💕 How to Manage Money Together: 4 Tips for Millennial Couples
There’s no doubt that millennials have made an impact on the world, especially considering the tough economic circumstances they’ve faced.
Individuals born between 1981 and 1996 (currently 26 to 41 years old at the time of writing) are a unique generation. They’re typically more accepting of different ideas and diverse cultures and they certainly aren’t afraid to change the status quo.
For instance, millennials approach marriage and finances very differently than those in neighboring generations. Compared to their grandparents, they are 3 times as likely to never have married for reasons such as feeling like they aren’t ready financially, they haven’t found a partner with the right qualities, and they’re too young to settle down.
When it comes to love and money, millennials simply don’t fit any traditional mold we’ve seen before. While this can lead to new, progressive ways of living, it can also create challenges. Millennials may be moving in together sooner, but they are marrying later. They may find themselves enjoying dual-income relationships but they’re saddled with unbearable amounts of student loan debt.
As an entrepreneurial millennial working in personal finance coaching, I love diving into all things millennials and money!
Common Millennial Money Problems
Millennials have certainly not had an easy time navigating life’s financial waters. Personal finance coaching allows me to get up close and personal with these challenges.
Millennials are drowning in debt. Approximately 70% of millennials carry non-mortgage debt, with the average millennial owing $117,000. Saddled with student loans, credit cards, and car payments, many millennials carry staggering amounts of debt (and regret). This makes it difficult to prepare for their futures. It’s estimated that millennials and Generation Z will need 3 million dollars in their retirement savings.
Millennials face incredibly high home prices and interest rates: In the 3rd quarter of 2022, the average home price in the United States was over half a million dollars. These incredibly high price tags make it very challenging for the average millennial to purchase their first home. And high-interest rates make it difficult to move homes.
Millennials are starting to care for aging parents: While many millennials are enjoying active, independent lives, some are starting to care for aging parents. This may lead them to pivot their careers or require them to purchase larger homes to accommodate both aging parents and their own children.
Millennials are feeling the effects of inflation. Even though millennials may be earning competitive, healthy salaries, it’s not getting them as far as it did with previous generations. Instead of enjoying more luxuries such as high-end cars and fancy vacations, many millennials are struggling with the cost of groceries and childcare.
Financial Tips for Millennial Couples...Get Intimate (Financially)
Increasing your financial intimacy and vulnerability can be a game-changer for your relationship! Money is a necessary part of life, so you might as well be clear and get open about it early.
One of the best places to start is to share your money stories. This can spark tons of intimate, important conversations and can allow you to be understanding and gracious to your partner because you know where they’re coming from.
If your relationship is getting serious, whether you plan on getting married or not, you’ll need to decide if you’re going to completely combine finances, stay separate, or implement a hybrid approach. This decision can bring up a lot of questions and potentially uncomfortable topics, so go slow, speak up, and don’t give up if it gets difficult.
Sooner or later, you’ll find yourself butting heads with your partner over a money topic. Millennials currently fall into an age group where money arguments are plenty. Whether it’s spending habits, secret debt, differing goals, or a drastic income difference, money arguments are sure to come. Educate yourself early on the common money arguments and how to prevent them.
Financial intimacy can increase when you and your partner are fully transparent about your finances and each partner feels as though they are true partners. A major barrier to financial intimacy can occur when one person feels like they don’t get as much of a say in financial decisions because of their education, past, income, or gender.
Encourage Healthy Habits
The way we care for our bodies can directly affect our finances. If we don’t eat well, keep our stress low, get enough sleep, and move our bodies, it can end up costing us big.
We all know it’s easier to feel motivated to eat healthily and exercise when you have someone else along for the ride. Use your powerful force of influence in your relationship for good and encourage one another to improve your health.
Together, choose more home-cooked meals over restaurants, sleep instead of Netflix binging, and walks instead of stress-eating. These small habit changes will not only save you money, but they can allow you to think more clearly, make better decisions, and lower overall medical costs.
Speaking of medical costs, encourage each other to look over your health insurance to ensure you have the right type and amount of coverage. Paying for premiums for plans you don’t actually use or not having enough coverage can both derail your financial progress.
This is especially important if you have children or plan to have a child soon. Proper medical coverage for your situation can prevent you from dipping into your emergency fund or going into medical debt.
Learn Something New Together
Relying on well-meaning financial advice at the extended family dinner table is a dangerous game to play. Everyone’s financial situations are highly unique and you and your partner must learn together what is best for you!
Read financial books, listen to podcasts, and have conversations with a personal finance coach who works with couples. This will help you and your partner feel empowered about your decisions and learning together can help build a stronger relationship.
If one of you has more time to educate yourself on various topics such as investing, saving, or tax strategies, share what you’re learning with your partner! But remember, don’t expect your partner to change on a dime if you learn something new and want to implement a new strategy. Be patient and always work together.
Set It (But Don’t Forget It)
Automation not only saves us from unnecessary late fees, but it can also help us with our financial future!
When setting up automatic payments for your bills and debt payments, ensure you’re still reviewing your accounts each month. This allows you to check for any discrepancies and keep an eye on your overall budget. Talk about who will be responsible for each bill (if you don’t combine finances) and who will be responsible for setting up automatic payments.
Automating your retirement savings, whether through an employer’s 401(k) plan or individual retirement accounts, can help you build your long-term wealth. It’s helpful to not even think of this money as available - as soon as you’re paid, a portion of your paycheck goes straight to your future self.
If both of you work, it’s a great idea to each contribute to your own retirement accounts, if possible. If one of you is a stay-at-home parent, consider opening a Spousal IRA for the non-working parent.
While it’s good to keep an eye on these accounts too, try not to check them daily. They will fluctuate and may cause you stress. Remember, you’re playing the long game with retirement savings!
Taxes are another payment you may want to automate. If you plan on filing jointly, pull up the IRS’s tax withholding estimator and fill in your numbers. Ensure each of you is contributing the correct amount to avoid a hefty tax bill. If you’re filing separately, you can still use the calculator to make sure you’ll each be in a strong financial position next tax season.
Find Accountability and Support from Wealthy
As a personal finance coach, I love helping millennial couples achieve their financial goals by teaching them various financial strategies and providing accountability and support.
At Wealthly, we love helping couples identify (and address) any financial problems that might be causing financial stress and helping them uncover financial priorities that align with their values. To get started on your path to financial freedom, download my free guide: 7 Simple Steps to Break Free Financially!
Content in this material is for general information only and is not intended to provide specific advice or recommendations for any individual.