5 Money Conversations Every Couple Must Have for a Stronger Relationship and Financial Future

Essential Money Conversations for Couples

Welcome back to The Retire Early Retire Now podcast hosted by Hunter Kelly, certified financial planner and founder of Palm Valley Wealth Management. This episode emphasizes the significance of open money conversations for couples at any stage of their relationship. Hunter delves into five crucial money topics that every couple should discuss to avoid future financial stress: understanding each other’s values, creating a game plan for goals like paying off debt or purchasing a home, establishing a system for daily money management, envisioning retirement and future plans, and addressing estate planning. By discussing these important topics, couples can align their financial goals, support each other's individual aspirations, and build a more harmonious financial future. Hunter also highlights the importance of revisiting these conversations regularly to adapt to life's changes.

00:00 Introduction to Money Conversations for Couples
01:21 Understanding Each Other's Values
07:43 Creating a Financial Game Plan
10:35 Managing Day-to-Day Finances
17:26 Planning for Retirement and Future Goals
22:03 Estate Planning and Tough Conversations
24:11 Conclusion and Final Thoughts

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Transcript

0:00

And welcome back to The Retire Early Retire Now podcast. I'm your host, hunter Kelly, certified financial planner and founder of Palm Valley Wealth Management. Today's episode is for every couple listening, whether you're newly dating newlyweds, been married for decades. Because when it comes to money, there's a hard truth. The conversations you avoid are the ones that come back to haunt you. I've seen it all in my work. Couples who thrive because they talk openly about money and couples who consistently fight because they don't. Here's the thing, it's not about agreeing on a budget. It's about understanding each other's values, your goals and visions for the future. So today we're diving into five money conversations. Every couple needs to have these talks might feel uncomfortable at first, but having them early and revisiting them often can save you years of stress and potentially thousands of dollars. So if you know a couple that could use this help or use this podcast as maybe a, a benchmark on how to start working better, With money, with their, with their spouse or their significant other. Share this with a friend and leave a five star review on your favorite podcasting app. So let's jump right into it. What values do we have? This is the first conversation that you and your significant other should be having. It shouldn't be about budgets or investments or retirement. You need to know what the other individual values so that you guys can have a conversation and align those values together. That doesn't mean it'll always be a hundred percent aligned or the same, but you can have. Empathy and perspective on what they value. And you can see kind of like you can see where you guys meet in the middle, right? So you can identify with what matters most. could be financial security, travel home ownership. Early retirement, hopefully because you're listening to this, this podcast itself. Charitable giving, family experiences, career flexibility, or maybe just living with zero consumer debt, whatever that may be. there's certainly something, that. Made you guys get together. and there's probably some overlap there, right? And so the important thing is to have that conversation, understand where you guys overlap, how you guys can align, but also acknowledge that you're going to have individual goals as well. couples, often have overlapping priorities, but also have personal passions or hobbies or interests. So you guys need to talk openly about both and commit to support each other's individual goals and values, right? So whether that's funding a hobby, so for me. I really, really enjoy hunting. and this is something that is not a shared, hobby with my wife. She, she supports it, but, I don't know that I'll ever get her in a tree, in the middle of September or October. getting ready to, find a whitetailed deer. But she supports it, right? Just like there are things that she values, like going on girls trips and getting her nails done, and things of that nature. all the things that girls like to do, right? that. I could care less, but I wanna support those things because she works hard as a mother and a nurse, and I want her to be able to enjoy her life as well. Now, the things that we like to do together, we like to travel, we like to support our children and their endeavors. we love going to new restaurants and things of that nature, so we do obviously have some overlap, right? we want to one, talk about this. We want to acknowledge it, and we want to make sure that we have a plan so that we can both achieve those goals and do the things that we love to do, whether it be our individual goals or our team or shared or family values and goals, right? making sure that you can. Understand both your goals and your spouses and getting them together, and