MONEY Insurance

Why Your Auto Insurance Rate Could Go Up If Your Spouse Dies

couple holding hands in automobile
Marius Hepp—Getty Images

Critics are calling it the "widow penalty."

It’s hardly news that unmarried drivers tend to pay more for auto insurance than married ones. In today’s auto insurance industry, complex pricing algorithms take into account an ever-growing number of factors like driver credit score, gender, and age—factors that seemingly have very little to do with, well, actually turning the steering wheel.

But according to a new study by the Consumer Federation of America, a change in marital status from married to unmarried (through divorce or the death of a spouse) can cause a woman’s auto insurance premiums to rise as much as 226%—suggesting a “widow penalty” that CFA director of insurance Bob Hunter said in a press teleconference Monday with executive director Stephen Brobeck is “immoral and should be stopped at once.”

Using the stock profile of a 30-year-old female with a perfect driving record and holding all variables (from income to car model) constant except for marital status, the CFA study surveyed quotes from six auto insurance giants—State Farm, GEICO, Farmers, Progressive, Nationwide, and Liberty—across ten different U.S. cities. Of the six, State Farm was the only provider to never change its prices according to driver marital status; the remaining five routinely quoted higher prices to single—never married, divorced, or widowed—female drivers. Of those five, only Nationwide sometimes made exceptions for widows by not raising their rates. The “widow penalty” overall averaged to an approximately 14% increase.

The logic of the “widow penalty,” according to insurance companies, is simple: unmarried drivers are, allegedly, statistically riskier drivers. According to James Lynch, who serves as chief actuary and director of information services at the Insurance Information Institute, this is hardly immoral. Rather, it’s “very much the way that insurance works.”

“Rates aren’t supposed to be based upon what makes you feel good,” Lynch said of the CFA study. “Insurance companies are not in the business of creating favored classes of people.”

The CFA questions whether insurance companies’ risk information about unmarried drivers is even actuarially sound, claiming it comes primarily from a 2004 New Zealand-based study, which admits to including too few instances of accidents among divorced, separated, and widowed drivers to make any conclusive statements about them. Lynch counters that insurance providers are basing their rates on significant correlations in their claims data.

Yet it’s hard not to object to the notion of an insurance “widow penalty,” which seems to compound personal loss with financial loss, raising the question of how far insurance classification plans should be allowed to go. We wouldn’t, after all, accept a race-based insurance system; and under the Affordable Care Act, gender-based rating for health insurance is out.

The CFA argues that “widow penalties” are part of a trend in the auto insurance industry of charging higher premiums to those least likely to be able to afford them. Drawing a parallel to the practice of charging higher insurance premiums to customers with bad credit scores, Hunter and Brobeck noted during the teleconference that unmarried women tend to be less well-off than married women. “[Insurance companies] are just not that interested in selling liability coverage on an older car to a younger or lower income person, and they price it accordingly,” they said.

It’s an insurance landscape not unlike that which has provoked efforts to overhaul the American healthcare system—and that in December 2013 caused the Federal Insurance Office to issue a report entitled “How to Modernize and Improve the System of Insurance Regulation in the United States,” including the suggestion that states revisit the question of “whether or in what manner marital status is an appropriate underwriting or rating consideration.” The report pointed to same-sex couples in states where it was then illegal for them to get married as one key population discriminated against by marital status ratings.

But what to do for the single consumer here, now, and not looking to get hitched?

Shop around. Get as many quotes from as many providers as you can. And take into consideration all of the factors (and not just your single status) that might jack up your insurance rates. Most importantly, don’t feel tied to the same insurance provider you’ve been using for years. Should your marital status suddenly change, get back out there and shop some more.

MONEY Love and Money

How We Paid Off $10,000 in Debt in 20 Months

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Lisa Dell and Cory Tiffin No wonder Lisa Dell and Cory Tiffin are smiling

Think there's no way to get out from under your credit card debt? This couple proves it's possible.

When Chicago couple Lisa Dell and Cory Tiffin tied the knot three years ago, they had $10,000 in credit card debt spread across four cards—a common problem among their peers in debt-ridden Gen Y.

