H:CC - New Study Shows 36% of Couples Hide Spending From Partner And It's a Pressure Point

2024-02-09 20:45:00 ET

When it comes to the hardest conversations for couples to have, money usually takes the top spot. And it looks like that continues to be the case, especially in this difficult economic environment. In fact, a new study by the Bank of Montreal ( TSX:BMO ) recently found that a whopping 36% of couples admit that they aren’t always truthful with their partners about finances.

But not only is honesty the best policy, it can help you and your partner create far more passive income in the future. So today, let’s look at why and how to get started with some financial honesty.

Talk it out

It can be such a hard conversation to have, but being honest with your partner about your financial fears as well as needs can be incredibly helpful to you both. Yet only 51% of those in the BMO study said finances should be discussed early on in a relationship.

Nearly a third believed that the conversation could be put off until living together. But this can affect your future of living together even sooner. Are you addicted to buying clothes? Maybe you and your partner can come up with a budget that works for you both. Do you like buying and selling stocks? Again, come up with a reasonable amount that won’t put your future at risk.

Now I’m not saying that partners need to agree to every single line item that you spend. And I’m not saying that everything needs to be joint and intertwined. Having some independence is certainly beneficial to you and your partner.

But you should certainly know a fair amount about the other person’s finances. If they have debt, that could fall on you in a worst-case scenario, and can also affect credit ratings. Bottom line, you’re a team! And need to act like one. Furthermore, it doesn’t all have to be bad news when it comes to spending and saving together.

Meet with an advisor

A great step is to simply put the decisions in the hands of someone else. For instance, consider meeting with a financial advisor. This person can give you a line by line list of what to do so that you and your partner get on the same page, and work towards the same goals.

It’s likely the advisor will first ask about your money coming in, and money going out. From there, they’ll help you plan out a budget. What’s great is that many banks also offer applications where you can put in your budget. That way, every time you spend something on say a joint credit card, that will come out of your monthly budget.

And it’s not just about how you’re spending, but saving as well. An advisor can help you both determine the kind of goals you want to set up together. Not just the big ones like retirement, but maybe a trip next year! Now not only are you working towards goals together, but achieving them together as well. And that will likely bring you closer, not further apart.

Start investing

Part of the plan will likely also include investing together. You could both identify an amount you’re comfortable with from your income to put towards a guaranteed income certificate (GIC), for instance. It can even be as short as 30 days. You could also agree to an amount you can put in your own separate investment accounts.

For instance, let’s say you want to invest towards a trip next year. You want to achieve $10,000 in that account, so you both need to end up with a portfolio of about $5,000. To do this, a great idea is to invest in dividend stocks that show strong returns. And a great, solid one to hold would be Hydro One ( TSX:H ).

Hydro One stock currently has seen shares rise by 15% in the last year alone. It holds a dividend yield of 2.95% as of writing as well. So here is what you would need to invest if the stock does this once more, adding in both returns and dividends.

With returns of $636 and dividends of $126.14, you would create a portfolio worth $5,002.14! Thereby creating enough to go on that trip for you and your partner. So don’t be afraid! Have the hard talk. It can literally pay to do so.

The post New Study Shows 36% of Couples Hide Spending From Partner, And It’s a Pressure Point appeared first on The Motley Fool Canada .

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

2024