Do you know how much money your spouse earns?
Believe it or not, four out of 10 couples do not know their spouse’s income, a recent Fidelity Investments study shows.
Many couples grossly overestimate their financial communication skills. “When we asked couples ‘Do you communicate well around financial issues?’ two-thirds of them said, ‘Yes, we do,” explained John Sweeney, Fidelity’s Executive Vice President of Retirement & Investing Strategies.
“But when we dug deeper and said, ‘Do you know what your spouse makes?’ 43% of the couples we surveyed could not correctly articulate that number.”
It gets even worse: Of the 43% unable to correctly name their spouse’s income, 10% got it wrong by $25,000 or more.
Right now you’re probably mentally quizzing yourself to see if you can recall your spouse’s income.
If you’re in the lucky 57% who can, well done! Having a clear picture of how much money is coming into your household is a key component of financial success.
Of course, it isn’t enough to just track income; you and your spouse have to be able to communicate about money going out of the household as well. You also have to be on the same page regarding financial goals, including homeownership, retirement and other milestone expenses.
Why Couples Don’t Talk About Money
You’d think that married couples, of all people, would regularly discuss their income and expenses. But there are a few big reasons why couples don’t know what their spouse makes — or what they spend.
“Societally, we’re taught not to ask what other people make, and we don’t talk about what we make,” Sweeney told us. “So we bring that to our relationships.”
It’s probably not a good idea to share your income on the first date, but some couples continue avoiding the income conversation even after marriage.
We also tend to avoid talking about our debts . Couples who are used to handling income and expenses independently may be hesitant to ask a partner to contribute to student loan debt, or to be honest about how much credit card debt they’re carrying.
As Sweeney put it: “It’s important for both halves of a couple to put all of their debts and assets on the table, in addition to their income, and say, ‘this is what we’re bringing to the relationship.’”
Why do couples need to communicate about both their debts and their assets? So they can turn these debts and resources into shared goals.
If couples don’t have shared financial goals, from paying off debt to saving for retirement, they’re likely to find themselves unable to achieve much financially. Big financial goals require couples to work together and agree on how to allocate their income.
How to Get Back on Track
Let’s say you’re part of a married couple with poor financial communication.
Maybe you don’t even know how much your spouse earns, or how much debt your spouse is carrying. Maybe you haven’t had a conversation about how much you need to save for retirement, or when you might be able to afford a down payment on a home.
How do you get back on track?
After having a conversation about income, debt and assets, work on aligning your goals, Sweeney suggests.
Will you focus on getting out of debt? Saving for your children’s college education? Planning for retirement? Setting up an emergency fund?
Once you’ve set your goals, it’s action time.
“If you know what your income is and what your goals are, try to take some money off each paycheck to achieve those goals,” Sweeney told us. He also suggests putting money towards your goals first, before spending on anything else.
After you discuss your big goals, it’s time to start talking about smaller goals, including what Sweeney calls “transparent communication about the monthly budget.” You and your partner need to be in alignment about what’s appropriate to spend on clothes, restaurants, entertainment and other budget line items.
Some couples prefer to give each partner a certain amount of “mad money” to spend as they choose, but even that decision should be a shared financial goal.
Sweeney also reminds couples not to forget about the medium-sized goals. Cars and laptop computers need to be regularly replaced; children will probably need braces and summer camp; you’ll have holiday and vacation expenses to plan for.
Have regular conversations with your partner about upcoming expenses and how to prepare for them, to ensure there are no financial surprises.
Overwhelmed? We’ve Got Resources
At this point, you might be feeling a little overwhelmed — and we don’t blame you.
If you’re starting from a place where you don’t even know your spouse’s income, suddenly feeling like you have to plan for emergency funds, retirement, new laptops, next year’s clothing expenses and more might seem like an impossible task.
Here are some resources to help you and your spouse start the next part of your financial journey together:
If you want to rate your financial communication skills, take Fidelity’s Couples Quiz. Its nine questions will give you a better picture of how you and your partner communicate financially.
If you want to improve your financial communication skills, The Simple Dollar has a guide to help you structure that first big money talk with your spouse.
If you want tools to help you plan your budget and goals, we’ve got a guide to help couples create a budget and plan for big financial goals.
If you don’t feel like you and your spouse have enough money to put towards your goals, we’ve got a story about a married couple who cut their monthly bills by $1,045. Chances are you can shave a little off your own monthly bills, and put that money towards your goals.
If you want a plan to save for your medium goals, Frugal Confessions has a step-by-step guide to help you figure out when to start saving for that new car and when to start saving for your big family vacation.
If one of you earns more money than the other, read our guide to financial planning when there’s income inequality in a relationship.
If you want to continue strengthening your financial communication, read Six Figures Under’s guide to setting up a monthly budget meeting with your spouse.
And tonight, ask your spouse to guess how much you earn — and see if your spouse gets it right!
Your Turn: Can you correctly name your spouse’s income? How would you rate your level of financial communication, and where would you most like to improve?
Nicole Dieker is a freelance writer focusing on personal finance and personal stories. Her work has appeared in The Billfold, The Toast, Yearbook Office, The Write Life and Boing Boing.