YouTube: https://youtube.com/watch?v=46rNvtUbdy8
Previous: How Being Broke Impacts Your Mental Health
Next: How My "Impulse Journal" Keeps Me From Overspending

Categories

Statistics

View count:93,540
Likes:3,515
Comments:356
Duration:15:29
Uploaded:2021-03-09
Last sync:2024-05-24 09:30
In this episode, Chelsea tells us the important conversations everyone needs to have in their relationship, no matter how scary or irrelevant they feel in the moment.

This video is sponsored by Bestow. Apply for easy, affordable term life insurance with Bestow. It takes as little as five minutes, a medical exam is never required, and you'll receive a decision instantly after applying: http://bstow.me/3aX9yGs

Broke Millennial: https://brokemillennial.com/2016/06/10/financially-naked-checklist/

Prenups: https://www.nytimes.com/2018/07/06/smarter-living/millennial-prenup-weddings-money.html

Average wedding cost: https://www.valuepenguin.com/average-cost-of-wedding

Merging finances statistics: https://phys.org/news/2019-02-joint-bank-accounts-happier-couples.html#:~:text=Nearly%20two%20thirds%20of%20these,median%20happiness%20score%20of%205.82

End of life planning: https://www.npr.org/2020/06/26/884051182/end-of-life-planning-is-a-lifetime-gift-to-your-loved-ones

Watch more of The Financial Diet hosted by Chelsea Fagan here: https://www.youtube.com/playlist?list=PLD30V46E07RR99cC0gCjKUbt-BKoDUcnc

The Financial Diet site: http://www.thefinancialdiet.com

Facebook: https://www.facebook.com/thefinancialdiet
Twitter: https://twitter.com/TFDiet
Instagram: https://www.instagram.com/thefinancialdiet/?hl=en
Hey, guys. It's Chelsea from The Financial Diet. And this week's video is brought to you by Bestow. And this week, we wanted to talk about some of the conversations that are incredibly important to a relationship, yet many people go entire relationships-- and even sometimes marriages-- without having. While we obviously believe that financial transparency is one of the most important foundational elements to any given relationship-- and that's not just romantic relationship. It's also important to friendships, and family relationships, et cetera-- even roommates, for God's sake. There are other types of communication that need to be established early. There can sometimes be taboos with getting too transparent with a romantic partner early on about things like your finances. But, ultimately, it's important to be clear about those things early. Because if something is a deal breaker for someone, or if something is potentially going to cause a lot of strife in a relationship, it is better to know early than to let it hit you in the face when you're already deeply invested in this other person.

Number 1 is the initial money conversation. As our friend Erin Lowry of Broke Millennial puts it, now is the time to get financially naked in your relationship, if you're not already. And what does it mean to get financially naked? It means that to lay out all of your financial realities-- to be transparent. We're talking about things like how you currently deal with money, how you're planning to deal with money in the future, your goals, your debts, et cetera. Erin's checklist includes covering your total credit score; the total amount of debt you have-- including student loans, credit cards, auto loans, mortgages, et cetera; your debt repayment strategy, or lack thereof if you still need to make a plan; your current savings and savings goals, both long and short term; your net worth, and your general vision for the future. Now, obviously this conversation in depth is not something you need to be having on the second date, for example. But it is something that should be happening with someone as soon as it seems realistic that you could be sharing your life long-term with this person, which, almost by necessity, will mean merging finances to some degree. And amongst all of these conversations we'll talk about today, it's one of the ones you will most regret not having if you don't early on.

Number 2 is the life insurance conversation. As we've mentioned on this channel before, being open with your partner about money goes well beyond just doing your monthly budget together. You'll want to be on the same page with your future goals, the financial choices you'll need to make to get there, and how you'll plan for the future should the worst thing possible happen to either of you. And part of that is talking about life insurance. It's easy to feel invincible when you're in your 20s, or even your 30s, especially if you've never had any major health scares. But life is unpredictable. And one of the most responsible, caring decisions that you can make is to prepare for the worst. Having a life insurance policy means that if anything ever happens to you, your loved ones won't have to deal with the financial hardship on top of the emotional toll they would already be facing. And with Bestow, term life insurance is something you and your partner can each apply for in as little as five minutes. Bestow's digital life insurance experience never requires a doctor visit, phone screening, or a medical exam. You find out if you're approved instantly and, if so, can start coverage immediately. Plus, coverage purchased through Bestow is provided by a top rated insurance company. And it's affordable. A healthy 30-year-old woman can purchase a 20 year, $500,000 term life insurance policy entirely online for as little as $16 a month. Check the link in our description so you can apply for easy, affordable term life insurance offered by Bestow, and help make sure that your loved ones are taken care of.

