How to Have Healthy Conversations about Finances with Your Spouse

Conversations about money can be stressful if you allow emotions such as guilt or blame to take over.

Why Financial Disclosure and Planning is Important for Couples

Even prior to getting married, couples should have an idea of each other’s financial obligations and debt, save for emergencies, talk about a budget for their joint household, and create a financial plan for themselves. Finances can be an uncomfortable topic, but it’s a necessary one.

Some married couples prefer to keep their finances entirely separate for their own reasons. They will have separate bank accounts and credit cards. One may rent or own the house they live in, while the other may simply contribute to household expenses monthly. 

Reasons for not combining finances or keeping finances separate may include:

• One has a great deal of credit card or medical debt
• One has significant student loan debt
• One wants to protect their good credit
• One wants to protect the other from their lousy credit
• One has filed bankruptcy in the past
• One is a child or spousal support obligor
• One is a child or spousal support obligee
• One is actively deployed in the military or travels a great deal for work
• One has significant resources they wish to preserve for their children or other loved ones
• One owns a business or works as an independent contractor
• One or both simply prefer to be solely in charge of their finances

Of course, there is nothing wrong with a couple maintaining separate finances if they need or prefer. But if you plan to combine or have combined finances to any extent, this article is for you.

Disclosing Debt and Ongoing Financial Obligations

Before you combine finances by opening a joint bank account, taking out a joint credit card, or renting or purchasing a home together, you should sit down and discuss your debt situation and ongoing financial obligations with your spouse and ask them to disclose theirs.

Why? Because first, honesty is the foundation of a healthy relationship. Your partner should know what they are getting into and vice versa. Failing to disclose a past bankruptcy filing, a foreclosure, significant student loan debt, substantial credit card or medical debt, or ongoing obligations such as spousal or child support is being dishonest, and your partner may combine finances with you not knowing what potential ramifications your past financial behavior may have on their own credit.

Second, your partner ought to know something about your current financial situation and habits, even if you had poor financial management skills in the past, so they know what they are getting into. This is your opportunity to show them you’ve learned from past financial mistakes or misfortunes.

Third, there is no way to properly execute your joint financial plan unless you know one another’s income, expenses, assets, and debts. If you are going to form a financial partnership, just like a romantic one, you each must enter into it with eyes wide open. 

How to Manage Emotional Reactions to Financial Disclosure

Talking about money can be difficult. If you have blemishes in your financial past, you may be embarrassed or concerned about your spouse’s reaction. Rest assured that most of us have made financial mistakes, especially as young adults with no experience managing credit lines. If you can show you have learned from your mistakes, that shows positive growth.

If your partner has a less-than-ideal financial history, you must refrain from judging them for it. Conversations about money can be stressful if you allow emotions such as guilt or blame to take over. If you find these conversations are getting heated, take a break and remind your partner that you love them and this conversation is necessary for your financial health as a couple. 

Revisit the topic when you have both cooled off. It may take weeks or months to achieve full financial disclosure, and that is okay. Be patient with one another.

Agree on a Household Budget

Once you know something about each other’s financial past and present, you can plan your household budget together. Whether one of you already rents or owns the home live in or you plan to rent or buy together, you need to decide what your contributions will be and how much you can afford as a couple.

While couples may retain individual responsibility for paying their car or cell phone bills, many couples will have a joint bank account from which they pay most of their household expenses. There are three ways you can go about funding your joint household:

1. You can each contribute equal amounts, regardless of your relative incomes.
2. You can each contribute amounts in proportion to your relative incomes.
3. You can each contribute all but an agreed-upon amount of individual discretionary spending (and/or individual ongoing financial obligations) to the joint household account, regardless of relative incomes.

No option is “better” than another. Each couple should decide on their own what they are willing and able to contribute to the household budget. Keep in mind that obligations such as student loan debt and child or spousal support will affect the amount that one can contribute to the household.

Once you know how much money you have to spend on your household each month, you can budget for:

• Rent or mortgage
• Renters or homeowners insurance
• Groceries and household supplies
• Utilities
• Cable and internet
• Ongoing household maintenance
• Car payments, if not paid individually
• Car insurance payments, if not pad individually 
• Cell phone bills, if not paid individually

When you add these expenses together, that amount should be less than what you have budgeted. This is so that you have funds to save for emergencies and your financial goals.

Commit to Starting and Maintaining Emergency Savings

Every household should have emergency savings. Why? Because if you rely on credit cards to fund emergency savings, you pay an excessive amount of interest charges and may end up working for your credit card lender instead of for yourselves. 

For example, let’s say you have a $2,400 car repair that must be done. You don’t have $2,400 on hand, so you charge that repair to your credit card, which has an interest rate of 14%. 

You have $200 a month to pay that debt off. It will take you two years to pay this debt, and you will have paid $201 in interest. If you are not lucky enough to have a credit card at 14% interest and instead have 22% interest rate, you will pay $336 in interest. And what happens if another emergency occurs during the two-year repayment period? You’ll have to charge that expense, too. You can see how relying on credit cards for emergencies can quickly get you into a hole. 

If you had started saving at least $200 a month two years ago, you would have had the $2,400 you need to pay for the car repair in cash. Then you simply start to replenish your emergency savings with your $200 a month rather than pay the credit card company for the next two years.

Conventional wisdom suggests having at least six months of emergency savings at hand, but don’t worry about achieving that specific number. Start saving now—you will be grateful for whatever you have saved when a financial emergency appears.

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