Why is talking about money — even with your life partner — so difficult to do? It’s not a challenge we’re born with; rather, it’s one we learn, often as children. It’s not uncommon, particularly among millennials and older generations, to have been taught by our elders that personal finances are a taboo or impolite subject.
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Today, many of us realize that money should be talked about openly and even passionately, especially with our significant others, with whom we likely have financial ties – inarguably so if we’re married to them.
Ramit Sethi, author, entrepreneur, and media personality and host of the Netflix series “How to Get Rich,” is among the many financial experts who adamantly insists that we talk about money with our partners. In a recent email newsletter Sethi sent to subscribers, he discussed excerpts from his new book “Money for Couples” and shared the top money conversation all couples should have every year.
Do a Life Review
Sethi makes a point of participating in an annual life review with his wife. Usually, they do their life review while traveling, but you can do yours anywhere — like at home or at a coffee shop — as long as you carve out genuine focus time together. In this review, Sethi and his wife casually talk about their dreams for the coming year. They also dig into how the past 12 months shaped up, particularly as finances are concerned.
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Ask Each Other These Key Questions
Sethi and his wife answer the following four questions together.
- Did you hit your four key numbers (fixed costs, savings, investments and guilt-free spending)?
- How well did you do on projecting your expenses? Get granular to the level of groceries, travel, child care, etc.
- Did we follow our money rules, if applicable? (Consider discarding any that didn’t serve you or adding new ones.)
- What do we anticipate in the next 12 months? Income changes? Additional expenses? Things that we need to start planning for now?
Express Appreciation for Your Partner
You don’t want this money talk with your partner to be an all business, cold scenario. Bring warmth and love into the conversation by highlighting aspects of your partner that you appreciate. Sethi suggested praising your partner for a parenting win, a kind gesture or a frugal habit they implemented successfully.
Highlight Your Financial Wins
During your annual live review, you may spot some goal you missed or an area where you downright failed. While you shouldn’t let these slide, you shouldn’t let them dominate the talk, either.
“Discuss shared victories, birthday celebrations, potty training, whatever,” Sethi said. “Include at least one financial win.”
Walk Through What You Would Do Differently
When you inevitably come across a financial goal that you didn’t reach or an impulse buy that threw you off course for even a few weeks, talk about what you would do differently going forward.
Set New, Fun Goals
While talking about all the nitty gritty financial stuff, make time to address what you want to happen in the next year. Get pumped together. Plan a trip or talk about exciting (not stressful) steps toward buying a home, if that’s a vision you share.
Now is also a good time to explore all the things you want to do more (spend time with friends, do more things together in general, etc.). Also go through things you want to do less of (order takeout, find yourselves unprepared for emergency expenses, etc.).
Pinpoint Where You Are Today
What is your collective net worth? What are your total annual expenses? Where might you be overly frugal or where might you be not frugal enough? Pinpoint exactly where you stand as a financial unit right now.
Broach the Topic of What’s Next
Finally, make a plan about how you want to tackle the future, whether that be starting a family, embarking on a new business venture or getting more aggressive with saving for retirement.
You don’t have to wait until New Year’s Eve to have this conversation. Pick any day, mark your calendar and get ready to be real with your beloved.
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This article originally appeared on GOBankingRates.com: Ramit Sethi: Have This Money Conversation With Your Partner Every Year
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