Why couples should talk about financial planning
PNB MetLife 19-05-2016 11:55:19 AM
Money affects everything-your career, lifestyle, and even your children. It also tends to be at the root of many divorces, according to a study from Utah State University. We asked Catey Hill, a columnist for Smart Money online and the author of Shoo, Jimmy Choo! The Modern Girl’s Guide to Spending Less and Saving More, for advice on keeping hearts and wallets in blissful alignment. Read More
- Set financial goals together. Hill recommends that couples write two sets of financial goals and then see where they overlap. “What are your concerns: Saving for retirement? Life insurance or investment plans? Paying for a good college education? Write it all down, then compare notes to create a shared plan.” Consulting a financial planner can be helpful too. As long as you set your goals together, there won’t be any uncomfortable surprises.
But you don’t have to share everything. “Some people are spenders, some are savers,” Hill points out. “Share a bank account, but consider having your own as well.” This isn’t a license to keep secrets from each other, as financial infidelity is as damaging as any other kind, but it offers some independence to the individual.
- Expect the unexpected when it comes to career paths. “Shifts happen,” Hill says. Let’s say you married a tax attorney who now wants to switch careers and become a kindergarten teacher. Or what if one of you is laid off? “Couples need to ask, what if? If you build up your savings, you will have some time to answer that question.”
Many career changes are actually lifestyle changes. A career change will most likely affect your financial planning as well as your investment plans, hence you need to adjust your budget to your salary. “There are trade-offs. If your wife wants to go from being a lawyer to a teacher, it may not be easy to accept, but happiness is as important as a pay check.”
- Discuss kids – and the financial issues they create. Children complicate life in ways that are hard to predict. Expectations differ: How many kids? Public or private schools? A lot of people want to give their kids the very best, but if you are spending every last dime on them, you can’t prepare for retirement or get the life insurance you really want, which wouldn’t be doing anyone any favours.
What’s the bottom line? Pick your battles or better yet, don’t battle. “Couples tend to run over the same ground, and they don’t get anywhere,” Hill says. “Go back to your shared financial goals list once a month or so. It’s a safe way of broaching hot topics which you can then negotiate.” This particular shared approach is what marriage is all about. Should you be unsure about how to combine your goals, you can always consult a financial planner to give you and your partner some guidance along the way. So don’t become part of the divorce statistic and plan your goals together.