How to hit ‘reset’ if COVID-19 is shifting the money dynamics in your relationship
Money conversations are hard, but better talk sooner than later.
Bobbi Rebell, CFP®
Personal Finance Expert at Tally
September 28, 2020
Since February, 1.3 million women in their prime money-making years (ages 25 to 54) have dropped out of the workforce to care for their children and help them with distance learning during COVID-19.
These women — more than any other age group — are risking their personal financial security and retirement. The career setbacks and lower (or nonexistent) earnings also can impact the power dynamics in their relationships.
For some, the loss of income means they may lose their say in financial decisions at home. Women are more likely to have an influence on financial decisions when they contribute more financially, according to a study published in the Journal of Financial Counseling and Planning.
This sentiment was echoed in a recent Tally consumer sentiment survey conducted online by The Harris Poll. Nearly 1 in 4 (23%) Millennials aged 24-39 said that the person in the relationship who makes more money should have more financial-decision making power. This sentiment was higher among Millennial men (29%) than Millennial women (17%).
“Couples need to hit the ‘reset’ button if the pandemic shifted the money dynamics in their relationship,” says Bobbi Rebell CFP®, personal finance expert at Tally. “Leaving too much unsaid may create resentment and cause financial trouble down the line.”
If you find yourself in a situation where the money-making and decision-making power has changed in the last year, here are some conversations that you should have with your partner sooner than later.
Set clearer child care expectations
When one parent takes on the bulk of the child care responsibilities, the other parent shouldn’t assume that they are free to focus on their jobs. Instead, have a conversation on how the other parent can help with specific distance-learning assignments or take on other chores like dinner or dishes.
Budget for adult children living at home
Share how you both really feel about your adult kids moving back. If it’s creating financial stress and your child has a job, get on the same page about asking them to help cover shared expenses (read: their part of the cell phone bill, buy groceries at least once a month). Or figure out how you can work with them to create an exit strategy.
Figure out your financial priorities together
Get on the same page about your long-term and short-term goals. For example, is paying down high-interest credit card debt a priority? Do you want to buy a house in the next year or can it wait for later? What about saving for college for children? This will determine how you save and pay off debt during the rest of the pandemic.
If paying off debt is your priority, be aggressive
List out all of your debts, how much is left, and the corresponding interest rate. The priority should be the debt with the highest interest (read: credit cards), then auto loans, personal loans, student loans, and mortgages. To help pay down credit card debt faster and manage your cards easier, consider using tools like the Tally app.
If saving is your priority, focus on cutting costs and earning more
To figure out what you can cut out of your budget, start at zero and add things back in, one by one, starting with the most urgent. First might come things like food, housing costs, and medical prescriptions. Next might be transportation, insurance, and digital subscriptions. Meanwhile, consider gig work that can help bring in extra income such as online tutoring, freelance writing, or remote customer service.
The sooner you have these conversations, the sooner you can open up the line of communications and reset expectations with your partner. This will get you on the same page on the immediate and longer-term financial priorities so that you can work together to get through the next year.
This survey was conducted online within the United States by The Harris Poll on behalf of Tally from March 2-4, 2020, among 2,011 U.S. adults ages 18 and older, among whom 570 are Millennials (age 24-39). This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact firstname.lastname@example.org.