First comes love. Then comes serious money convos. At least, that’s how it should be, according to Erin Lowry, the author of the “Broke Millennial” series. She advocates for getting “financially naked” with your partner and baring it all, from your debt to your credit score. Below, she shares her tips for how to make money convos easier and navigate financial differences with your partner.
How can I get “financially naked” with my partner?
There are two steps to getting financially naked with your partner. The first is picking up on context clues. Pay attention to the kind of lifestyle your partner says they want. Look at the kind of gifts that you're getting each other or who pays for the dates. This gives you a lot of context clues without having to ask direct questions. Then, eventually, you and your partner need to have a full-frontal financial meeting. This is where you actually share absolutely everything: salaries, debt amounts, the types of debt that you have, the credit score and credit reports that you have, what your financial goals are, the lifestyle that you want to be living, etc. Sometimes people get really overwhelmed by that, but you don’t have to do full-frontal financial nudity until the relationship gets serious. If you’re talking about moving in together or if this is somebody you think you could marry, that’s when you want to achieve full-frontal financial nudity.
What should I do if one of us brings debt into our relationship?
First and foremost, debt doesn’t need to be a deal breaker. The question is, what type of debt is it, and where did it come from? Are we talking about student loans, an auto loan, or a mortgage, or are we talking about consumer debt like credit cards? Did you take on debt because you had a medical emergency and ended up paying $7,000 out of pocket and had to finance it on a credit card because your emergency savings fund wasn't that large? Or, did you have an emergency savings fund, but it got completely depleted in the pandemic? Get the context for why the debt exists.
I would also say many people don't have the privilege of financial literacy at an early age. Maybe you were taught how to handle money, how credit cards work, or how to balance a budget. Your partner might not have. They could be at a phase of life where they're just starting to figure it out. Or, maybe they just didn’t know any better. If their family financed their lives on credit cards, and that to them is what is normal, then can you really fault them for that? The thing to look for is that they are willing to create a new plan and a new ecosystem for how you handle finances together.
Should I get a prenup before getting married?
A prenup is just marriage insurance. You hope you’re not going to get divorced when you get married, but the reality is that some people will. Why not get an insurance policy on your marriage, and have a conversation early on about what feels fair and equitable for you in the relationship? Everyone already has a prenup. It's just the default laws of your state. Every state has its own rules around divorce and how assets are split. If you don't have your own prenuptial agreement, the state's rules are going to be the ones that dictate your separation and how assets are split.
The majority of people probably sign their marriage license without ever reading the terms and conditions. Yes, a marriage should be about love and trust, but it is also probably the biggest financial decision you're ever going to make in your life. Without a prenup, you are basically signing a legally binding agreement without understanding what you're signing.
There also might be cultural or religious reasons for why you think you won’t get divorced. You might not leave the marriage but that doesn't mean they won't leave you. The prenup isn't just about protecting the person with the most assets, a prenup is about making sure if you were to split up, it feels fair and equitable for the ecosystem of your relationship.
What should I do if my partner and I have different investing strategies?
When it comes to divergent investing strategies, one of you could be very bullish on a new asset class, like cryptocurrency, and the other person could want to just put money in a savings account. You can have a lot of different ways in which people have very different relationships with investing. Part of it could be just a plain old compromise. Some of our money's going to get invested the way somebody wants, and some of the money doesn't. But I don't think always going 50/50 and compromising is necessarily the best choice. A third-party objective opinion on your finances from someone like a certified financial planner can help because they're also not emotionally invested.
The other thing to consider is having a conversation that isn't about your investment strategy at all, but about what you want for the future. See if you’re aligned on what that future looks like. I would start this exercise by writing it down separately, and then come together and share that with each other and see how many similarities you actually have and where you might have wildly opposing views on what your futures are going to look like. Your investment styles are probably going to be fairly aligned with your goals. If your investment style is wildly out of whack with each other, that also means the future you're both trying to build is not aligned. That could be a big problem for the longevity of a relationship because you really do need to be able to get on the same page. If you're building a life together, you would presumably want to be financially working towards a fairly similar future as well.
What are some tips for managing combined finances in a relationship?
Have money dates. We [Lowry and her partner] did this more frequently when we were aggressively paying off debt. Most of our money dates are just check-ins. We update our spreadsheet and ask ourselves, “Hey, this is where we stand, how does it feel?” Good. Okay, great.
Also, set a household budget. Our budget is a version of the zero-sum budget. Every dollar has a job, which means that we have a spreadsheet that details for both of our paychecks exactly where all that money is going.
Have quarterly conversations about your goals. We review our household budget, as well as savings and investing goals. We look to see if everything is still in alignment with what we want in our future. We sit down together for like 30 minutes to an hour and have a conversation about what our current goals are. Personal finances are personal and emotional, but I think when it comes to having some of these conversations, we make them a bit more businesslike so it’s more straightforward.
What other money matters should couples consider before getting married?
Think about your family and friends, too. Do you think you're going to be supporting any of your family members in the future? What is the cultural expectation of doing so? What is your personal expectation around that? Are you comfortable sharing your financial lives with family members? Those are all really heavy things that will come up over the course of a marriage.
People think about parents a lot, but you also have to think about siblings. What if a sibling comes to ask you to co-sign an auto loan? Are you going to do that? Are you comfortable with that? Would your partner do it for your sibling too?
What’s one personal finance book you would recommend that all couples read before getting married?
“When She Makes More” by Farnoosh Torabi. It’s about breadwinning women. That’s one book to read if you are in a relationship where you, as a woman, are out-earning your partner.
This interview has been edited and condensed for clarity.
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