The Modern Couple's Money Guide. Lesley-Anne Scorgie

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      More important than your respect­ive bank balances are compatible views on money. When you share a parallel perspective, your financial goals are likely to be similar, which means that together, your actions will be complementary and focused on supporting those goals. Talk through the following questions:

       What assets have each of you brought into the relationship (savings, real estate, a business)? What made you successful at building assets in the past?

       What financial “baggage” have each of you brought into the relationship (a settlement from a lawsuit, a loan from a business that went sour, student loans, bankruptcy, racked-up credit cards)? Have you agreed on a strategy to deal with the baggage?

       Have you been successful at building assets together? What strategies worked?

       Have you accumulated debt together? How did that happen?

      If you’re worried that your partner is a gold digger or simply has a drastically different financial picture relative to yours, speak to a family lawyer about legally protecting your assets.

      Debt

      Charles has $60,000 in debt, including student loans and a vehicle loan. Rebecca, his girlfriend, owes $35,000 on an investment loan. The couple’s total debt comes to $95,000. They are discussing getting engaged.

      Some people are comfortable carrying large amounts of debt; others are not. Some perceive certain debts to be “worth it”; others disagree. These days, debt has become part of the average person’s finances due to the increased costs of education and housing, and also because of lifestyle choices and the availability of credit. Our grandparents’ generation had little access to credit, forcing them to save up and pay for things in cash, and, therefore, have less debt. Yes, they still had daily living expenses, but many of the expenses we have today (two cars, large homes, luxury vacations) were deemed unnecessary back then. Having to save up and pay for things in cash eliminated our grandparents’ opportunity to overextend themselves — the “buy now and pay later” approach used by many people today. It’s important to align your beliefs about what is and is not worth going into debt for.

      Debt has become part of the average person’s finances.

      Obviously, it’s in your best interest to focus on getting rid of, first, bad debt (expensive debt for non-assets like a television purchased on a store credit card) and second, good debt (debt for assets like a home). But if you and your partner don’t understand the root cause of your debt accumulation, you’ll always be in debt. I’ll walk you through the Crush It debt-reduction system in chapter 5 (see page 66), but in the meantime, to prevent frustration and resentment, you first need to discuss debt and agree on solutions with which both of you are happy.

       Did your parents carry a lot of debt?

       Have you carried a credit card balance for more than 60 days in the past 12 months?

       Do you wonder where your money disappears to after payday?

       Do you feel like you are living paycheque to paycheque even though you earn a healthy income?

       Does debt cause stress?

       What’s worth going into debt for?

       What debt-reduction techniques have worked for you in the past?

      From a legal perspective, you are not responsible for your partner’s debts prior to your union. But debt taken on during the union is legally your responsibility. So if your partner defaults on a loan that was signed for while the two of you were in a legal union, you are responsible.

      Investing

      Lindsay invests 15 percent of her annual income by contributing to her RRSP and TFSA (Tax-Free Savings Account). She’s very career-focused and wants to retire at age 45 with $2 or $3 million in investments. Currently, Lindsay is 25 years old and has $30,000 invested.

      Financial experts suggest that today’s 30- to 50-something couple will need approximately $2 million to support an average retirement income of $8,000 per month until the end of their lives. That may seem like a lot of money — $96,000 a year, in fact — but powerful forces of inflation are working against you. Assuming you are 40 years old right now, in today’s dollars that’s more like $50,000 a year. As a general rule of thumb, to allow for $1,000 per month retirement income, you need to have $250,000 in retirement savings to generate it.

      Sure, there are programs like Old Age Security (OAS) and the Canada and Quebec Pension Plans (CPP and QPP, respectively) that you’ll receive money from in your golden years, but that money will compose only a mere 20 percent of your income needs, so they can’t be relied on as the sole source of your retirement income. Old Age Security is a modest income benefit paid out (or clawed back if you’ve earned above the threshold during your working years) to Canadians over 65 regardless of their employment history. Most Canadians who have worked throughout their lifetime also contribute to the Canada Pension Plan or Quebec Pension Plan. These funds are paid out in retirement as early as age 60, but there are limits to the amount of money paid out through both. Service Canada (servicecanada.gc.ca) has information on OAS, CPP, and QPP rates.

      Successful investing is vital to your retirement saving, and you simply can’t rely upon government support, a possible windfall inheritance, or the lottery to get you there.

      Discuss the following questions with your partner:

       On a scale of 1 to 5 (1 being low knowledge and experience and 5 being high knowledge and experience), how confident an investor are you?

       Are you a low- or high-risk investor?

       How much do you invest each month?

       Do you invest with a particular strategy in mind?

       Do you have a financial adviser? If so, do you like having an adviser? Why?

There are many different views on investing. Some people like to take risks, others are more conservative. People have different timelines in mind when they think of retirement. A money coach or financial adviser can help navigate any investing challenges and questions you and your partner might have.1 We’ll dive into this subject in a big way later on in The Modern Couple’s Money Guide (see chapters 7 to 10).

      Family and Friends

      Colin spends a great deal of time with his family and close friends. His partner, Angela, enjoys this time as well. Every so often, though, it gets in the way of their time together and their shared values. Angela feels that Colin is heavily influenced by his friends’ and family’s views on money, career, and lifestyle, which doesn’t allow him to think independently. Colin, on the other hand, really appreciates having the support and advice of those closest to him.

      Establish clear financial boundaries first with your partner, then with those closest to you.

      According to a 2013 BMO Bank of Montreal survey, most Canadian couples wish they’d talked more openly and received professional financial advice prior to forming a permanent household. The majority of people received financial advice from their parents and friends. Unfortunately, as in my own case growing up, rarely are these sources of information qualified to offer financial advice. So, as you and your СКАЧАТЬ