Marriage, Money & Inflation: Tough Money Talks to Have as Life Gets Pricey
With The Federal Reserve making moves, it's time to take another look at your personal finances to ensure you've got the best plan in place for your family.
Bobbi Rebell, CFP®
Personal Finance Expert at Tally
February 17, 2022
Love is priceless, but life is getting pricey. Inflation is rising. Stocks are down. Higher interest rates are coming. If you’re not on the same page with your partner about finances and avoid talking about money, things are about to get uncomfortable.
A recent poll of economists from Reuters indicates the Federal Reserve is expected to raise interest rates for the first time in two years next month. If this happens, these higher interest rates could have an immediate impact on many Americans' financial lives, especially for those who are carrying any credit card debt.
Keep reading for the tough money talks you need to have with your spouse so you can keep making progress toward your financial goals together even as prices rise.
How to get on the same page
The first step to getting on the same page with your spouse about money is to create your own set of financial rules for life and love.
This is a set of guiding principles that you agree upon when it comes to handling money. These guidelines force communication and give you a plan to follow, which lowers tension. It also forces you to get intentional with where your money is going as a team.
Sit down and look at your income and your expenses. Dream about your future together and decide what type of lifestyle you want.
To make this activity more fun, you can even create a vision board together that’ll help you make a plan for your money. Limit these rules to values and goals — you don’t need to put in specific day-to-day expenses. This is a master plan, not a detailed to-do list.
Set a threshold for purchases you decide on jointly
Even after you say “I do” to your spouse, you understandably will want some freedom with your finances. To cut down on money fights, it can help to decide on a dollar amount for purchases that you discuss. If a purchase is above that dollar amount, you need each others’ approval. If it’s below it (and within budget), you’re free to spend.
It’s also important to allocate some spending money for each of you as it fits within your budget. Have the understanding that this spending is still respectful to your joint values and goals.
How to work as a team when it’s time to save
Speaking of spending, it can cause friction in a relationship when one partner is committed to spending less and saving more while the other continues to spend to their heart’s content.
To work as a united front, you both need to show up. Sit down monthly together and decide where your money is going. This shouldn’t rest all on one person, even in a one-income household.
If your spouse is resistant to making these changes, tell them that they can take the back seat and you‘ll do the heavy lifting. Explain that you’ll manage the money, but they have to listen to your decisions, proactively accept them, and live with what you decide. In most cases, they’ll get interested and get on board.
It’s important to remember that cutting back doesn’t have to be forever. You can set a time limit for things you cut back on and even put the date on your calendar for these temporary budget cuts. Once you reach the time limit of scaling back, you may even decide these new adjustments aren’t so bad. But knowing the plan is temporary may get your partner to agree to make the change.
Make a plan for inflation
Life changes, and so does your budget. The changing prices due to inflation are the perfect tipping point to talk about priorities and sometimes tough choices. You may need to adjust your budget to adapt to these rising prices and this is a great time to add some of the money goals you set as a couple into your budget.
Your goals should be reflected and adjusted in your budget. If you want to get out of debt or save for a home, your money is a tool to help you do that. Decide together what moves down on the priority list or what moves off the list completely.
Focus on cutting things that are going to cost more and that you can control — like credit card debt. You can’t control the cost of gasoline and groceries, so it can be harder to save in those categories.
Make a plan to tackle debt
Odds are, one or both of you came into your relationship with debt. According to the latest data from the Federal Reserve, the average household’s credit card balance is more than $6,000. With interest rates set to rise, it’s in your best interest to pay down your high-interest debt sooner.
Don’t be like 30% of couples who keep secrets about credit cards and debt from each other. Debt can be shameful and add stress to relationships. Still, it’s important to face it together as a team — especially now that market conditions are making a major shift and your money secrets are definitely not safe.
What better way to spend date night than to create a debt repayment plan that you’re both happy with? While each couple will have different preferences for debt repayment, generally, you’ll want to pay off your debt with the highest interest rate first.
Credit cards are usually at the top of the list because their interest rates are so high. Consider using tools like Tally† to pay down your credit card debt faster and potentially consolidate it into a lower-interest line of credit. That’s money back in your pocket that you can put toward debt.
†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.