Build a Solid Financial Foundation with Your Partner
- Studies show that a weak financial foundation can increase the chances of divorce or a relationship break up.
- Communicating with your partner about your finances is key to a strong foundation.
- You can have a strong financial foundation and accomplish your goals at the same time.
Relationships are supposed to make you feel loved, supported, and understood. However, both parties in a relationship must do their part, especially if they plan to be together for the long haul.
One way to build the foundation of your relationship is to discuss finances. Finances can be an uncomfortable subject for some, but it’s necessary because it helps you become more comfortable with your partner and their money habits and mindset.
Additionally, financial infidelity can cause serious problems in a relationship. So it’s vital to talk with your partner about your finances and long-term financial goals. A strong relationship is built on a solid financial foundation.
A Solid Financial Foundation is Essential
We all know that money can cause problems in a relationship. In fact, not being on the same page financially can be extremely detrimental to a relationship.
According to a study by Fidelity, nearly half of all Americans say that money is their biggest relationship challenge. In addition, according to divorce attorneys Wilkinson and Finkbeiner, “Feeling that one’s spouse spent money foolishly increased the likelihood of divorce [by] 45 percent for both men and women.” This means you need to get your money right with your partner, or the chances of fighting and divorce increase dramatically.
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Components of a Solid Financial Foundation
There are four “cornerstones” to a strong financial foundation. These apply whether you are building a financial foundation with a partner or individually.
Emergency Savings Fund
An emergency fund will help you avoid most money problems. If you have a surprise financial emergency, this can increase your stress levels. If you have the funds to cover the surprise expenses, your stress levels can be mitigated.
An emergency fund can solve the problem before it becomes an issue worth fighting over. Most emergency funds include categories for car repairs, potential job loss, and medical expenses.
Track Your Spending
Another problem that can put a crack in your relationship foundation is debt. Whether it’s student loan debt, car debt, or credit card debt, this issue needs to be discussed if you are in a committed relationship. Debt can damage your credit, negatively impact your net worth, and prevent you from achieving your short and long-term financial goals.
In some cases, married couples can inherit their partner’s debt. For example, if you sign up for a joint credit card, you are responsible for your partner’s debt.
A budget is key to helping you and your partner track spending. This allows you to be aware of where your finances stand in real-time by creating a financial plan.
Recommended Read: Four Types of Budgets to Level Up Your Finances
Asking The Tough Questions
A financial plan is an agreement between two or more people on handling money. Regarding your relationship, it’s important to ask the right questions such as:
-Will you combine your finances into joint or separate accounts?
-How much are you planning to set aside for investing?
-What are your financial/savings goals?
-What are your thoughts about having an estate plan?
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The more specific you can be about a plan for how you will deal with your money daily, the less likely you are to create tension if both partners decide on this plan. Then communicate with each other as you adapt the plan.
If both partners follow the financial plan, this will increase financial harmony.
Planning for Long-Term Goals
There is nothing to keep you on track without common and individual money goals. This is the time to dream about what you want your life to be like and create the financial future that fits both you and your partner.
By creating goals together, you will be motivated to work hard together and stick with your financial plan. This will reduce friction moving forward.
Five Ways Build a Solid Financial Foundation With Your Partner
Now that we have the basics figured out, couples can take specific steps to strengthen their financial foundation.
Regular Money Dates
When you make plans and set goals, you are almost guaranteed to get off track. This means you will need time to get together with your partner and discuss your finances. Finances can be fun to discuss if you go on regular monthly money dates with your partner.
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A money date is where you get together with your partner, make yourselves as comfortable as possible, and discuss your finances. This allows you to quickly get on the same page and recommit yourselves to your plan and goals.
A money date becomes ineffective if it becomes another episode of the blame game, which is why you need to create a money-safe zone. Of course, you can still ask the hard questions and analyze how you both can do better in the future. But if you accuse your partner of something, you’re setting the groundwork for an argument.
Provide a safe space to talk about money with your partner. Both partners must understand it’s okay to question purchases, try to understand habits, or dive into reasons for your money behavior. If you feel yourself getting angry, ask if you can pause and start the conversation later.
Cracks in your financial foundation cannot be fixed if you aren’t willing to fix them with your partner’s help. Make it safe for you and your partner to talk about money in a vulnerable and comfortable way.
Create a System That Works For You
The only people your financial system has to work for are yourselves. Therefore, adapting your financial strategy to meet your needs is crucial to solidifying your financial foundation.
Use Each Other’s Strengths
Everyone has their own strength regarding their finances. One of the standard money strengths that many people possess is saving money. It’s important to have different money personalities and strengths in a relationship. Your diversity creates your strength.
If you are a saver, you can become miserable by saving all the time and not spending any money to treat yourself for your hard work. A responsible spender for a partner will help balance that out. If you’re big on investing for out-sized returns, a more conservative investor partner can help keep your portfolio stable.
Use each other’s strengths to build the best financial foundation you can.
Openness and Honesty
Honesty is an essential component of any relationship, so if you've made a mistake, let your partner know about it and be honest with them. Don't get defensive if they ask you about it because the key is transparency when discussing money issues. Sharing and communicating with each other will keep your financial foundation strong.
This may be the hardest step of building a strong financial foundation, but it is crucial. If you can be honest and open with your partner, you can build the strongest foundation by handling everything that comes your way.
What can you do to build a strong financial foundation? Feel free to share your thoughts with us in the comment section below.
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