When you start dating, you usually start off sharing stories. Tales of your childhood, your previous relationships and your college days. Those stories help explain to your partner who you are and how you act. Sharing those stories is a vulnerable process and can either deepen the bond or widen the gap.
But those aren’t the only stories you should share with the person you care about. Money is an important topic to get comfortable talking with your partner about. In general, money can fuel some passionate responses and with each of you bringing your own money histories into the relationship, learning to communicate and understand what you’ve each experienced around your finances can help to build a stronger financial foundation.
Here are six stories to share.
How was money handled in your house growing up?
How your parents spent money determines how most people handle their finances into adulthood. Watching your parents struggle to pay the bills could be why you’re so frugal now. Knowing you had to work for an allowance and spending money could be what contributes to your work ethic. If one parent handled all the bills or doled out an “allowance” to the other, that could be why you take an active role or shy away from things. Finding out how your partner’s family treated money could lead to greater understanding between you.
What was your first job and how did you spend your first paycheck?
Who doesn’t like sharing childhood stories with their spouse? But one tale you might gloss over is the story of your first job.
Most teens and young adults relish the first time they’re allowed to join the workforce. Whether your first gig was at a movie theater or a McDonald’s, sharing that story will remind you of a time you were excited to go to work and earn a paycheck.
Don’t forget to share what you bought with your first earned dollar. Did you save for your first car? Were you trying to go on a fun spring break trip with your friends? Talk about how long it took you to save up that money and how excited you were to buy something.
What is your favorite purchase you’ve ever made and why?
How we spend money reveals what our values are. For example, there’s a difference between someone who buys Starbucks every day and someone who visits a local coffee shop that roasts its own beans. The first person values the convenience, while the latter appreciates a finely made cup of coffee.
Learning what your partner values will help in future budget discussions and help you understand why they’re opposed to giving up a daily latte. If you remember that they told you that their favorite purchase was a Corvette, then you won’t ask them to drive a beater for a few years to save money.
What is the best money advice you’ve ever received?
Any piece of advice, no matter its impact, should be shared with your spouse. It might be knowledge they haven’t heard before or it could be something they already know, but didn’t fully comprehend.
For example, maybe you learned early on that hoarding your money in a savings account was better than spending it on clothes and movie tickets. Your partner might be impressed that you started saving at a young age and realize that continuing that habit is important to you.
What would you say is your biggest money mistake?
Unless your partner is a Dave Ramsey fanatic, they’re likely to have a few money blunders in their past. Ask them to share them, what they learned from the experience and how they approach finances now.
No matter what he or she says, be compassionate. Sharing mistakes is humbling for anyone, and if you judge or berate them, they’ll know not to open up next time.
What is the smartest thing you’ve ever done with your money?
Even a money maven could learn something from their partner. Sharing your biggest money wins could renew your confidence in your partner, teach you something and create a sense of togetherness.
Plus, what your partner shares could inspire you. Maybe they bought an old car and drove it for years, learning how to fix basic problems. Now you know that you have a handyman living at home so there’s no need to buy a brand new sedan. Or perhaps they started their Roth IRA at 18 and have been slowing saving away each year.
If you’re like many of us in our 20s, 30s and 40s, you haven’t taken the decision to start a family lightly. Choosing whether or not you want to have children (and then, you know, actually making it happen) is one of the biggest, life-altering choices you’ll ever make.
I don’t necessarily want to compare it to starting a business, but based on my experience so far at almost 30 weeks into my pregnancy, the emotional roller coaster has been quite similar. There’s joy, stress, excitement, utter exhaustion, hundreds of books to read on how not to screw your new role up, a bazillion questions and considerations to make, and oh – the occasional feeling of needing to vomit. So yeah, similar to entrepreneurship in my book.
As a parent-to-be or perspective parents-to-be, there’s going to be a lot to undertake and consider. Below are the top considerations this CFP® recommends you make to ensure you’re prepared.
Do you have a quarter of a million dollars laying around? No? Well, according to this article, it will cost the average middle-income couple $241,080 to raise a child that was born in 2012 (not including extras like cub scouts, soccer, private schools, dance lessons and the newest line up of Disney movies, shows and books that your kid will be singing along with for months to come on repeat).
Let’s not forget that this is a per child number. Meaning if you’re looking to build a big family (bless your soul), you’re looking at upwards of $1 million just to get your kids out okay on the other end.
