How to have the "Money" talk when you're dating at age 50

You were single and now you’re not.  You’re also not in your 20’s.  Or your 30’s.  

There’s history.

Now you’re in a new relationship and all of a sudden you’re in love again. Things are going so well, you’re making big plans together. Before weekend sleepovers become permanent, have you had the money talk yet?

In this episode of Sara Makes Sense, host Sara McCullough talks listeners through a potentially prickly issue that can sometimes end up being a relationship deal breaker.

Got a question for Sara? Send her an email at ask@saramakessense.ca and she might respond to it in an upcoming episode

Sara's website is https://www.wddevelopment.ca/ 

Transcript

Sara McCullough (00:01):

Yeah, I'm completely not ready. So let's do this thing. 

Sara McCullough (00:11):

You didn't think it would happen again. You didn't think you'd ever feel this way again, but here you are in love. What a great feeling. You'd almost forgotten how good it feels. You spend all kinds of time together. You make plans, you discuss everything under the stars. Well, almost everything. Have you talked to your partner about money? I know, I know you'll get there. It's awkward, but you are gonna get to it sooner or later. And then you go on to talk about yourself, kids,  jobs, houses, where you were when you've talked about movies, music, and you definitely know which side of the bed you prefer. So it's really time to talk money with your partner. Maybe you've done that already. I won't ask you how it went. It was uncomfortable for one of you or for both of you. If you haven't talked about money with your partner, I'm so glad you're listening. If you have, I'm so glad you're listening, because I'm sure that you've missed parts of the money talk. I'm Sara McCullough and this is Sara Makes Sense. 

Sara McCullough (01:20):

You've spent adulthood spending money and saving money. Maybe by now you've actually split your money and stuff already. And nobody wants to split things twice at the end of a relationship. As one of my clients said in our intro call after her second separation, it's not like riding a bike. It's not easier the second time. If you haven't ended a relationship that had financial consequences, possibly your partner has. And you've both put a lot of time, energy and effort into getting where you are financially, which is where exactly? That said, here you are in a now serious kind of new relationship and it feels permanent, or you want it to be, maybe you've moved in together and you still don't know. You still haven't had a good conversation about money. You have income and assets. Your partner has income and assets. Yours are well? And your partners are well? In this episode of Sarah Makes Sense, how do you have a meaningful conversation about money when you're in a relationship with a new partner and you're older than 45? 

Sara McCullough (02:44):

I don't think anyone would argue with me when I say that money is one of the top two reasons that couples break up. So let's talk about how to make sure that money doesn't sandbag your relationship. Sure, you can find articles like five questions to ask your new partner before you…they won't help you. Why won't they help you? There's a few reasons. So let's look at a likely question. Does your partner have debt? And you think I wanna know that? Okay. Do they have debt? Yes or no question. Yes or no doesn't tell you what to you about the debt or where it came from or how long it's been there. Debt from continuous lifestyle overspending is different from debt that came from single income parenting, is different from debt that came from starting your own small business. And when I say it's different, I mean, how you or your partner, if that's who holds the debt, can come out of that debt, that's what's different. How do you allocate income? What's the timeline to paydown? What's the source for paydown sound like a big conversation yet? Before we go any further, I want to share a story about client, clients of mine who were committed to each other, then they had a money talk, but they were already moving in together. 

Sara McCullough (04:07):

Arthur and Janice had been in a relationship for eight years before they moved in together. Jobs and kids kept them in different cities. Arthur's kids grew up and moved out. Arthur's job changed. And he and Janice decided it was time. Arthur sold his condo and packed his stuff. They came to me to review their cohabitation agreement and they had some questions about, uh, how to make this whole thing work. They didn't really know how to bring this part up. Yes, they needed some advice on the clauses in the cohabitation agreement, but they also really weren't sure about the day-to-day financial transactions. That wasn't covered in the cohabitation agreement. So at the high level, in the agreement, Arthur was going to buy into Janice's house and then it was going to be theirs. The sticky part of that clause was financially, it wasn't as easy as it looked for Arthur. So Arthur had retired at the same time that he sold his condo. He had $600,000 in the bank and a TFSA and an RSP. 

Sara McCullough (05:28):

So that's a lot of money - and he can afford the house. But once he gave Janice 400,000 to buy his half of the house, and this was really important to each of them personally, that Arthur had ownership. He actually, over a longer period of time, couldn't keep up to Janice in the house maintenance department,  or if he did contribute to half of the house maintenance costs, he would run out of money in mid retirement. And then Janice would quote, unquote, “have all the money” because Janice was about nine years younger than Arthur. And she loved her job. And she actually had an opportunity to increase her scope of work and her income and she had a defined benefit pension. Which was completely different scenario than the industry that Arthur had spent his career in. He had a good career and he had saved well, it was just different. 