But the newlyweds, who had already been practicing frugal tactics for months to pay for their wedding, decided to apply their methods to a new goal: erasing their debt. The move is likely to offer emotional as well as financial dividends: MONEY’s survey of 1,000 millennials and boomers found that 70% of millennials and 77% of boomers say properly managing debt repayment makes for a healthy relationship.

To tackle the problem, the couple took a systematic approach.

“Once we got to the point where we could afford to pay more than the minimum on our credit card balances, we made paying off that debt our top priority,” says Tiffin. Initially the couple, now 31 and 29, started paying the minimum on their lowest-rate cards and double the minimum on the highest-APR ones. “But we kept feeling we weren’t making progress,” he says.

That feeling of stress and frustration is why many financial experts recommend starting with the smallest balance. Enjoying an early success can be a big motivator to stay on track with your payment plan.

Consolidation Play

But Dell and Tiffin took another approach. The two moved their remaining credit card balances onto a single card with a 0% APR for balance transfers and agreed to pay $900 a month to vanquish the debt in just 20 months.

Making such large monthly payments did have its drawbacks. “Money was so tight it caused some stress and bickering between us,” says Tiffin. To end the money disagreements while keeping focused, the couple kept detailed spreadsheets and analyzed their spending regularly.

“The numbers don’t lie, so that makes it easier to have an objective conversation” advises Tiffin. “It is always more stressful when there is less money, but if you communicate regularly and keep good records, it keeps you from having a major falling out.”

Indeed, credit card debt is tied for third among the most common sources of conflict for both boomers and millennials, the MONEY survey found. And debt not only increases the frequency of money arguments, but can also affect couples’ feelings about the union. Utah State professor Jeffrey Dew found that marital satisfaction is tied to assets, so that as debt increases, happiness wanes.

The good news? Paying it off can bring a couple closer together and instill smart money habits going forward.

“The good thing about that experience was we got accustomed to living without that money,” says Tiffin. “So now we just put that same amount in savings.”

Read next: How to Deal With Your Boyfriend’s $50,000 Debt

MONEY Love and Money

How to Deal With Your Honey’s $50,000 Debt

young couple on beach
Eric Audras—Getty Images

Here's how you can both break free of that financial ball and chain ... together.

As a generation overburdened with debt, millennials are also very forgiving of their debt-laden peers. In MONEY’s poll earlier this year of 1,000 millennials and boomers, we found that Gen Y was far less likely to say a large amount of debt was an unattractive quality in a mate, 41% vs. 61% of boomers.

They were also less likely to reject a relationship because of debt. While nearly a third of boomers said having more than $50,000 in student debt was a relationship deal breaker, only a fourth of millennials felt the same.

To some extent, this is basic empathy and shared experience. But Gen Y may be failing to truly take into account what carrying debt into a union can do to future aspirations like owning a home or raising children.

So before you unite your finances with the one you love, follow these steps to ensure you have a solid plan for handling and paying off your debts so that it doesn’t end up chipping away at your happiness and self-confidence within the relationship.

Confront the Situation

You and your partner may have discussed debt in passing, and maybe even bemoaned how much of your monthly paycheck goes to paying back loans. But if you’re thinking about tying your life and finances to each other, you need to come completely clean. Have a respectful and honest conversation with your mate in which you both outline every debt.

Discuss not just the amount of each loan, but the terms, any plan you’ve made for its repayment, and the progress you’ve made. “You can’t fix a problem if it’s not accurately defined,” says College Station, Texas-based financial planner William Grantham.

Then, together, create a net worth statement: List your incomes and other assets as well as debts and other obligations. Get a clear sense of how much is currently going toward debt repayment and how long your current payments will take to eradicate it.

Decide How to Tackle It

Once you know exactly how much debt you have as a couple, you need to have a frank discussion about whether you want to regard each debt as the sole responsibility of the one who incurred it or want to regard it as “ours.” Obviously, your partner’s debt load will affect you too, even if you’re not directly putting a portion of your income toward its repayment, as it will limit the amount you both can afford to spend on housing, vacations, retirement savings, etc.

Marriage is the inflection point, says Brian Wright, a planner in Fishers, Ind. For couples who are still dating but not married, “keep focused on paying your own debt and don’t obtain any joint debt,” he suggests. “If married, [you should] budget together, even if you don’t physically merge bank accounts. Once you’re married, treat the debt as ‘our debt’ and put a plan together to pay it off, regardless of whose debt it is.”

