It's important to talk about finances with your partner to stay on the same page
When it comes to choosing a partner, everyone has a list of qualities they just can’t live without.
A recent pollOpens a new website in a new window, revealed that having a financially responsible partner is a priority for both millennial (88 per cent) and baby boomer (92 per cent) survey participants.
Despite the desire for financial compatibility in relationships, money can be a source of friction for both new and established couples. While it’s best to understand your partner’s financial picture before joining accounts, engaging in regular conversation about your finances is always beneficial.
Open communication and setting clear goals for your future can help you avoid conflict on the topic, but it can be overwhelming to start the conversation if you’re not sure where to begin. Here are five fundamental money matters you may want to address with your partner.
1. Discuss your assets
Having a grasp on your total combined assets (including salary, savings, investments, insurance and property) is important to making financial decisions as a couple. This simple discussion is an essential starting point in making a realistic plan for savings, spending and future goals.
2. Understand your debts
Managing debt effectively is a key aspect of wealth building. It’s important to know the total amount of your partner’s debt (such as credit card, line of credit, mortgage and student loan debt), discuss whether the debt will become a joint responsibility, and determine how it will affect your budget. It’s also a good idea to discuss your partner’s credit score, as it will affect your ability to get credit as a couple.
3. Set a spending plan
Creating a joint spending plan may shine a light on any differences between spending styles – perhaps you’re a saver, but your partner opens their wallet a bit more freely. Taking account of your individual and combined monthly expenses can start a realistic discussion about how to allocate any surplus – even if it involves some compromise.
A recent poll, revealed that having a financially responsible partner is a priority for both millennial (88 per cent) and baby boomer (92 per cent) survey participants.Opens a new website in a new window
4. Strategize your savings
Defining your individual and joint savings priorities is another essential part of building your budget, and ensuring that you’re well positioned to meet your goals. It’s also important to discuss which type of savings vehicle will best suit your needs; consider factors such as your tolerance for fluctuations in the value of your investments, and the amount of time you have to invest.
5. Plan for your future
Is travel a priority for you and your partner? Perhaps you’re dreaming of buying that cottage you always wanted, or you just want to make sure you can retire comfortably. If you don’t discuss your goals for the future then it’s hard to make them happen. While your dreams may differ, starting a dialogue can help you compromise so you can set your plans in motion.
Get a second opinion
As you consider these factors with your partner, a financial security advisor can provide a professional opinion on the best approach to help you achieve your financial goals. Your advisor can provide a holistic assessment of your joint financial picture, and offer a variety of planning services including cash-flow planning and investment analysis.
The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.