KNOWLEDGE CENTER: How to discuss finances as a couple [Column] | Business
The excitement that comes with deciding to buy a home together, get engaged, or get married can come with added stress, especially when it comes to discussing joint finances.
According to a recent study by the WSFS Bank, 50% of Millennials and Gen Zers said they were very uncomfortable discussing money with their families.
While discussing finances with your partner can be stressful, there are ways to take some of the pressure off and make sure those conversations are productive.
Find the right time
When you’re ready to take the next step in your relationship, one of the first things you should check off your to-do list is to take the time to discuss finances.
Pick a time when you and your partner can let go of distractions and additional stressors. While you might not want to spend your weekend talking about money, this can be a great time to have those important conversations to make sure you’re not tired from work.
First assess your personal finances
Once you’ve decided on a time to have your discussion, do some homework to make sure you’re ready. Taking stock of your own financial situation on a regular basis is a good idea and is certainly something you will want to do before discussing joint finances.
Make sure you understand your savings, your investments, your monthly budgets and expenses, as well as any debt you put on the table.
You will also want to know your credit score as it can impact your financial goals and you may need to work to improve yourself. Closing or opening too many credit cards can negatively impact your score, so decide if you want to open a joint credit card or just make your partner an authorized user.
Having a clear picture of your own finances can allow your discussion with your partner to be productive and to set a course of action for your trip together.
Set achievable goals
Once you have a clear understanding of your finances as a couple, it’s important to define your goals together and map out a plan of action to achieve them. Whether you want to save to renovate a newly purchased home, take an annual vacation, or just build up your rainy day fund, it’s important to set quantifiable goals.
It’s also never too early to start thinking about retirement. If you have any existing 401 (k), be sure to continue contributing to it and consider setting up an IRA to invest more in your future.
Once you’ve identified your goals, you can start budgeting for the short and long term to help you reach the finish line. Remember to also review your budget regularly to take into account variations and make sure there are no deficits.
There are a number of bills that come with the excitement of buying a home, planning a wedding, or other major life events. Be sure to discuss who will be responsible for paying each invoice on time so nothing falls through the cracks.
As you decide who will take care of each bill, you’ll also want to consider whether a joint bank account, such as a checking and savings account or a money market account, is right for you. Opening a joint account can make it easier when it comes to paying bills with the same amount of money, but not all couples go this route.
There is no single decision on whether or not to use joint or separate accounts. The important thing is to understand which accounts you will use as a couple and which bills will be paid by each.
If you think you need some extra help creating a financial plan that is right for you as a couple, there are a variety of free resources available online like WSFS iQ. You may also want to speak to a financial advisor who can help you strategize to achieve your long-term financial goals together.
Taking the next step with your partner is an exciting time in your life. It’s important to be honest and transparent when developing your action plan so that you don’t derail the process. By working together on a solid plan, you can start a long and happy life together.
Vernita Dorsey is Senior Vice President, Director of Community Strategy at WSFS Bank. She has over 35 years of experience as a community banker and has actively served her community throughout her career.