Your Life in Money: Conversations To Have With Your Partner and Parents

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Money is a deeply personal topic, so it makes sense that money-related choices involve the people you care about. As you move through life, your financial decisions will be inevitably affected by the people you choose to share your life with.

But wait! This isn’t a bad thing. While many of us were taught not to talk about money to avoid discomfort or awkwardness, having candid money conversations with your partner and parents can actually help you feel more comfortable with your finances and secure in your relationships. You’ve already built strong connections with these people, and with allies like them, you don’t have to feel isolated in your finances.

As you hit new milestones, here are some key money questions to keep in mind. 

Key Takeaways

• Talking with your partner and parents about financial goals and planning can help ensure you are on the same page about money. 
• Begin money discussions with your parents as early as high school to determine how much support they will give you after graduation and beyond. 
• Be proactive about money conversations with your partner and revisit your financial planning at least twice a year. 
• When discussing money with your partner, remember that a 50/50 split may not be fair and completely merging finances may not be in anyone’s best interest.

Leaving the Nest

Whether for college or just for the next chapter of your life, moving out is one of the first steps to becoming an independent adult. But leaving the nest doesn’t mean leaving that relationship completely. After you stop living full-time in your parents’ home, you may still want — and need — their financial support. 

Before you decide what to do next, sit down with your parents or guardians to have a serious discussion about your future finances. With conversations like these, experts recommend letting your parents know about them in advance, so everyone involved can feel prepared and ready when the time comes. 

If you haven’t had these kinds of conversations with them before, this probably seems like a daunting task. But these talks will likely help you feel more confident in your decisions and empower you to take ownership of your life and finances. 

What Level of Financial Support, if Any, Can I Expect From You for College Expenses?

According to Erin Lowry, young-adult financial expert and author of “Broke Millennial Talks Money,” you should start talking to your parents or guardians about financial decisions as soon as necessary. This may mean sitting down with them as early as your junior year of high school to understand how they are willing to financially support you during college.

Some parents are not willing or able to support their students financially, while others can fund their student’s education while also providing them with a monthly allowance. Either way, by getting a jump on this conversation, you will be able to make smart decisions when deciding where to go to school or how to save for your education. 

Besides Tuition, Will You Provide Support for Other College Expenses Such as Housing, Food, and Transportation?

When you’re a kid, there are some aspects of life that you don’t have to worry about.  When you move out, these responsibilities become your own instead of your parents’. These additional expenses are not directly connected to tuition, so you will want to consult your parents on if or how they are willing to support these costs. 

You may also need to acquaint yourself with the real costs of these expenses if you haven’t had to think of them in the past. Regardless of whether your parents can provide you with financial support or not, they will probably be able to help you estimate costs and build a budget for the future. 

After Graduation, Will You Help Me With My Expenses?

For many, graduating college means being on your own without the structure of school for the first time. During this transitional period of your life, it’s important to know whether there is going to be a strict cutoff or slow withdrawal from your parents’ financial support.   

According to Lowry, you may want to consider if you are staying on your family’s phone plan, health insurance, or subscription services. Past behavior doesn’t necessarily indicate future behavior in this situation, and you shouldn’t assume that your parents will pay for tuition if you choose to go to grad school or assist with rent if you move to a more expensive area. 

Some parents may allow their children to live at home after graduation rent-free, while other parents may require rent. If you choose to move out completely, you may need to discuss whether your parents are comfortable cosigning or acting as guarantors on your new lease.

“Don’t say anything to make them defensive,” Lowry says. “They don’t owe you a stipend once you’ve graduated college, or even in college, quite frankly. So it’s just making sure you’re able to have this conversation in a pragmatic and direct way that also respects the boundaries that they might be putting into place.”

After this conversation, you and your parents should walk away with a clear plan and timeline.

Moving in With a Partner

Moving in with a partner is one of the most exciting times in your relationship. You’ve found someone that you like enough to live with. 

But amid the excitement, remember that living together is not only a romantic decision but also a financial commitment. Combining households means merging finances to some extent, from dividing rent and mortgage payments to sharing utility bills and managing household expenses.

How Should We Split Rent, Utilities, and Other Household Expenses? What About Chores?

Fair is subjective, and according to Lowry, splitting rent, utilities, and household expenses equally may not always be the most equitable to divide expenses — especially if one partner has a much higher income than the other or if one partner owns the home that the other is moving into. Once you factor in the household tasks too, the division of physical and financial burden becomes harder to define. 

“When it comes to compromising, we often have this rhetoric of ‘If they want to spend $100, and you want to spend no dollars, $50 is in the middle.’ But then, both of you lose,” Lowry says. “Sometimes the compromise is about one person getting the thing that they want, and then just being careful that it doesn’t become tit-for-tat later.” 

Tip

With a conversation like this, you are opening the door to the nitty-gritty of salaries, credit scores, and savings. While you may not cover all of these topics when you move in together, this conversation could help you gauge your partner’s comfort in discussing the topics. 

What Are Your Financial Goals for the Next Few Years?

Lowry says that asking your partner about their financial goals can help you understand the money values ingrained in them throughout their life and learn what they want your life together to look like. 

As Lowry noted, you likely already have a sense of your partner’s financial priorities and style of spending and saving based on their clothing, what vacations they take, and how much they spend on dates. Having a direct conversation about money values may not always be the most productive way to approach the conversation. 

Asking about goals can also delicately approach the topic of debt, allowing your partner to bring up their student loans or credit card debt in the context of their long-term plans.  

How Should We Approach Finances Moving Forward?