Now of course this isn’t a bill that’s going to hit you at once, and I’m sure that plenty of Americans are raising their kids on less, but what this statistic does highlight is the fact that there is a need for some serious planning and organization. So what can you do to alleviate some of the money stress that comes with prepping for a baby? Rework that budget!
Emergency Funding: Build up your emergency savings to include 3-6 months of living expenses. Err on the side of caution if only one of you will be working and build up 6 months of reserves. Remember, this is money that you want to be accessible should you need it, so don’t go throwing it into the stock market or tying it up somewhere.
Groceries: Factor in new expenses like diapers (and more diapers), wipes, formula and baby food into the budget. Start pricing these items out and determine if you need to make adjustments in other areas of the budget to compensate.
Transportation: What does your current car situation look like? Do you have safe and adequate room for a car seat? Will you need to put aside money for a second or replacement vehicle? If so, now is the time to set a plan in place to work towards this goal.
Medical Costs: Always read the fine print on your insurance policy and call your benefits department with concerns or questions. Look into what will and won’t be covered throughout the pregnancy and also understand what your premiums and co-pays may increase by once your baby is here. Check with your HR department to determine if your employer has any tax-advantaged plans in place to assist you. Also, you typically have up until 30-days after the baby is born to add him / her to your insurance. Do NOT miss this window.
Childcare: This report by the U.S. Census Bureau shows that childcare costs have risen tremendously since the days when our parents were confronting the expense. Explore the costs of childcare in your city, whether it’s daycare groups, individual care or hiring a nanny. Are you or your spouse planning on making the switch to a stay-at-home parent? Be sure to sketch out what your new financial picture will look like with one income instead of two. (If you need help working through this, let’s chat).
College Funding: Are you hoping to assist your children with college? Consider the ever-increasing costs and set a plan to start saving as early as possible. Keep in mind though, as much as you don’t want to, your retirement needs to come first. Your kids can take out loans and get scholarships for college. However, nobody is going to give you a loan for your retirement.
Your Plans, Wishes, Hopes
The thought of not being around for your family and children is one of the most unpleasant around. However, when it comes to planning for the “just in case” scenarios, remember this is about them and not about you. In order to make any situation where your family needs to make decisions for you less stressful, it’s in your (and their) best interest to document your wishes and ensure you and they are protected against the unknown.
Wills: Whether you do or don’t have a will in place, now is the time to either implement one or review it. Having a will not only ensures that your assets are distributed in line with your wishes, but it allows you to assign an executor to handle any matters associated with your estate and select a guardian for your children.
Guardianship: When choosing a guardian for your children, ask yourself who your children would feel most comfortable with and whom you feel would most responsibly and effectively control any funds left to them. Consider the values, beliefs, and overall emotional comfort your chosen guardian could provide to your children. Remember to have a discussion with those you choose and to nominate a contingent should your primary be unwilling or unable to serve.
Trust: A trust document can provide instructions on how you would like any funds left to your children to be managed and spent. In addition, you can appoint a trustee (also a primary and contingent) to manage the funds.
Having the right kind of protection in place is just as important as having a detailed spending and estate plan. Evaluate your existing life, health and disability coverage and ensure that you have the appropriate amount of insurance in place should something happen to you or your spouse.
Life Insurance: Life insurance is important because it ensures that if your family is faced with the premature death of you or your spouse, the coverage provided by the policy can be used to replace any income lost so they are able to cover their living expenses and sustain their lifestyle. When applying for coverage, term policies will be the most affordable. Be sure to consider items like your current income level, outstanding debts that would need to be paid off, existing savings and assets and even the role you play around the house in terms of yard work or just keeping the place picked up.
Disability Insurance: Even though your ability to earn an income is one of your greatest assets, disability insurance still tends to often overlooked (although it’s incredibly important!)! A disability income insurance policy ensures that should you become disabled for a short or extended period of time, you are paid a percentage of your current income on an ongoing basis. These types of policies safeguard you and your family against a complete loss in income.
13 Money Tips for Parents to Be
So there you have it from a CFP® and mom-to-be’s perspective. When I started writing this post, I put a call out on Facebook for input from current parents on, if they could give one money tip to a mom-to-be — whether it’s how and where to save money, websites to shop, organizers to use, systems to put in place, etc. — what would it be?
