Ah, February. With only 28 days, this short little month manages to pack quite a wallop, from wacky weather to omniscient groundhogs, to Super Bowl hype, to Mardi Gras, to the wrap up of a glitzy Hollywood award season.
Our general mood seems to shift with this month, too, as the practical and the romantic converge to realign our focus to a few key February agendas:
taking stock and organizing, as a byproduct of lingering New Year’s resolutions, being stuck inside, and current Marie Kondo mania; money, thanks to those freshly delivered W2s and the commencement of tax season; and love and relationships, as Valentine’s Day serves as our annual reminder to ply our loved ones with cards, candy, and gifts.Because of this unique convergence of organization, money, and love, the brief month of February can serve as the perfect catalyst to get on the same financial page with your spouse or partner.
In other words, make February the time you have “the talk.”
Whether newly coupled, further along the path, or with the golden years right around the corner, reviewing your plans for combined finances and retirement can ensure you are both taking the right steps to get to where you want to be together.
Here’s how to get started.
Common GroundThe
2018 Fidelity Couples and Money Study shows just how out of sync most couples are when it comes to shared financial planning:
46% cite money as the biggest challenge in their relationship 67% argue over money Over 40% of couples do not agree on when they will retire 54% don’t agree on how much they need for retirement savings; 49% have “no idea” what that number might beClearly, we seem to be acting as single people within the context of our shared finances. Only by gaining insight into our partner’s resources and goals can we begin to remove the fear and anxiety around money and replace it with shared purpose and strength.It starts with establishing a common ground in which you are both completely honest about short and long term issues:
Current financial debts and obligations Current methods of budgeting and saving Shared goals for short term savings (think vacations, cars, home improvements) Shared goals for long term savingsThis last category will be very broad and should include the big questions like where you want to live in your later years, what you want to accomplish in retirement, any known health issues or how you can plan for the unknown ones, at what age you want to retire, how much you want to dote on the kids or grandkids, and so on.The key to this discussion is to be frank and open about your dreams and expectations, and how you can work together to make both of you happy.Be thorough, but don’t make it painful. Stretch it out over a few nights, maybe with your favorite takeout, or the promise of watching your favorite show together once you’ve covered X, Y, and Z.
RESOURCE:
Fidelity’s Couples and Money Starter Guide Take Action
With a new perspective on where you both are coming from and where you want to eventually be, now is the time to lay out a plan for the next year. What steps can you take in the next twelve months to get you closer to those shared goals?Months 1-3If you haven’t budgeted together before, now’s the time to do so. Otherwise, you’ll each be making decisions in a vacuum, never knowing if or how you are contributing to the future.If you have been co-budgeting, try recalibrating and seeing how you can cut back, rearrange, or prioritize in ways that positively impact your goals.Related:
Before You Kick Back to a Traditional Retirement, Read ThisRelated:
How to Budget and Make Room For Your Passion RESOURCE:
Best Budgeting Apps for CouplesMonths 4-8Get your affairs in order. Take these months to review all the paperwork: insurance policies, account statements, wills, and trusts, etc. Work with a professional if you have to in order to create a solid plan for your assets.This exercise will serve double-duty, not only tackling these important topics but helping to identify which one (or both!) of you need help in better understanding these topics.Part of caring for your partner is caring enough to give them the information and resources to be financially empowered in the event they will have to manage finances on their own.
RESOURCE: Estate planning for
unmarried and
married couples.Months 9-12Take advantage of end-of-year incentives to better align and maximize your goals:
If you get a holiday bonus or tax refund, use that money to max out retirement account contributions, beef up your emergency fund, or build college savings plans. If you itemize, now’s the time for charitable giving. Most companies offer open enrollment toward the end of the year, usually in October. Analyze your benefit utilization to determine if your enrollments are appropriate, or if you could make better use of the options available to you. If you’ve got FSA money to spend, now’s the time to schedule a physical, get new glasses, order the screenings, dental issues etc. Remember that physical wellness is a component of overall financial wellness.This twelve-month plan will prepare you well to meet again next February, maybe over a romantic Valentine’s Day dinner, to review how far you’ve come, and plan once again for the year ahead.
RESOURCE:
Year-end Money Moves Know When You Need Help
If managing shared finances were as easy as all this, then money wouldn’t be the primary cause of stress for almost half of all couples.Navigating “the talk” can be challenging even for the most simpatico of couples. You should expect to hit some bumps along the way, and maybe even face what appear to be absolute stalemates as you try to establish your joint plan.This is where a certified financial planner can help. We can provide an objective third party perspective, guide you with expert advice, and suggest solutions that will be in the best interest of both of you and your future plans together.Including a professional advisor in your financial planning may be just what you need to ensure that you and your partner remain happily on track for many Valentine’s Days(and Mardi Gras) to come.
