The Conversation You Should Have - NOW - With Your S.O.
One of my all-time favorite finance (and life) gurus, Suze Orman, famously lives by the tag line- FICO first, then sex. While, personally, I think this approach is a little extreme + might scare off your potential suitors, the overall message is super important. It’s no secret that money is one of the leading causes of divorce in the United States. Learning how to talk about money with your partner, especially early on, is key to the success + longevity of your relationship.
A majority of couples wait to discuss anything money-related until they are ready to make a joint financial decision, but I would strongly urge you to have these conversations as early as possible. Imagine you + your partner are ready to purchase a home together. The first thing any lender will do is to pull your credit reports. How terrible would it be to wait to find out in that moment that you wouldn’t be approved to purchase a home based on your partner’s credit history? Another super common example - you wait to discuss + share finances until after marriage, only to discover that one partner has a huge student loan or has maxed out his/her credit cards. This debt is now your responsibility too. While knowing may not have impacted your decision to get married, it definitely would have been nice to know beforehand.
Being transparent, honest + vulnerable about money early on in a relationship is essential.
So, maybe you understand that having the money talk is important, but you don’t know where to start. Every couple is different. Money is a deeply personal + sensitive topic. While there is no “one size fits all” approach, my partner, Zach, + I have been able to navigate the topic successfully so far + our experience might give you a sense of where + how to get started.
Zach + I are, by no means, a traditional couple. We’ve been dating for 5 years, are not married, but own a house together. The timeline for conversations that we followed below, may be a little different for you + your partner.
0-6 Months (or newly dating)
Every relationship moves at a different pace, but, for us, the first 6 months were just about having fun + getting to know each other. We definitely didn’t exchange credit scores or bank balances at this time, but just being attentive to details during this time can tell you a lot about how a person manages money. None of these observations are inherently good or bad, but noticing habits + behavior can tell you a lot about a person’s relationship with money at the beginning.
Does your partner ball out on Pay Day + then live on Top Ramen for the last few days of the month?
Does your partner pay for everything with cash or credit cards?
Does your partner say “yes” to every invite, trip or activity or do they decline occasionally to focus on other goals?
Does your partner buy a new outfit for every event or date?
At the beginning of our relationship, I asked Zach a ton of questions about every aspect of his life. Sounds a little intense, but, evidently, didn’t scare him off. When it came to money, by asking questions about what his childhood was like, what his high school/college jobs were, what scared him about the future, etc., I learned a lot about his approach to money before we ever had any “official” conversations.
From asking me the same questions, I feel that he had a good understanding of my approach too. For example, my dad works in the construction industry, which is one that can definitely ebb + flow with the health of the economy. As such, I remember, from a young age, my parents being huge savers to be sure that we would have enough to cover our expenses + lifestyle, should the economy decline, without going into debt. As an adult, that has instilled in me the strong desire to save + I think it would be harder for me to be in a relationship, long-term, with someone who wasn’t on the same page.
At the beginning of a relationship, you should definitely focus just on having fun + getting to know someone, but don’t doubt how much you can learn about someone’s financial views just from paying attention to habits, behaviors + general conversation.
6 Months - 2 Years (or getting serious)
Around this time, Zach + I started to open up a little more around specifics with our finances. It’s no surprise that I love to travel at any opportunity + it was important for me to have a partner who enjoyed doing so as well. About a year into our relationship, Zach + I were planning our first international trip as a couple. I remember Zach being a little stressed about booking the flights, hotels, etc. + when I asked “why,” I learned that he had been feeling stretched thin with always agreeing to go to all of the Happy Hours, dinners, concerts, etc. that I wanted to do. This led to us both breaking down + sharing our budgets to figure out what we could do.
I’ve always been all about spending your money on what you value most + cutting costs on the things that don’t matter to you. Zach is a golf enthusiast + would be so much happier to spend his extra money on a round of golf than dinner at the latest hot spot. By sharing our entire budgets with one another, we definitely learned more specifics, such as each other’s incomes + how much we were paying for student loans, but, more importantly, we learned more about what the other person valued spending money on. I have always believed that as close as two people get, they should always try to maintain their personal hobbies, interests + friendships. I want Zach to be able to enjoy his love of golf + by opening up with one another, I realized that all of our dinners out were making it harder for him to be able to enjoy this hobby. Knowing this I started suggesting making meals at home instead of going out. We still got to spend time together, but he was also happier + living a more fulfilled life. Besides, I’d rather enjoy the newest rooftop bar with a girlfriend who totally thinks a $15 cocktail is worth it for the view versus Zach who is much more at home in a dive bar.
