Do you and your partner struggle to talk about money? Does it turn into a tense environment whenever you talk about the subject? What if you could look at this important conversation in an entirely different manner?
Discussing money should be a conversation about dreams and moving forward positively as a team, rather than a source of dread, accusation, and guilt.
To start the conversation, plan it like a business meeting by scheduling it on both your calendars. Jot down ideas prior to the “meeting” to help keep you on track. Begin by talking about the vision you have for yourself, and for the two of you as a couple. What are your five-year, three-year, and one-year goals?
Once you have established your long-term goals, start to incorporate spending and saving into the conversation. Finally, tie everything together by deciding the economic values that you want to live by day to day. Follow this construct and watch your conversations about money change for the better.
As with any business plan, the next step is to add in the financials — regarding both your spending and saving habits. In terms of spending, divide your expenses up into “variable” and “planned” categories.
When having this conversation, be creative, not judgmental. This is an exercise in the development of a mutual vision. For example, when discussing variable spending habits, account for the reasoning behind a habit to deem whether or not it is an expense you want to keep. There are expensive habits, such as going to the coffee shop, that are not just for the coffee but for networking or for use as a pseudo office. Another example may be purchases of sporting tickets, which are really being used as business marketing activities.
Meanwhile, the planned expenses should include regular items such rent or mortgage, utilities, insurance, groceries, and health care, but also items such as shoes, clothes, and charitable events that you know you normally spend money on. The planned expense area is a no-judgment zone between partners. So if you know you buy a pair of high-priced shoes every season but put away funds for it, include it as a planned expense.
Now that you have sat down and crunched the details of your financials, determine what this means for you both on a daily basis to achieve your long-term goals and values. Perhaps it means reallocating your spending by each of you bringing lunch to work, or, watching Netflix instead of going to a weekly movie. Make sure to sit down monthly and review how the past month’s cash flow and savings and investment accounts actually reflect the day-to-day changes you agreed upon in order to achieve the goals that were originally discussed.
When you start this new approach, make sure to emphasize that there will be no judgment of how or where each partner spends money. Be patient; it will take several months to see the plan in action. Issues you did not originally plan on or think about will pop up and get in the way — adjust accordingly. Be open to changes as financial plans are meant to be flexible and serve as a guide to help you focus over time.
You will find that when you approach the money conversation from the perspective of a five-year, three-year, and one-year plan, it can be a positive conversation instead of a struggle. Use this conversation to begin the journey to living the legacy you want.
Joan Sharp is a member of the DailyWorth Connect program. Read more about the program here.