To find the funds to help you and your partner pay off the debt, comb through your spending. “Sit down with your credit and debit card statements and other bills, and highlight in one color the things you need to have [like] food, gas,” says financial planner Jeff Motske, author of The Couple’s Guide to Financial Compatibility. “In another color, highlight items that you really want to have, like gym memberships or other entertainment; and in a third color highlight your other more emotional purchases. You can quickly see if you’re spending hundreds in one area, and what unnecessary items you can cut out.”

Set Payoff Priorities

Once you’ve found the extra funds, determine which debt requires your attention first. Planners tend to break debt into two categories: “good debt” — a category that includes mortgages, student loans, real estate loans and business loans, and often allows the holder some tax breaks — and “bad debt” (credit cards and auto loans).

Focus on paying off the bad debts first, starting with credit cards. Many people recommend starting with the highest-rate card, to reduce the total interest paid. It may be more emotionally satisfying to start with the smallest balance, however. “Once you’ve successfully paid one off, you’re emotionally excited about doing the same with the rest,” says Motske. “If you tackle your highest debt first, you may feel frustrated by the lack of accomplishment, and end up falling back on old habits.”

You could also transfer all debts to one new card that has a 0% APR on balance transfers, like the Chase Slate card — but only if you have a realistic plan to pay off the balance in 15 months. After the 0% period, the APR can spike to as high as 22%.

Change Your Student Loan Payment Plan

Meanwhile, rethink your approach to the good debt. Federal student loan program automatically enroll all borrowers in a standard 10-year repayment plan, but the feds also offer six other repayment options. This tool, created by the Department of Education, will help you figure out the right plan for you.

Income-driven plans tend to be the best fit for most recent graduates, as the monthly bills adjust to your salary and in some cases offer a possibility of loan forgiveness. For example, if you work for the government or a nonprofit and pay on time every month for 10 years, the remainder of your debt can be forgiven; you won’t even owe taxes on the balance. Graduates working in other fields may have similar opportunities after 20 or 25 years, but will owe taxes on the amount forgiven.

Keep in mind that if you opt for income-based repayment, and you marry, filing a joint tax return could have a big impact on your monthly burden, as the loan servicer will consider both incomes when calculating payments.

If you’re a graduate with a steady job, good credit and enough income to pay down your loans, you can find much lower interest rates with private consolidation loans, but the amount you can save is generally not worth giving up federal consumer protections and possible debt forgiveness. (The Consumer Financial Protection Bureau estimates that more than one-quarter of working Americans are eligible for the Public Service Loan Forgiveness Program.)

For more ideas on ways to get your student loans forgiven, see this list.

Make Sure You’re Paying the Principal

To rid yourself of the debt faster, you’re going to need to put down more than the minimum required payment each month — and make sure the money goes toward lowering the principal. The CFPB says borrowers have complained about lenders applying extra payments toward next month’s bill instead.

To avoid this confusion, the CFPB suggests sending a letter to the lender explaining how your extra payments should be credited. Here’s their sample letter.

Consider Life Insurance

If you and your partner have taken on debt together, such as a mortgage or an auto loan, and you think your mate would have trouble covering those bills without your income, “protect yourselves from financial disaster by purchasing enough life insurance to cover at least the amount of your debts. The loss of a loved one is hard enough without having to worry about a mountain of debt,” says Grantham.

Celebrate the Victories

Your debt won’t vanish overnight, and paying it off will require a lot of self-restraint and patience. So review your progress regularly to ensure you’re remaining on track to meet your payoff goals — and as you whittle down the debts, don’t forget to reward yourself (frugally, of course).

“Maintain a positive outlook, says Grantham. “If you have multiple loans and pay one off, commemorate the event by going out to dinner. Even a small gesture like dinner can be good motivation to stick to the plan.”

MONEY home buying

Buying a House Together Before Marriage? Read This First

house keys in a ring box
iStock

Love may be blind, but don't go into a real estate purchase with your eyes closed.

Serious young couples used to mark their commitment to each other with an engagement ring, but now they’re in the market for a bigger asset: a set of shiny new house keys.