being supportive of one another is a big deal. And honestly, working as a financial advisor for the past eight, nine years, the most difficult couples to work with are the ones that don't have. This conversation because they're not on the same page. It leads to more arguments about money. And no surprise, one of the biggest drivers of divorce is money. Right? And so one of the easiest things that you can do to alleviate some of this problem is having these conversations. Some more examples, right? So a couple could realize that they like to travel and one, one spouse likes to travel. The other one likes, or values home renovations more. They want to have the place where they live to be comfortable in the way that they like it. So in this scenario, you would need to create a plan that would satisfy both, right? Again, these are good conversations to have and one of the things that my wife and I like to do, I call it the lottery conversation. and you don't necessarily have to do it this way, but I like asking myself, I like talking with my wife and asking, okay, well if we had an extra$10,000 this year. What would we do with it? And of course, the mind wonders, right? So you say, oh,$10,000. Well, that's easy, was put in savings or invest or or go on a vacation or whatever, right? Whatever fits with your values. So that, that's what makes this, conversation fun as you get to dream. But also you can really understand, where your spouse is coming from, what they value, because now they. Theoretically have an extra$10,000. and if they're putting it toward, home renovations, obviously that's something that they value and want to improve on and, and things of that nature. Right. And so I call it the lottery game because, uh, you can just progress from here. So what if we had a hundred thousand dollars? I always try to 10 x exit every time, right? So what if we had a hundred thousand dollars? What if we had a million dollars? and so this really, can be a fun game, but also understand, okay, well once we hit some of these milestones. We can achieve some of these things that we want to, to do and these things that we value. and it's just a fun game to play as well. So that can be one way that you can, have this conversation is, is kind of have a, a silly or fun conversation with it is. Is say, okay, well we have a little bit extra money, what would we do with it? Right? and you can do this on date nights, you can do it on a random Sunday night, whatever it may be. the biggest thing here also is to, is to revisit these conversations because, things will change over time. Right. and I'll, I say this a lot in my podcast and I say a lot to clients. Five years ago probably looks quite a bit different than it does now, and it's likely that five years from now is going to look different than than your current situation. And so you wanna revisit these conversations because, as things change, you'll need to change your plan. Right? And that's the next portion or the next conversation that you need to have with your significant other. And that is creating this game plan. And so we're gonna use the example of maybe you're working to pay off debt, right? And so what is our debt game plan? Because we have discussed that, hey, we don't want to have consumer debt, or we don't want to have any debt at all. and a lot of times. Especially, physician clients. One may come in with a bunch of student loan debt. The other one, maybe has zero student loan debt. And so how do we attack this? It, it, obviously if you know that you're marrying a spouse that. did go through medical school and residency and all that, they, they're likely going to have a significant amount of student loan debt. and you obviously have to be okay with that, but what is the game plan to pay that off, right? Is it, is it paid off as quickly as possible? And a lot of this comes down to values. Yes, there are numbers involved and, and you want to be efficient with it and make sure you're doing the best thing financially, but also there is that emotional side to it. Does that debt. Keep you up at night, things of that nature that you're gonna have to talk with your spouse about. Right? And so you have to create a game plan, to accomplish these goals. And maybe that goal is to purchase a new house in five years, right? Because that's. You value having a nice home where your kids can have their friends over and you can, you guys can have that entertaining space where now instead of your kids going out and playing elsewhere, you can be that kind of central location of where the neighborhood kids want to hang out, right? in order to do that, maybe you have to purchase a new home to, to create those spaces that you want, right? Yes, you can dream about this. You can have these conversations like I talked about, just a second ago with what if we had an extra$10,000 or a hundred thousand dollars or a million dollars, right? But if you don't put a plan in place, if you don't create a plan, none of that will come to fruition. having the conversation of, okay, how do we take action on these values, on these goals, on these hobbies that we talk about? and so writing this stuff