Discussing Money with Family - Part 2: Conversations to Have With Your SpouseInsights Retirement Planning Finances and Planning for Women
It isn't uncommon for one spouse to take a leading role in the family's finances. As with any marriage, a lack of communication about what is happening can create stress and potential problems. We share some of the issues we have seen and offer some ideas about how to make the financial side of marriage better.
Watch Now: Discussing Money With Family Part 2: Conversations to Have With Your Spouse
- 0:00 - Intro, Disclaimer, Welcome
- 0:47 - Horror Stories - not knowing what is going on.
- 3:30 - Horror Stories - pleasant and unpleasant surprises
- 4:52 - Horror Stories - a saver and a spender
- 5:56 - The issues with keeping separate finances
- 8:05 - The disinterested spouse
- 9:48 - Challenges of a second marriage
- 11:40 - Tips to avoid potential issues
- 13:25 - Wrap up and outro
Discussing Money With Family
Talking to family and loved ones about money is challenging. But having those discussions can help avoid significant problems in the future. Check out our three-part series: Discussing Money With Family. Subscribe to our YouTube channel so you don't miss them.
Part 1: Discussing Money with Aging Parents
What's Mine is Mine, What's Yours is Yours - Keeping Separate Finances
In many relationships, one spouse keeps track of everything. That person pays the bills, monitors progress toward certain goals, and makes many of the major decisions. But in some marriages, the finances are kept separately. On the surface, this is a reasonable approach, but it can lead to issues if there is a lack of communication.
For example, each spouse may have a different idea of what retirement looks like. There may not be common ground on how much they should try to save or how they should save it. It also keeps them from knowing how close they are to those major goals like retirement, paying off the mortgage, or paying for college. It can also cause other problems. One spouse may be accumulating large amounts of credit card debt. One spouse may start to lose trust, thinking their partner is hiding things. And it could be worse.
Think "together" a few times each year. Look at things at the household level one or two times per year. It can make sure you are on the same page.
Put all your cards on the table. Transparency is a key part of maintaining trust in any relationship. If you know what each other is doing, it can be reassuring.
Dream together! Talking about retirement be a fun conversation. You may find there are more common ideas. And you may find out the other person has a better idea of what things should be than you!
"You handle it..." - The Disinterested Spouse
Many times one spouse has little to no interest in the financial side of their lives. They are either busy with other things, or just don't feel comfortable with the numbers and terminology. Unfortunately, this can lead to unpleasant and unexpected surprises. When one spouse handles the bulk of the financial details, significant problems can arise when something happens.
In the horror stories of our episode, we share examples of both the possible good and bad outcomes that can happen when one spouse is unaware. They might find themselves in a very difficult situation.
To avoid these problems, here is what we suggest:
Discuss high-level details, one time per year. Once per year, both of you should sit down and go over your accounts, what you have, and how to access them. Make sure you each know where you keep the important documents and statements. Make sure you both know whom to call if you need help.
Talk about important goals - like retirement. One spouse may have a different vision of what retirement should be. Perhaps there is some common ground. But understanding what you both want to accomplish is important.
What to do when bad things happen. At some point, we all face adversity. What happens if the spouse who handles the details can no longer do it? Have a plan for how to get help and whom to contact. This can help eliminate stress and potential problems down the road.
His Kids and Her Kids - The Financial Challenges of Second Marriages
People who have been through a divorce have a different set of financial challenges. They become protective of what they have. They want to make sure their kids are taken care of. And there are other emotional and mental barriers to overcome when combining things with their new partner. This can create a different set of issues.
Many times, we find those spouses have "his accounts, her accounts, and our accounts." Some goals, like retirement, are a joint effort. While other things like wealth transfer can be complicated. We often find a disconnected approach to achieving both of those. But you can avoid some stress and difficulties.
Figure out what you want to do together - For example, retirement. If your idea of retirement is similar and you are moving in the same direction, it will make your life easier.
Figure out how to protect what is important - Understanding how each of you feel about taking care of children from a previous marriage can help eliminate problems in the future. It makes the planning more complex, but not impossible.
Communication is Key
No matter how you approach finances in your marriage, talking about will help you avoid problems.
Ask Questions - Be curious about what is happening. That way you both understand the opportunities and how to avoid the possible problems that could happen.
Educate yourself - You don't have to have a degree in finance to understand the basics. But you should know simple aspects of your household finances. Things like basic cash flow, long-term vs. short-term investing and how to pay bills.
Dream together - Money can be a source of stress if you let it. But it can also be the pathway to amazing opportunities to do things in your life. Talk about what's important, what you want to do, and how to get there. You may find it to be a fun conversation!
And if you need it, we can help you. Fill out the form below to connect with one of our advisors.
Appearing in this video...
Vince is a financial advisor in Parkersburg, WV.
Nikki Lude, CFP®
Nikki is a financial advisor in Woodsfield, OH.
Neal Watson, CFP®
Neal is a financial advisor in Marietta, Ohio