Below is a sample of the responses. To download the complete list of Money Advice for New Parents from Parents, go here. And if you’re at the point where you’re staring down a growing family, but aren’t sure where to start with getting your finances organized, take advantage of a free 30-minute focus session to gain some insight.
1. Outsource. Delegate. Automate. Set up systems and outsource or delegate as much as possible before the baby gets here! Not just business tasks, but as many personal ones that you can get automated and delegated too.
2. Network with other moms/families to trade clothes and items (playpens, swings, etc…). When kids are newborn they rarely get to wear their stuff long because they grow so rapidly. Other folks may have baby clothes (and older) they would be happy to part with. We’ve been fortunate to have friends that have been able to hand down clothes for our kids that has saved us a TON and many of the clothes were hardly worn (we’ve even gotten stuff that still had price tags on them). Of course we’ve passed on a ton of clothes and items as well.
3. Don’t be afraid to ask for help! … And create a budget for wine.
4. Never go to the grocery store without a list. You’ll buy nothing you need and everything you want. When I go without a list it takes me twice as long and I never get anything we actually need.
5. Never go to Target alone. You will spend way too much! Only go when your kids are with you and you can’t leave fast enough. (I did NOT find myself alone in Target last night and drop a hundo or two in like 5 minutes – that was totally someone else). This tip is from Kelly Parker Smith.
6. Don’t buy every big ticket item you think you need prior to your baby coming. Borrow items from friends like baby carriers to see if they work for you and your baby. Some babies like to be swaddled, others their legs hanging. And each child you have can and will be different. Some baby carriers don’t have enough back support; others do. You’ll find these nuances with almost every product/child. Borrow first, then buy. This tip comes from Rachel Olsen.
7. Find a way to put your investing on autopilot, either with the use of an advisor or a well-developed plan. Unless you are a super-mom, there will be weeks, months, years, when you’ll be too busy to scrutinize every investing move so the more that is automatic, the better. Max out retirement (when possible!) and put money aside for college savings…the more in designated tax-advantaged accounts, the better. This tip comes from Julie Starnes Rains.
8. Practice your baby budget while you’re still pregnant. Have a month or two where you add in the cost of diapers, wipes, formula and/or breastfeeding supplies, daycare if you’re using it, pediatrician copays, and any other expense you think your kid will need. Working it out ahead of time makes it so much easier when you actually need to do it.
9. Use Amazon Subscribe & Save. If you get 5 or more things a month you save 15% off Amazon’s already reduced prices. We do this for diapers, wipes, diaper pail trash bag refills, and more. It’s also nice that I don’t have to haul these things from the grocery store every month!
10. Make the most of your spending. Do your online shopping through the ebates.com portal. Ebates pays you cash-back when you enter certain online stores through their website. Some of the online stores moms might be interested in include target.com, drugstore.com,diapers.com, and – my personal favorite – vitacost.com. By shopping on sites like those through the ebates website, I’ve earned over $400 cash-back! Tip from Brianne Grogan.
11. Buy diapers at Target. There’s almost always a buy 2 get a $15 gift card. The stock-up method works for us and it helps to not be stuck last minute with a diaper run to make.
12. Don’t be loyal to brands! My first baby had the best of everything including the expensive formulas. My 2nd child received Walmart brand formula for half the price and it was just as good as the expensive brand. This tip comes from Michelle Remeta. 13. Buy Costco wipes. You will not be disappointed — nor will you have any fingers break through the wipe.
Get the Full List of Money Tips for Parents to Be
Want to download the full list of financial tips for new and expecting parents? Click here! And if you need someone to walk you through the right money moves to make, don’t forget that you can grab a free 30 minute session with me.
Did you know that disagreements around finances can raise your risk of divorce? It’s not unsurprising when you think about it — and you may even have personal experience with this fact if you’ve seen friends or family members struggle to work in financial harmony with their spouses.
Fights over finances can stem from a number of causes, including disagreements over goals and priorities and feelings over anger and resentment over who makes more.
Here’s the good news: arguing over money doesn’t need to be the norm in your relationship. You can reduce anxiety, fear, and other negative emotions over your household finances by taking action to become a financially savvy couple who feels confident and excited about the future.
And most importantly, you can feel financially in tune with your partner so that money fights don’t happen in your house. Start with these 7 money moves that all financially savvy couples make:
Keep Records and Document Your Finances
Couples who are financially savvy understand the importance of staying organized. This can help with everything from small, everyday situations to your big annual trip to your accountant’s office to file taxes.
