The Best Zero-Fluff Way to do Financial Planning With Your Significant Other
The best zero-fluff way to do financial planning with your significant other
Have you had that all-important money talk with your partner? Do you have a clear-cut plan for your money so that you can both sleep in peace?
According to a survey done by IDFA, financial issues are the 3rd biggest reason for divorce in North America only behind basic incompatibility and infidelity! Another CNBC report says that 44% of adults have lied to their partners about money!
Take for example the problem that Claire and her husband Paul had when their son was seven months old. Claire was a full-time editor earning £35,000 and Paul was a police sergeant earning £45,000. They didn’t have a system for paying their bills. And somehow Claire ended up paying for most of their son’s expenses.
Claire wanted a joint account, but Paul kept putting it away. So, they went to a counsellor and the counsellor said to him, “It’s a form of control; you really need full financial disclosure.” Paul was taken aback because Claire had been feeling that he was being secretive. Yet, he was never willing to talk openly leaving Claire in distrust and malaise.
Money affects every area of your life. It’s a fundamental element in your relationship with your partner. Play it right and you can avoid a great deal of strain and bitterness in your family.
So here are the 5 steps you can follow for a winning couple’s financial plan.
- Look through the same lens
What’s your attitude towards money? What emotions do you attach to it? Do you worry about going broke all the time? Or are you usually casual about it?
Money is a complex matter. How you feel about it, is going to depend on your background, unique experiences, upbringing and a whole lot of other things. You cannot expect your partner to feel the same way you do. That’s why you need to spend a little time discussing this topic as openly as possible.
While this can be a self-explorative and healing activity make sure you don’t forget to talk about two points.
1. How do both of you feel about money?
2. What are each of your levels of financial knowledge?
When you have these two things clear you will be able to see your situations clearly. You’ll be able to understand each other’s words and feelings better. So fewer misunderstandings, lesser uncertainty and fear, more clarity, and more peace of mind.
2. Start on the wrong foot
Once you’re able to empathise with each other the next thing to do is to talk about a difficult topic — debts.
Did you take any loans as a student? Did you borrow in the past for an unexpected expense that you’re repaying now? What about your partner? Do they have any debts or loans that they need to return?
Put your cards on the table. Share honestly. This is extremely important because whatever you want to do as a couple, your debts can keep impeding you. Then, in a few months, you’re likely to get very frustrated with each other.
Plus, whatever plan you’re coming up with for your money, if you don’t include your debts, it’s just going to be an unrealistic daydream.
So, set some time apart and discuss your debts. How much do you owe? How long before you can close it? How much do you need to pay per month? What size of your salary is going off on debts? What’s the interest rate? And other such questions.
While doing this check if you can transfer your loans to your partner’s bank if the interest rate is lower than yours.
3. Put your feet only on planet earth
Now that you’ve crossed the difficult part, you’ll find it relieving to talk about the future.
What are your wishes? What would you like to achieve individually and do together? Where would you like to travel? What kind of house would you like to own? Write them down. You know, a lot of your dreams can come to pass if you play it right?
However, keep in mind one thing. Nobody in this world can have everything they want whenever they want. And, for most of the things you want, you’ll have to patiently work for them. So, understand that patience, hard work and smart financial planning are going to be part of the deal.
Also, be wary of peer pressure. You don’t have to live your life to be better than someone else. So, keep your focus on your partner and yourself alone.
Doing these things will not only give you clarity but also help you know each other better. It’ll greatly enrich your relationship.
4. Prepare to plough the earth
This is the part where you’re going to work on how you’re going to reach your destination. This is an elaborate activity that’s going to need careful attention, knowledge, energy and time from both of you.
You need to do two things here:
1. Set goals
2. Plan how you’re going to achieve them.
When you talk about goals, both of you need to sit down and make decisions on the ones you’re going to pursue and the ones you’re going to put away for the moment. Make sure you’ve got a healthy mix from lists of the two of you so that neither of you feels left out.
And focus on setting SMART goals. SMART is an acronym for specific, measurable, achievable, relevant and time-bound. These words describe the characteristics of the goals you set. This is a hugely important step where your dreams start to take a physical form.
Second, comes the plan. You need money to pay your bills every month. Then a bunch of other things like repaying your loans, health insurance, life insurance, saving, investing, gifting, recreation, giving to charity and so on.
You need to allocate portions of your income for each of these depending on your goals and sound financial principles. This is where you’ll find a good knowledge of the financial system very useful. Perhaps you could also consult an expert.
You’ll have to discuss umpteen things before you build your plan. Go for a joint account? Save? Invest in what? Transfer debt? What level of risk are you comfortable with? Your partner? What’s each one’s responsibility? Change jobs? Side hustle?
Make your plan hyper-detailed. Don’t leave anything to assumptions.
There are several apps available for financial planning. Make use of them. And, don’t expect to complete this in one shot. You may need several iterations before you arrive at a good plan.
Once your plan is ready, put it down clearly on a sheet of paper or on your computer. You’ll need to refer to it often.
5. Walk but keep talking
Finally, your plan is ready. Now you can start your journey to achieve your goals and realise your dreams. So, get to work.
As you go through the month, you should keep yourself aware of where you and your partner are in reference to your plan. That’s why you need to maintain transparency. Use one of those apps or Google sheets to update your current position.
Establish a system where both of you are able to keep track of your expenses and progress without much effort.
Have regular money talks with each other. Have regular appraisals. It’s easy to lose sight of your goals in the hustle of every day. But, striving to stick to the plan and oftentimes reworking the plan is what’s going to get you to your destination.