The Awkward Conversations That Can Save You Big Money
Talking about finances with a significant other can be brutally awkward — especially if you’re tempted to hide past financial misdeeds or are unsure how to bring up touchy subjects.
According to a February 2017 survey by LearnVest, most people feel uncomfortable talking about their finances with their better halves. Only 44 percent of respondents said they didn’t mind disclosing intimate financial details, such as the size of their savings accounts or the depths of their financial troubles, to their partners. Meanwhile, 20 percent admitted that they had never seriously discussed financial issues with their partners.
Although talking about finances with the person you’re trying to woo can be embarrassing or painful, it’s crucial, say experts — especially if you already live together or plan to share your lives with one another. Diving into uncomfortable discussions may help you save time or money over time since you’re likely to make smarter financial decisions; it could also reduce the odds that you’ll fight about money in the future.
Here are seven common money issues that are often embarrassing or delicate to discuss, but are well worth bringing up:
Your credit scores: You may not want to admit that your credit score is less than perfect, but sharing your credit scores and credit reports with one another is crucial to making sure you’re making the right financial choices. For example, if you’re planning to buy a car together, but one partner has a significantly lower credit score, you may get a better interest rate on the car loan if only one of you applies for it. Similarly, if you have a lot of debt you need to transfer to a lower rate credit card, you’ll likely get a better deal if the person with the highest credit score applies for it.
Your debts: Fessing up about your debts is also important for long-term planning — especially if you’re thousands of dollars in the red. If you’ve got tens of thousands of dollars in student loan debt or are secretly struggling to pay for maxed out cards, share those debts with your partner. You may be surprised to find your significant other is able and willing to help you shred those debts. Joining forces and using both your incomes to pay down balances can also help you get rid of debt more quickly.
In addition, sharing information about your balances can help you jointly strategize your next financial moves and pick a strategy that works for both of you.
Your spending habits: Don’t forget to talk about spending, too, the next time you discuss finances. You may be embarrassed to admit how leaky your wallet is, or how often you splurge on junk you don’t use. But speaking truthfully about your spending habits is essential for creating a budget that both of you can stick to. Working together on a budget and holding each other accountable can also help you follow through on your good intentions. Not wanting to disappoint your partner can do wonders for your ability to say no when you’re feeling tempted by a purchase.
Your taxes: Don’t just leave it to your accountant to talk about your year-round tax strategy. It’s also important to talk about your taxes with your partner so that you can make joint financial decisions that will save you money over time. For example, you may want to discuss cutting back on your household’s discretionary spending so that you can park more cash in a tax-free retirement account. Or you may want to reduce your taxable income by increasing your charitable donations.
Your ideal family: How many children you decide to have will also have a major impact on your family’s bottom-line. Many people don’t like to discuss the financial realities of having children — especially when they’re deciding how many to have. But it’s a good idea if you want to avoid overextending yourself and putting your financial security at risk. Talking about how many kids you both want and how you hope to raise them will help you decide what you can afford. It will also help you clarify whether one partner is willing to stay home, how much you’re willing to spend on childcare and how much you envision spending on extras, such as summer vacations, sports camps or classes.
Your wills and other end-of-life details: It’s no fun to talk about each other’s deaths; but you could come to regret it if you don’t. Be sure to talk about what would happen if one of you should suddenly pass away. Take time to discuss and jointly set up your wills and other important details. That way, the surviving partner doesn’t lose time or money trying to get your affairs in order. Also consider adding additional life insurance — especially if one of you is financially dependent on the other.
Your Plan Bs: You may have every intention of staying together for life, but it’s still a good financial move to agree beforehand on what would happen if you separate. Agreeing on a financial plan in the event that you break up will save you time and legal fees. Signing a prenuptial agreement could also give you long-term peace of mind — especially if one partner has significantly more money than the other.