When you keep records and document all aspects of your finances, you create a detailed source of information when you have questions or aren’t sure about the right decision to make. You can reference your files to solve problems, answer questions, and realize what money moves make the most sense for you in the present.
And of course, keeping records of your cash flow — in other words, keeping a budget — means you stay on track for the future, too.
Track and Measure
Don’t let your money run wild without supervision. Financially savvy couples track income and spending so they can evaluate whether or not they’re putting their available dollars to the best use.
Another smart money move once you’ve started tracking your finances: measure your progress! Each month, measure how much your savings has grown. Keep tabs on your home value. See if your income is growing or staying stable.
You can also put all these metrics together to measure your net worth. This is a good indication of your overall financial health.
When you track and measure, you understand what’s going on and you can see your progress over time — and that can be a huge motivating factor to help you keep going.
It’s critical that both of you are involved with your finances and aware of what’s going on with your money. Don’t put one person in charge of all things financial, while the other remains in the dark and clueless about the bank accounts and retirement nest egg!
Assign roles based on your skills and interests. If your partner hates keeping a budget but you feel better when you can account for each and every purchase, you should man the spreadsheets (and your partner should help by bringing you receipts or otherwise making sure you know about the purchases they made throughout the month).
Or if you’re not great at staying organized and tend to forget what day it is, maybe your partner can handle paying the bills. Think about each of your strengths, and give yourselves financial tasks based on these.
Of course, neither one of you should monopolize your to-do list when it comes to money. You each need to be aware of what the other is doing and why so you can remain on the same page. That brings us to…
Communicate Clearly and Often
The first step to becoming a financially savvy couple: communicate! Remember, you’re a team and you can work together to achieve your goals and get what you want. But you can’t do this successfully if you don’t speak up, share your ideas, and understand what your partner thinks.
Always be honest, remain open, and don’t bottle up negative feelings.
Set up a framework to ensure each person’s thoughts and ideas are heard on a regular basis. Put a monthly “money date” on your calendar. Take 30 minutes to an hour once a month to sit down with your partner and go over all of your finances.
Look at your budget, pull up your bank and credit card accounts, examine your bills, and look at your retirement fund and investments. Evaluate what happened with your money last month, and make a plan to correct any mistakes or reign in any runaway spending for the upcoming month.
Then, brainstorm ways you can continue to improve your current actions with your finances. Save some time at the end to discuss goals, hopes, and dreams and ways you can continue to feel motivated and inspired to work for those things.
Don’t Be Afraid to Negotiate
Let’s face it: when you start communicating, you may find that you and your partner aren’t on the same page about everything. Maybe they want to save up for a down payment on a house and settle down, whereas you’d like to save for a round-the-world trip where you’ll spend some time volunteering on an organic farm.
Is one of these goals more valid than the other? Of course not! But you may find it difficult to make both happen at the same time.
Some couples may view “compromise” as an ugly word. A compromise might mean someone wins and the other person loses. If this sounds familiar, change up your mindset and negotiate instead.
Each person’s wishes and goals are valid, and you should work together as a couple to find solutions that make both of you happy. Be willing to negotiate as you give and take. Avoid making demands or getting angry as you try and work out an agreement. Brainstorm ideas that speak to each of your needs.
Hope for the Best and Plan for the Worst
No one likes to think about what can go wrong, but financially savvy couples take action to protect themselves in emergencies, disasters, and worst-case scenarios. Start by creating an emergency fund, or liquid savings account with enough cash to cover a few months’ worth of expenses.
It also means evaluating your needs and looking into the proper insurance coverage. In addition, when you’re a couple and especially if you have children or other dependents, you need to establish an estate plan.
Keep Learning (Together!)
One of the most powerful actions you can take to become a financially savvy couple is to embrace learning together. No one has all the answers and there’s always something new to ask questions about and consider.
Make it a habit to ask those questions and research the answers together. You have a built-in study buddy, and someone to discuss your thoughts with — take advantage! By learning together, you’ll continue to improve the money moves you make and create a stronger partnership.
By making these money moves, you can work together as a financially savvy couple who understands each others needs and wants — while keeping your organized, well-run financial house on the right track to meet your biggest goals.
Recently engaged or married? After all the excitement and honeymoon bliss has faded, you might be left wondering how to manage your finances as a couple. Concerns over how to work together to deal with your newly joined lives might be heightened if you have more than just bills to pay and savings to build. When it comes to newlyweds and money, figuring out how to deal with debt when one or both individuals brings it into the marriage is an important step.
