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We need to talk.
No, we don't mean the difficult “this-isn't-working-out” chat. We're referring to the dreaded conversation about money problems many 50-plus couples blindsided by coronavirus-caused economic carnage now must engage in.
The economic fallout of COVID-19 has upended the finances of many pre-retirees and retirees: disappearing jobs, shrinking 401(k) balances, crushing cash shortages. To get through this painful financial period, you need to talk things through with your spouse or partner, financial advisers say. The goal? Quantify the size of the hole you're in, and then come up with a plan to climb out.
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"It's such an uncomfortable topic that people typically avoid it,” says Jeffrey Corliss, managing director and partner at RDM Financial Group at Hightower. “It can be tremendously stressful, not only from a financial standpoint but also mentally and emotionally.”
But the money talk must be handled civilly. “Managing your own money is hard enough on its own, and adding someone else into the equation can add an entirely different layer of complexity,” says Connor Spiro, CFP, financial consultant at John Hancock. The last thing you want is for your discussion to turn into a family fight. “There are ways to do so without ultimately storming off into the other room,” Spiro notes.
That's not easy, given that money is the number one issue couples fight about, according to Ramsey Solutions.
Here are the dos and don'ts when having serious discussions about money with your significant other.
Do lay out goals you want to achieve
Just as you would do before a meeting with your boss, you must prepare in advance for the money talk with your spouse. You and your partner must have an idea of what you want to talk about, what you want to achieve and what steps you need to take to accomplish the goals you laid out. “People should start separately and just put down their topics, the things they're concerned about, to give some framework to the conversation,” Corliss recommends.
It's also a good idea to broach the idea of a talk about finances before you actually do so, rather than barreling into the kitchen and initiating the conversation when your spouse isn't prepared, says Lindsay Sacknoff, head of U.S. consumer deposits, products and payments at TD Bank.
"A more effective way might be to say, ‘Hey, I'd really like to have a conversation because I'm worried,’ “ Sacknoff says. “Plant the seed about the conversation and what you might want to get out of it. Then step back and plan a good time to have that conversation.”
Do identify the scope of the problem
You can't hatch a recovery plan until you've tallied up the extent of the damage, Sacknoff says. “Talk about what's changed. What is the size of the goal or the challenge? Just putting a magnitude or size [to the problem gets you] thinking about the next stage of the conversation. Often it comes down to, What's coming in? What (funds) do we have access to? What do we need to pay for (such as mortgages, rent utilities, groceries)? What's going out? Do we have a gap, or are we in a good place?"