Talk Money With Your Honey

The role of money and the ritual of talking about money rank high in relationships. Here’s how partners can chat about their cash.

Even as divorce rates decline slightly, money’s influence on divorce grows. American consumer debt shot up in late 2013 by the most in more than six years, according to a report by the Federal Reserve Bank of New York. As of late last year total U.S. outstanding consumer debt stood at almost $3.1 trillion.

Research suggests that as our debt rises, so does couples’ squabbling about money. Some research cites money fights as the top cause of divorce.

Invest in your relationship by exploring – then discussing with your partner openly – these five financial facts of your lives.

Credit scores. This three-digit number won’t tell you everything about your honey – life’s upheavals can force a credit misstep from even the most financially responsible people – but it’s a logical start.

Most lenders rely on reports from companies such as the Fair Isaac Corp. (FICO), which bases scores on five areas: payment history, current debt, types of credit used, length of credit history and new credit. 

Each year you can get one free report from each of the national credit-reporting bureaus. Double-check these scores for yourself and your partner: According to a recent study by the Federal Trade Commission, 20% of consumers had errors on at least one of their three credit reports and a quarter identified errors on reports that might affect credit scores.

The unsexy-sounding yet highest score of 700-plus credit indicates that your sweetie places a premium on making timely payments and low overall debt ceilings. (The average recent FICO score for approved mortgage borrowers was 734.)

Present and future cash demands. From expenses for children to dependent elderly parents to charitable giving and clothing or entertainment budgets, expect many demands on your income and on your partner’s.

To tackle one possible outlay, U.S. Department of Agriculture researchers project that 17 years of raising one child costs almost $302,000, adjusted for inflation. Forecasted expenses for child care, education, health care and clothing saw the largest increases; projected housing, food, transportation and miscellaneous expenses also jumped.

Illustrating your respective priorities helps stave off future disagreements and disappointments amid the normal stress of parenthood.

Income. Some folks actually marry without learning how much his or her soon-to-be spouse earns.

Many happy couples do keep their money separate but best to fully disclose earnings, retirement accounts and other assets before committing to a lifetime together. If both college graduates, you can also calculate earning potential in your chosen fields.

Financial personalities. Are you a saver or a spender? Financial opposites often attract and, sadly, suffer unhappy marriages.

Talking about – and perhaps compromising on – your spending goals helps you balance your respective financial needs. Be aware that men and women can skew basic facts: One study found that 73% of women said they were jointly responsible for finances with their partners yet only 45% of men agreed.

Retirement age. If you have no idea how long you expect to work, time to grapple with this question that affects your savings rate, major purchases, your children’s schooling and where you decide to live.

If you want to stop working early, you probably scrimp and bypass most extravagances along the way. How does that sit with your beloved? Better find out.

Money discussions may not be romantic but honesty and agreement build trust – a relationship’s most precious asset.

Follow AdviceIQ on Twitter at @adviceiq.

Manisha Thakor is the CEO and founder of MoneyZen Wealth Management in Santa Fe, N.M. – an independent boutique advisory firm focusing on the needs of high net worth women and families. Manisha regularly shares her financial insights on her blog, and her work has been featured in a wide range of media outlets including The Wall Street Journal, Forbes, The Boston Globe, The Chicago Tribune, MORE and Glamour. She is the author of two personal finance books aimed at women, and often appears as a guest on national television. Manisha earned her MBA from Harvard Business School, her BA from Wellesley College and is a Chartered Financial Analyst.
AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.