down, creating a plan, Yeah. And then revisiting this plan, whether that be weekly, monthly, quarterly, whatever that may be for you guys to help you stay on track. in the example of paying down debt, write down the debts, whether that be, the different suit loans you have, maybe you have some consumer debt, credit cards, auto loans, whatever that may be, the interest rates. And then come up with a game plan, right? Whether that be the snowball. payoff method, the avalanche payoff method, taking a chunk of cash that you may have to pay off a significant amount of it or all of it, whatever that may be for you guys. create a plan that you both can get behind, and then reevaluate that plan, periodically so that you can stay on track. And then the next conversation, number three, you, should know how. Or have a system in in place have a conversation to create a system to how do we handle our money day to day? Right? And this is where most of the arguments that I find come into play is with this daily budgeting or this day to day spending of money. one because. We don't have this convers, the first conversation that I talked about, couples don't have that, Hey, what are our values? Right? You said that you wanna spend more money on hunting, but you, just bought, this random tool for six,$700 that is taken away from your hunting budget or whatever, right? it can be a number of things. creating a system on how you're going to handle, that day-to-day spending. Centered around the values that you've already talked about with your spouse. So Will, if you're, if you're getting married, maybe, or maybe you're not happy with how you guys manage the day-to-day money or, transactions, will you combine finances? Will you keep it separate? Will you do a hybrid? who pays the bills? is it from an individual account, from one spouse or the other? Who tracks the spending? Who pays the credit card? Who pays the other, other utility bills that can't go on the credit card as a reoccurring payment? things of that nature. Setting up systems, who sets up the joint accounts, who manages the joint accounts, and in, whatever bank that you're using apps. and so how is all of that gonna happen? And so one of the ways that I have found to be the most effective, for my clients, is what I like to call the hub and spoke system. So I, I find that having a centralized account, pick. Whatever, x, y, z bank you want, but having a centralized checking account for all your income flow to go in and then sending that money out to other accounts for personal spending, saving, investing, retirement investing, or even just discretionary fund makes the budgeting far more efficient. and it helps you track everything. or where every dollar goes, right? having that one central account can be your operating account. So for me, I like a a, a baseline. Dollar amount in that account. one that I know generally it's about a month's worth of, expenses there. and then anything over that I keep in like a money market account where I can earn a little bit more interest, but I just wanna say a month ahead, essentially. Right? and then so all of my spinning, or credit cards, whatever my monthly is from there. And then, from there I send out my, my savings to my. My emergency fund, I send out my investing, to another account, whether that be for my brokerage account or my retirement accounts that I'm investing in. And then, I like to have, an account where, We essentially can have, an account, me and my wife, where we can't spend whatever we want and we don't have to have like a check and balance. Because a lot of times when couples come in, arguments are, well, you just bought this a thousand dollars tool, or you bought this. thing at Target for$600 or whatever. if you can create an account where maybe you have some discretionary spending money left over and one is set for you, one is set for your spouse, and whatever you wanna spend out of that account is whatever you wanna spend. If they save that thousand dollars to go buy that fancy tool or piece of hunting equipment or whatever, Decoration for the house at Target, whatever that may be. then there's no, there's no, uh, reason to get upset or, question what they're spending because that is from their account that you guys have decided, Hey, we're gonna put a couple hundred dollars. In here a week or a month or however you guys divvy up your, your expenses, right? So it gives you, some autonomy on spending, and not feel like you're being micromanaged by your spouse. And I, I think that's helped, a bunch of my clients, but also, me as well personally. the next thing that I like to do, within these conversations of how we handle things is I like to know, or discuss like what we should be spending on a weekly basis. Maybe it's just the way my mind works. I can't see for further than a week ahead. I, I don't know. but, I go in, I look at my, what my credit card bill should be every month. I pay it off every month. what should it be? And then I break it down into weekly segments, right? And so I have a conversation with my wife and I say, okay, well this is how much we should spend this week. And so it's easy to just pop on