Tips for talking about money with your significant other
Getting to the heart of the matter
Making important decisions with your spouse or partner can at times be tough, even more so when it involves money. In a nationwide study of adults and their partners by the American Psychological Association, nearly one-third (31%) of the couples reported that money was a major source of conflict in their relationships.1
Couples who frequently discussed their household finances were more likely to report being extremely happy with their relationships.
And even for duos who don’t squabble, it can be a difficult conversation. A recent online survey by honeyfi.com found that that, although 72% of couples talk at least once a week about money, only 41% said that they regularly track and discuss their household budgets.2
Fortunately, for those who did, the news was good! Couples who frequently discussed their household finances were more likely to report being extremely happy with their relationships.
Put your emotions aside to focus on common goals
So how do you and your spouse make sure your conversations about money remain productive and mutually satisfying? A review of expert advice on “couples and money” suggests leaving your emotional baggage behind and using a third party to help you focus on:
- financial activities you must tackle together,
- points of agreement about common aspirations, goals, and priorities, and
- making sure you both have a say in how your financial and estate plans take shape.
Meeting together with your Boston Private advisor is a good place to start. He or she can help you:
Create your household’s Personal Balance Sheet. Just as the financial statements for a business can show how healthy it is, so too can a review of your personal financial statements help you keep your finances—and your relationship—on a strong foundation.
Avoid emotional decision-making and strengthen your financial life by pursuing goals-based planning.
Review your investment accounts and make sure they reflect any recent changes in your short-term needs and long-term goals as well as planned and unplanned life-events. If your views on investment risk aren’t in sync as a couple, your advisor can suggest an appropriate asset allocation that aligns with your goals and the level of risk that you are both comfortable with.
Check the primary and contingent beneficiaries for your retirement accounts to see that they are up-to-date as well. By law, the primary beneficiary for workplace (or “qualified”) retirement accounts is your spouse, unless you have signed and filed a waiver.
But you have more flexibility in naming contingent beneficiaries. “They can be children, grandchildren, nieces and nephews, your trust, or a favorite charity, depending on your goals for that money,” says Jeanne Barrett, Managing Director at Boston Private. For IRAs, SEP IRAs, and annuities you can name non-spousal beneficiaries as well. Just make sure you update them together as your life changes.
Make sure your estate plan and related documents line up with what you both want for your family and your own care in the future. If you already have an estate plan, wills, and health care directives in place, Barrett recommends reviewing those documents every three to five years or more often if your circumstances change. Life events, such as the birth of a new child or grandchild, a death in the family, the purchase or sale of a home or other assets, changes in your income, or an inheritance are all reasons to re-examine your estate planning strategies she says.
Consider trusts to meet your unique needs
It can be sobering to think about who will take care of things if one spouse becomes ill or incapacitated, but this is also a critical planning element to agree on, says Barrett.
If there are substantial assets at stake, you may want to consider establishing trusts to make sure those assets are handled by your spouse according to your wishes.
Jeanne Barrett, Managing Director at Boston Private
As an example, Barrett offers the case of a couple who worried about the husband’s ability to manage the assets designated for their daughter if the wife predeceased him, because his family had a history of dementia. Their solution was to put their assets into a trust that specified that a new trust would be created if the wife died first. That new trust named a co-trustee who had to agree with any decisions that the husband made about the assets before he could implement them, to make sure his decisions were sound.
There are many ways trusts can be structured to make sure your wishes as a couple and as individuals are honored. A trust advisor can help you examine all of the options available to you.
Guidance through rough spots in solid marriages
For those whose marriages are strong, keeping the lines of communication open about your finances also makes it easier to tackle any tough money situations or setbacks as they arise. And if you should hit a rough spot in the future, remember to turn to your Boston Private advisor for a knowledgeable resource and sounding board.
Are you ready to talk to an advisor?
At Boston Private, we take a holistic approach to managing your wealth today and for future generations, not just stepping in for one aspect of your financial life, but guiding you and your spouse or significant other toward long-term success.
1 - American Psychological Association (APA) Stress in America™ survey, 2014. http://www.apa.org/helpcenter/money-conflict.aspx
The opinions expressed and information contained in this article are given in good faith, may be subject to change without notice, and are as of the date issued. The accuracy and completeness of this information is not guaranteed. Since each client’s situation is unique, please review your specific investment objectives, risk tolerance and liquidity needs with your advisor before a suitable investment strategy can be selected.
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The opinions expressed and information contained in any article published in the Vault are given in good faith and considered reliable. However, such opinions and information are subject to change without notice and are provided only as of the date issued. Neither Boston Private nor its affiliates warrant the completeness or accuracy of such information. Any third-party opinion is solely the opinion of its author and does not necessarily reflect the opinion of Boston Private or its affiliates. The materials on this website are for informational purposes only and do not take into account your particular investment objective, financial situation or need. Since each client’s situation is unique, you should consult your financial advisor and/or tax planning professional before acting on any information provided herein.