According to Lowry, after you have an initial conversation, it can be productive to check in twice a year to make sure that you are both still on the same page. Financial circumstances and expenses may change, and adapting your financial ecosystem for your home is key to creating a sustainable living arrangement with your partner. 

Most importantly, Lowry advises against completely merging your finances when you move in together because no legal protections are preventing your partner from draining the account. While married couples would undergo court proceedings to divide their finances during a divorce, there are no such requirements for couples who break up. 

Committing to Your Relationship

After living together, many people choose to get married, have children, or join their finances in a more serious way. These commitments come with new financial challenges and legal frameworks to navigate. 

By factoring your finances into important life decisions, you will be able to better manage your life and set yourself up for a healthy and happy relationship. 

What Do You Want Our Life Together To Look Like? Should We Be Planning for Children, Travel, or Homebuying?

You should know if you and your partner align in your visions for the future before deciding to commit to one another. Misalignment in these areas can lead to significant conflicts down the road, so attacking them head-on is ideal. 

When it comes to having children or buying a new home — two large financial commitments — Lowry advises looking at the situations holistically to know what budgeting will look like in real life. For children, you may want to consider the costs of childcare, while for moving you may want to consider the effect of a higher rent. 

Tip

Lowry recommends estimating the costs of a lifestyle change and trying to live within a budget that accounts for these costs. The added benefit is that after living within a tighter budget, you will have a larger pot of savings if you decide to pursue that lifestyle change. 

How Do You Feel About a Prenup?

While discussing a prenuptial agreement may not be the most romantic topic, it’s important because marriages are not only about love but also legal and financial considerations. Discussing a prenup can kickstart conversations on financial matters, trust, and approaches to asset management should you need to separate. 

To put a prenup into perspective and dispel some of the stigma surrounding the topic, Lowry said that everyone technically enters marriage with a prenup — the default laws of the state. By creating a formal agreement, you are only personalizing your plan instead of accepting a one-size-fits-all solution. 

Lowry has a prenup herself, and she said that prenups are especially important for women to pursue, due to gender disparities in caregiving and financial responsibilities. Your prenup may involve contributions to spousal IRAs, evaluation of life insurance policies, or revisiting alimony agreements to reflect new circumstances.  

Who Should We Turn to When We Need Advice?

Partners should discuss who they feel comfortable seeking advice from, whether it’s family members, friends, financial advisors, or lawyers. Because money is such a private topic, your partner may not be happy with you consulting certain people about your joint finances. 

Understanding each other’s preferred sources of guidance can foster communication and trust within the relationship. This question also helps to establish a framework for handling challenges and emergencies before they happen. 

Planning the Golden Years

Discussing retirement with your partner, your parents, and your partner’s parents is crucial to building a sustainable financial ecosystem. While your relationships with each person will differ, you should know how your loved ones want to live out their golden years and how you will or will not be involved with that vision. 

The last thing you want is to put off retirement conversations until it is too late to plan ahead, so be sure to prioritize this topic as you and your family members go “over the hill.” 

What Is Your Retirement Plan, and Do You Expect Financial Support From Me?

“One heavily overlooked topic with parents is ‘Are you your parents’ retirement plan?’,” Lowry says. 

As Lowry said, it can be difficult to discuss retirement with parents because they may get defensive or feel like you are trying to “parent” them. However, having these conversations early — around your mid-20s — allows you to prepare well in advance if you will need to step in to provide for your parents. 

The same is true for your partner’s parents as your lives and families become intertwined. Bringing up this topic to a partner is a difficult task but your partner’s finances will probably be your finances too, so their parent’s retirement is a key topic of discussion. 

When it comes to your retirement and your partner’s retirement, being open about your retirement plan and timeline is the most important thing. You should make it clear if you plan to share a nest egg with your partner or if you want to draw a boundary there. As equals, this conversation will likely come naturally over a longer period of time, but you should try to check in about retirement plans every now and then to make sure that you are both on track. 

What Is Your Ideal Care Arrangement When You Get Older?

While this is more of a personal question, it’s again important to know how your family members want to be cared for and how you are involved with that plan. In some cultures, parents return to live with their adult children when they retire or grow old. In other cultures, it is acceptable to send older family members to care homes. 

Understanding the care expectations of your parents and your partner’s parents can help you better plan for the costs of different care arrangements and draw boundaries early on. 

How Should Couples Talk About Money?

Couples should talk about money proactively before making major commitments such as cohabiting, marrying, or buying a home. They should be forthright about their financial and personal goals, including having children, buying property, paying off debt, and retiring. It’s also important to check in regularly to update plans and ensure that you’re still on the same page. 

How Do I Manage My Money With My Partner?

The best way to manage money with a partner is to understand that financial planning as a couple is rarely a 50/50 proposition. “I always love the expression ‘equal is not always fair,'” says Erin Lowry, author of “Broke Millennial Talks Money.” For example, if one person is earning twice as much and has half the student loan debt as their partner, splitting the rent down the middle wouldn’t make sense. 

How Do I Talk to My Parents About Money?

Talk to your parents about money as early as possible, starting in high school if you’re able to do so, and touch base regularly to ensure that you’re not missing out on new goals or information. Be clear about how much support you can expect from them and how much they hope to receive from you, especially during big life changes like your graduation and their retirement. 

The Bottom Line

From school expenses and moving in with your partner to family planning and your parents’ retirement, you will be confronted with difficult and deeply intimate money conversations throughout your life. It’s crucial to have an open dialogue surrounding finances in your close relationships, and early communication can strengthen bonds and provide clarity on financial expectations. 

Proactive communication can ensure mutual understanding and alignment on financial matters, ultimately leading to healthier and more secure partnerships. These questions can put your conversation on the right path.

Read the original article on Investopedia.