my credit card app, and say, okay, well, uh, we've spent$300 just this week. We have this much left to spend, right? And so now I don't have to worry about. Again, the specific items that I'm buying, I just know I can't hit over a certain amount. If I have other goals that I'm trying to hit for saving or paying down debt, investing, whatever those other goals may be, I know that if I can hit this amount every week, then I'm gonna have enough one money to pay off my credit card. But two, I'm gonna hit those other goals, which is the more important, point here. Right? again, it's just an easy way to, to break your spinning into digestible chunks. Again, my brain works in weak segments. You can do, you could do it a month, you could do it a quarter, however it works for you. I think the more you look at it, the more frequent you look at it, the more you're gonna measure it, the more it's going to, Work out for you and you're being able to have a, a, a more, a better handle on the day-to-day money. And again, these are conversations that you need to, to have with your spouse and create a system that works for the both of you. Right? Maybe combining accounts. Wouldn't be a good idea based off your situation. Maybe you had some past experiences, maybe you're divorced and, your, your ex spouse was very controlling and you wanna have your own thing. Well, that, that, that can work, right? You just have to get your spouse on the same page and this is how we're gonna do things. All my money is gonna go in my account and then we will have a specific bill paying account that we'll Venmo money into or transfer money into, whatever that may be. And then my money is my money, right? at least in the eyes of how we manage things now legally and being married and all that, that may be different. But, that's just kind of, we gotta get on the same page of, we gotta get on the same page of how do we do the day to day? Money management. the fourth conversation that you should be having with. Your significant other is what does retirement look like or what does our future look like? Kinda alluded to this earlier, but you guys should be having conversations of like, what do we want to happen in the next five or 10 or 15 years? you can't plan for retirement if you don't agree on what it looks like or even know what your spouse thinks it's gonna look like, right? what age do you wanna retire? What, what work? Do you wanna work part-time in retirement? do you wanna be able to travel? Where do you wanna live? Do you wanna downsize or do you wanna stay in the same home? do you wanna buy a vacation home? how much do you want to help the kids with college and weddings or inheritance? Like, what are all these questions look like? and honestly, I think especially if you're still in your thirties or forties, having that conversation about what the next five years looks like. It's an important one as well. Probably more important than retirement. Obviously you wanna save for retirement and you want to talk about it periodically, but having that conversation about the next five years, again, maybe it's the way my brain works in smaller chunks, but it gives you kind of that more short, shorter time horizon. Where you can kind of see the light at the end of the tunnel. You may have some goals, some aspirations that you want to achieve in that five years. and they're, they're attainable or they, they seem, just within reach. Whereas if you still have 15, 20 years into retirement. It's hard for the brain to conceptualize what that's gonna be like. Especially like me with having young kids that are, just barely getting into school. I can't imagine them graduating high school right now. What that, what life would be like at that point. I know kind of what I wanted to look like. and so I'm, I'm gonna work toward that. But having that conversation about. Five years from now, I think can, can be just as helpful if not more helpful, moving forward. And For me, it could just be, I know I wanna retire early, so hey, I know I need X amount of dollars, in my brokerage account or my retirement account. so that I know that I'm on track, to retire, at a certain age. Right? And that can be my five year goal. And then the next five year goal can be another balance that I need or a debt paid off, or whatever that may be for my specific goals. And so, uh, couples who have totally different retirement visions. So sometimes when you have these conversations, you may have totally different visions. Right? and so that, that's kind of the theme of this podcast. If you have a different vision, I can, how can you come together and be aligned on it? Right. Obviously you guys got together, you may have gotten married for a certain reason, so there are going to be things that you want to do together or obviously you wouldn't be together, right? Or we wouldn't be having this conversation, we wouldn't be listening to this episode. and so you wanna make sure that you're doing those things and prioritizing those things, but again, there's going to be differences. And so how do we create a life where we can both be fulfilled, and aligned, do things together, but also have our