Many relationships are built on the foundation of two people working independently and getting paid in today’s world. If you have to talk to your partner about money, that can be stressful because you’re both independent contractors who don’t usually share your financial information. But to avoid stress in your relationship, it’s important to work through these steps and make sure you’re both on the same page financially.
Talking to your partner about money without stress can be different from one couple to the next. However, some steps apply to every couple working through this important and potentially contentious topic together. We’ve created this five-step guide to help you take charge of the situation rather than letting it take you.
1) Prepare Yourself
Make sure you have all of your information before sitting down with your partner. Make a list of all monthly bills and debts, account balances, savings goals, and debt reduction strategies. Determine how much money you need each month to maintain your current lifestyle. Gather information on any existing investments, 401 K’s, or pension plans to evaluate if they are fulfilling their purpose. You may also want to consider what you would like to accomplish in 5 years (i.e., buy a house, retire early).
Ask your financial advisor for advice if you don’t know where to start. They will help you create an action plan based on your specific needs and goals. Be ready for questions: When talking about finances with someone close, it is important to know what questions will be asked and how those questions might be answered. The biggest question when starting is How much do we make? The best way to answer is by providing a pay stub. This will allow your partner to see exactly how much money you bring home after taxes and other deductions.
2) Figure out your relationship with money
Everyone handles money differently, so first, you need to figure out how your partner views finances. Are they independent contractors with a separate checking account, or are they more on par with a housewife who relies on a pay stub to keep track of their finances? This can help shape your approach when talking about money.
For example, if your partner is an independent contractor and has no problem handling their finances, then it might be best to handle all of it rather than step in and try to do it for them. However, if they’re used to having someone else take care of everything for them, you might want to take a more hands-on approach instead. The important thing here is to understand where your partner is coming from before making any decisions.
3) Know What You Need Vs. Want
Nobody wants to have that awkward money talk with their significant other. It feels like a drag, and who wants to admit they want something when they don’t? But here’s a secret: you need money for everything in life. And simply knowing what you need is key to having an effective conversation about it with your partner. If you don’t know what you really want, how do you expect your partner to know? Thus decide what you require, then consult with your partner.
Here are some examples of things people might think they want but need: A vacation home or fancy car, which can be better achieved through saving up over time; instead of needing a new pair of shoes every month, you need enough money each month to buy new shoes as needed; instead of needing designer clothing all the time, you need enough money to get clothes at good prices.
4) Have A Plan In Place To Reduce Debt
If you’re worried about money and need a plan to reduce debt, getting an independent contractor or freelancer to bring in extra cash might be necessary. Getting rid of credit card balances and reducing debt will likely lift your spirits. You can always see where you stand with personal finance tools like Mint or YNAB (you need a budget). These tools help you keep track of your spending, income, savings goals, and more all in one place.
Of course, you don’t want to get into even more debt by hiring someone—so make sure you have a plan in place. Before you hire anyone, discuss your situation with them and find out exactly what they can bring to your business. Ensure that if you hire an independent contractor or freelancer, you remain in charge of making decisions about finances and deadlines and hiring more help when necessary.
5) Remember The Bigger Picture
Before talking about money with your partner, it’s important to remember the bigger picture. Discuss the reasons why you two want to pool your resources together. Think about the mutual goals and aspirations that brought you two together in the first place, whether they be starting a family or traveling around the world. Life is much more fun when we share it with our partners – and pooling your money can help bring these experiences a little closer to reality. With a clear vision of what you both hope to achieve, it will be easier to find common ground when talking about finances. It will also allow you to see how saving money can help chase your dreams and transform yourself.
For example, if one of your goals is to own a home within five years, sitting down and mapping out a plan to get there could help alleviate some tension over smaller financial decisions like where to spend your money today. The decision may seem inconsequential now but could become an obstacle later on. If buying new clothes helps make you feel good (and therefore helps you work better), don’t let anyone tell you otherwise!
Easily put your goals into effect by printing them out, sketching them, cutting out magazines, and pasting them to a mirror (yes, we did this). Display them so that you and your partner can see them as often as possible. Talk about it weekly and take the time to visualize it. When you impulse buy your kids an expensive set of matching pajamas that are all organic, you’ll have to know your why.