How to Succesfully Create a Joint Investing Strategy With Your Partner
By: Kara Perez
Updated: October 17, 2019
Deciding to combine money with your partner is a big and exciting step in your relationship. But it also requires open and clear communication to make sure that you’re both on the same page when it comes to spending, saving and investing.
Developing an investment strategy for yourself is one thing. Developing an investment strategy for you and your partner is an entirely different ball game. Do you merge accounts? Are you aligned on the timeline for when you want to hit certain goals? Do you have the same goals?
Let’s go into how to talk with your partner about your joint investment strategy.
Establish Healthy Communication Around Money
When it comes to your relationship, the more you can communicate openly about money, the better off you’re likely to be. A 2017 study by MagnifyMoney showed that 21% of divorced people said money was the reason for their divorce.
To avoid heartbreak, establish healthy communication patterns around money early on. Use “I” statements to express your own relationship to money.
For example, “I find debt to be stressful, and I’d like to avoid increasing my debt burden,” is a way to share with your partner that you’re uncomfortable taking on more debt.
Strive to also set regular money check-ins with each other. That can be a monthly money date, when you review your monthly budget and savings. This opens the door to regular communication around money and helps ensure you both look at all the finances at least 12 times a year.
Review Your Own Money First
Before the two of you make any changes, start with understanding what you’re each dealing with.
If you’ve been working for a few years, you may each have a retirement account through work. Perhaps one of you owns property or one of you started investing in college.
To make the best plan for both of you as a couple, you’ll each need to understand what you did with money as an individual. Take judgment out of the equation and set up a time to go over all your accounts together.
work-related investment accounts
physical assets, like property, cars and jewelry
cash savings accounts
any automatic withdrawals from your paycheck or checking account
You can also use personal finance apps, such as Personal Capital[/actionnlink] or Sign UpYNAB, to better understand your financial situation. This will help you understand where you’re each starting from and what accounts and tools are available to you as a couple.
Set Goals Together
Now that you have a firm understanding of what your money looks like, you can start to define what combining it looks like.
What do you want your money to look like as a couple? Does it make sense to combine everything or just part or nothing? Remember there’s no single correct way for anyone to do money. You and your partner should find what’s right for you and not feel beholden to any nonexistent standard.
A great way to think about goals is to break them down into timelines. Setting goals for one-year, five-year and ten-year timelines allows you to see what needs to be a short-term focus and what is a longer-term focus.
Talking through your joint and personal goals will shape your finances. If you want to buy a house within five years, it may make sense to open a joint savings account so you can each contribute to it.
If you want to be able to max out your retirement accounts so you can leave work at age 55 instead of 65, you may each need to increase your monthly contributions to your retirement plans. In turn, you’ll need to talk through how that will affect your monthly budget.
Discuss the Investment Accounts You Have and Want
Not all investments are created equal. There are pre-tax investment accounts, like a traditional IRA or a 401(k). There are post-tax accounts, like a Roth IRA. And of course there are your robo advisors and your taxable brokerage accounts.
Which accounts do you want to contribute to as a couple? Which ones make the most sense to get you to your goals? These questions are particularly important to answer if one of you is a freelancer or part-time worker or if one of you will take time off to stay home with kids one day.
There are penalties and fees for withdrawing money from retirement accounts but none for your taxable brokerage account. Consider this in your investing decisions.
Remember, there really is no single correct way to invest. It’s all going to depend on your goals, your income and your ability to invest.
Review Your Contributions
Speaking of your ability to invest, a final good thing is to review your current investment contributions.
If you’re going to be combining money or bank accounts, your contributions may need to change. Try to work through your goals before coming to this step, as your goals will help inform if you need to make a change to your contributions.
A thorough understanding of where each other’s money goes each month will not only keep you on track to hitting your goals but also help build trust in the relationship.
Creating a joint investment strategy with your partner is an exciting moment in your relationship, but it may also be a little stressful. Few people feel comfortable talking about money, but there’s no one else in the world you should feel more comfortable talking finances with than the person you’re sharing your life with.
If there is a lot to go over, you can break up this conversation over the course of a few days or weeks. No need to overwhelm yourself or your partner in one session!
Finding a type of communication that works for you may take some time. Don’t feel rushed. If you each have good financial habits and feel comfortable with the path you’re on, you can adjust the money part as you need going forward.