Talking Money With Your Partner

Being able to talk about money and work through uncomfortable conversations is the mark of a strong partnership. Many of us would agree with that but that doesn’t mean we’re good at it. Most people do not grow up hearing adults modeling healthy financial conversations, which means most of us could use some practice developing this important skill. Money is also deeply personal for everyone. Broaching a conversation about how to manage money as a couple means tapping into each others’ childhood, history, personal values, fears, and dreams. It’s no wonder that, according to a 2019 study from the Financial Therapy Association, nearly 80% of people surveyed hadn’t talked to friends or family members about money in over a year.1

So how do you successfully communicate about this loaded topic? The answer is: with care. It can help to have a framework that fosters the psychological safety, respect, and kindness you strive for in other aspects of your relationship. Ultimately, when you know your partner understands where you’re coming from and cares about your feelings around money, you will be able to discuss finances constructively with confidence – even when you don’t totally agree!

 

Be Curious and Open

Whether you’re dating, planning your wedding, or have been married for years, it’s never a bad time to start talking more about your finances and how you want to approach them in your relationship. Like any new skill, it’s best to work on mastering the basics first. When it comes to talking about money one of the key basics is to approach the topic first with curiosity and a desire to learn more about your partners’ feelings around various money topics.

Tip: keep the conversation in a healthy mode of curiosity by agreeing up front to take decision making off the table.

Here are a few questions to get your wheels turning:

“How did your family handle money growing up? How did your family view and talk about money?”

This question helps clarify existing beliefs and habits, which is necessary to start moving forward and having more in-depth, constructive conversations.

“If money were no object, what would your ideal life look like? What would it mean for you if you could achieve that?”

This allows you to open up your mind to more possibilities and can help get to the root of your financial desires and goals.

“What’s one thing you would change about the way we manage our money?”

This helps set a baseline and gives you both a chance to share concerns and wishes so you can start aligning on a shared future vision.

“What would you like money to do for us that we haven’t done yet?”

This question may help you develop more tangible action items that can help you on your way to your shared vision.

👉 Sign up here for more conversation tips and money discussion prompts.

 

Set Collaborative Goals

It’s essential to set financial goals in order to put your money to work towards your life goals. The critical part is doing it together. If you’re new to setting collaborative financial goals, start with one you can control. For example, a great first goal together could be to review your spending together monthly.

If you’ve created trust and comfort in your financial conversations, you can start discussing more difficult money goals. These could be prioritizing paying down debt or building up an emergency savings fund. If your finances are in good shape, you can tackle life goals such as saving for kids’ college education, buying your dream home, or funding a new business venture.

When you set goals together, you get buy-in from both sides. Each person gets to express their thoughts and opinions and, ultimately, finding common ground will give you room to adjust to life’s inevitable surprises while still remaining on the same page.

Lastly, don’t neglect individual financial goals. Let your individual goals help guide how you set up your finances. You may have a joint checking account you each help fund to cover shared expenses while you also save to personal accounts for individual goals. There’s absolutely no right or wrong way to do it as long as you find a way that works for the two of you. Having conversations around what you each value individually will help each of you support each other’s individual goals as part of your big-picture goals as a couple.

 

Make a Plan

Goals are only as good as the plans made to achieve them. Once you’ve had conversations and highlighted some key goals, get out a pen and paper (or a Google Doc) and write them down along with achievable action items you can take to get there. Committing plans to writing can be powerful. Spelling out your goals and steps also helps you remember them when life gets busy. Don’t worry about making a perfect plan. Real life will always get in the way and require you to make adjustments. Just setting a starting point and moving in the right direction will take you far.

In addition to making plans to achieve your big, long-term goals, your money plan can consist of many different things. It can outline financial responsibilities for the household, such as who pays the bills, who reviews the spending, or who manages the investments. It’s not uncommon for partners to each think the other is handling a task so it’s worth checking together to make sure the lines of responsibility are clear and that you’re both comfortable with them. And if you’re one of the many busy couples that operates by addressing “fires” like past-due notices and tax deadlines as they come up, your schedules and stress levels will benefit greatly if you discuss responsibilities clearly and give yourselves room to divide and conquer financial tasks proactively.

 

The Takeaway

Talking about money is hard but avoiding it is harder in the end. Communicating about money is just as vital to your relationship as any other type of communication but it also takes practice. Start small and build confidence and trust before tackling bigger conversations. If you’re both willing to practice the skill of communicating about money, you’re already off to a fantastic start and you have a lifetime ahead to keep practicing.

 


Sources:

1. McCoy, Megan. Exploring How One Exploring How One’s Primary Financial Conversations Varies by Marital Status. Financial Therapy Association. 2019.

Disclosures:

The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.

This content not reviewed by FINRA.

Kaylin Dillon Financial Planning, LLC (“KDFP”) is a registered investment advisor offering advisory services in the State of Kansas and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training.

The information on this site is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision.

Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal any performance noted on this site.

The information on this site is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Kaylin Dillon Financial Planning, LLC disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.

KDFP does not warrant that the information on this site will be free from error. Your use of the information is at your sole risk. Under no circumstances shall KDFP be liable for any direct, indirect, special or consequential damages that result from the use of, or the inability to use, the information provided on this site, even if KDFP or a KDFP authorized representative has been advised of the possibility of such damages. Information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.

