Reaching Financial Intimacy: Q&A on Overcoming Money Hurdles in Relationships

Thursday, August 2, 2018

Manisha Thakor, CFA, CFP®, vice president of financial education at Brighton Jones and author of Get Financially Naked: How to Talk Money with Your Honey, offers her advice on tackling those tough financial conversations you’ve been putting off with your significant other.  

Couples are often told to be transparent with each other about finances. But what if neither one of them is very comfortable doing so? What are some good icebreakers to open the door to financial intimacy?

Let’s be honest, most people are uncomfortable being transparent with their finances—sometimes even with themselves let alone with other people. That feeling becomes compounded when talking about it with your significant other.

The first challenge of financial intimacy is the underlying “social taboo” about discussing money. Most of us are taught from a young age that talking about money with other people is “not polite.” To complicate matters, modern America far too often equates success with money. As such, one—or both—people in a relationship may feel judged if they share their finances, as if there is something wrong, broken, or deficient about them if their financial situation is not what they hoped it would be at their current stage in life. My point: Start with the assumption that virtually every couple finds this conversation awkward, especially in the early years of a relationship.

So where does financial intimacy begin? Consider starting the conversation with an adult beverage (or ice cream) and stating that the statistics show clearly that disagreements over money are one of the top causes of fights in relationships and divorce. Then say you don’t want your relationship to become one of those painful stats so you’d like to “get financially naked” with each other. Acknowledge the inevitable awkwardness to come but affirm that you want to push through it because it will be a significant long-term investment in your relationship. In fact, many couples report feeling even closer to each other after starting to get financially intimate.

To start down the path of financial intimacy, I recommend sharing what you each earn, how much you are saving per year (and where), and any debt you have outstanding. Those are scary topics to put out there, but if you can make it through those three numbers, you’ve broken through the financial glass ceiling and it only gets easier from there.

When does an aversion to financial intimacy pose problems, and when is it normal?

It’s a rare case when I meet a couple who is excited to sit down and talk about money with each other. Even couples where both partners work in the financial services industry don’t like to talk about it. The reasons for the discomfort can range from feeling shame about one’s knowledge level or circumstances to a lack of interest in the topic to feeling it’s just too personal to share. So the aversion to talking about money is not only normal, it’s extremely common.

When it becomes a problem is when one person has a financial situation that will negatively affect the overall couple’s situation. Examples of this can include excessive debt, little to no savings, a very low credit score, poor personal finance hygiene (not paying bills on time, consistently late on preparing tax returns, having no idea how one’s accounts are invested such that they could be too aggressive or too conservative).

What if couples don’t want to pool their money? What are some good reasons not to? What are some examples of expenses that couples commonly wish to keep private?

In days of old, financial intimacy was pretty simple. People tended to get married very young, when neither person was coming to the relationship with much of anything. Barring someone who went into the relationship with a trust fund, it seemed logical at the time to pool everything. Fast forward to modern life and marriage or cohabitation can be tricky. Marrying later means people come to marriage with a money history (good or bad). Second (or third!) marriages raise issues of how to protect children from prior marriages, etc.

The primary reason not to pool money is if one party doesn’t want to! It doesn’t have to be more complicated than that.

I recommend what I call the “financial three-way”; three buckets of accounts: yours, mine, and ours. Some couples may choose to put nothing in yours and mine and pool everything in ours. Others are at the opposite extreme and put money for clearly defined shared expenses such as mortgage payments, property tax, insurance, utilities, groceries, joint travel, and child care expenses. And then they carve out things such as each person’s charitable giving, gifts to extended family members, personal grooming and self-care treatment, clothing, etc.

There are no right or wrong items to pool or keep separately. The key to success is to be clear with each other about what is pooled and what will be separate so there’s no confusion.

If a couple doesn’t want to pool their money, what are some important questions they should ask each other to make sure they’re on the same page?

If there is zero pooling of money, questions to discuss include:

  • If you have kids, how will you handle their expenses while growing up and what kind of, if any, money do you want to set aside for their education?
  • Will you each have your own health insurance or will you use a family plan?
  • Will funds stay separate into retirement?
  • How will you handle expenses for things you are clearly both benefiting from—a home, meals out together, a vacation together, etc.
  • What each other’s goals are for saving; does one person have a desire to die with precisely zero in their accounts while the other one wants to live off dividends and interest and never touch principal? Those kinds of widely differing money viewpoints can cause friction around the amount spent on things that are done together (for example, one person insists on flying first class on overseas trips and the other person cannot fathom paying the excess money for that and is perfectly happy in coach).

One way to define this is in a prenup or a postnup; it can sound clinical, but it is an interesting way to set a blueprint for how you will handle your non-pooled funds for what hopefully is an “until death do us part” situation. This can be particularly important in common law states!

Manisha Thakor, CFA, CFP® is vice president of financial education at Brighton Jones. You can follow her on Twitter @ManishaThakor. This article grew out of a conversation between Manisha and The Cut. Read more: What If I Don’t Want to Combine Finances With My Live-in Boyfriend?

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