They say money can’t buy happiness, but it sure can complicate a relationship. Financial issues are a common source of disagreement and are often listed as one of the primary reasons for divorce. However, that doesn’t mean couples should avoid the subject altogether.
A large number of American couples need to sync their financial priorities. According to a new study from Fidelity, 51 percent of couples admit to arguing either frequently or occasionally about money. Making matters worse, 38 percent of those couples never actually resolve their arguments in a mutually agreeable way. In fact, four in 10 couples don’t even agree on the lifestyle they expect to achieve in retirement.
“The fact that many couples disagree about money isn’t surprising, but the realization so many don’t actually resolve their financial squabbles is cause for concern,” explained Lauren Brouhard, senior vice president of Retirement at Fidelity, in a press release. “When it comes to making your relationship a financial affair to remember, even the closest of couples have opportunities to get more on the same page. Just as you plan for everything else in life, it’s important to make financial planning a regular part of your conversations.”
Let’s take a look at three simple tips to help improve your financial situation with your significant other.
1. Build communication
There are different degrees of communication throughout the relationship process. In the beginning, you should learn about a person’s financial habits. Are they spenders or savers? If you find yourself with a person that doesn’t have the same financial habits as you, that could lead to larger problems down the road, especially if you don’t openly discuss it. As the relationship progresses, don’t shy away from talking about longer-term goals such as purchasing a home, raising a family, and retirement dreams. These don’t necessarily have to be deal-breakers, but knowing expectations ahead of time will help dampen frustration.
Even if you don’t find yourself arguing about money, simply discussing financial matters can improve your situation. Fidelity finds that 36 percent of couples do not both know where important household financial and legal papers are kept, and about one-third disagree on who the primary beneficiary is on their life insurance policies. Failing to talk about these and similar issues can cause undue stress at the most inconvenient time. There are also legal implications if beneficiaries are not assigned.
2. Establish roles
Both adults in the relationship should know their responsibilities. Couples need to decide who will be responsible for paying bills, balancing checking accounts, saving for purchases or vacations, and investing for the future. Some couples may even want to have one person paying monthly bills, while the other partner pays quarterly or annual bills, so both partners are involved with the expenses and learn the value of a dollar.
Not every couple will have truly equal partners when it comes to handling the finances. Although, Fidelity notes that even if one person is responsible for the majority of the financial duties, the other partner should understand and be prepared to take over as the Family CFO if necessary. This is where communication comes in handy. A small amount of preparation now can prevent larger problems in the future. For example, does your partner have access to passwords to pay monthly bills online? Do they know where all of the savings and investments are located?
3. Create a plan
Once you’ve communicated and established roles, you need to create a plan that addresses short-term and long-term goals. Keep in mind that goals should be easily measured and obtainable. Among other things, you will need to decide how much income will go toward debt, savings, and retirement each month. Don’t forget to budget for fun things in life too.
On the positive, a report from HSBC revealed that 77 percent of people have some kind of a financial plan. Those with a financial plan in place save the most. Not including money put towards mortgage payments or home improvements, people with no financial planning save an average of only $77 per month. Those with some kind of informal planning such as ‘my own thoughts’ or ‘my own approximate calculation’ save an average of $335 per month. If you really want to commit to a strong financial relationship, save on a regular basis and keep a written plan that you review with your partner on an annual basis.
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