Couples and Money: How to Better Your Finances Together

Written by: David Elder, Wealth Manager & Partner & Jennifer Mann, Relationship Manager & Financial Planning Coordinator

It can be a challenge when you have two different lives merging into one. You each may have different morning routines, food preferences, and social habits. However, these differences become much starker when it comes to money. More specifically, many couples run into issues related to budgeting, saving, investing, and retirement funding — just to name a few. Fortunately, if you and your significant other are struggling to see eye to eye about money, there are a few strategies you can implement to improve your shared financial life.

Communication is Key

It may sound cliche, but it is true; maintaining an open channel of communication with your partner about money is the only way to overcome obstacles. Money can be a heated topic and it frequently divides couples. Additionally, every couple has its own rhythm. This means that you have to find your individualized rhythm to work together.

All couples should communicate about the big goals of the household, but how you manage the day-to-day is up to you. Our financial advisors utilize a program called Financial DNA to give you behavioral insights about yourself. This way, you can see how you and your partner differ in your psychological approaches to money management, which frequently helps improve financial communication going forward.

At Merit, we help many people who have worked at large companies for decades and now own company stock that is all in one spouse’s name. It is important that advisors speak with both partners, regardless of their role in making money or “owning” assets. Everybody should be on the same page and be given a voice. It all comes back to open, honest communication between all parties involved. So, work to be as transparent as possible. Remember: over-communication is always better than under-communication.

Cultivate a Team Mentality

It’s important to look at money and other assets as “ours” vs. “yours” or “mine.” The key is to diminish the pressure or responsibility put on each partner and instead approach everything as a team. To help couples cultivate a team mentality, we use a cash flow worksheet, which allows each partner to make note of the most important things to them, organized into 4 categories: needs, wants, likes, and wishes. Not only does this help prioritize different financial pursuits, but it also helps you plan your finances ahead of time by really knowing what you want (and need) to achieve. By comparing the cash flow worksheets from each partner, we can see where there are areas that crossover and areas that diverge. This helps our advisors guide couples who want to figure out how to get rid of the “me” mentality and adopt the “us” mentality.

In many cases, there is one spouse that is more “dominant” than the other. But a good advisor will know how to talk to both spouses, regardless of who is the dominant party. The dominant ones may think that they make most of the decisions, but the passive ones may wish that they could have more say in financial matters. As a result, it can be difficult to ensure that both partners are expressing their true feelings and being heard by the other.

When conflicts arise, it could be from the scar from a bad past decision. Advisors have to help make sure that both people express their feelings on different issues. Ultimately, it is up to you and your spouse to decide what to do with your money, but working together and coming to mutually beneficial and consensual decisions is what matters the most.

Identify your Biggest Concerns

Worries and fears should always have a place in financial conversations. Couples need to look at risks, such as potential unemployment, inflation, or market downturns in a realistic, pragmatic way. Estate planning is a common concern for many couples, as it can be tricky to agree on how to treat children or heirs down the road. In our experience, men in relationships tend to be more bottom-line focused, whereas women tend to think more about how money makes everyone feel. Consequently, women often drive the estate planning conversation more because they want to make sure that everyone will be cared for once they are gone.

Your specific concerns and feelings about money can also affect the acquisition of different valuable assets, like real estate property. You might have a spouse who likes to host and wants more space in a home, while you are more practical and want to save on square footage. Naturally, you will both have to meet somewhere in the middle and stay in constant communication. Once you discuss these concerns, you can get on the same page with expenses and spending to work towards your larger goals.

So, figuring out your relationship to money can help you express your concerns clearly. Just as importantly, you need to learn about how your spouse or partner thinks about money. Are they savers or spenders? Do they want to micro-manage budgeting or have a more hands-off approach? Do they want to use the money to enjoy life now or save as much as possible to reduce risk in the future? Finding the answers to these questions now can help you avoid potential points of contention later on.

Dig Into the Details

Take the time as a couple to sit down once per year to evaluate finances. Ideally, you should have emergency savings in case all the financial responsibilities shift to one person (for example, if someone gets laid off). But the conversation about long-term goals should go much farther than just savings. You should also discuss childcare, 529 plans, and life insurance in the event that one spouse dies. We often advise younger couples to get term life insurance policies, as they are far cheaper when you’re young. Additionally, get your important documents like a power of attorney in place as soon as possible, because you never know what could happen tomorrow.

Lastly, don’t get into the view that the world as it is now is the way it will always be. You should do your best to focus on long-term plans that take different potentialities into account. For example, giving more money to charity may not be in the budget now, but if you start small with charitable donations now, you can make it a part of the ethical framework of your marriage for life. This can not only have real-world benefits for others, but it can also help reduce your tax burden and strengthen your family culture at the same time.

For professional help overcoming the issues that arise with couples and money, be sure to contact Merit Financial Advisors today!

Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Merit Financial Group, LLC, an SEC-registered investment adviser. Merit Financial Group, LLC and Merit Financial Advisors are separate entities from LPL Financial.