individual interests, uh, as well, come to fruition and enjoy those things as well. And, and so I help these, these types of, clients have these conversations. because it's important. It's often difficult, to do, especially if it's the first time you've ever had these conversations. And the more and more you do it, the more and more, you're gonna get comfortable doing it. But these can be hard conversations, especially if you've never really talked about money, in a deep way. It's kind of like, Hey, we just pay our bills and. We're kind of flying by the seat of our pants. but if you start creating these visions and these plans, I think sometimes people just get scared that their idea of the future is gonna be different from their spouses. And in reality, that's okay. Right? you gotta. Come up with compromise. I mean, that, that is, a relationship and it takes work and things of that nature. what I'm hoping to get out of this podcast today is that one, you need to have these difficult conversations so that you can, understand your spouse more, in align your spending, your saving, and all the things that you make decisions about with your money. In a way that both of you are going to be happy and fulfilled over the long term. Right? Um, and then the last conversation is always the toughest conversation. And, that is what happens if something happens to us, right? it is more common. Then I care to discuss that most people do not have any sort of estate planning documents put in place. In fact, if you're a big football fan, you probably have seen in the news Dion Sanders, either just got cured or is going through treatment to cure bladder cancer. and he released a video of some sort that said, Hey, this is the first time I've ever had to write a will. My first thought being a financial planner is you've made how much money over your lifetime, tens of millions of dollars, and you've never sat down with someone about estate planning, whether that be a will or a trust or anything. and so this is not uncommon even for people that have wealth like Deion Sanders. And again, I don't know what his wealth is like and how he's managed his money over time, but, I would imagine he's fairly wealthy. and again, you hear stories about this all the time, you're just making it more difficult on your family when you don't have a, you don't have a plan in place, whether that's your spouse or your kids or whoever is going to take care of your kids, if something happens to you. So having things like a will power of attorney guardianship plans for your kids. Having proper insurance, disability insurance, life insurance, who knows how to access your accounts and important documents if you become, incapacitated or pass away. and so we wanna make sure that we have a plan. That is, if something happens to us, then it is going to be easy on the people that are grieving over us. And again, that is. the toughest conversation that you can have, right? yes. This money stuff is tough conversations, but no, nobody really think likes to think about death. but unfortunately, there's only two guaranteed things in life, and that is taxes and death. And so having this conversation again. Not easy, very difficult. but it is necessary, if you care about your spouse and your kids. I hate to end that on kind of a, a, a morbid conversation or a morbid, topic, if you will. But, again, have these conversations with your spouses, whether that's, Hey, what do we value? Maybe you haven't had that conversation with your spouse before. create that plan. Once you understand what you both value, have those conversations. Hey, what if we had an extra$10,000 or a hundred thousand dollars? What are we gonna do with that money? And you can learn a lot about what people value in, in that particular, series of questions and things of that nature. Have a plan for how you're going to handle your day-to-day money. whether that's combining, finances through, joint bank accounts or keeping it separate and having a Bills account, whatever that may be. using a hub and spoke system like I spoke about. and then have these hard conversations. What does the next five years look like? What does retirement look like? And then what happens if something happens to us? Right. So if you feel like your partner and you need help guiding these conversations, especially around bigger picture planning, like retirement or estate planning, that's exactly. What I have built Palm Valley Wealth Management for are these hard conversations to help people achieve an early retirement, or becoming financially independent. So go to my website, check out my website, palm valley wm.com. Learn how I work with clients. I listen to some of these other podcasts episodes that I've done and I dive in deeper into specific topics on tax planning, investing, things of that nature. and would love to have a conversation with you and help you out. but we'll see you in the next one. This podcast is for educational purposes only. It is not meant to be financial, legal, or investment advice. Please do not make decisions solely based on this podcast alone. Please seek professional help when considering your own situation.