7 Steps to Financial Happiness in Your Relationship

By: Carmen M. Wu, CRPC®

Love and Money blogMoney problems are cited as one of the top reasons why couples get a divorce. As I wrote in my earlier blog, cultivating a solid financial relationship with a loved one is essential in living out the “for richer or poorer” part of the vows. Whether you are married or living with a significant other, you will find that the topic of money comes up more often than you’d like.  Differences in approach to financial decisions play a significant role in relationship happiness.  Thus an honest conversation and a holistic approach to financial awareness is essential to a well-balanced relationship.  When counseling couples on financial planning, I often suggest to use the below checklist to begin forming a healthy financial union with your partner. Even if you already have been married for many years, you’ll find this list useful to re-assess your relationship’s financial health.  

1.    Share your finances with your partner

We all have our ideas about money, therefore, if we want our partnership to prosper we need to look out for our loved ones.  It begins with honest communication.  Full disclosure of income, assets and debt.  Speak frankly about your family money values and how you grew up – poor or affluent.  Many of us will discuss anything else in the world, but talking about money is often awkward, uncomfortable and thus most of the time avoided.  Having an open discussion about our spending habits early on is necessary to avoid disappointments and costly mistakes later on. You should know if your loved one lives every day like it’s the last one or is a scrupulous saver. How do you compare in your approaches? Can you mend your ways to meet in the middle so you both feel happy and fulfilled in the relationship and with your personal goals? 

2.    Set financial goals

Consider what is fundamentally important to you and your partner and why.  First, list what you both want the most.  Then prioritize your wants, and then create a plan that meets your priorities.  Here are some questions to consider:
•    Is your ideal living situation an apartment, house or condo?
•    Do you prefer to rent, or feel strongly about owning your home?
•    What standard of living do you both have and address any necessary adjustment?
•    Address your retirement goals
•    Decide how much of your income will each of you contribute to your retirement accounts
•    How will the household expenses be taken care of?
•    Why type of furnishings will you have…new or used…traditional or latest trend?
•    How often will you vacation? 
•    Will you both work, career goals?
•    Set threshold costs for big expenses.

3.    Create a budget

The old adage of killing two birds with one stone applies to creating a budget because it can also assist you in getting an idea of the amount of your emergency fund.  Start by determining your typical monthly expenses.  Consider if you become unemployed, disabled or develop a serious illness, how long might it take to find a job or return to work?  Can you expect a severance package if you become unemployed? How long does your health insurance coverage last and what is its replacement cost?  What other benefits will you lose if you lose your job?  Do you have disability insurance - short and long term?  Do you have savings to cover your time off work?  


Emergency fund reserves provide peace of mind and financial flexibility.  Financial experts recommend saving three to six months of living expenses in reserve.  There are plenty of online aggregators, but here are some expenses to keep in mind when determining your budget and the amount of your emergency fund.  

    Taxes -    federal and state income taxes, real estate taxes and personal property taxes
    Real Estate – mortgage, or rent payments, insurance maintenance
    Utilities -    electric, gas, water trash, phone, cable/satellite/internet
    Vehicles – loan or lease payments, insurance, personal property taxes, license, maintenance, fuel
    Health Care – medical insurance, out-of-pocket costs, prescriptions glasses or contacts
    Food – groceries
    Clothing – new clothes, dry cleaning and tailoring
    Vacations – travel, lodging, food, entertainment, souvenirs and car rental
    Entertaining – restaurants, tickets, movie rentals, books, CDs, pay TV
    Savings/Contributions – education or retirement savings, contributions to charities
    Memberships – health clubs, social clubs, professional organizations
    Student loans – loan payments for tuitions and related educational costs
    Miscellaneous – gifts, magazines, newspapers
    Household items – cleaning supplies, laundry supplies, toilet paper, trash bags, etc…

4.    Decide how to set up your accounts

Prior to moving in together you need to discuss your money management habits and how checking and savings accounts will be set up.  Although two separate households are becoming one, this may result in three checking accounts instead of one joint.  Traditionally, it has been common practice for individuals to combine all of their assets and checking/savings accounts.  In other words, what yours is mine and what’s mine is yours.  Many today are opting to keep some assets separate for emotional reasons, to protect prior wealth, pre-nuptial agreements or simply choice. You want to discuss how you will be paying for the joint expenditures like mortgage, cars, household expenses and how you want to approach it. Speaking openly about your preferences may make managing financial matters less challenging.

5.    Designate a bill payer and set a financial meeting 

Assign financial tasks by designating who will pay the bills, update budget and share financial responsibilities.  However, make sure that both of you know all your expenditures and bills and when and how to pay them. Life happens unexpectedly, and it’s important that both of you are prepared to carry on. Setting financial meetings at least once a month to discuss bills, account balances and discuss unexpected expenses will prove productive.   Keep in mind during these discussions, that integrity and open communication is crucial to cultivating a healthy financial relationship.

6.    Update and re-evaluate all of your insurance policies 

It is wise to evaluate your insurance policies to meet your new financial needs.  Review your choices and costs for health insurance, life insurance, disability both short term and long term, homeowners or renters insurance, car insurance and umbrella policy.  You may want to consult your financial advisor and appropriate insurance agents to make sure you are appropriately covered.

7.    Establish your estate plan

Most of us would like to have a say on how our assets are distributed to our beneficiaries when we die, right?  According to state law, upon a person’s death assets must be properly distributed.  Without a Will, you forfeit your right to designate who will receive the assets of your estate and give that right to state law. Without a durable power of attorney, your spouse or other loved ones would have to go through the delay and expense of seeking approval from the court to carry out important financial transactions.  An estate plan may be as simple as having a Will, durable power of attorney and living will/medical directive.  

Follow these steps and you will be more likely to achieve financial security and happiness in your relationship. 


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