Money can be a sensitive subject, especially during the early stages of a relationship. Unfortunately, money is also one of the top factors in a couple’s overall financial health and happiness. To ensure that you and your partner are both on the same page when it comes to money management, here are some important questions you should ask each other:
What Are Your Financial Goals?
Financial goals are essential for developing a long-term stability and security. You’ll both need to be on the same page when it comes to big-picture items, such as saving for retirement, paying off debt, or buying a home. By establishing each other’s respective goals, you can fashion a plan of action as a couple and support one another as you reach for your financial objectives.
Do You Live Within Your Means?
It’s important to establish whether or not your partner lives within their means. This is the practice of spending no more than the total income you bring in. If your partner finds themselves frequently in debt or rolling over balances from one credit card to the next, that suggests they may struggle with putting their spending in check. And if your partner were to run into money problems, it would also implicate that you too would be financially exposed.
Do You Have Any Debt?
The amount of debt your partner has – if any – is a decisive factor in gauging their current financial health. Credit card debt, student loans and car payments all factor in. If your partner is saddled with a substantial amount of debt, they may have difficulty balancing their payments with your shared expenses. In the worst-case scenarios, they could end up damaging their credit score and, by extension, yours too.
How Do You Feel About Different Types of Investments?
Whether to invest in stocks, mutual funds, annuities, real estate or other types of investments depends on several factors. Refinancing or transferring a home loan, for instance, is a potential money-saving and long-term investment strategy that can help couples stay ahead of bills and reduce their cost of living. The attitude your partner has towards different investments should tell you a good deal about their financial mindset.
Which Financial Responsibilities Are Yours?Which Financial Responsibilities Are Your Partner’s?
Knowing who is responsible for your shared finances, meaning who pays which bills, is an important consideration when entering a relationship. Will you set up a joint checking account, or are all expenses split 50/50? Establishing who takes care of what right off the bat can help keep misunderstandings, disagreements and financial setbacks to a minimum.
What Is Your Relationship With Credit Cards?
Credit cards are one of the most common sources of financial woe for individuals and couples alike. But they can also be a valuable tool for building credit and freeing up funds for investments. Discussing how to handle credit cards responsibly, such as capping spending limits and only using them for emergencies and purchases you can pay off quickly, can help avoid financial disputes and major debt.
Do You Have An Emergency Fund?
Emergencies are understandably hard to plan for, but it’s always best to make deposit a small percentage of your combined income into an emergency fund every month. This can help minimize the financial burden should a sudden expense arise or something catastrophic happen, such as a job loss. Knowing how you both plan to handle unforeseen events can help prevent financial instability further down the line.
How Do You Feel About Automating Online Banking?
Automating your financial transactions is a highly convenient way to take control of your finances. By setting up bills to be paid automatically, you can manage your income, budget and investments without spending time and energy sorting through paperwork. Automating your banking also eliminates the risk of late payments, overspending and unnecessary interest fees.
What Are Your Cohabitation/Marriage Expectations Regarding Finances?
There’s no one-size-fits-all approach for managing finances as a couple, but it’s still wise to discuss expectations when it comes to money-related decisions. For example, who will handle paying the rent and the electric bill? Will both partners be involved in day-to-day decisions, or will one make those choices? What about joint investments or buying a home together? Having these answers to hand can help make the transition into shared finances smoother.
Money is a tricky topic for couples but one that’s necessary to talk about if you’re looking to maintain financial peace and stability as a couple. Asking each other the above questions can help you discover your respective comfort levels when it comes to money-related decisions. This will make it much easier to create a financial plan that works for both of you, and set up both long-term and short-term goals towards a more secure and financially stable future.