Many couples who want to start building wealth with their partner come up against a common roadblock: talking about it.
Money isn’t fun or easy to bring up, and it usually comes with a lot baggage. I struggled with this, too, even though it’s what I do for a living! But if you’ve found someone you want to build a life with -- for decades to come – you already have something huge on your side (besides love of course): time.
That’s right, time is an investor’s best friend. It’s your biggest asset, thanks to good ol’ compound interest, which basically means you’re earning a higher rate of return as you’re making interest on top interest. Albert Einstein called compound interest the most powerful force in the universe. If that doesn’t want to make you get in on this, I don’t know what will.
So where do you start?
To begin, debt can be a dealbreaker so if the two of you are struggling with this area of your finances, you might want to put the brakes on investing for now.
I’m not saying you have to have all your student loans paid off before you begin putting your money to work, but you do need a repayment plan that’s working for your budget. And if either of you have thousands in credit card debt with high interest rates on those cards, it could be wise to pay down a chunk of the funds you’ve borrowed, before you dip your toes in the market.
For those of you who have a handle on your debt, you probably already have a good sense of each of your money personalities. But it never hurts to dive in deeper with a fun online money personality quiz to break down whether either of you is a saver or spender -- and the level of risk each of you are willing to take to grow your money.
Next, take a hard look at your numbers. Gather your bank statements to see what’s coming in and going out so you can figure out how much to set aside each month to invest. This is the pressure point that needs to be dealt with wisely as there will be temptation to start pointing fingers over different line items.
We’ve all been there and done that. But did you know that successful marriages have one thing in common? According to the findings from the Gottman Institute from studying couples for decades, they found that happy couples follow the 5-to-1 ratio and balance their negative and positive interactions. For every negative interaction, they found it helps to have five or more positive, affirming ones.
So if you chastise your partner with a comment like: “I can’t believe you spent $100 on that shirt!” Then try sprinkling in five positive interactions like: “I’m so impressed with how often you’re packing your own lunch,” or “Wow, I really look up to how you’ve been able to pay down so much of your debt this past year.”
Because money can be a pain point in relationship – and being able to move past this with a positive and respectful manner can set the tone for other difficult conversations throughout your marriage.
Balancing financial responsibilities is also key to making your money grow. Women have a tendency to default to their spouses to make the important money decisions -- but both parties need to be on equal footing. That means both of you need to know the logins and passwords to all of your accounts -- and you each should have input on how much is invested, where it goes and who your beneficiaries are.
Expect this to take more than one sitting and consider scheduling regular “dream dates” to share your money goals. And keep at it, weekly or monthly, until you land with an investment strategy that you’re both comfortable with. Once you’ve done that, you only have to check your portfolios together once a quarter — and re-adjust as needed depending on your milestones and financial needs as your family grows.
Have any money questions? We want to hear from you! Email us at [email protected].
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