How to Set Financial Goals Together and Avoid DebtFeb 13, 2018
It’s surprising, but according to our recent poll about relationships and money, around 35 per cent of Canadians in a relationship rarely or never talk about finances. One in five confess they’ve never talked about their individual debt load with their partner!
If you have goals for yourself and your partner — like a vacation, a new home or retirement plans — talking about money and working towards your goals together is important. And doing so can even help you avoid debt.
Setting goals together matters
Think of your financial goals as a roadmap to what you want to achieve. In order for you and your partner to get to where you want to go, you need to have a plan. Goals help you prepare for the challenges that might come up, plan for contingencies, develop realistic timelines, and decrease risk and disappointment.
But, let’s face it, it’s going to be difficult to create financial goals with your significant other if you aren’t communicating. Shockingly, our poll also found that three in 10 Canadians are keeping at least one financial secret from their spouse or partner. A majority of people in a relationship wish they could change at least one of their partner’s financial habits.
If you feel frustrated by your partner’s money management (is consumer debt is a problem in your household?), and think it’s keeping you from reaching your goals, communicate your concerns and develop a plan to reach mutual goals together.
Why couples should set different types of goals
When you consider all the things you and your partner might want to achieve, the list can seem daunting. Split your goals into three categories: short-term, mid-term and long-term goals.
Short-term goals can include things like paying a modest balance off of a credit card or loan, or purchasing a new computer. Mid-term goals are things like a vacation, or a vehicle, or a down payment for a home. Long-term goals include retirement planning or estate planning (charitable giving and inheritance plans).
See the Financial Consumer Agency of Canada’s (FCAC) mortgage stress test tool if you and your partner plan to buy a house. Consider higher interest rates and various costs of bills and income levels to determine a realistic plan for your down payment and your mortgage level.
Communicate about money and debt
Don’t let your lack of communication keep you from achieving your goals. Talk openly with your partner about your priorities and listen to theirs. Discuss how you can each alter your behaviour to get what you want.
Our poll found that boomers and GenXers are the least likely to openly discuss finances as a couple, while millennials are the most likely to talk about their financial plans and voice concerns. If you feel uncomfortable talking about money, remember to be patient. It can take time to build a dialogue.
The more you talk about issues and strategies like savings goals and spending habits, the less surprises and disappointments you’re likely to encounter — including consumer debt.
Visit Rubina Ahmed-Haq’s blog, Always Save Money, to read about ways to save big this year by adjusting your spending and making lifestyle adjustments. You could save enough to achieve a mid-term goal!
Open up the lines of financial communication with your partner this month, and start turning your dreams into plans. Set timelines and agree on how to make adjustments to your financial behaviour to achieve your goals.