By Paula Pant
When you're getting serious with someone, you'll need to initiate many serious conversations -- getting married, having kids, who gets control of the TV remote -- so a conversation about money might be the last thing on your mind.
Talking about money might feel unromantic. Some people consider it a taboo or impolite subject. And it tends to come with all sorts of emotional baggage we'd rather not drag into our blissful new relationship.
But having "the money talk" early on is crucial to having a happy future together. Here's why it's so critical, plus tips on what you should discuss.
Why You Need to Have "The Talk"
1. Many Couples Fight About Money
Studies and polls consistently rank money as one of the most-frequently-fought-about topics. This is often a result of not having the money talk early into a relationship.
If both partners aren't operating from the same playbook, simple discussions can turn into disagreements, which can quickly escalate into major fights.
Not being on the same page as your partner financially can lead to resentment, secrecy and a ton of other bad things that can seriously harm your relationship. Getting the talk out of the way now, uncomfortable as it may be, will save you tons of stress and trouble down the road.
2. It's Part of Planning Your Future Together
You wouldn't purchase a home if you hadn't seen the place yet, would you? Or agree to get married if you hadn't talked about whether or not you want kids someday?
(I hope the answer to both of those questions is "Of course not.")
Having the money talk is no different. Your finances, whether you keep them separate or combine them, will play a major role in your life decisions as a couple. If there are any disconnects or issues to be overcome, you need to address them now before they turn into bigger issues that are more difficult to deal with later.
3. It Can Reveal Your Compatibility
There's more to being compatible than liking the same movies, music and sports. Financial compatibility also plays a big role in how happy you'll be as a couple.
If you're a big spender and your partner is all about frugality, you'll find yourself butting heads over spending decisions large and small. If your top priority is building your savings and analyzing investments and your partner's approach to money is spur-of-the-moment, you'll have a tough time coming up with any sort of long-term financial plan.
You don't have to be exactly the same in order to be "compatible." Dog lovers and cat lovers, introverts and extroverts have been known to have perfectly happy partnerships. The key in being happy together even when your mindsets are different is to be honest about who you are and what you value, then discuss as a couple how you'll mesh your money personalities in a way that will make you both happy.
And if you can't find a way to do that? It may be a sign you're not really meant to be together after all.
What You Need to Cover
Okay, so now you get that having the money talk is important. But how exactly do you go about it? What do you discuss?
Here are the top things you need to cover to lay the foundation for a happy and successful financial future together:
1. Standard of Living
Do you picture yourself in a McMansion with the latest SUV and dinners out every night, or would you be content in a cozy little bungalow, curled up on the couch with a Netflix marathon?
What type of lifestyle do you envision? How much money will you need to support this lifestyle, and how will you earn that money as a couple? Will you both work? Will one person work while the other stays home with the kids or pursues a graduate degree? Clarify these questions to make sure you're both on the same page.
2. Joint or Separate Finances?
There's no right or wrong way to handle your finances as a couple.
You can combine everything in full, putting all income into a joint bank account and using that account to pay for everything.
You can divide the household bills, each person covering certain bills but otherwise keeping your spending money in separate accounts.
You can divide the bills by percentage, based on your relative income.
You can live off one person's income while banking the other for savings goals.
There are plenty of different arrangements you can decide on. The important thing is that you choose one that works for both of you.
3. Dealing With Baggage
If either of you bring any financial problems or issues to your relationship, you need to be upfront and honest with each other about these from the start.
Maybe you're shouldering hefty student debt. Maybe you grew up with parents who set a horrible example of how to handle money, and now you have a tough time saving.
Whatever issues you're dealing with, talk them out together and accept the fact that they are now issues you'll be dealing with as a team. Don't place blame or pass judgment; look forward and ask yourselves how you can solve these issues, together.
4. Long-Term Goals
Where do you both see yourselves in 5 years, 25 years, 50 years?
How much would you like to put aside into savings, including an emergency fund and a retirement account? If you plan on having children, will you be helping them pay for their education, and if so, how much will you give them? Would you like to travel often, or are you content to stay in your hometown? What age do you hope to retire? What does your ideal retirement look like -- travel, golf and cruise ships, or staying home watching TV?
Take some time to outline your priorities so the decisions you'll be making in the years to come will line up with your overall life goals. Consider using a financial advisor to help you through the conversation and make sure that you are asking each other the right questions.
Having the money talk won't necessarily be easy, or fun, or comfortable. But by discussing finances early in your relationship, you're setting yourself up for a much happier ever after.