For many couples, talking about money is a lot like going to the dentist. You know it is good for you, and you know you have to do it, but you also really, really don’t want to. Unfortunately, no one sends you a nice postcard in the mail reminding you to talk to your spouse about money every six months. That’s what I’m here for. Visiting you with a friendly reminder of the top money conversations to have with your spouse!
A survey by SunTrust Bank found that money is the number one stressor for couples in the U.S. Lack of communication around differing goals and money beliefs ruffles everyone’s feathers. But that doesn’t mean all is lost! People who get married, and stay married, do better on average financially than single individuals, divorced couples, or couples who live together but don’t marry, according to another study by Boston College. And married folks do even better when they work together!
Money Conversations You Have to Have With Your Spouse
Money is not all dollars, cents, and spreadsheets. Our disagreements with our spouses usually have nothing to do with money, but with our beliefs about it. As such, most of these conversations, at least the first time around, shouldn’t focus on coming to a fixed number goal. Center your discussions around your goals, feelings, and views on the topics and work to come together on what you would like your family’s life to look like.
By the way, these conversations are best done on a weekend morning or afternoon, particularly with some food in your belly. Studies have shown we are more open to new ideas when we aren’t tired after a day’s work. Also, we’re just less cranky when we aren’t hungry.
Kids & Careers
Whether or not to have kids is a major discussion for every couple, particularly before marriage. This talk is one of the most emotional for many couples, as beliefs run strong and deep.
- Do you want kids? How many?
- How will you afford it?
- What if you run into infertility issues? Do you want/need to have your own biological kids or are you open to adoption?
If you decide you both want kids (or you already have them!), it is time to talk about childcare and careers. Unfortunately, women with kids tend to have less career growth than women without. Alternatively, men with kids advance faster than men without. There are a lot of reasons for this, some avoidable, some not, but it is worth considering either way.
- Is one parent going to stay home with the kids? How will that spouse and the kids be protected if something happens to the working spouse? Will you have sufficient life insurance? What if something happens to you as a couple, is there a way to compensate the stay-at-home spouse for the lost earnings power from years out of the workforce?
- Will one spouse’s career take priority over the other to help manage daycare pickups and school sick days? Will you alternate to protect both careers?
- Do you believe kids should have the chance to grow up in one neighborhood instead of moving around? This could impact either spouse’s ability to take upwards career opportunities in other cities or temporary abroad posts.
Daddy Fish is a stay-at-home dad, a decision we came to after years of discussion starting before we were even engaged. I had loved having my mom home as a kid, but I’d also watched her go through a divorce after 20 years as a stay-at-home parent. I couldn’t imagine that happening with Daddy Fish and me, but it worried me none the less.
In the end, the decision came down to the fact that he understood the risks and really wanted to be a stay-at-home dad. He has job skills that won’t easily age, was miserable at his desk job, and as his job had less vacation and much stricter sick days than my job, him staying would limit our family’s freedom, not add to it. Now, after being against the idea early on, I can’t imagine our life any other way.
How to Handle Debts
Whether you came into your marriage with existing debts (student loans!) or have accumulated some debt together (credit card debt, mortgage(s)!) you have to have a sense of how you want to tackle those accounts. Some people are vehemently against debt and are uncomfortable having any debts, even a mortgage, while others view even mild credit card debt as a way of life. It is important to understand what your spouse’s preferences are and come to terms with how you plan to handle debts as a couple.
- How much debt do you have outstanding? What is your credit score?
- Should each spouse pay down their pre-marriage debt separately, or are you taking the “all-for-one and one-for-all” approach?
- Are you only making minimum payments or paying down principal? When is each debt expected to be paid off?
- How do you feel about carrying a mortgage? Do you want to pay it off over the standard 30 year period or pay it down early?
- Do you believe in using credit cards? Do you pay off the entire balance each month or have outstanding credit card debts?
Interest from debts quickly eats away at our ability to build wealth, chipping off percentages of our income that go to creditors instead of into savings and investments. Coming up with a joint plan to reduce debt, including a priority order of how to tackle debts, is incredibly important to becoming debt free.
In our house, Daddy Fish hates owing anyone anything. A lesson I learned when he wanted to very quickly pay off the mortgage on our first home, despite our very low-interest rate. Personally, I was comfortable having a mortgage as our only debt and preferred to invest over paying down the mortgage. As a compromise, we spent the first two years in our home aggressively paying down the mortgage. Those first years are when the interest burden is highest and you are attacking less principle, so the extra dollars made a big difference. We built up about ~40% equity in our home and now focus on investing and college savings. Which brings us to the next big conversation…
Alright, so you decided to have kids. How do you prepare for the biggest expense of their young lives, college? A lot of millennials saddled with mountains of student loans don’t want to leave put their children in that situation in the future. But some believe that having some skin in the game can motivate kids and help them get the most out of their college experience. And some believe college isn’t worth the cost at all. Do you know what your spouse believes?
