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The below text is a transcript of the Calm Cash Podcast episode: The Money Talk
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Hi and welcome to Calm Cash. I’m your host Ben Jackson. Today we are covering something that can be pretty awkward, talking to your spouse or partner about money. Let’s call it the money talk. But with a little bit of planning and an understanding of why it matters to you and your loved ones, you can get through it and make it a regular part of relationship conversations. A ton to get through today so let’s get started.
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Divide and conquer. I say that a lot and I hear it a lot. Mostly at work when we have a bunch of stuff to do and time and resources are tight to pull it off. But divide and conquer happens at home too…especially when kid number 2 showed up earlier this year. This will probably seem weird to some people but my wife has never given either of our boys a bath. Ever! We have a three and half year old and 6 month old baby. She just does other stuff while I’m doing bath time. And there are things I’ve never done like cut fingernails or used a Q tip to clean ears, and I could probably name more stuff if I think really hard because my wife does those things. We divide and conquer with the kids and chores and pretty much everything else.
But there is one place where we don’t divide and conquer and that comes to our money and financial goals. It is a place that I think is so important to be aligned in a relationship, partnership or marriage but unfortunately it is a place where lots of dividing and conquering can and does happen with couples. And let’s face it, talking about money, even with the closest people in our lives can be really hard.
So what do we know about how money impacts relationships, especially when we aren’t openly talking about it and working together to make and keep a plan?
According to a Policy Genius survey, about 25% of people in relationships keep their money separate from their significant other and in that same study, more than 16% of respondents were totally in the dark on their partner’s finances including not even knowing the other person’s salary or income. Additionally we know that money is the number 1 issue married couples fight about and is the second leading cause of divorce in the US behind infidelity. And couples that argue about money once a week are 30 times more likely to get divorced than those who don’t.
Money is so emotional and that is why Calm Cash exists in the first place…to help you manage your mental health and money health at the same time. This definitely includes how to map out a plan to successfully talk with your significant other about your money values, goals and state of your accounts. So why should you have this potentially awkward conversation?
Let’s start with those people that aren’t married yet. If you are in a serious relationship that could progress further, I think it is wise to know about the financial values, goals, expectations and some key information, like how much debt your partner has before major life decisions like tying the knot. If you hear money values and roll your eyes, I think you should think twice about that. If you have misalignment with your partner on financial values, like being debt free, saving for the future, their views on financial freedom and how they want to spend money, you can find yourself frustrated, confused or worse in arguments and disagreements about what to do with your hard earned money.
The same thing applies to money goals like owning a home, having kids or other major purchases or milestones that will compete for scarce resources like your time and money. Do you have to agree with 100% of what your partner values and their goals? Of course not, but having this understanding and expressing your similarities and differences will uncover some important truths. Lastly, I mentioned key information like debt. Let me tell you about one of my best friends from my hometown.
I grew up with my friend and we went to the same middle school and high school. He is a super smart, driven and hilarious guy. He went to an exclusive private college that cost about $60,000 a year so he started piling up student loans. Then he went to law school, again a hefty price tag and when he graduated he had over $175,000 in student loan debt. Now he makes good money as a partner at his law firm but his monthly student loan payments are still pretty huge. He is long married to his high school sweetheart but she often jokes about how much debt she married into.
It is easy to make fun of because she knew exactly what she was signing up for and he was super transparent about how much debt he had. But think about if he wasn’t so forthcoming about his debt situation. There ARE people who are too nervous or ashamed to talk about those kinds of things, and you might be on a path to get legally married to those debts and potential issues some day. This really all comes down to trust and trusting that your relationship and the person you are in it with is in a place where you can be vulnerable and honest about these sensitive but important topics.
I’m not a relationship counselor…far from it. But if the thought of having these conversations is concerning, think about why that is. And later I’m going to outline how to have some of these difficult conversations so hang tight.
But next I need to talk to the married people listening. You need to have all those same conversations that I just talked about. The money values conversation, goals, expectations and knowing the key information about debt. But you are more committed now than our non-married listeners. By getting hitched, you not only tied yourself to that person but also to their finances. And if you have divided the responsibilities and your spouse is running the financial show, now is a good time to start a dialogue so you can know more about where your household stands.
The reason this is important is because you likely have debt and accounts like credit cards, mortgages and bank accounts that have both of your names and social security numbers on it. This means that your credit score and potential financial future if something bad happens is on the line with someone else managing these decisions. So to me, it is only fair that you know where your money is going and how it is being spent when so much of your financial future hinges on making sure your bills are paid, debts paid down and savings is growing.
Ok, let’s now shift to some of the tactics for how to make these conversations come to life.
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The goal of these money talks is that they happen calmly and are a dialogue between two people instead of one person lecturing or dominating the conversations. This means that when they happen and how the conversation is structured matters. I was debating how to do this and I think the best place to start is with those couples that are NOT talking about money right now, and there might be real nervousness by one person about how to get the conversation started. To get off of zero, let’s call this Small Talk and Observing.
Because of divide and conquer or if your relationship isn’t talking about money and finances, it probably is best to start small instead of diving right into a sit down, involved conversation about money values and goals. That might feel like a trap or an intervention or something worse to the other person. So start with observing and listening intently to pick up clues for how your partner thinks and feels about money. A way to see firsthand some of their money values play out, go shopping together (of course only do this if it is safe in your hometown right now with COVID really flaring back up). This could be your weekly grocery store run. A simple trip to the grocery store can reveal a lot about what you and your partner value and how you make buying decisions. You may discover you prefer products that offer the greatest savings. At the same time, your partner may be willing to pay more for eco-friendly or name-brand goods. Or you may see some impulsive buying habits that are good data points to file away.
