Everyone has money secrets and ways they feel about money, how do you begin the conversation?  First, can you agree together that money should be discussed?  When my wife Becky and I were receiving pre-marital counseling advise from our pastor, he advised us that if we can talk openly about money and sex, you’re going to avoid a majority of the arguments caused by misunderstandings and lack of communication.  It doesn’t mean there won’t be some disagreements and even arguments, but at least the issues will have been discussed and you each understand the other’s feelings and wishes.

We need to recognize that everyone has had different experiences and upbringing about money and finances.   To start, you can share with each other what lessons or messages about money you learned growing up.  My wife’s dad was an accountant so she learned the value of a sale and how to find bargains.  She learned how to balance a check book, manage credit and keep debt to a minimum.  They were a solid middle-class family in suburban Atlanta.  My experience was different, growing up in a small community, both parents were in low wage positions and money was always a challenge, it was never discussed and I learned zippo about personal finance.  My dad did help me go to the bank and get a loan for my first car but that was all I recall in any money discussions.

Next, you can each share some good and bad financial decisions you’ve made and what you learned.  But as a couple, openness and honesty is paramount to coming together on these topics.  Can you agree to be fully open and honest about your feelings around saving, spending and investing?

So, what if two people are too far apart from their feelings about money?  Start with open dialogue about the following topics as a guide:

1. How much should be in savings/cash reserve and how much should we save vs. invest per month? Wisdom and experience suggest that families have at least 4-6 month of expenses in cash reserve.   Setting us an auto deposit into savings each month can make this a seamless process.

2. Who handles the bills and expenses? We usually find that one spouse does the heavy lifting here but both should be aware of the household income, account information and how to access them. Its common that one spouse has a desire or willingness to take on the responsibility but the other should not be kept in the dark.  But what happens if neither prefers to take it on?  You could take turns for a period of time only to find out that one of you is better suited for the task.

3. Should we work from an agreed upon monthly budget for household expenses? It depends many times on your income.  Those with lower incomes may need to monitor expenses and stretch the dollars more closely.   More affluent families may not be so concerned with tracking their cash flows.  Budgets are hard work and tracking expenses can be a challenge but with some commercial software programs like Quicken or QuickBooks, it can be more easily automated.  Then there is the issue if you exceed a budgeted area of expense, do others need to be cut etc.?

4. This one’s a biggie- can you come to agreement on how much is ok for each spouse to spend without approval from the other? This is critical to avoid future blow ups and misunderstandings- what happens if you find out one went over the agreed upon limit without consulting the other?  For example, to surprise his wife, Roger goes to her favorite car dealer and signs a loan for a new car above their agreed amount for her 50th birthday. Did he violate the code?

5. Should we both work with our Financial Advisor, Tax professional and estate attorney or is it ok if only one of us deals with them? Its always better that both are engaged to a certain extent and aware of things like investment objectives, risk factors, income needs, to name a few. Both should know what insurance coverages are in place and who are the named beneficiaries.  Each spouse should be involved in decisions like who will act as our power of attorney, personal representative and health care surrogates for each.

6. How much consumer debt are we ok with? What kind of debt-to-income ratio (DTI) are you willing to take on?  DTI measures all your monthly debt payments divided by your gross monthly income. This number is one way lenders measure your ability to manage the monthly payments to repay the money you plan to borrow.  When it comes to home mortgages, auto loans and credit cards, its best to agree on a debt-to-income ratio that positively impacts your credit ratings.  At 35% or less, you’re looking good – Relative to your income, your debt is at a manageable level. You most likely have money left over for saving or spending after you’ve paid your bills. Lenders generally view a lower DTI as favorable.

7. Do we each have our own separate credit cards or use the same card #? If you’re using separate cards, I believe you’re opening up potential land mines that could blow up trust in the relationship.  My wife and I each have two copies of the same credit card, so no secrets are potentially lurking on our expenses.  Unfortunately, it does make it a little challenging to surprise her with birthday or Christmas gifts, so a little creativity is needed.

8. Do we maintain separately registered savings and investment accounts or in joint name? Each will most likely have their separate 401k, Roth or traditional IRA accounts.  There may be reasons to keep separate non-retirement accounts like an inherited investment account by one spouse.  Second marriages with pre-nuptials can often necessitate maintaining single ownership record keeping.  Sometimes separate trust registrations are appropriate for estate planning purposes.  More commonly though, using Joint Tenants by Entirety or Joint Tenants with Rights of Survivorship is the typical account registration.

9. How do we come together on what our idea of an ideal retirement looks like?

a. What kind of lifestyle are we both accustomed to living now?

b. How much do we actually want to have in full retirement?

It all starts with defining retirement goals together. It’s never a good idea for one spouse to decide on these goals without the other’s input!  Can you agree on what amount of income you really want to have from all sources?  The question is not necessarily what will we have from social security, pensions, retirement account distributions etc. but what do we want?  Having your financial advisor run projections on inflation, your longevity estimates, your goals and conservative rates of return can help determine the feasibility of your goals.

Bottom line, open and honest communication on all these topics should help families enjoy a well-balanced approach to their money matters.

This content has been made available for informational and educational purposes. For professional financial advice always seek the advice of your financial advisor or other qualified financial service providers with any questions you may have regarding your individual situation. Securities are offered through Raymond James Financial Services, incorporated member FINRA and SIPC. Investment advisory services offered through Raymond James Financial Services advisors incorporated. Fleishel Financial Associates is not a broker dealer and is independent of Raymond James Financial Services.