In Episode 18, I discuss how to get aligned with your significant other / fiancé / fiancée / or even spouse when it comes to money and finances.
Specifically, I share 17 questions to discuss with your partner to get aligned on money and finances.
This is important for any couple. But it’s absolutely critical once you start to seriously contemplate marriage.
Even if you are already married and haven’t gotten aligned on money yet, it’s better to do it now (especially before kids) rather than put it off.
It may be…not the most fun conversation. But it’s an investment in your relationship because finances are a leading cause of divorce: about a quarter of all divorces are because of money issues.
So, develop a curiosity mindset for the other person’s philosophy around money. It’ll be one of the best investments you can make in each other.
What you’ll learn in this episode:
- Why it’s so hard to have completely transparent money conversations with your partner
- Why money and finances is not a single conversation…but a long series of them
- Why investing in this conversation stacks the marriage odds hugely in your favor
- How I have navigated money issues with my own spouse
- The 17 questions you should ask / get to know about your person, ideally before getting married, plus the rationale for each question
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All right, finance friends. Welcome back to another episode of the podcast.
Today I want to talk about how to find alignment when it comes to money and finances with your significant other or your fiancée as you’re starting to seriously contemplate marriage.
Or even your spouse if you’re already married. It’s never too late to start.
This is really important because finances are one of the leading causes of divorce. Upwards of a quarter of all divorces relate to money and finance problems.
So you want to get at what the other person’s philosophy is around different aspects of money as clearly as possible. It is one of the best investments of time and energy you can make in getting to know “your person.”
As part of this episode, I have also created a checklist of money and finance-related questions to get to know about your significant other or fiancée, or even spouse, as you contemplate marriage or begin marriage — whether it’s by asking them directly or just by observing their actions. So you can get that freebie by going to the show notes page for this episode at hackyourwealth.com/18.
I also want to invite you, as always, to join the private Hack Your Wealth Facebook group which you can find at hackyourwealth.com/fb.
I definitely encourage you to join. It’s a way for us to connect, have a two-way dialogue. I’m in there literally every single day, multiple times a day, responding to every question and post that’s in there.
And it’s a way for folks to ask questions about financial independence, early retirement, tax strategies, real estate investing, side business income, online income, career issues, and just ask for advice generally about their personal finance life.
There’s a really great community of people in there, and it’s a great place to meet other like-minded FIRE folks. So I definitely encourage you to join there.
To kick things off, I want to mention that the key lesson or takeaway that you should walk away with, if you learn nothing else from this episode, is to have conversations earlier if possible, as early as possible with your significant other on money and finance issues.
It’s not going to be a single conversation. It will be many of them throughout your relationship. It will be observing their actions and getting clear on your own philosophy when it comes to money.
But do that hard work upfront, before you get married, ideally, if possible. Don’t just jump into the marriage thinking that being deeply in love is enough to conquer all. You are stacking the odds hugely in your favor if you can get to know and get comfortable with how your partner thinks about money and makes financial decisions.
In my own life, my wife and I are generally aligned on finances, but we do have some minor areas, I’d say, where we differ in terms of how we think about money. And I think we’re in a good place now, but that definitely took some getting used to at first.
For example, I live like a frugal hobo college student. I just never shook that off.
She’s generally quite cost-conscious, or cost-prudent, but she is willing to spend more on many things that I probably wouldn’t spend on. Nothing hugely out of alignment, but it’s something that’s important to be aware of.
When we were getting serious about contemplating marriage, my frugality was a little bit of a struggle for me because I was always thinking, “Well, do we really need to buy this or that?”
And to be sure, for me at least, it actually is really mentally liberating to truly not desire material things, which is the case for me now. There’s just very, very few things that I want. I’m very minimalist in my needs and wants.
And that actually frees up a ton of mental space and time to focus on things that I do value more, like my family and loved ones and getting to FIRE, doing work that is good and meaningful, building Hack Your Wealth, this podcast even — all these things that I really want to focus my time and attention on.
If, for example, by contrast, I bought a really nice Mercedes, I know myself well enough to know that I’d be spending so much of my time and money getting the car waxed and polished, hunting down the best service and maintenance shops, worrying about getting scratches on it, nagging my wife not to eat or drink while sitting inside the car on the upholstery. Just stupid stuff like that.
If I had a habit of buying a bunch of expensive gadgets or clothes or whatever, I’d have to spend time learning how to program them all, monitoring their battery levels, servicing them, or worrying about getting stains on the clothes (which is basically every day now with my kid), getting them specially cleaned and things like that.
The point is that all that stuff just takes mental energy. When you buy more shit, it takes more energy. It takes more of your time.
Your stuff owns you as much as you own it.