Number 3 is the moving in, marriage, and kids conversation. Do both of you actually want to get married and to have children? We often treat these things like a package deal. But they are, in fact, very, very separate. My husband and I are married. We've been together for almost 10 years. And having children is not, as of now, on our agenda. As one of my older favorite sayings goes, life is not a prefix menu. it is a la cart. And this is all stuff that should be talked about very early on, well before it becomes a reality for your situation. Because, unfortunately, in a lot of cases-- when it comes to things like moving in together, getting married, and having children-- once you've reached a certain stage in a relationship, to one party it can easily start feeling like the next obvious logical step and therefore a kind of countdown slash ultimatum situation, and to the other person something they were never expecting to do in the first place. The rom-com cliché is the woman who's waiting for the man to pop the question and who ends up losing the relationship altogether, because that was never on his agenda. You never want to reach a point in a relationship where the next step is assumed on either side. You want to make sure that you both feel aligned about these things. And being up-front early about how you feel, even just about the institution, is very important. Because, again, it may not even be that the person doesn't want to marry you or to have children with you. They may not even want to do either of those things at all. And even when it comes to something as seemingly low-stakes as moving in together, pragmatically, there can be tons of reasons why people end up choosing to live together that may not even be because they ever intended to for romantic purposes. And it also doesn't necessarily mean that they expected to get married. But even if you don't end up getting married, breaking up when living together is something that you shouldn't take lightly, as it's a thousand times more difficult to extricate yourself from a relationship situation when you also have to untangle all of your belongings and find a new place to live. According to Kayla Knopp, a clinical graduate student who studies facets of commitment in relationships at the University of Denver Center for Marital and Family Studies, "serious commitment should never be made sooner than a year in, at least. But that's just a ballpark estimate. Definitely go slowly in a relationship. Let it develop over time. And take time to get to know your partner," she says. It's also a good idea to discuss your future and views on marriage before moving in together. "We know that moving in tends to be a bigger commitment than people think they're making," she says. "They need to really know what it means to the both of them." So, it is crucial that, before taking any of these steps, you have a clear plan in place for A, the idea that you both want it and are moving toward it, but B, what should happen in case it doesn't work out. Who gets what? Who gets to stay in the apartment? Who takes the pet? Do you cut the pet in half biblical-style and just each take a side? Having a plan will prevent either party from being blindsided. And if you do choose to get married, get a prenup. It is not something that only rich people need. And if you think you don't need it because you're in love forever and will never get divorced-- surprise. For 50% of you that will prove to be incorrect. We'll link to a great primer on prenups and how to get started with your own in the description.

Number 4 is the wedding conversation. And you might be thinking to yourself, Chelsea, you just covered the marriage conversation in the previous point. The marriage conversation and the wedding conversation have almost nothing to do with one another. And it's funny, because for as much as we tend to focus on the wedding, and what it looks like, and who's invited, and the dress, and all of those other things that ultimately don't matter at all in the long-term survival of a relationship, we barely think about what it truly means for these two people to actually be coming together in practice. But that being said, the wedding itself can be an enormous expense. So, it is something to discuss. First of all, do either of you actually even want a traditional wedding, which, in places like here in New York City, can average about $38,000-- psychotic. So, it's important that once you both establish that you want a wedding at all and you're not more interested in doing something like eloping, that you both have a similar vision of what that wedding would look like and, therefore, approximately cost. Take the time to both individually imagine your dream wedding. How many people are there? Is there a DJ or a live band? Is it buffet style, or are people eating plated? Do you have a massive wedding cake or just a tray of cupcakes? Are you in an expensive hotel or just some random park? Once you know what those things are for you, look them up. See how much they actually cost. Start to put a bit of a price tag on your day well before you're actually in the process of planning it and can, therefore, have that runaway train feeling of, like, well, I can't stop now. They already know that I'm looking into getting a wedding. I'm going to seem like such a cheapskate if I back out of this macaroni and cheese bar. Saving up for a wedding isn't just a big undertaking financially. It's also a good litmus test for how much you actually want these things. Because even a quote unquote budget-friendly wedding can easily run you $10,000 or more. Making sure that you're both on the same page about what your special day looks like early on in the process will ensure no surprises.

Number 5 is the spending priorities conversation. Take some time separately to actually write down what you believe is worth investing in, versus what you feel more comfortable being frugal about. That should be for things like experiences, life choices, everyday products, big ticket items-- try to paint a picture of your life that really details what you do and do not deem worthy to spend a lot of money on. And of course you can be a little bit nuanced about what you consider a lot. But generally try to figure out what it is in your life that you truly feel is deserving of that budget attention. Compare and contrast your lists. See how they line up and how they might be at odds with each other. Because, ultimately, if as a couple you are moving forward together in a coherent, unified budget, you're not going to be able to spend on everything at all times. So, early on identifying where the areas of compromise are and, perhaps more importantly, deciding a portion of your budget that each of you get to independently manage, and therefore spend with without having to consult the other person, is a very good way to avoid a conflict down the road when one party thinks it's totally worth it to spend a bunch of money to go to a bunch of bachelorette parties in a single year, and the other one would rather not attend any weddings at all. It's also a good exercise in learning to compromise on some of these things. Because the way we chose to spend our money as a single individual may not be sustainable when we're in a couple and, therefore, have a lot of longer-term merged priorities to consider. It's a chance to know yourself better, but to also be a little bit less selfish.