HYPERLINK DISCLOSURE: The information being provided is strictly as a courtesy/convenience. When you link to any of the websites provided here, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites.

KDFP is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, websites, information and programs made available through this website.

When you access one of these websites, you are leaving our website and assume total responsibility and risk for use of the websites you are visiting.

KDFP does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to KDFP’s website or incorporated herein, and takes no responsibility thereof.

HelloPrenup Podcast: Navigating Finances as a Blended Couple with Kaylin Dillon

How do I get on the same page as my partner? How do we navigate conversations around finances, assets, debt, and goals? How do we navigate life events? How do I feel confident as a woman in my marriage? And the biggest question of all… How do I get a prenup and feel really good about it?

Whether you’re single, engaged, married, or divorced, you’re going to get a lot out of this episode. Check out my interview with Host Lauren Lavender of HelloPrenup.

Hear me talk about why I focus on working with couples with prenuptial agreements and blended families. I care about helping couples uphold their legal agreements in a way that supports their relationship. Whether it’s for a divorce or a marriage, couples don’t enter into marital agreements lightly but tracking the terms of an agreement into the future (indefinitely) is no easy task.

As you’ll hear, I believe “Couples deserve to have ongoing support in these matters and no one is better positioned from a cost and visibility standpoint than their financial advisor.”

I really enjoyed my conversation with Lauren. We dive into why upholding legal agreements is so important and how the lack thereof has affected me personally. We also talk about the all-too-common trap of money shame and to seek help if you need it. Lastly, we cover why blended families really should consider prenups and estate planning in order to protect the financial outcomes of their families.


I hope you enjoy listening!

Planning for 2022 Taxes

The IRS Has Increased Several Key Deductions and Exemptions

The spike in inflation we’ve seen this year has impacts beyond having to pay more for goods and services. The IRS uses consumer price inflation (CPI) to determine certain increases to exemptions and deductions for federal tax purposes. These are automatic and calculated from the rise in CPI. That means that the increased inflation this year may actually end up saving you money. While the changes are for 2022 and you won’t be paying the associated taxes until 2023, it’s a good idea to be aware of the new limits.

You may be able to make changes as you go that can help you maximize the benefit. For example, the amounts for Flexible Spending Accounts (FSAs) and the commuter benefit increased, so you may want to have more taken out of your paycheck. This saves you money by paying with pre-tax dollars.

The income levels at which AMT applies also went up. If you have stock options, AMT very often comes into play. The increase amounts to $2,300 over the 2021 level for a single filer. While it doesn’t seem like much, it may be enough to allow you some flexibility in structuring them that will save you on taxes.


Taking the Standard Deduction
Empty heading

The standard deduction increased in 2018, and many taxpayers now opt not to itemize. For 2022, this choice becomes even more attractive as the deduction for a married couple filing jointly increased by $800. Taking the standard deduction simplifies tax preparation, but if you have deductible expenses such as medical expenses, property taxes, mortgage interest, charitable giving, or others (and there are hundreds), you may be passing up tax savings.

If your total itemized deductions are close to the amount of the standard deduction, there are strategies for charitable giving that can increase your tax deductions in any one year. This can be done without increasing your overall plans for giving. Giving some thought to your deductions as you move through the year can help you keep track of where you want to be.


Standard Deduction Amounts 2022

Standard Deduction Amounts 2022

 


Alternative Minimum Tax

The alternative minimum tax was created to limit the amount that high-income taxpayers can lower tax amounts through deductions or credits. It sets a floor on the amount of tax that must be paid. The AMT is particularly relevant if you have been granted incentive stock options (ISOs) as part of your compensation.

The AMT is adjusted based on the price you pay for the shares (the strike price) and the fair market value when you exercise. Because you can choose when to exercise, you have some flexibility in avoiding or minimizing AMT, but it requires careful planning of your income.


Alternative Minimum Tax (AMT) Exemption Amounts 2022

text


Flexible Spending Accounts and Commuter Benefits

The dollar limit for 2022 contributions to a flexible savings account is $2,850, an increase of $100 over 2021. If your plan allows carryovers, the new carryover limit is $570.  The monthly commuter benefit contribution limit for 2022 to your qualified parking and transit accounts increased to $280.


Gift and Estate Tax Exclusions

The annual federal exclusion for gifts was bumped up $1,000 to $16,000 for 2022. For a married couple, this means they can gift $32,000 to any individual without using their lifetime exemption. The lifetime exemption also went up, to $12.06 million per person.


The Takeaway

Increases in deductions and exemptions are one of the few areas that inflation can help out investors – but you’ll need to plan ahead to take advantage of some of the increases. There are lot of moving parts to a comprehensive plan that can save you money on taxes, and it’s never too early to get started in making the right moves.


Tax Planning 2022 IRS Deduction and Exemption Increases

symbol

This work is powered by Seven Group under the Terms of Service and may be a derivative of the original. More information can be found here.

The information contained herein is intended to be used for educational purposes only and is not exhaustive.  Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return.  If applicable, historical discussions and/or opinions are not predictive of future events.  The content is presented in good faith and has been drawn from sources believed to be reliable.  The content is not intended to be legal, tax or financial advice.  Please consult a legal, tax or financial professional for information specific to your individual situation.

This content not reviewed by FINRA.