3024: How to Have the "Money Talk" With Your Partner by Ryan Larson of First Line Fin on Couples And Finances

[00:00:00] Hello, everybody. I'm Greg Audino, your host here on ORD, and you found yourself in another one of our weekly bonus episodes, in which, instead of reading to you myself from an article about relationship building, I share a previously aired episode from one of our other shows in our network that I think you might enjoy. Today's comes from Optimal Finance Daily, our show that covers all sorts of posts about personal finance information and how to cultivate a smart money mindset.

[00:00:27] So with that, let's hear our host over there, Diana, narrate this post for you and provide her commentary as well as we optimize your life. How to Have the Money Talk With Your Partner by Ryan Larson of FirstLineFin.com

[00:00:46] Raise your hand if you're dating, engaged, or married. Now keep your hand up if you want it to stay that way, as in not divorce or break up. Hopefully everyone's hand stayed up. If not, we're the wrong people for the job. However, if you kept all five fingers high, this article is for you.

[00:01:05] Money and finances are routinely cited as the number one topic couples fight about and one of the leading causes of divorce. Though this statistic is shocking, it's almost always preventable. How? Honest, hard conversations and a game plan for moving forward together. We're here to help with the first part by providing a five-step plan to discussing finances with your partner and having the talk.

[00:01:31] Before diving in, we'd like to offer some advice. Be patient, kind, nonjudgmental, and sensitive. Money can be a touchy subject for lots of people, so be aware of your tone and pick the right time to have the talk. Step 1. Discuss history. Our spending habits and how we feel about money can often be traced to our childhood.

[00:01:55] Everyone's upbringing looks a little different, and if your mom and dad lived paycheck to paycheck while your partners brought in millions and set up a hefty trust fund, you probably have some different money-related beliefs. That's okay. You don't need twin upbringings to be compatible. But you do need to take an honest look at your histories and determine why you both feel the way you do, spend the way you do, and save the way you do.

[00:02:20] Once you're more clear on the other's reasons, further discussion will be much easier. Not sure where to start? Ask these questions. How did your parents handle their money? Did you have to work for things you wanted, or did your parents simply provide you with it? What fears do you have surrounding finances and money? Do you see money as a tool or a burden? And is there anything you want to do differently than your parents?

[00:02:48] Step 2. Deep dive into debt. Debt. Nearly everyone has it. In fact, consumer debt was approaching $14 trillion after the second quarter of 2019. But the nation's debt isn't your current concern. Your partner's is. Getting real and raw about your debt, home, auto, school, and credit card is an incredibly important step in the talk. Sure, it's uncomfortable enough knowing your own debt, so saying it out loud to the person

[00:03:17] you love can be scary. But what's even scarier is the look on someone's face after saying, I do, and finding out what they actually said was, I do promise to take on your secret $100,000 credit card debt I knew nothing about. Instead, take some time to map out, on paper or in an Excel doc, exactly how much debt you owe, to whom, with what interest rate, and what payment plan. Your partner should do the same.

[00:03:44] If you're approaching marriage or considering combining finances, we suggest paying off all personal debt prior to doing so. And please, don't consolidate your loans together. There are benefits to keeping them separate, and we'd love to share those with you. Step 3. Assess assets Understanding each other's debt is half the equation. You should also discuss all assets you both own.

[00:04:09] This includes things like your retirement savings, 401k, IRA, etc. General savings and bank accounts, homes, investments, cars, etc. Assessing these assets offers a fuller picture of your financial health. This step is especially important for people planning to get married, because for most, these will soon become mutual assets. Though we're firm believers in continuing to tackle personal financial goals well into marriage,

[00:04:37] your joint goals are what matter most long-term. Goals like paying for your child's college, purchasing a new home, retiring together, owning vacation property, etc. Step 4. Combine and think about the future Now that you've both opened up about your experiences, debts, and assets, it's time to come together and make a plan for the future. It's important to keep an open mind and be willing to compromise.

[00:05:04] The point isn't my way or the highway, it's what works for us. Remember, it's you two against the problem, not you two against each other, which means there's no right or wrong answers, just the truth. Some questions to ask and topics to gain clarity on include How will we handle spending going forward? Will we strictly have a joint account, or will we both have personal accounts for things like fun money?

[00:05:32] What's our plan for paying off debt and saving for retirement? What will we do if one of us wants to work part-time or stay home in the future? How will we handle the loss of one of our jobs? And what are some areas we need to compromise on, and where are we unwilling to budge? And step 5. Continue the conversation You've made it to step 5. Congratulations. The hardest part is through.

[00:05:58] All that's left is to continue the conversation. Money talks don't need to be boring and tense. You can even turn them into a fun monthly date night. Grab your favorite snacks, a little wine, not too much, we need you coherent here, your computer, and find a cozy spot. Dig into your budget and discuss where you overspent and where you absolutely crushed it. Celebrate the victories and make a plan to improve on shortcomings.

[00:06:25] It's important you're both honest, involved, and willing to work together. You just listened to the post titled, How to Have the Money Talk with Your Partner by Ryan Larson of FirstlineFind.com I think getting on the same page with your partner when it comes to money is incredibly important. This is something that comes up fairly often within the FIRE community.

[00:06:52] Typically, one person discovers this path to financial freedom and is challenged to get the other person on board. There's a great documentary about this very topic called Playing With Fire. If you haven't seen it, I highly recommend. And you can check it out now on Amazon Prime. The film follows Scott Rickins and his wife Taylor as they learn all they can about the FIRE movement and apply some of the basic principles to their own life over the course of a year. Now, at the beginning of the film,

[00:07:21] Taylor was not totally on board with the idea of FIRE. She was comfortable in their luxurious lifestyle and initially saw the changes Scott wanted to make as a bit too extreme. But they ended up having a conversation similar to what's recommended in this post about what really mattered to them and how they wanted to spend their time. Taylor realized that the things most important to her actually didn't cost a lot of money. Their lifestyle up to that point was just something they had become used to.

[00:07:50] I got the impression they were kind of running on autopilot without really thinking about it too much. I think this documentary became so popular because many people can relate to Taylor's experience and initial hesitation. I know a lot of couples that watch this film together and it opened up some really fruitful conversations. So if you're a FIRE enthusiast and looking for some tools to facilitate a discussion with your partner, check out Playing With Fire for date night and see where it leads.

[00:08:21] And that should do it for today. Have a happy rest of your day and I'll see you on the Thursday show tomorrow where your optimal life awaits.