Whether you are dating, newly engaged or already married it is always important to understand you and your partners relationship with money. Research has shown that a couple’s finances are the most common subject for argument in their relationships. However, there is no “magical key” to financial success in a relationship. Every couple’s financial situation is different based on money beliefs, their spending plan and their needs/wants. Therefore, it is important to sit down with your partner and talk about these three topics.
- Money Beliefs
Everyone’s money beliefs are different based on how you were raised, how you viewed money growing up and how open one’s parents/guardians were about their finances. It is important to sit down and discuss these topics with your partner, some questions to consider are: How do you feel when you have to make a financial decision? What emotions or words come to mind when you think about money? How would you describe your level of financial knowledge? These questions will help to get the conversation going to help you better understand each other’s money beliefs. While beginning to understand your partners money beliefs you can begin to recognize what “category” they fall into. The four main categories are as follows:
- Money Status: the belief that self-worth and status is defined by money
- Money Worship: the belief that money will solve problems and bring happiness
- Money Vigilance: the belief that money should be saved for the future to ensure they have enough
- Money Avoidance: the belief that money is bad, and they don’t deserve to have it
Along with these different categories come money tendencies as well. If you fall under the “Money Status” category you tend to overspend and have financial dependence. Money Worshipers tend to have credit card debt and can be seen as “workaholics”. The Money Vigilance category seems to have greater financial health but also stresses about their money situation a lot. The “Money Avoidances” category tends to give money away and avoids looking at their financial statements. All these categories have negative consequences that go along with them, but it is important to know which category you and your partner fall under to help avoid them. Attached is a link to a quiz to help known what your money beliefs are https://www.bradklontz.com/moneyscriptstest.
- Spending Plan
The next step in the process is to talk about your spending plan. If you are still dating, you are more likely to have split finances from one another. However, if you are engaged or married you are likely talking about the possibility of merging your finances into joint accounts. Again, every relationship is different and there is no perfect way of doing this, but whether you choose to merge your finances or keep them separated it is important to set up and stick to a spending plan together. When creating this spending plan sit down with your partner and take into consideration both you and your partners strengths and weaknesses with finances. Maybe one of you is more organized then the other and is charge of paying your bills. Whatever you decide it is important that you both agree on it and stick to the plan to pay for everyday expenses and meet your long-term goals. When creating your spending plan, it is important to first set up your SMART goals to achieve optimal success. You will also need to figure out your net monthly income between the both of you and your reoccurring expenses such as rent/mortgage, savings utilities, groceries, and other bills. This will bring you to your discretionary spending income, or leftover money that you can spend on “wants” but that you don’t necessarily need. Attached is a link to the spending plan along with our financial goals worksheet that are on Powercat Financials website for easy access! Spending Plan: https://www.k-state.edu/powercatfinancial/budgeting/ , Financial Goals Worksheet: https://www.k-state.edu/powercatfinancial/loans/Financial%20Goals%20Worksheet.pdf
- Needs/Wants
Your “Needs/Wants” amount can and will vary from month to month depending on your reoccurring expenses. Before you look at your needs/wants, you may want to take the money beliefs assessment to see how you view money. When considering what to do with this leftover money it is important to revisit your goals and see how they are progressing. Maybe you are saving up hard to buy a new car or to make a down payment on a home, then you can use some of this money to save toward that. However, it is important to set aside some “fun money”. You work hard for what you earn, it is important to let yourself enjoy some of it throughout the goal saving process. Whether this “fun money” is set aside for a vacation, date night or new toy it is important to do something that brings joy to the both of you and makes the budgeting process easier.
No process has been deemed perfect, but it is important to stay open and honest with you partner about these topics. Powercat Financial will be hosting a seminar on “Love and Money” on February 7th at 4:30pm in the Union Big XII room. This seminar will cover the thoughts of combining your finances with your partner, and the number of things to consider, such as: goals, debt, financial accounts, attitudes, and expectations. K-State professor Dr. Megan McCoy and peer financial counselor RJ Salmen will be giving the presentation. You must register at the attached link https://orgcentral.k-state.edu/PFSAB/rsvp_boot?id=378027, we look forward seeing you there!
Kolby Stein
Peer Counselor II
Powercat Financial