3 Years (or before you move in together)
Zach + I moved in together a few weeks before our 3rd anniversary. I have always firmly believed that moving in together should never be about convenience, saving money or anything other than wanting to be committed to one another + start a life together. As such, before we moved in together, I wanted to lay everything about our financial health out on the table.
I made sure Zach was on the same page about having this conversation, then we set a date on the calendar + made sure we had a great bottle of wine ready to go. Trust me, money can be sensitive + uncomfortable to discuss at first, might as well make it as fun + relaxing as possible!
During this conversation, Zach + I filled out a spreadsheet with EVERYTHING that the other person could possibly ask about finances.
Credit Score - If you need a great place to find this information, Credit Karma is my go-to. Many people confuse a credit score with a credit report. You can check your credit score for free + as often as you like. A credit report is what you can only check for free once a year. If you want to know more about the difference between the two, check out this past Hello HENRYs post.
Salary - Obviously, your annual income. This is also a great place to list any bonuses or additional incentives that are part of your total compensation.
Assets - This is where we listed all of our accounts + the balances in each. Checking accounts, savings accounts, 401(k), stocks, investments, real estate, etc. Anything that has a value + that you personally own. It’s helpful to break down each asset, as well as include a total. That way you can understand how your partner’s assets are allocated. ie do they have 95% of their assets in cash in a savings account?
Seeing the breakdown can help you to have important conversations, such as whether he/she is risk averse + opposed to investing. Or if your partner has no money saved for retirement, you can discuss what his/her plan is. If you have been diligently saving for your own retirement + your partner hasn’t, it’s important to understand what your approach to this will be together. You may or may not be comfortable funding your partner’s retirement + it’s important to have this conversation early.
Debts - In this section, we listed any money that we owed to someone else. Student loans, car loans, medical bills, all credit cards + the balance on each. Even if the balance is 0, it’s still great to list all of your cards here. It’s helpful to know how many cards your partner has + their overall history on each. For example, you may just have 1 credit card for emergencies, while your partner is the type to open a new account just to save $10 at Pottery Barn. Again, no judgement on either, it’s just important to understand how you + your partner differ in your approach to credit.
Net Worth - This number is determined by subtracting your total debts from your total assets. Ideally, this number should be positive. If not, you should understand why + be actively working to increase it every month. Net worth is the single most important indicator of your financial health + well-being. SO many people assume a person’s income is the most important predictor of their financial future, but this is so far from the truth. Let’s say your partner is making $250K a year, but has a negative net worth. You’re making $60K a year, but have a net worth of $10K. This should definitely spark a conversation between you both. There may be perfectly valid reasons for the difference here. Maybe your partner has huge student loans that resulted in a higher paying job, but will take some time to pay off + get out of the negative, where you have 0 student loans. However, if your partner is just simply spending more than he/she makes, you may need to have a bigger conversation about how you can get on the same page.
4 Years + Beyond
A year after moving in together, Zach + I bought our first home + have continued to have open, honest conversations about money. We have a finance “meeting” on the calendar every 3 months, which may seem intense for some, but, for us, it has prevented us from having any issues or arguments about money. We treat this as a true appointment + never miss it. During these meetings, we continue updating the same spreadsheet that we used before we moved in together with all of our debts, assets, etc. It’s been really cool to have a diary, if you will, to see how far we have come with our finances over the past 2 years.
Even if you aren’t in a serious relationship, I would strongly suggest keeping a similar spreadsheet for yourself to track your progress + to easily see which areas you want to focus on!
We think learning how to navigate finances with a partner is SO important. We’ll be continuing sharing similar posts over the next few months, including how to combine (or not!) money with a partner, what to do when you make more + so much more!
On another note! Hello HENRYs is trying to grow our readership! (Cheers to you guys, the OG readers!) If you enjoyed reading this article, or any article on our website, we would LOVE if you would share with just one other person who you think might benefit from our tips + tricks! We started Hello HENRYs as a resource for our friends + family to be able to live their best lives, but we are confident that there are people in each of your lives that could benefit too! After all, I’m sure you want them to be able to join you in retirement one day! :)
Thank you for reading + for all of the love + support so far!