- How much are you willing to pay for your child’s college expenses? Will you cover an in-state education? What about room & board? Would you cover a private college, like Harvard, if they got in?
- Do you want to save for your child’s college in a tax-advantaged 529 plan, cash flowing the cost from income, or take out some parent loans at the time?
- Do you expect your child to work part-time while in college? Will that money go towards their education or their own spending money?
- Will you expect your kids to take on any of their own loans to cover their education?
- Do you believe college is an appropriate choice for everyone? What if trade school or entrepreneurship seems best for your child?
- If you are paying for your child’s schooling, will you expect to have a say in their classes or major? Will they have to maintain a certain GPA?
College is a huge investment and if you choose to pay for your child’s college education, it can mean an additional financial strain on your family if you aren’t prepared. Even if your kids are very young, it is best to have an idea of what you are comfortable doing with respect to college costs to help you prepare. Also, having a set plan will help you communicate your thoughts to your child as they get older, helping them respect the investment and determine their own choices thoughtfully.
With the ever-increasing costs of higher education and the rising need for tradesmen, Daddy Fish and I aren’t sure college is worth the cost for many people. In some ways, I find it easier to envision Fuss Fish starting a small handyman or electrical business as an adult than going to college and sitting behind a desk. Thus, we are saving for an in-state college education, with room & board, in a Vanguard 529 plan, and putting all other savings for him in a taxable account. While 529 Plans are best for college expenses, they still have uses if your child doesn’t go to college. Whether he chooses trade school, an in-state education, or a private college (he’ll have to have a pretty good argument for that), we will have options.
Retirement may seem eons away or you may be dreaming of saving aggressively to retire in your 30s. Either way, the planning needs to start now. People are living longer than ever, which means longer retirements and larger nest eggs needed to protect yourself for years to come. Discuss how each spouse views retirement and how you both plan to achieve your dreams.
- At what age do you want to retire?
- Do you think you’ll work part-time in retirement or do you want to be fully retired?
- Do either or both of you have employer-sponsored 401(k)s? Do you have IRAs? How much are you both saving today?
- What do you envision yourself doing in retirement? Living in your dream house on a lake or at the beach, or traveling the world?
- What hobbies do you want to pursue in retirement? Do you think your annual budget will go up or down?
- How do you want to be cared for in old age? Do you think you’ll live with your kids (might want to check with them first or be prepared for your adult kids to say “no”…) or go into assisted living? Will you have enough savings for long-term care or should you consider long-term care insurance?
If you want to see how your current savings rates will set you up for retirement, check out my free retirement calculator. And if you want a sense of whether you are overstating how much you will get from Social Security, check out how Social Security benefits are really calculated.
Retirement planning is a conversation that should really happen on a regular basis. Things change, career paths and health considerations shift, and our beliefs about how much money we need to retire go up and down. Checking in once a year or so on how you’re doing versus your goals will help avoid a big surprise down the road when the years to right the ship are far fewer.
When I got married, I pictured retiring around 55. Daddy Fish and I saved ~35%-40% of our pre-tax income, but that was mostly driven by natural conservatism. We hadn’t even heard of the early retirement movement. Since having Fuss Fish, my job has become far less fulfilling. I miss my family every day at the office, and now want to “retire” much earlier. Our focus has shifted to upping our savings, reaching true financial independence, and helping me build my dream business through Mama Fish Saves.
Spending priorities & budgeting
So far, you’ve talked a lot about goals, preferences, and emotional aspects of money. Now you have to dive into the numbers a bit. While money is emotional, you can’t exactly keep it in a fully theoretical box. Either you are moving towards your goals or away from them, and you can’t know where you stand until you understand what you have. Here are some things to discuss for new co-budgeters.
- How much do you each make after taxes? How often are you paid?
- What are your most important expenses that have to happen every, single month? How much money is left over after those expenses?
- Can you organize your goals in order of priority? Paying down debt, saving for retirement, saving for kids college, etc.
- Are you prepared for emergency expenses like home or auto repairs or high medical bills?
- Do you plan to keep separate financial accounts or merge your money? How will your personal spending money be managed/allocated?
- Will you keep a detailed budget? What service will you use (YNAB, Mint, etc.)? Who will maintain it? If you’ve never built a budget before, check out my free Better Budget Toolkit to start you on the right foot!
- If you don’t keep a budget, how will you know if you are on track? Will you check in with Personal Capital? How often will you discuss where you stand?
Personally, Daddy Fish and I budget using YNAB (You Need a Budget) and I update it about once a week. We sit down to discuss it once a month, but I let him know if we are off track somewhere each week. In our discussions, we bring up if any of our spending priorities have changed and how we want to see money allocated. For instance, a few months ago Daddy Fish decided he wanted half of his spending money to be put into a “woodworking” savings bucket in YNAB. He is building out his workshop in our basement and wants to separately for his tools. A quick click and we were in action!
