March 17, 2023
Communicating about Money
Why is it important to openly discuss finances with your partner?
Money enables us to meet our basic needs like food, shelter, transportation, and healthcare but also allows us to engage in activities we enjoy such as hobbies, vacations, and other experiences. Much of the way we live our lives are influenced by our access to money.
As money is central to how we live much of our life, it is important to discuss finances with our spouse or partner(s). If you start out with an open communication regarding finances, it often carries on throughout the relationship and can have a positive impact.
What to talk about?
Debt is extremely common and can often limit our options financially. It is important to discuss any current debts including credit card debt, student debt, any lines of credit as well as any debt owing on property (mortgages). Debts have different priorities depending on interest rates and other factors. A financial advisor can often provide clarity and direction in these types of situations.
In addition to debts, it can also be important to discuss assets you own which could include retirement savings, homes, cars, and other investments. Having a solid understanding of your partner’s balance sheet is the first step to having healthy conversations regarding finances. As couples engage in financial planning and prepare for retirement, viewing everything together under one roof can often assisting in helping your dollars go further.
If either you or your spouse have been through bankruptcy in the past, it is important to discuss this not only because it can affect access to financial instruments in the future but also as it can be an indication of spending habits.
Spending habits as well as savings habits are key factors you need to consider when planning for the future. It is generally best if a couple has similar spending and savings habits, although often spouses help each other out with getting on the same page on these issues. Being able to effectively communicate these topics can help set expectations and enable the couple to plan more efficiently for the future. Understanding the reasons behind why someone might spend or save helps one understand the other better.
Money frequently triggers emotional responses and therefore can influence how we feel or view things. Communicating how we feel when completing a big purchase (like a home) or perhaps savings for retirement in an RRSP account can help direct our actions in the future. Some things you may want to discuss are: How your parents handled money and how it made them feel? Do you view money as a burden or a tool? Do you like to spend money on experiences or things?
Couples typically have one who takes the lead in dealing with the finances. This is okay if it works for the couple. It is important that large financial matters are discussed, and major decisions are made together. It is important that both parties understand the goals and means by which they will be achieved as well as a high-level overview of the financial plan and investments.
As your financial situation is constantly changing it is important to keep an open and ongoing conversation about money. Our financial advisors at Northfront financial are always happy to add clarity and color to conversations about money.
About Northfront Financial
Northfront Financial, based in Calgary, Alberta is a boutique full-service financial planning firm serving professionals and business owners. We pride ourselves on being a different kind of investment firm. This stems from our humble roots, entrepreneurial spirit, and a culture of integrity and professionalism. Our goal is to offer the best investment products, services, advice, and ideas the financial industry has to offer from our experienced team, which includes individuals with the Chartered Financial Analyst® (CFA®), Chartered Investment Manager (CIM®), and Certified Financial Planner™ (CFP™) designations.
Sources:
https://www.thebalancemoney.com/communicate-with-your-spouse-about-finances-2385830