Spring is well sprung and perhaps, in this season of love and marriage, you have a honey. If so, now is a good time to talk about money. A couple of years ago, when speaking on this topic I asked the audience for a show of hands if they had ever checked their credit report. At least half of them had.
Then, I asked how many had shared that credit report with their main squeeze. A handful of digits were hesitantly raised. One woman in the front row made a face and said, "Oh my god, that's so intimate!"
And she's right. Money is a very intimate topic and while many couples have no trouble talking about what they'd love to buy or how life would change if they won the lottery, getting down to everyday dollars and cents is a lot harder.
Happily, the Financial Consumer Agency of Canada (FCAC) is taking love and money very seriously. I applaud this step as I've maintained for years that financial difficulties are a leading cause of marital stress. You don't need to know anything about finances or how to start the money conversation because the FCAC has laid down a yellow brick road for couples to follow in its online "Life Event" series.
Before you get down to the minutiae of who buys the groceries and who pays the utility bills, take a look your joint big picture. Inspired by the FCAC couples project, I've come up with six steps that will help define each person financially and lay the groundwork for short, medium and long-term planning.
If it all seems a little daunting and, well, intimate, why not tackle each topic between periods of the playoffs - they go on forever anyway so you'll have lots of time.
1. Who are you? It's true confessions time. Talk about how you each behave with money, what worries you and where your strengths and weaknesses lie. Quite frankly, many people aren't very good at self-assessment when it comes to money but once you start exploring the topic as a team, aspects of your financial personality you ignore, avoid or simply have never thought about will come to the fore.
2. What do you owe and own? Many couples go into a relationship and even get married without a clue about their partner's assets and liabilities. It doesn't help a relationship to discover an ancient student loan, deeply in arrears, just as you're negotiating a mortgage for your first home together.
List out every debt including loans, credit cards and anything owed to family or friends. Then detail assets including all bank and investment accounts as well as anything such as art, jewelry or antique cars. Don't forget to include workplace pension plans and benefit packages, as they are notable assets.
3. Share credit reports. If you've never examined your report and don't know your credit score, this is an excellent time to repair that omission. Aside from anything else, you might find closed accounts or discharged debts that are still listed as active. You can then correct the error with the credit-reporting agency.
Another bonus is that if one partner has a poor credit history, the other person can help make a plan to improve it for the future. Of course, the trick here is not to boggle openly at debts that have been hanging around since the Arc or be judgmental about stupid mistakes, such as that time-share your best beloved purchased after a few too many tequila shooters and has lately "forgotten" to make payments.
4. What's the cash flow? I am constantly amazed to discover couples that don't know each other's gross income, let alone disposable income at month's end. Lay out the monthly after-tax income and list all monthly obligations. Don't forget annual or semi-annual payments such as insurance. This exercise will lead you toward creating a couple's budget, which is a far more efficient way of handling money than trying to stick two individual budgets together.
5. Establish your roles. One of the most difficult aspects of coupledom, especially for those who have been single for a long time, is deciding how to manage joint finances. It isn't really important how you do it but rather that you have a discussion, come to an understanding and stick to it until you decide together on a change. Some couples throw everything into one pot; others keep their money separate and split up the bills.
6. Dream. We all do it and, chances are, those visions dancing in your head cost money. Whether it is being a stay-at-home parent, bicycling around the world, going back to school, starting a business, living on a farm or retiring at 45, cast such dreams in your honey's direction. All kinds of wonderful things can come of this exercise including discovering that the love of your life shares in them.
But even if that isn't the case your dreams and goals should form the basis of a financial plan together.