“Hit by a Bus” binder
In most families, one spouse is the family “CFO” (Chief Financial Officer), managing the budget, bills, and investments. This works while both spouses alive and well but opens you up to a lot of confusion if something happens to your CFO. Not only will the other spouse be dealing with an incredible loss, but they’ll also be struggling to understand where all the important documents are and how to login to pay the electric bill.
There are probably way more appropriate and gentle names for a binder or file with all your important information in case of emergency, but talking about one of us living without the other makes Daddy Fish and me very uncomfortable. So, to break the tension, we call it our “hit by a bus” binder. It includes all our life insurance documents, account numbers, login info, and who to call in case of major emergency. Here are some things to consider while building your “hit by a bus” binder.
- What insurance company issued our life insurance policies? How does someone notify them and what do they need if something happens to one of us?
I included the full printed policy documents in our binder. I only read them online, but figure it is best to just have them on hand.
- Where do we have checking accounts, savings accounts, investment accounts, and credit cards? What are all the logins and passwords?
- Which bills are on auto-pay and which do we have to pay manually? If they are on auto-pay, what accounts are they pulling from?
- Where do we have debt? Which accounts are on auto-pay and which do we have to pay manually? Which should be paid down immediately with life insurance proceeds?
- What are life insurance proceeds meant for? What is meant for debts, for living expenses, and for future savings?
I know that Daddy Fish’s policy is largely to cover childcare expenses, but as a breadwinner, my policy is much larger and its uses more complex. As Daddy Fish doesn’t manage our investments day-to-day, I broke down what the proceeds were meant for in writing and we talked through it. If something happened to both of us, this would be controlled by a living will (next conversation!) but for one of us I wanted it to be more personal and easy to understand.
- Do either of you have insurance policies through work? If so, what are the sizes of the policies? Who should be contacted at your office about accessing those policies?
- If you have kids – What are the kids’ pediatrician’s names and contact info? If they go to daycare, what is the contact information there? Do they have any allergies?
This binder is primarily for if something only happens to one of us, but my mom knows about it too in case something happens to both Daddy Fish and me. I plan to update it annually and to include a few of Fuss Fish’s favorite foods, toys, songs, and TV shows. I want whoever is caring for him to know how to comfort him, even a little. Yes, writing this part out definitely makes me cry every time.
- Should we write letters to our kid(s)? To each other? To their potential guardians?
We haven’t done this yet, but some families definitely do. Do you think your kids would be comforted by a note from mom or dad that they could look back on if they had to face a terrible circumstance like losing a parent? Is there anything you would want the guardians of your kids to know if you weren’t around any longer?
Putting together this binder and talking through it isn’t any fun. It is heavy and emotional. (You can save yourself some of the work by purchasing our fillable In Case of Emergency Binder.) But both of my parents lost a parent in their formative years and, while unlikely, it is best to be prepared. We never know what could happen and a few uncomfortable hours could provide months or years of comfort and support for your loved ones if something terrible happened. Which leads us to our least fun spousal money conversation. Fair warning, lawyers are going to get involved…
This last one is a conversation Daddy Fish and I are still having and I hope to write more about it this year when we finally get an official living will. While I hate thinking about what would happen to Fuss Fish if Daddy Fish and I were both gone, it is a crucial conversation all parents needs to have. And it needs to be official.
- Who will take care of your kids if something happened to you and your spouse before they were adults?
- What will happen to your assets if you pass? Will all money be held aside until your kids come of age at 18 (or older, based on what you set in your living will) or do you want a trust set up with some assets to cover their expenses that can be accessed by their guardian? Who will manage the money until they come of age?
- If you got into a serious accident, would you want to remain on life support? For how long? Do you want to be an organ donor?
- Are your beneficiary designations for all your investment accounts in line with your will? These designations can override wills.
I’ve avoided this discussion for so long not because I worry about talking to my husband, but because I want to avoid awkward conversations with potential guardians for Fuss Fish and trustees for our assets. Yes, that is an immature thought process, but it has meant a years long delay in the living will process for Daddy Fish and me. A risky move for us and for our son.
As we prepare to go through the process ourselves, we are using this will and estate planning preparation guide. It has raised some questions we wouldn’t have considered and I hope it helps you too!
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Talking to your spouse about money can make you closer
Anytime you are doing something new, it can feel uncomfortable. Talking about money is no different. But if you take the quality time to talk to your spouse about money, your family goals, and feelings about money you will avoid disagreements in the future and better understand each other. Money is a huge part of our lives, and we can’t just ignore it. Take an hour to drop the kids at a grandparent’s or friend’s, grab some snacks, and tackle one of these important conversations with your loved one!
Do you talk to your spouse about money? What do you think is the most important conversation you’ve ever had? Drop a note in the comments so other couples can learn from your experiences!