Sara McCullough (06:28):

And his first separation was financially very different than Janice's. Arthur's first marriage had a big difference in income. Arthur was the higher income earner, and so he paid support for a number of years. In Janice's first marriage, she and her first husband were financially equal. The only support payments were related to their children who were living with Janice. So, here they were. The goal was to treat each other equally and to be partners, but financially, they weren't equal in that they weren't the same. So how do they navigate that? So, first of all, you need to know that that's what's happening. So after several conversations, we figured out what was happening, who had what? And we found a solution. I did propose a few plans. Once I had worked through an initial plan and showed it to both Arthur and Janice, they were able to say what they did and didn't like about it. 

Sara McCullough (07:31):

So sometimes they didn't like the same thing about a scenario. Sometimes they didn't like different things. The important part was, they now what Arthur's assets can do and what Janice's income and assets can do. And they agreed on how they were going to manage that. So when we can reduce surprises, often we're going to reduce resentment. And we're going to increase the chance that the relationship stays together. And if they get off track in the future, they know - they know because they've worked through their plan ahead of time. You can't know that you're off track. If you don't know what your track is. So in that short synopsis of Arthur and Janice, please know that these were hard conversations. Janice started one meeting by saying, Sarah, we talked about not continuing with the cohabitation agreement. It was really hard to come here today. We've been arguing. Yes, this is hard. As a society, we aren’t comfortable talking about money. 

Sara McCullough (08:34):

In, in this case specifically, we also attach importance to careers and Arthur didn't have one anymore. He moved to a new city. Janice was used to running her own house. We talked about all of that in meetings. We also talked about what they loved about finally living together. Remember they had been a couple for eight years. What Arthur loved about not being tied to a career. What Janice loved about having a partner who made dinner, there's joy and friction. Joy in having had these conversations about finances and not worrying separately anymore. Joy in being clear about what decisions mattered financially and what didn't. At the beginning of their planning, Janice often worried that she didn't know where her money was going and what she meant by that was she didn't budget in that traditional sense. Categories, knowing how much you spend in each category, looking back over the previous month. 

Sara McCullough (09:38):

What she did know was how much she was saving. And in her situation, I actually didn't need to know how or on what she was spending. Partway through our planning, she started a meeting by saying that they had overspent. They had booked a last minute vacation. I asked her about her savings account balance, and it was exactly where we had planned it to be. So in Janice's case, she didn't need to budget in the traditional sense. If you've heard previous episodes, you've heard me say that traditional budgeting works only for a handful of people. That's it. Most of us need another way. So pre-planning with me, Janice would've worried a lot about that last minute vacation, but spending that money didn't change anything for either Janice or Arthur long term. So think about all of the backhanded comments they saved from just knowing that one thing. If you don't talk about money, you'll miss the joy and you're only going to find the friction. 

Sara McCullough (10:40):

So surfaced fast answer questions won't help you work out how to make your assets work together with a partners or how to make your money personalities work together. You have a money personality, so does your partner. Some of it you were born with lots of it was shaped by your experience. All of it will affect the conversations that you have with each other. Stop right there! In your head, did you just claim to be the calm levelheaded money one? Did you lean in a bit closer so you could hear me explain how to straighten out your partner - knock it off. In 19 years of advising and advising very smart people, sometimes other people who also deal with other people's money all day long. The most frequent feedback that I get from my clients is “that's a really good question. I hadn't thought of it that way”. 

Sara McCullough (11:40):

Thank you for clarifying all of that, now I understand. To have a meaningful conversation about money with your new partner, you need to understand your own stuff, their stuff, and how the stuff is going to behave together. Your own stuff. Let's start with that. Have I told you about the time I emailed my own life insurance agent? I had just worked through my own plan again because a few things had changed for me and I needed to increase my life insurance coverage. So I felt really organized as I hit send on that email, the email that said “hi there, that insurance policy that I have for 300,000, I need to increase it to 500,000. Let me know what you need from me”. And my agent got right back to me. “Hi, Sarah. That policy is for $500,000”. Huh? Next step for Sarah. Find actual other financial planner, do not do own stuff. 

Sara McCullough (12:42):

So let's assume that you have some gaps in your knowledge, your understanding and your ability to apply your own financial situation to yourself. So your partner, all the same stuff only now you are gonna try to interpret their slightly off kilter explanation through your own slightly off kilter understanding. Super, and you both have biases for and against. And the point here isn't to eliminate bias, judge your own bias or judge your partner's biases. It's to know that it's there and to work with it. For example, successful business owners. Successful business owners are mild to extreme adrenaline junkies. You have to be to be self-employed. The good news is that trait generally positively contributes to a successful business. Bad news, sometimes when it relates to money, adrenaline junkies sometimes overspend, sometimes they don't have a full conversation about where they're spending, why they're spending. Then they go on to try to apply business principles, to personal relationships and personal conversations. And so what if the business owner's partner, isn't an adrenaline junkie? What if they value money, peace and quiet? They're going to clash. 