But my wife has definitely less of an extreme mindset on this compared to me. She doesn’t spend extravagantly by any means, but she also isn’t as extreme or just monastic as I am. And so that’s something that is just important to be aware of in our relationship.
And those kinds of issues could definitely creep up in your own relationship if you haven’t observed them already. So it’s definitely worth the time to try to get insight on those things before you tie the knot.
Another example with my wife and I is that she’s very conservative when it comes to investing. She’s analytical, but she has just low risk tolerance.
She doesn’t have a finance background, so to get her to buy in on things that I think are good investing bets, like the fourplex apartment building we bought a couple of years ago, for those of you who have been following the Hack Your Wealth blog, you know I’ve written extensively about this.
I have to talk things through with her, explain my rationale, really figure out how I can explain it to her in a way that she can fully internalize the risk and reward tradeoff.
If I wanted to invest in, say, dividend stocks, I’d have to explain the rationale for why. That certain companies reliably pay dividends over long periods over the long term and consistently increase those dividends, and that can be a key part of building passive income.
That, for example, qualified dividends get taxed at preferential rates. That they’re truly passive, unlike rental real estate. And what some of the considerations and tradeoffs are versus investing in stocks that don’t typically pay dividends, like Amazon or Google.
These are just a couple of examples when it comes to spending, when it comes to investing.
You can obviously get a sense of these things just by being with someone and dating them for a while. You’ll get some pretty good signal on a range of issues, but marriage will bring out all the issues to the fore.
So as much as you can get insight about these issues before you marry, the better.
It can be really difficult to get that information by just asking because talking about money is hard. It encapsulates so much of our anxieties and fears and worries.
But there’s no other way to do it really, other than having honest, genuine conversations where your heart is in the right place and where you’re coming from the right place.
But it’s really to your benefit to have those conversations earlier rather than later and definitely trying to get clarity on it before you officially tie the knot. It just gets a lot more complicated after that. And I want to save you from that potential heartache.
It gets exponentially more complicated once kids enter the picture.
So I want to talk about some of the questions I would recommend asking before getting married. And I’ll share some rationale and what the question is really getting at with each one. So, foundational questions first.
1. Joint or separate finances?
Number one. Will you completely join your finances together or are you going to keep them mostly separate with each person contributing some amount to a shared pot regularly?
This is really getting at your core philosophy around money. Are you mix and mingle, or are you each side has their own pot so that they can have freedom to spend how they want on discretionary items?
2. What debts are you bringing into the marriage?
Number two. What debts are you each coming into the marriage with? And who’s going to be responsible for those debts?
It is very possible that when you get married, that you’re starting off on two different footings. One of you may have just graduated from school. The other may have been working already for some time and have some amount saved up.
And so this is really getting at your philosophy behind preexisting debts and how you’re going to handle them.
3. What’s your family financial situation?
Number three. What is the financial situation of your family on each side?
Does either side’s family members need any financial help? If a family member from one side gets sick, will you collectively contribute to their care?
What these few questions are getting at is really that when you get married, you’re definitely getting married to the person, but in some sense, you’re also getting married to their family.
And each family has their own baggage they’re bringing to the table. And it’s good to be aware of what that is because you don’t want that to surprise you in a bad way and cause potential problems.
4. How would you spend a windfall?
Number four. If you suddenly got a windfall of $100,000, what do you think you’d want to do with the money?
Would you spend it, save it, invest it? Some combination? A little bit here and there?
This is really getting at some core philosophy around “save, invest, or spend,” how you are likely to handle disposable cash, disposable income.
Number five. What are your views on getting a prenuptial agreement?
Now, this may feel like it’s really awkward and taboo to discuss, but prenups are actually becoming more common, especially given the fact that the divorce rate is more than 50%, at least in America.
So those are some foundational questions. Then, using the four by four FIRE framework pillars, you can begin to probe some additional questions.
6. What are your career income goals?
So around the earn pillar, for example, how much income do you want to strive to earn in your career? How much would be enough?
What this is really getting at is what is the ambition level that each of you has. And you’ll undoubtedly get a sense of this just from dating the person over time, but it is also worth having explicit discussions around what your philosophy is around work.
Do you both foresee yourself working until traditional retirement age, like mid-60s?
Or do you foresee yourself and are you aligned on potentially retiring earlier, maybe in your 40s or 30s, or maybe even 20s if you’re super lucky, and then doing other things with your time?
7. How much money is “enough”?
How do each of you think about financial independence and early retirement?
And how do you think about things like career and income relative to balancing family priorities?
It could be that one of you over time will prefer to shift priorities to focus on family more than focusing on career. Not necessarily saying it’s the woman who does that. It could definitely be the man who does that.
