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Reduce Arguments with Money
Finances are the top reason most marriages don’t make it. The challenge of combining two different spending habits and ideas about money is difficult for any relationship. Add on top of that the emotions of marriage, and you can see sparks fly.
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Based on my practice, there are five steps you should follow when considering combining finances with your partner or vetting the financial fitness of your partner.
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If you have reservations about utilizing my five steps with your partner, you might want to reevaluate your relationship or how you handle money.
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To limit disagreements about money, follow the five steps below.
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Transparency – “Getting Naked’
If you have been a working adult for over three years, you probably are used to keeping your personal financial affairs a secret. Now that you are married or seriously vetting a potential partner, it can be hard to open up about where you are financially and the goals you have with your money. Transparency is by far the most critical step because it sets up the foundation for the other steps. When we talk about transparency, we are talking about four areas
- Income / Personal Balance Sheet / Current Spending Habits
- Family
- Financial Aspirations – Vacations, holidays, birthdays, giving, house, cars, education, eating out
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Income / Personal Balance Sheet / Current Spending Habits – Income is a great starting point when it comes to communicating about money. Ask your partner how much they currently make (gross of tax & net of tax). Then ask, what is your expected income in the future? Documents like tax returns and pay stubs should be used to put your partner at ease with your numbers.
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Next is your Personal Balance Sheet. List out all of your assets and liabilities. Share your story of how you have accumulated those assets and liabilities. The transparency of those stories should deepen the intimacy of your relationship. And shed light on areas you both have an opportunity for improvement.
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Next, show how you currently spend money.Each Partner should come to the table with at least three months’ worth of expenses and categorize them by expense type. Sit down with each other and explain how you spend money. Describing how you spend your money can be challenging for some because you may not know your spending tendencies. In addition, showing your tendencies to another person can be challenging.
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Family – How your family spends money can significantly affect you more than you think. How your Partner’s family has exposed them to money management can also affect your relationship. Sit down with your partner and explain your family history with money. A serious point of concern is if you or your partner is expected to or expecting to support a family member in the future. How your partner handles money in connection with their family can be a deal breaker for some.
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Financial Aspirations – How you spend today is an important indicator of what an individual will do in the future. But as we increase our income or age, we tend to express our secret financial aspirations. Lay out what your financial aspirations are. Below is a list of common points of contention in relationships
- Vacations
- Holidays birthdays
- Giving
- House
- Cars
- Education
- Eating out
- Savings
- Network Goals
- Entrepreneurship
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Mutual Goals – Hopes and Dreams / Trade-offs
Now that you have been transparent with your partner, don’t focus on the differences (This can be tempting). A better use of your time is finding where your goals and lifestyle preferences are the same and how you can complement each other. For example, if you spend a lot on groceries, you may cut costs by cooking for your partner, who eats out a lot.
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Next is to prioritize your financial aspirations. We all wish we could do it all, but we must prioritize what we desire. Create a plan for your lives individually and together. When creating this plan, understand the trade-offs you must make to achieve the most important aspirations on your list. This exercise will be repeated again and again as you and your partner develop and grow.
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Set and Maintain Regular Check-ins
Maintain a regular cadence to check in on your goals and your progress towards those goals individually and as a couple. Monthly check-ins are commonly used because monthly is the payment cycle of most bills. For yourself individually and for you and your partner, have a regular time and place to review your spending, goal progression, and investment objective. If you need help with this step, please seek the help of a fee-only financial advisor who can set the appropriate cadence for your financial situation.
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Being Willing to go on the Financial Journey with your partner (the ups and the downs)
You both now have a plan individually and as a couple. But no one is perfect. You and your Partner will make mistakes. The empathy and encouragement you show during these times are what’s going to make your relationship work.
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Look for Ways to Solve Each Other’s Money Hurdles
As you go through the journey of building wealth as a couple, your partner is bound to run into problems that seem unsolvable. Now that you know your partner’s aspirations helping your partner solve their money struggles will sweeten the pot of your relationship. Whether that is helping your partner find a job, creating a workable budget, or finding other investment opportunities.
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Summary
- Transparency – “Getting Naked’
- Mutual Goals – Hopes and Dreams / Trade-offs
- Set and Maintain Regular Check-ins
- Being Willing to go on the Financial Journey with your Partner (the ups and the downs)
- Look for Ways to Solve Each Other’s Money Hurdles
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I hope the information above helps improve your and your partner’s relationship with money. If you want more information about working with your partner around money, please use the link below to set up a free 15 min consultation.
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[sh_btn link=”https://calendly.com/deasil/15min” target=”_blank” shape=”squareRounded” style=”dimension” size=”extralarge” color=”rgb(27, 54, 156)” bordercolor=”rgb(11, 0, 0)” bordersize=”0″ fontcolor=”rgb(248, 247, 247)” enablehover=”enable” enableicon=”enable” iconbg=”square” iconset=”fontawesome” iconfa=” fa fa-calendar”]Schedule Your 15 min Consultation Now![/sh_btn]Randall Avery, CFP® CFA
Financial Planner │ Author │ Public Speaker
R.S.A. Deasil Advisors, LLC
Office: 531-333-2745
Email: Deasil@rsadeasil.com
Website: www.rsadeasil.com
P.S. If you would like me to speak at your next event, please click HERE
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While working with clients, Randall realized there was a missing process that individuals were not performing when choosing to use their money. Motivated to fill this gap, Randall developed three models to ‘Hack The System’ and allow individuals to Create Your Own System (CYOS). Randall hopes effectively using these models will help individuals identify the best moral and ethical use of their money.
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