Sara McCullough (14:18):

And what if the successful business owner's partner is also an adrenaline junkie? So that's double the risk-taking with money, sometimes. Sometimes double the overspending and easy justifying conversations, skimming across the surface. That's a different clash, more like hitting the wall - of debt - together. Relationship success over 45 is really possible and you're going to clash. And unless you've had a very clear discussion on what's happening and how to handle your money, you're not able to get past the clash. And by handle the money, I mean, manage the money and manage the conversation. So that you don't have those kind of under the breath comments or throwing down kind of an inflammatory comment when you're at the cashier. No cold shoulders. No, no comments. Silence is not golden here. So how to do this thing? Combine your life with someone you love at a time when you already have stuff and people in your life. With someone else who has stuff and people and you each have a possibly fuzzy, possibly confused, absolutely biased sense of your own money. 

Sara McCullough (15:55):

There is a healthy, positive, and beneficial way to have the money discussion. So how do you navigate this? Start early, pay attention, practice small, and know your own stuff. As you're getting to know someone, you notice lots of things about them. How they take their coffee, when they drink their coffee, favorite books, restaurants, movies. Pay an equal amount of attention to what happens with money. How does your partner talk about money? When does your partner talk about money? When you think about retirement, do they have hobbies? Do they have expensive hobbies? You're not judging here. You're just noticing, looking for patterns, you're trying to understand how does your partner relate to money. And maybe practice small. Often the beginning of a relationship can be a bit of, um, moneymoon, a moneypalooza, spending spree… As it starts to get serious, maybe you could agree on a dollar limit that you're going to put towards going out every month. 

Sara McCullough (17:10):

Maybe you could save for a vacation together before you're living together. Christmas gifts. Could you talk about what each of you is planning? I mean, at this stage be independent or be combined, it's up to you, but test things out, practice having those conversations. They're not all going to be comfortable, but the more you practice and the more you pay attention, the more you're going to understand. And that third piece early in a relationship - know your own stuff. Really know your stuff. Don't say I got this, I'm successful, I know everything I need to know. Yes, you're successful. You are very smart and you know what you need to know to be financially successful while you are single. We're talking about being in a partnership. So think chemical reaction here. Each of you on your own may be nothing like you are together. Sodium and chloride are nothing like salt. Get an objective opinion. In Canada, doctors don't treat their own families and there are actually severe repercussions for self-treating. That doesn't mean that they aren't good doctors. It means that we agree they're too close to the situation to be objective. The same thinking applies here when we're talking about your own stuff, what did I just tell you a few minutes ago about my own stuff. I forgot. I made a mistake. I, I had the wrong number in my head. 

Sara McCullough (18:56):

So early in a relationship, pay attention, practice small, and know your own stuff. Later in a relationship, understand your stuff all over again. Understand your partner’s stuff from their perspective. Understand what happens if or when you combine stuff. One of my couples had to work through several possibilities for combining financially. Both of them were in their late fifties. He had a great defined benefit pension. So guaranteed income for retirement, but no accessible investments in cash. Partly because of the way his savings went. Partly because of the way his first separation went. She had cash and investments, lots of flexibility, no guarantees. And in our initial meetings, each one focused on what the other one had that they didn't. So they felt the other one was much better off and had it way easier. So how to combine what they each had in a way that met their goals for themselves, for each other, the goals for their adult children - that they actually didn't share - and long-term protection for each other. Again, there were some hard conversations and there were some really amazing conversations, that started with money and then pulled in how they really felt about each other and what they wanted for each other, now and in the future. Very few things in life get easier the longer we put them off. Talking to your partner about money is one of those things. It doesn't get easier. Don't put it off. 

Sara McCullough (21:03):

From time to time, we need someone who can cut through the noise. Someone who not only gets to know you as a person, but also can really show and make sense of your financial plan. From time to time, we also need somebody who knows you as a couple. So what the numbers mean for you individually and together as a couple. And this relationship, this plan belongs to you, not your planner. I'm Sara McCullough. Thank you for listening to Sarah Makes Sense. 

Disclaimer (21:39):

The information in this podcast is intended for general information and illustrative purposes. For advice relevant to your specific situation, meet with a qualified financial planner, lawyer, or accountant before making any changes to your situation. Sara's designations and licensing include: Certified Financial Planner, Registered Financial Planner, Certified Divorce Financial Analyst, and holding an insurance license.