I was a little bit nervous the first time I ever brought it up. Theresa and I had been dating for about two months and I was fairly certain she was the one. One thing I knew we needed to discuss however was money. Money touches almost every aspect of our lives but it’s this funny taboo topic that people don’t want to talk about. Talk money while dating to avoid yelling about money while married.
Why Money Matters
Roughly a third to a half of all marriages end in divorce and money is typically cited as one of the main issues. The funny thing is that it is rarely an issue of the amount of money. People always fall into the trap of if only we made/had more then we would be okay. There are countless cases of extremely rich people divorcing over money. Usually caused by one spouse feeling inferior because they aren’t bringing in the money.
People can have wildly different opinions on saving and spending money. If you are wanting to retire early but your spouse is wanting to live in an expensive neighborhood, join country clubs and drive new cars you are in trouble. Don’t kid yourself with the “love conquers all” type thinking.
Bringing It Up
A lot of what you need to know you can observe. I didn’t need to ask to see bank statements to know that Theresa wasn’t a big spender. Piece of crap car (no offense babe), old apartment with a roommate, nails done at home, small wardrobe, etc. If she would have told me she was a big saver but drove a new BMW I would have been suspicious. Actions tend to speak much louder than words.
I wanted to talk about the harder stuff. Retirement plans, debt, managing accounts, saving, budgeting, income, etc..
I can’t remember what my first question was but something simple. How much do you owe on your student loans or something like that? Just anything that gets the ball rolling without putting that person on the spot or making it fell like an interrogation. The thing to remember is there is no such thing as personal finance 101 in college. Most people, especially 20 somethings, aren’t financial nerds. Most young people are happy to have a job and aren’t too concerned about IRA growth over the next 40 years.
Theresa was like most people who didn’t really have any plans and had never been taught anything. This actually worked out great because she was very open-minded and willing to learn. I asked her to read what I consider to be the best book for complete money beginners. The Total Money Makeover by Dave Ramsey. She did (even though her family thought it was funny I was giving out reading assignments) and was pretty much on board with everything.
Things To Discuss
1. Joint or Separate
The discussion about having joint or separate accounts tends to be a touchy subject. There are pros and cons to both systems. We discussed keeping everything separate but did NOT for a variety of reasons.
1. Introduces a level of secrecy that neither of us felt comfortable with.
2. Creates some kind of insurance policy for your marriage ending in divorce. I prefer the “burn the ships” method to marriage.
3. More efficient to have one bill to pay and account to manage instead of 2. Time is extremely valuable once you have a little one.
4. If my wife ever decides to stay home she would have no income and she hates the idea of me “paying her”. Said it would feel like getting an allowance like a kid.
5. It acts as a band-aid for not addressing underlying communication problems.
We are a team and we either succeed together or we fail together. I believe working like this introduces a synergistic effect where you can achieve more than the combination of the separate parts.
2. Working After Kids (If Having Them)
After you have kids your views and opinions about work and money will almost certainly change. I know it has been a massive wake up call for us. You can’t know how you are going to feel after kids but it is good to talk about possibilities and plan for them.
Perhaps you one or both of you would like to be able to take one year off to stay home. How could you make that work without an income or insurance? Is that something you both would like to save up and prepare for?
Once you have kids how you thought you might feel could change drastically. I have heard of some women who thought they would like to be a stay at home for a year and 8 weeks in were anxious to get back work. And vice verse.
3. To Budget or Not To Budget
Some people start having heart palpitations the second someone mentions the B word. Like the idea of having a budget means no more fun for the rest of your life. Budgeting doesn’t have to be complicated or time-consuming but if only one person is willing to participate it will be quite frustrating.
If the idea of traditional budget scares one of you perhaps you could try what is called a “reverse budget”. Basically, you save for everything at the beginning of the month and then live off the remainder. This might be an option but it takes work or else you will end up with more month than money and have to carry the balance on the credit card.
Basically, you need to discuss expectations and agree on some form of a system.
4. Savings Rate
How much you are going to save out of every paycheck and how are you going to save it? Are you going to use it to pay off debt, max out your 401K, max out an IRA, save for a down payment, vacation,…? I believe 20% is the minimum you should be saving and 50% or more being the gold standard. Based on the below study most people feel like 0-1% is more appropriate.
Are both of you going to be on board with saving for retirement? If one person believes in living for the moment and enjoy their life now and the other would like to avoid eating rice and beans in retirement you will have huge problems. Just like you can’t out train a bad diet you can’t out save a big spender.
Don’t be afraid to bring up money while dating. You don’t have to have these conversations in one night but they need to be had. They also need to be had sooner rather than later. Don’t date for two years to find out you guys don’t agree on any of this stuff. Now I’m not saying to instantly break up if one person wants to save 25% and the others wants to save 20%. Small differences are no big deal and make marriage fun.
However, don’t kid yourself into thinking the other person will change if they have drastically different views than yours. I personally don’t see how you could have a happy marriage if one person is spending it all as fast as the other can save it. That would certainly cause resentment. No reason to voluntarily walk into a lifetime of that.
So what do you think? Can a spender and a saver make it work in marriage? Should people be talking about religion, kids, and money while dating? If married did you talk money before taking the leap?