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Financial Tips for Couples At Any Stage

Money — it’s no surprise — causes stress in relationships. This may particularly true for couples now in the midst of a global pandemic characterized by widespread social distancing and economic hardship. Those we love, indeed, we lean on more.

In our recent 2021 Love & Money Report, we found nearly 2 in 3 Americans (61%) of survey respondents said the COVID-19 pandemic has made financial stability in a partner more important to them this year. 

Almost half of our respondents (49%) believe financial stress is a deal breaker. Millennials in particular (56%) agree that “the COVID-19 pandemic has made me realize that I can’t be happy in a relationship when there is ongoing financial stress.”

Our feelings about money are inextricably linked to deeper emotional values like security, control, status, success, and freedom. With so many loaded emotions attached, a fight about money can cause a lot of pain for both parties.

The solution? Most psychologists agree that talking about money with your partner early (and often) is the best way to prevent future quarrels. While there’s no way to completely eliminate money stress from your life, knowing your partner’s stance on finance from the beginning can help you predict how well you’ll manage your money together down the road.

Here’s an easy guide to the essential conversations you need to have with your significant other at every stage of your romance.

1-3 Months

Let’s be honest, dating can get expensive. Begin a conversation with your partner about how you’ll go dutch on date-night expenses. Make a plan to split the cost at the point of purchase, Venmo each other later, or agree that one of you will grab the takeout and the other the live-streamed concert. And don’t worry about killing the romance. Instead, just agree that if someone says, “My treat!” you’ll each accept the generosity.

You can budget using Personal Capital’s free financial tools, which allow you to set a monthly spending limit and categorize all of your expenditures from your different accounts.

6-12 Months

While you may have more casual dates at this point in your relationship, there’s always money items that come up. For example, if your partner always wants to dine outdoors at that hot new restaurant in the neighborhood while you are trying to save for a big purchase, you need to have a talk. Be open about how you like to spend your money and what your budget is. Talk to your partner about what you each want to spend on dates, and come up with some creative ways to spend time together that don’t require pulling out your credit cards.

1-2 Years

At this stage you may be daydreaming about your next vacation together, but make sure you both know the other’s budget and expectations before booking that trip. If you have different income levels, it’s especially important to set expectations around hotel costs, airfare and eating out while traveling. Having a candid conversation about what you can and can’t afford is so much better than having a fight because one of you booked a scuba-diving adventure the other can’t really swing. If you need to compromise on costs, taking advantage of credit card points toward flights, or traveling somewhere you can stay with friends, are both great options.

Moving In

By now you’re probably pretty familiar with your partner’s financial habits and budget. But make sure you ask all the hard questions you’ll be facing as domestic partners before you move in:

  • What can you spend on rent?
  • What is your budget for new home items like furniture?
  • Do you believe in spending on the same splurges, or would one of you
    rather spend lots on groceries, while the other wants all the cable add-ons
    and a flat screen TV?
  • Should you open a joint checking account and credit card to pay rent and
    other shared expenses?
  • Who will be the main cardholder if you go that route?

Planning a Future

You’ve been living together for a while and things are going great. When you think you’ll spend your lives together, you may also begin discussing how you’re each saving for the future.

Our Love & Money Report revealed that many couples don’t talk a lot about retirement plans with their partners — even though retirement is a financial goal that’s decades in the making. More than half (58%) of the people we surveyed wouldn’t talk about their retirement plans outside of marriage. Of those, 12% think it’s never appropriate to discuss post-work plans.

You can have this conversation without using the word “retirement,” but there are major advantages to starting earlier and utilizing various tax-advantaged retirement vehicles.

At this point in your relationship, the focus can be on planting the seed in order to set yourselves up for success in the future.

On an individual level, how prepared are you? Calculate how much you should have saved by your age.

Just Engaged

If you’re planning a traditional wedding, prepare for some major expenses! Of course, take some time to enjoy your engagement, but make sure you leave space to sit down with your partner and plan out your wedding budget. Who is paying for what? Are your parents and in-laws contributing? What steps will you take together to make sure your big day stays on budget? Money woes right before you say “I do” are never a good idea. Better to have a plan and stick to it now than risk tensions arising down the line.

Nearly Married

Before you tie the knot, it’s important to have a serious conversation with your partner about your financial state of affairs. Being open and honest with one another about what you make, owe, and own is important. After all, once you’re married, you’ll share one another’s debt (or riches). It’s not always fun, but that can mean working together to pay off your partner’s debts. You should also make a financial plan for how you’ll manage your finances once you’re married. Will you keep your finances mostly separate or combine them into a joint account? Will you set a cap on purchases that can be made without the approval of the other partner?

Sometimes, it helps to talk things out while looking at your overall financial picture. Personal Capital’s free online tools aggregate all of your financial accounts so that you get a bird’s eye view of your net worth and cash flow. Nearly 3 million people use the tools to budget, plan for long-term goals, and analyze their investments. If you’re planning to combine finances with your significant other, you can share access to the account.

When talking through finances at this stage in your relationship, tread lightly. These conversations often have a lot of emotional baggage. It’s important to remain aware of your partner’s insecurities and approach the conversation with an open and empathetic attitude. This can be a great time to get a financial advisor involved. They’ll help you look at your finances objectively, take the emotion out of the discussion, and work with you to put together an actionable plan.

Read More: Should I Combine Finances with a Partner Before Marriage?

If you or your significant other has significant assets, established businesses, or previous marriages, it may also be valuable to discuss a prenuptial agreement. In our recent Love & Money survey, Millennials, at 51%, were the most likely to consider a prenup more than they would’ve in the past because of the COVID-19 pandemic. This can be a delicate subject; couples should speak with an attorney to work out the details.

Baby on the Way

While you await your bundle of joy, you’re excited about what the future holds for you and your growing family. Take this time while you’re still getting a full night’s rest to create a financial game plan with your partner. Raising kids is expensive! How are you going to handle the additional cost now while also planning for your child’s future? How much of your paycheck will you set aside for your child’s care and schooling? Will one of you become a stay-at-home parent? What are the financial implications of losing that income? Are you going to help fund college or set up a 529 plan? Put your heads together and come up with a plan that includes all of these items.

Nearly Retired

Where has the time gone? Your kids are out of the house, your mortgage is paid off, and you’re ready to retire. Congratulations! By now, you and your partner are aligned on your vision for retirement — like where you’ll live and how much you’d like to spend. And hopefully, you’ve been discussing this for a long time now.

Where to Begin

Throughout your lives together, you’ll have more and more financial conversations. Luckily, setting the right foundation early on in your relationship means that it will be easier to talk about money with your partner. Open, honest, and serious conversations about money are hallmarks of a solid relationship with a bright future.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Lacey Cobb serves as the Director of Advice Solutions at Personal Capital. She has 10 years of financial industry experience, with a background in portfolio management, trading, research, investment analysis, and financial planning. Prior to Personal Capital, she was the Head of Trading and Research at Polaris Greystone Financial Group, where she managed the portfolio management team and served on the investment committee. She started there as a financial planner and helped grow AUM from $250 million to $1.5 billion. Before that, she worked for State Street as a fund accountant. Lacey graduated from the University of California, Davis, and holds both the Chartered Financial Analyst® designation and Certified Financial Planner™ designation.
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