The Art of the Money Conversation

Talking about money is a very difficult thing.

For starters, the individual choices we make about how to spend our money are rather personal. In some ways, they’re an expression of who we are. If I choose to spend $30 on a board game, it’s because I’m personally passionate about playing games at the table with my family and friends. If Sarah chooses to spend $30 on our pet rabbits, it’s because she deeply cares about our family’s pet rabbits, Oreo and Bandit.

We also each have our own visions about the future. I’ve described the ways I look at the future many times here on The Simple Dollar. While my vision overlaps Sarah’s to a large degree, they’re not perfect matches. They differ in quite a few of the details.

We draw upon different life experiences and ideas when making decisions. I grew up differently than Sarah did. I’ve been exposed to a different set of ideas than she has. When I make a decision, I’m drawing on different things than she would be when facing a similar decision.

Those are a lot of obstacles to overcome, and if it was not paired with a sincere desire from both of us for our relationship to work, money conversations would be very difficult.

That’s the core of all of it – both of you have to want this to work. Both of you have to want something better than what you already have. If that’s not the case, then there isn’t a money conversation in the world that’s really going to work. Instead, you should be seeking some marriage counseling because you’re two people who view the world and the future in essentially incompatible ways.

If you are both willing to sit down at the table under that assumption that you’re both there because you want a better future, a healthy money conversation might be uncomfortable in places, but it’s always possible.

The first step should be establishing the goals you each have and, thus, which ones you share. Spend some time – say, a week or two – in which both of you think deeply about what you want from the future.

Yes, this goes before things like discussing spending and talking about credit card statements. You need to both be on the same page about where you’re going or else you’re going to endlessly argue about the steps you’re taking now. You might be walking down a sensible path toward whatever your goal is, but if your partner has a different goal, it looks to your partner as though you’re walking away – and that’s extremely difficult. Get your goals straight first.

For us, it worked well when we visualized things a certain number of years down the road. What do you want your life to look like in five years? Ten years?

Then, think about the differences between the way your life is now and the way you want it to be then. What are those differences? Make a list of them. Don’t worry about how to get from here to there yet – that’s something you should work on together.

At that point, compare that list of differences. What things overlap? What things are different?

Again, for us, the best route to success was to minimize the things that were different and focus instead on the things that overlapped. It was easy to do that because I knew that Sarah was on board with that goal – and she felt the same way.

After that, you have a clear context by which to judge both of your choices. When you spend money, is it helping with those shared goals? Are we saving appropriately for that goal?

Naturally, both of you need some breathing room. I’ve found that each person in a relationship needs some spending latitude. My suggestion is that each person has a certain “spending allowance” each month that caps what they can freely spend, and if there’s a disagreement about bills, make up the difference out of those “spending allowances.” Money spent out of that “allowance” is spent without question from the other person. This works really well for us.

Almost every money conversation fits well into this structure. If either of you has a money concern, it should either end up with a plan for that concern based on your shared goals or it should end up with a re-evaluation of goals.

If you’re both working from the same playbook, money conversations don’t have to be a challenge. You just need to start by making sure that you’re sharing goals and you’re using a plan that you both can live with that moves you toward those shared goals.

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