Joint or Separate Finances?
The first thing you need to figure out with your other half is whether or not to combine your finances. If you already have a working plan in place, great! Skip ahead to the next piece of advice. Ultimately, this is a personal decision, and one that every couple has to make for themselves.
What’s Mine Is Yours…Wait, Does That Apply to Debt?
You now need to decide exactly how you’ll pay off your debts. Again, every couple has to make this decision for themselves. It could depend on who has debt and how much. If both of you brought debt to the table, you can either tackle all the debts together or focus on it individually. If one of you holds debt but the other doesn’t, this may be a topic to discuss before the wedding. You might choose to support your future spouse and help them pay their debt – or you may agree that the individual with the debt holds the responsibility to repay it. Whether you work together financially or choose to keep money separate, you should always be supportive and encouraging of each other. “Helping out” isn’t limited to providing money. You can share ideas and knowledge to create a better repayment plan. One of you can research to find programs and tools to help make money management easier. Or you can even do a few more chores around the house when your spouse is out doing some part-time work on the side to earn more money to repay that debt even faster. Remember, this is a partnership and everyone can contribute – even if those contributions don’t look exactly the same.
Communication Is Key
When deciding how you’ll deal with debt, keep in mind that no one should feel resentful or neglected. It’s important to set up regular money dates to go over your finances together and allow both individuals to voice concerns as well as to celebrate little victories. You should discuss money with each other to ensure you’re on the same financial page. To start, set up your date to discuss the overall state of your finances. You’ll also want to create a plan on how to pay down your debt. If you need help getting started, use these ideas to get your first money date going. You can:
- Discuss the nitty gritty of your debts (and everything relating to them: interest rates, minimum payments, balances remaining), bank balances, and investments.
- Track your spending together. Even if you have separate bank accounts, you should both track your individual and joint expenses. If you’ve never done this before, it might help to backtrack a bit and reference prior statements to see where your money has been going.
- Create a budget, with input from both parties. This will help keep your spending on track, possibly allowing for extra payments toward debt.
- Mention and discuss the financial goals you both have (buying a home, establishing an emergency fund, saving for a family).
- Establish a plan to reach your goals – including paying off your debt. List out action steps that you’ll take to achieve financial success. This might include boosting your income (by picking up a side gig, working overtime, or earning a raise) and cutting expenses (by eliminating unnecessary costs, living beneath your means, and looking for frugal alternatives to expensive purchases).
After this initial meeting, make sure you check in with each other regularly to see what kind of progress you’re making. That might mean once per week or once per month – depending on what your “team” feels comfortable with. It’s okay if you don’t stick to an original goal or if your priorities shift, but you must communicate that with your partner. Regular money dates help create a good time to share all this and stay on the same page.
Prioritize Your Debt
If you have multiple debts, they may feel completely overwhelming. Before you panic, know that you and your partner can do this! And there are a few strategies you can use to help make it easier. The first strategy is known as the avalanche method. This method directs you to prioritize your debts by their interest rates. You work to pay off the debt with the highest interest rate first (while still paying the minimums on your other debts). Mathmatically, this makes the most sense. The interest rates on loans and credit cards cost you more the longer you hold on to them, and of course higher rates cost you the most. But some people find it really intimidating to try and tackle their biggest, baddest debt as the first step toward debt freedom. If you prefer to start small, you can try a different strategy that comes at the problem from the other end. This strategy, known as the snowball method, involves prioritizing debts in order of the amount of money you owe. You start with the debt with the smallest balance and work your way up, regardless of interest rate. This is helpful for those that feel discouraged by the amount of debt they’re in, as it should give them a quick win. However, it may not be the most financially efficient way to deal with all of your debt. You may end up paying more in the long run if you let high interest rate debts sit on the back burner while repaying other balances. What matters is that you’re making progress with your debt and moving in the right direction. It’s best to just start. If there’s one debt really weighing on you emotionally, tackle that first!
Don’t Give Up
Lastly, focus on the fact you both want to get out of debt. While things might get tough, remember that you’re both working toward the same thing. Be supportive of each other, even when mistakes happen. Be thankful you have someone to share the journey with. When all is said and done, you’ll have a stronger relationship.
Need Some Extra Guidance?
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