Number 6 is the merging finances conversation. So, this one is super important. Because what it means to merge finances in a couple can be totally bespoke. There's no one-size-fits-all rule. And some people might feel very differently than their partner about how one should or shouldn't bring their finances together, even when married. For example, if you decide to keep things separate, how are you going to decide how the costs get split? Is it 50/50 regardless of income, like that extremely creepy guy from The Joy Luck Club? Or is it based on individual earnings and sort of prorated to their ability to pay? And how does debt come into play on that? Is it both parties responsibility, or just the person who brought the debt into the relationship? And if you get married or are considering whether or not to merge your finances, take all of your options into consideration. In one study that surveyed 1,000 married couples and asked them about their finances and general level of happiness, nearly 2/3 of these participants reported having 100% pooled bank accounts with their spouse. And this group was the most content, with a median score of 6.10. The 22% of participants who reported having both joint and separate bank accounts had a median happiness score of 5.82. The 12% of participants who keep their bank accounts entirely separate reported the lowest median level of satisfaction, 5.46. Now, it should go to show you that studies are nothing in the face of anecdotes. Because my husband and I have almost entirely separate finances and we're deliriously happy-- 10 out of 10 for us. But suffice to say there is a good amount of data out there on what actually tends to give couples the highest level of satisfaction when it comes to finances being together or apart. And it's important to consider why this might be. The reality is that most couples are going to be pursuing joint goals when it comes to their finances. And it's very difficult to do that if you are not handling your finances somewhat jointly. Again, there's no one-size-fits-all rule, but it's important to decide what will help you live your best lives.

Number 7 is the home ownership conversation. Fun fact-- before sitting down to film this video, I was actually in the early stages of that conversation with my husband, as well as a few experts who we're looking to for some advice. But it's important to state that, even in the position my husband and I are in-- which is amongst the better ones to be looking into home buying-- it's not necessarily an obvious choice for everyone that buying is better than renting. It's a bit of received wisdom that most of us tended to inherit from our parents that doesn't always bear out financially, depending on our situation. And we recently dove into the pros and cons of buying a home versus renting in a previous video. We'll link you in the description. But even before deciding whether renting or buying is more adapted to your financial situation and goals, it's important to even establish that this is something you both mutually want as a big financial move. The truth is that, for most people, home buying is going to tie up a substantial amount of their net worth and be a serious commitment in terms of where you're living, what you're doing with your home, your other financial opportunities, and many other factors that make it so that even the idea of wanting to buy a home is not necessarily an obvious, even for couples for whom it is a distinct possibility. And even for people who both want to buy a home, there are so many nuances as to which home is the right one. Are you more urban versus rural? Do you both want the same amount of children, or children at all, and therefore need to account those factors into the home? Are you looking for a fixer-upper or something that's perfect from the first turnkey? Perhaps most importantly, how much money are you both willing to spend on a house if you do want to own? Just because you can spend up to a certain amount does not mean you want to be, both when it comes to the financing of the home itself and any potential work you might be looking to do on that house, which in and of itself can easily be in the six figures. Having a good idea of what living within your means financially in terms of home buying looks for both of you is an extremely important part of the equation.

Lastly, number 8 is the end-of-life planning conversation. Now, this might seem morbid. But as one of my favorite sayings goes, grief is the final act of love. And preparing with your most dear loved one about what life will be like for the other person when they die, or even the circumstances in which the person leaving this mortal coil is going to be when their turn is up, is incredibly important and, frankly, a deeply caring and loving act. Most of us tend not to want to think about it. But I encourage you to start looking into some holistic and humane ways to start thinking and talking about death. One of my favorite writers slash also a mortician and a YouTuber, Caitlin Doughty did an episode of The Financial Confessions with us. I'll link you to that the description. But she also does tons of amazing content, both in her books and on her videos, about how to get more comfortable with the topic of death-- how to explain what's important to us in our deaths, and learn from our loved ones what's important to them about theirs. Here are just some steps to include in your end-of-life plan from NPR's Life Kit, which we'll link you to in the description. Take an inventory of what you own, and put together a will-- a list of everything you own and who you would want to leave it to. Name the executor of your will-- someone you trust who will take care of all of your assets and communicate to everyone named in your will. Name a medical proxy-- a person who can legally make health care decisions for you if you cannot. Fill out a living will-- a document that details the kind of medical treatment you will wish to receive depending on your circumstances. Death can be difficult to talk about. But that's probably the biggest reason why it's so important to talk about it with the people you love.

So, thanks for watching. And do not forget to click the link in our description so you can apply for easy, affordable term life insurance offered by Bestow, and help make sure that your loved ones are taken care of. As always, thank you for watching. And do not forget to hit the subscribe and join buttons. And to come back every Monday, Tuesday, and Thursday for new and awesome videos. Bye.