Society

How to Get on the Same Financial Page as Your Partner

It's a joint venture.

by : Truc Nguyen- Mar 3rd, 2023

Michaela Ravasio (Stocksy)

Getting serious with someone? Moving in or planning a wedding with your partner? Then this is the time to have those big-picture conversations about money that one or both of you might have been putting off. It may not be an easy or fun process—according to an RBC survey conducted last year, money is a top stressor for 47 percent of Canadian couples and 32 percent find it hard to open up to their partner about finances—but the potential long-term gains for your relationship are more than worth the effort.

“My joke is always that you don’t have to whip out your credit report on the first date,” says Shannon Lee Simmons, a Certified Financial Planner (CFP) and founder of financial-planning firm The New School of Finance. “But I do think having big money conversations early on is critical to actually building a life with someone financially.”

There are many reasons why a lot of people avoid these conversations; maybe they’re worried about not meshing financially or about things like debt impacting a relationship’s prospects. “But as soon as you’re talking about future plans, that’s when you have to start having money conversations,” says Simmons. Those plans could include moving in together, having a baby, getting married, starting a business or buying a house. “Whatever it is that you’re going to do together financially, you need to make sure you’re on the same page so that things don’t blow up later,” she adds.

According to a 2021 TD Bank survey, 56 percent of Canadian couples share details about their finances with each other within the first six months of dating and 77 percent do so within a year. This was the case for 28-year-old Emily* and her 30-year-old boyfriend, who met online just over two years ago. Even in the early, getting-to-know-each-other phase of dating, the Toronto couple talked about their spending habits and money outlooks. “We were able to have those conversations around what we want,” says Emily. Not in an interrogative way, she notes, but through asking questions like “How do you spend your money or extra money?” Still, they didn’t get into specifics around things like assets and income until after about six or seven months of dating.

If you’re just getting started, Simmons suggests first asking your partner how much they make because that is an important piece of information for you to know. “It’s going to help things be equitable between the two of you later; if you have income disparity, you can’t just split everything fifty-fifty, right?” she says. Additionally, you want to talk about debt and savings, financial obligations, your money personalities and even your credit histories. “The reason for doing that is not to point the finger at anybody for making good or bad decisions or to say who’s good with money and who’s not good with money,” emphasizes Simmons. “It’s so that you can make a plan together that’s fair.” Keep in mind, too, that “fair” and “equal” may not mean the same thing, especially if there’s a big disparity between your incomes or debts.

Emily and her boyfriend have been splitting the costs of bigger joint expenses like vacations equally, but they have talked about how that might change once they are living together in his condo because he currently earns almost twice as much as she does. One approach they are considering is combining most of their money into a joint account. “We do believe it’s still good to have a personal account for whatever you want to do, but when it comes to joint expenses, they would come out of that joint account,” says Emily.

How you want to manage your finances as a couple or household is a very personal decision, of course. The important thing is to have honest conversations and make joint decisions around how you will share financial responsibilities. “I truly believe there’s no right or wrong,” says Vanessa Bowen, a Chartered Professional Accountant (CPA), money coach and the founder of financial-services firm Mint Worthy Co. “It comes down to what aligns for you and your partner and what’s going to make your life easier. And as long as you choose that and stick to it, that’s all that matters.”

Still, a study published this year in the Journal of Personality and Social Psychology found that couples who pool their finances are more likely to be more satisfied with their relationship and less likely to break up. And there can be other benefits to pooling some or all of your finances when you’re in a committed relationship.

Alice* and her husband, both 37, have been together for more than a decade and married for eight years. They opened a joint bank account when they moved in together and fully combined their finances shortly after marriage. “We were 26 when we got together and didn’t have a lot of assets or a lot of debt, so it was very simple to join our accounts,” recalls Alice. “And that has been helpful because at different times in our lives, one or the other of us has not been working.” They were able to take risks in their careers because they have shared accounts, explains Alice. She felt more comfortable starting a business a few years ago and, later, taking a step back from it to care for their young children during the early days of the pandemic.

If you do decide to go the route of shared savings and assets, consider talking to a family lawyer about the legal ramifications. “When couples are looking to combine finances or purchase property, they need to decide what will happen if the relationship fails or one of them dies,” says Richard Bell, a Vancouver-based lawyer who specializes in estate planning. A cohabitation or prenuptial agreement “would specify how assets would be distributed, which hopefully [means you would] avoid a messy and expensive legal battle,” says Bell.

Beyond that, however you choose to manage your finances as a couple, it’s key to get on the same page regarding your personal and family goals before you create a plan. Alice and her partner, for example, were aligned very early on about their goals. “I think the first two conversations that we had with each other were that it was important to both of us to not have a lot of debt and to buy a house by, hopefully, our 30th birthdays,” says Alice. And because they had those conversations, it was easier for the couple over the years to make lifestyle and financial decisions together that would support those goals.

When it comes to setting goals, you want to make sure that they are shared and prioritized in a way that makes emotional sense for both partners, advises Simmons. “Because if one person really doesn’t want to buy a house or if one person really doesn’t want to have a big wedding or go on a vacation, they’re not going to be as motivated to reduce expenses to save for it, and that’s just going to lead to fights.” Finally, keep in mind that the goals you set and the plans you make will shift and change as your relationship evolves—and that’s natural. “You have to come back to the family financial plan and adjust it as your life adjusts,” says Bowen. “It’s not ‘set it and forget it’—it has to evolve with you.”

*Names have been changed.