One in four couples between the ages of 18 and 34 bought a house together before they were married, according to a study by Coldwell Banker Real Estate. MONEY found in our own poll of 500 millennials’ financial attitudes that 40% think it’s a good idea for a couple to buy a home together before marriage, while 37% think the purchase should take place prior to the wedding.

Low-rate mortgages, rising rental costs, and the ability to deduct mortgage interest from income taxes all make being a homeowner now rather than later seem like an attractive option. And while making that move first can work out well, as it did for Seattle couple Katy Klein and Charles Hagman, not every story has that same happy ending.

In fact, many financial planners advise against it. That’s because buying a home is often the biggest and most financially complicated move a couple makes, and unwinding it can be especially difficult for unmarried partners if the relationship ends. So if you’re buying a home with your beloved before getting hitched, spare yourself any potential financial heartbreak by following these tips.

Compare Credit Scores

You and your partner have probably already shared details about your income and savings when determining if you could afford to buy. But another piece of information you’ll need to share well in advance of closing is your credit report.

“If a couple is entering into a business deal, which is what a home purchase between two nonmarried people is, they should know the creditworthiness of their business partner. A person’s credit score will impact your ability to obtain a mortgage and the interest rate you will pay,” says Pewaukee, Wisc.-based financial adviser Kevin Reardon.

If you or your mate has a poor score, it could influence how you decide to title the property and who takes responsibility for the loan. Married couples are generally viewed by creditors as a single unit, but unmarried couples are assessed as individuals, even if applying for the loan together.

“This can work to your advantage if you have the person with stronger credit purchase the home,” says Sandra O’Connor, regional vice president with the National Association of Realtors. By eliminating the poorer score from consideration, you can secure better rates. On the flip side, with only one person applying for the loan, and thus one income on record, the amount you qualify for could be lower than what you could get with two incomes. And, of course, only one person’s name will be on the loan and deed, leaving the other partner vulnerable in the event of a breakup.

Open a Joint Account

Consider setting up a joint bank account, if you don’t already have one, that can be used to pay the mortgage, property taxes, insurance, and maintenance, Reardon suggests. Each of you can set up automatic monthly deposits into the account from individual bank accounts; this way neither party can forget. You can further simplify bill paying and budget tracking by having home expenses automatically deducted from the account each month.

Decide How to Manage Costs

When you cosign on a mortgage, you are 100% liable for the debt, which means if the relationship turns sour and your partner stops paying, you must assume the entire obligation. For this reason, financial planner Alan Moore, co-founder of the XY Planning Network, recommends choosing a home with a mortgage you can swing on one income. That can also be a huge help down the road in the event of unexpected illness or injury, since you’ll still be able to afford the monthly payments.

Before setting a housing budget, both partners need to have an honest conversation about the amount of debt they’re comfortable living with. Just because you can borrow the maximum amount doesn’t mean it’s a good idea. Stretch your combined budget too far, and any unexpected expense will likely have one of you coming up short when the monthly payments are due.

Put Your Agreement in Writing

Contact a real estate lawyer to prepare a written document, such as a property, partnership, or cohabitation agreement, that clearly outlines the full details of your arrangement, including what percentage of the home’s equity each partner is entitled to, especially if you contributed different sums to the down payment or mortgage balance, and what will happen to the property if you split up.

“The contract should specify whose name will be on the deed or lease, one or both, who will pay for what—I pay the utility bill, you pay the cable bill—etc.,” says Reardon. “It would be productive to note what happens if one party can’t pay. Will both parties move out? Will one party take over the payments for the other, if they are able to, then create a note receivable from the partner who can’t pay to the partner who can? Will this note be collateralized? It’s great to iron out these details in advance because it removes any doubt or emotions in the event things turn out badly.”

Title It Right

You and your partner must decide how you will own the home or take title. You have three options: One person can hold the title as sole owner, both of you can hold title as “joint tenants,” or you can share title as “tenants in common.”

Typically, you would want both parties to hold title, as putting the property in only one partner’s name leaves the other partner without equity in his own investment. (You’ll certainly want that separate written contract mentioned above if you go this route.)

If both partners sign the title as tenants in common, then each owns a specified percentage of the property. One person may own a 60% interest, while the other owns 40%, for example. This split is specified in the deed. If one partner dies, ownership will not automatically transfer to the other homeowner unless that person is named in the will; instead the deceased owner’s heirs will inherit his or her share.