But my point is that you want to make sure you’re philosophically aligned, in lockstep, on how you see your careers and your income ambitions unfolding over the years, so that you don’t then drift apart over time in your goals.
Under the save pillar, there’s a few questions.
8. What is a reasonable budget to each of you?
Number one. How much do you think is reasonable to spend per month on food, clothing, entertainment, things like that?
As I’m sure you can imagine, these things can be very affordable or very expensive. And where do you each philosophically fall on the spectrum?
Do you tend to strive toward utility? Do you tend to strive toward luxury?
9. What kind of car would you buy?
Similarly, number two, if you wanted to buy a car, what kind of car would you buy?
Would you buy a luxury car? Would you buy a utility car?
This is getting at, for big ticket items, are you more of a functional person or do you really want something that is really nice and really luxurious?
These things matter because there are legitimate viewpoints on all sides, and it’s just worth having greater clarity and understanding of where each of you sit.
10. Do you want to buy a house? How much house?
Number three. Do you want to buy a house?
What kind of house? How big and where? Once you have a house, do you think you would hire help for maintenance or would you try to learn to DIY things whenever you can?
This is getting at your biggest consumer expense in life, your housing, and what you each foresee in terms of how big a share of expense housing is going to take from your budget each month. And again, it goes back to that utility versus luxury thing.
Maybe a three-bed, two-bath house is perfectly optimized for utility and is all you technically need, but one or both of you actually want something much larger, maybe with a pool or a large yard that is more in the luxury category.
And it’s just helpful to make sure that you see your futures in this way in alignment.
11. How many kids do you want to have?
Number four. How many kids do you want to have?
12. Budget for childcare, daycare?
How much do you think is reasonable to pay for daycare or preschool?
13. Budget for schooling? (private vs. public)
Would you want to send your kids to public or private school?
14. Budget for college education?
Will you stand ready to fully pay your kids’ college education costs?
All these questions are getting around probably the biggest family expense category you’re going to have, which is around your kids. And obviously, when you have more kids, the costs are going to increase quite substantially.
Usually, education costs are going to be the most expensive part of the kid budget. And understanding each of your philosophies on things like daycare, preschool, public, private school college are really important to understanding what’s going to be, long term, the expected cost burden that each of you has at different stages of your kids’ growth.
15. Target savings rate?
Number five. What savings rate do you want to target?
If one of you is thinking that 15% savings is more than adequate to build for a secure retirement future, but the other of you is thinking more like you need to save more than 50%, then that’s a pretty big gap. And it would be helpful to know that before you actually tie the knot.
Maybe that kind of gap and expectations can be bridged, or maybe it can’t. Maybe it will indicate that you’re actually on somewhat different paths and that those paths may diverge further over time.
Whichever way, it’s important to get that kind of clarity on what you expect, how much you expect to save, because that’s going to impact things like how much you spend, obviously, when you expect to retire.
And it’s just really helpful to get that kind of clarity with your significant other.
In the invest pillar, there are a couple of questions that I would highlight.
16. What’s your investment philosophy?
Number one. How would you invest your money if you had total control?
Would you just put it in the bank or in CDs? Would you invest in a passive index fund? Would you invest in physical real estate, dividend stocks, something else?
This is really getting at what your investment philosophy is because I think everybody wants to use their money and assets to make them grow. They would like to get some kind of return.
But people have very different risk profiles, risk tolerances. And each of you may have different philosophies when it comes to investing, just like my wife and I are coming from different places when it comes to both our understanding of finance but also our risk tolerances.
And it’s important to understand what issues or risk philosophies you can convince the other person on versus not.
And there’s no right or wrong here. It’s just helpful to be aware.
That’s the ultimate encouragement that I’m trying to nudge you toward.
17. What’s your risk tolerance?
Number two under the invest pillar is exactly this. What is your risk tolerance for investing your money?
Would you be okay with investing in riskier assets that could produce, say, a 30% drop, but also potentially produce outsized returns?
Or do you prefer a conservative return with less volatility because you really prioritize stability in your investments and you don’t want that type of volatility?
This is really getting at what I just mentioned a moment ago regarding your risk philosophies.
And it’s really important to understand what each of your risk philosophies are, so that you’re aware of it and you know whether it’s bridgeable and how to have those conversations.
So wrapping up here, we covered a lot. Hopefully, this episode has given you some things to think about when it comes to talking to your partner about money and finances before you get married.
The main thing again I want to urge you to do is to have these conversations earlier rather than later and getting really clear on your own philosophy when it comes to money.
Really invest the effort to do that upfront before you tie the knot. You’re stacking the odds hugely in your favor if you can get aligned with your partner on money issues before you get married.
And remember to grab my freebie for this episode to the checklist of money-related questions that we’ve covered on this episode that you can use as a reference sheet.
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