Next, you can start to tee up money conversations by talking about the lives and situations of others and watching and listening for reactions. If you’re uncomfortable talking about your finances, talking about friends’ or family members’ financial issues can be a smart way to raise the subject. You can use my friend from home. Tell your partner you heard about a guy with “$175,000 of student loan debt…isn’t that crazy!” and see if that gets a reaction. Or tell a story about a friend’s unannounced shopping spree or bet on the big game and see if it sparks a reaction, story or any engagement. And if it does get a reaction, listen closely because your loved one is giving you a window into their money values and maybe goals with their answer.
Lastly for Small Talk and Observing, talking about how your parents approached and handled money can be a critical step to understanding how you feel and think about money and how your partner feels and thinks. Let’s face it, like so many other parts of our life, our parents and family passed on learned and shared experiences and points of view about finances that we saw and probably adopted for ourselves. My grandad would talk to me about compound interest when I was like 8 years old. Or maybe those parental or family experiences were really rough and were turning points for why YOU are doing it differently. That history matters. And sharing those stories and more importantly hearing those stories from your partner can give you a real understanding of what they value and their goals.
These are simple but effective ways to try to get the conversation going. Please make sure you listen and pick up on the bits of information that can shed more light on your partner’s money values and expectations.
Ok, so let’s assume you’ve started some micro-conversations on the topic and have learned a few things, now you can move on to more structured conversations that focus more specifically on your finances as a couple. Let’s call this the Zoom In where instead of talking about others or observing, the conversations will be more directly about things happening to the finances in your relationship.
Let’s start by using the mail to your advantage. In 2020 it is hard to find much use for the Postal Service and the mostly useless mail that comes to my house but you probably still get SOME bank statements or bills that come in the mail. If you don’t, maybe switch an e-bill or 2 to paper to have something to talk about. When you bring in the mail, open a statement or bill when your spouse or partner is sitting with you and see if you can spark up a conversation about what is happening especially if there is a subject or area like debt, the budget or savings that you want to know more about. Maybe you don’t know how this other person values savings so you open YOUR 401(k) quarterly statement and spark up a conversation about how you are crushing your savings goals. That is a nice open door for your partner to say something.
Another way to talk more directly about your own situation and generate some empathy and dialogue is to admit your mistakes. We all make mistakes with our money whether we regret a purchase, didn’t start saving soon enough or whatever else it might be. But opening up, showing vulnerability and admitting to a money mistake with your partner, even if it happened 10 years ago, is an opportunity to create connection and see if they would like to admit something from their financial past or present.
And lastly on Zooming In, remind your partner you are here to help and ask what you can do to help. State one of your money goals that you are passionate and focused on and then offer to help in any way if your loved one has their own goals. This might open the door for some expression about goals...or maybe not. But you ARE being supportive and at the same conveying your own goals. Both are important.
Now, let’s get into more structured conversations. If your relationship is super open and you know all those other things about financial pasts, parent experiences and there is no need to talk about the finances of other couples, just jump down to these steps. At this point, it shouldn’t be awkward or create anxiety to ask to talk about your finances. So let’s make the most of these conversations.
First, set a date and make it a recurring time on the frequency you are most comfortable with. Some couples might want to talk every month, others may want twice a year. It’s up to you but whatever your cadence, make sure that is communicated and you stick to it.
I recommend that you don’t have these conversations at night, especially after work. You will probably be tired and potentially cranky and that isn’t Calm Cash. For me and my wife, we do brunch money conversations on a Saturday or Sunday that are just as likely to involve a mimosa as it is a spreadsheet.
What topics do you discuss? I think it has to include your spending plan (you might call that a budget but we don’t use that term on Calm Cash…listen to the 50/30/20 episode in July to learn why if you missed it) and a review of your money goals. My wife and I talk about goals between now and 5 years out for major purchases or events that will involve our money. This includes how much we want to have in certain accounts like college savings accounts for the kids and also our commitment to having as little debt as possible. If you are just starting these conversations, talking about money values and expectations is probably good too.
When you are all done. Thank your partner and emphasize how much it means to you that you can talk openly about something that is a tough topic. And then go do something fun together to celebrate. Always celebrate the wins!
Ok I have to finish with a reality that some of you may be facing and that is a spouse or partner that just won’t budge on these conversations. If you find yourself here, I would take this seriously. Begin by understanding where your individual financial situation sits. Look up your credit score based on your social security number, know your income like the back of your hand and take a quick inventory of the accounts you have access to. If something seems weird or off or if there are accounts like bank accounts with your name on it that you can’t access, this is a red flag. If any account has your name on it and is using your SSN, you need to have access to it…period. Because it can impact your financial future, whether you are with this person or not, you must know what is happening. If you partner won’t give you access, call the company directly.
If the situation is dire enough and you think bad things are happening, it is time to get help from professionals. That can come in two forms: a marriage counselor and/or a financial advisor. The marriage counselor for some of the clear trust and open dialogue issues in this relationship and a financial advisor to walk you and your partner through setting a keeping a plan that is transparent and reasonable for whatever situation you find yourself in.
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This was a lot but it is important so I hope you found this episode helpful. Wherever you are currently, there are small steps you can take to improve your situation and open the dialogue. Please stay safe out there and tell a few friends about Calm Cash. See you next week.