Couple's Therapy: Putting financial planning first
TORONTO - One of the pillars of a great relationship is communication, but when it comes to discussing financial plans some couples will find any excuse to skirt the subject, even though it can be a crucial part of their future.
Perhaps that's because financial management can be a make-or-break for many relationships, especially during times of crisis, so oftentimes it's easier to just delay the conversation.
"When money gets tight then the fault lines in the relationship start to appear," said Henry Sharam, a therapist based in Halifax.
"No matter how much you love somebody, there are (parts of the relationship) not as strong as others. So that's the place where the strain often comes."
But while finances can be a sticking point, money matters don't need to be this difficult for many Canadians. With a little bit of advanced planning advisers say couples can avoid the extra strain on their partnership.
"When you're first with someone perhaps you don't want to go into that detail, but at some point as the relationship gets serious, transparency is critical," said John Tracy, senior vice president of savings & investing at TD Canada Trust.
"When you are either taking on joint obligations or legally moving your relationship to a more formal status you owe it to each other to have that complete disclosure."
Sharing the details of finances goes beyond questions about home ownership or whether each partner wants children — those are the basics. Other questions run deeper and could avoid later conflicts, such as expectations on the household budget and whether it's OK to make notable purchases without having a discussion with the other person first.
Many of these questions are often swept under the rug and can stall getting financial matters in order. Advisers suggest to square away any uncertainties that could provide clarity on the future of the relationship.
"Sitting down and writing this stuff out is actually one of the most practical exercises you can go through," Tracy suggested.
"To some people that sounds extreme, but the reality is that doing that forces you to cover all the bases."
Areas that should be a point of discussion also include each person's personal assets, liabilities, debts and broader questions like what each person wants to achieve, such as career aspirations and whether either person wants to go back to school, he said.
Couples should eventually turn to a financial adviser who can raise other questions that might not seem obvious, and also address some of the more uncomfortable topics, such as existing debt.
"It's often easier if there's an independent third party who's asking questions," Tracy said.
"If it feels like you're interrogating your partner, that's a problem, and it's not going to feel good to anyone."
When it comes to daily banking responsibilities, such as bills and investments, advisers say it's a good idea to divide the responsibilities between both partners, rather than having one person manage all of the money.
"In general there will be one person who's going to take the lead on managing the finances for the household, but it's not an ideal situation," said Marlena Pospiech, manager of wealth strategies at BMO Financial Group.
"It's really important that both are engaged in the conversation and both feel accountable towards achieving common goals."
Aside from dividing the work, sharing the financial bookkeeping responsibilities allows each person to become familiar with their own bank accounts, which would lessen the impact if one person were to suddenly die. Dividing the financial work also lessens the burden if the relationship were to fall apart, because it leaves both people with some familiarity about their finances.
Advisers also say it's a good idea for each person to maintain their own separate bank account for emergency funds, in case of any unexpected circumstances.