what ifs’. But Michelle was able to help me relax by showing us just what we have and don’t have, and gave us objective information. That was so helpful, because talking about it lessened some of my fears.”

Taming the beast

Once some of Brenda’s anxiety was alleviated, she and Mike started their financial discussion, which has helped her take action. “Mike and I both decided to move our IRAs to Member Benefits to save on fees. Now that we’re talking together, we set a date to create a budget, like Michelle suggested. We’ve already come up with some things we can do to save money, like being smarter about our grocery bill. And we realized our summer cabin was underinsured, so we’re taking steps to correct that.”

It’s easy to forget that insurance plays a role in financial security. Having adequate insurance helps decrease your financial risk by protecting you against the cost of accidents, major health issues, and property loss.

It’s a good idea for both people to be listed on insurance policies. Review your policies annually to make sure your coverages are up-to-date.

“If we hadn’t started talking, we wouldn’t have known about the cabin or taken action on improving our financial situation,” says Brenda.

Saving is all in the family

Bill Kirsch, a physical education teacher in Waukesha, and his wife Marianne, a learning disabilities teacher, are on the same page financially because they have talked regularly together about their finances over the years. “I usually take the lead by doing as much research as possible and then we discuss it. It works for us,” says Bill.

Bill handles all the details of his and Marianne’s savings and investments, “…probably because I had good fundamental knowledge from my years working with Member Benefits before we were married,” he says. “Both of us are pretty conservative when it comes to money, and because of that we have not created a formal budget.

“However, we did learn about starting early with saving, so as soon as our daughters began working, we opened up Roth IRAs for them. We chose to go with Member Benefits because their products and strategies are extremely solid.” They like that the kids are learning the importance of starting early with retirement savings and contributing regularly.

Start your own conversations

Open, honest communication is just as important with finances as any other partnership decision, whether it’s buying a house, changing jobs, or having children. If you’re not talking finances and feel stressed about it, you may find that once you acknowledge the obvious, it won’t seem so huge. And, dealing with the big stuff can make the small stuff in your relationship easier.

Remember, what works for one couple won’t necessarily work for another. Find a plan that fits you both. And make time to talk together on a regular basis.

Talking finances helped John, Brenda, and Bill, and can help you:

  • Minimize interpersonal conflicts.
  • Break the cycle of indecision.
  • Identify financial goals.
  • Stay on track to reach your goals.
  • Move forward with a financial plan.
  • Build financial security.
  • Help you set a good example for your children.

Brenda sums it up well. “Money shouldn’t be a dirty word, it shouldn’t be something to avoid. You may not want to do it, but now’s the time. It’s a good thing to be able to talk about it.”

This article is for informational purposes only and not intended to be legal or tax advice. Consult your tax advisor or attorney before taking any action.