Call me crazy but between juggling work schedules, playing hot potato with parenting duties (“but I read stories last night…”), and trying to have a relationship with someone you aren’t responsible for dressing, it’s tough to have a meaningful conversation about anything let alone household finances. If and when you are lucky enough to get a moment (and neither of you fall asleep), have the money talk. While it may not seem as fun as other kinds of talk, the money talk will save you a lot of time, money and angst in the long run. Below are some things to keep in mind while having the financial planning talk.
1. Make it special. Talking about finances is emotional and if you haven’t had regular money talks along the way, you’ll want to make sure your relationship is in a good place. Go out for a date the night before. Enjoy a nice meal and a movie. Remember why you love each other. This will be important when you try to understand why someone needs $300 bike shoes.
2. Create a financial map for your family. There is a lot going on for families these days. Young kids are involved in more activities and older kids are sticking around longer after college. Create a financial plan–literally a map of where you are and where you want to go. Go ahead a draw a picture if you need to. Start with your current obligations and assets and then set some future goals. Whatever it is, agree to it, write it down and start planning how you will get there. Also include, what would happen if one of you couldn’t work or died unexpectedly. Which obligations could you meet on one income? Could you afford daily living expenses? While you may not have all the answers, starting to think about it is an important move.
3. Create a file for important papers. Create a central place to store account numbers and passwords. Don’t forget social media accounts and passwords, too. Keep this file updated. Make sure you have a copy of your wills and other legal documents in a safe place as well. Tell someone else you trust where this is in case both you and your partner can’t direct people to them.
4. Talk about ‘til death do us part. Yes, that was part of the deal, remember? Make sure you have adequate life insurance coverage to cover what needs covering: mortgage, income, paying for college, etc. Also, research life insurance with riders that will let you access the death benefit while you are alive if you have a qualifying terminal, chronic or critical illness or critical injury.* Many families consist of dual earners and would be hard pressed to survive on one salary alone for any amount of time. So yes, you both need life insurance. Use this calculator to see how much you might need.
5. Don’t forget the work you don’t get paid for. A lot of the work you do every day doesn’t provide a pay check. Driving to soccer games, packing lunches, doing laundry and food shopping, administering band aids and running a mini financial enterprise called Home. You do a lot. So remember to talk about who will take care of the kids, aging parents and your household duties if you aren’t able to due to an unexpected illness or death.
6. Plan for good times and bad. Successful savers are successful because they have a plan. And more important than the plan is that they have a reason why. Daydream about what you want to do and don’t want to do. This will help develop your why. The daydream part is critical so don’t skip it. If you aren’t invested in your dreams, your money won’t be either. Plan and save for both sets of events.
Aim to have a financial check-in at least quarterly to get in the habit. Once it becomes habit and talking about money is no longer a struggle, aim for weekly check ins with each other. It is easier to have lots of mini money talks than it is to have a quarterly summit. Frequent conversations allow you to be more nimble in changing things that need changing and being proactive about financial concerns.
*These riders are called Accelerated Benefit riders. Payment of Accelerated Benefits will reduce the Cash Value and Death Benefit otherwise payable under the policy. Receipt of Accelerated Benefits may be a taxable event and may affect your eligibility for public assistance programs. Please consult your personal tax advisor to determine the tax status of any benefits paid under this rider and with social service agencies concerning how receipt of such a payment will affect you.
Riders are supplemental benefits that can be added to a life insurance policy and are not suitable unless you also have a need for life insurance. Riders are optional, may require additional premium and may not be available in all states or on all products. This is not a solicitation of any specific insurance policy.