When you hold title as joint tenants with right of survivorship, you are considered equal owners, and if one of you were to die, the other would automatically inherit the other’s stake and own the entire property.

Bottom line: No matter how you hold title, it is important that you and your partner enter this agreement with a complete picture of each other’s finances and a written contract outlining your desires for the property’s division should the relationship end.

MONEY Love and Money

Financial Habits That Will Make You Sexier

couple on first date, man paying with credit card
Alamy

Money skills are more important than good looks when seeking a mate.

Ditch the makeup and hair products. Your budgeting skills might be the thing you should really show off on your next date.

In a recent survey about relationships and finances, MONEY found that both baby boomers and millennials agree on the three most attractive traits in a potential mate: a sense of humor, compassion, and—yes—financial responsibility. For both groups, those qualities all rank higher than physical chemistry, diligence, and even intellect.



Don’t worry if you don’t make a ton of money now. The survey, which included about some 500 millennial and 500 boomer respondents, found that smart financial habits were deemed more important than current salary among members of both age groups.

Both generations ranked budgeting and timely bill paying as particularly attractive behavior, though younger survey takers were more likely to value future earning potential in a mate. Property ownership was the least important for both generations.

Read next: Are You and Your Partner a Money Match?

MONEY credit cards

Help! I’ve Fallen In Love With Someone Who Has Credit Card Debt

couple doing expenses
John Lund—Getty Images

There is light at the end of the tunnel.

It finally happened. After all the bad dates and heartbreak, at last you’ve met The One, and you’re ready to start down life’s road together. Except your new love is carrying one piece of baggage you hadn’t counted on: credit card debt.

You’re not alone. In a new NerdWallet/Harris Poll survey of more than 2,000 adults, 35% of those who combine at least some part of their finances with a partner brought credit card debt into the relationship. (Men are more likely to do so than women, by the way). Millennials are particularly likely to commingle I.O.U.s and romance, with 45% of those between the ages of 18 and 34 toting a revolving balance. In fact, millennials were more likely to have credit card debt than student loan or car payments.

On average, people entered relationships with $4,100 in credit card debt, and 25% of couples with at least one indebted parter reported experiencing negative consequences. One-sixth of respondents said debt kept them from doing something they planned on, such as buying a home or taking vacation.

The findings dovetail with MONEY’s research into couples and financial harmony. Our recent poll of 1,000 millennials and baby boomers found that two in 10 couples regularly fight about credit card debt. Millennials are more tolerant of debt than older generations, with 40% saying a lot of debt is a romantic turnoff, versus 60% of boomers who said the same.

If you—or someone you’ve fallen in love with—is struggling with debt, here’s how to keep it from ruining your relationship.

Don’t hide it. “Being open and transparent about your debt is very important,” says NerdWallet credit card expert Sean McQuay. “When you’re dating someone and you have the conversation about introducing them to your crazy parents, you also need have the talk about your debt.”

By opening up about debt early, you won’t cause a fissure down the line. And once you put your cards on the table, you and your partner can come up with a plan for getting out from under. One strategy suggested by Beverly Harzog, author of The Debt Escape Plan, is to start paying off the smallest balances first. The math may say to go after the card with the highest interest, but unless there’s a big difference in the two cards’ rates, it’s often more helpful to get the mental boost from clearing a debt so that you sustain your repayment plan.

Transfer your balance to a cheaper card. If you’ve squeezed every last penny from the budget and still can’t seem to make much headway, one powerful tool is a balance transfer card. MONEY recommends the no-annual-fee Chase Slate. Not only is there no interest on purchases and balance transfers for 15 months, there’s also no balance transfer fee if you move your debt within two months of opening the card.

More from the Love & Money series:
Poll: How Boomer and Millennial Couples Feel About Love and Money
Why Couples Need to Get Financially Naked
The Single Most Important Money Talk for Couples
How Money Can Improve Your Sex Life (It’s Not What You Think)

MONEY Love + Money

How to Start a Money Conversation With Your Mate

150622_LOV_PartnerOpen
Peter Dazeley—Getty Images

Use this dialogue to let your partner know it's time to come clean financially.

Most Americans would rather have a talk about the birds and the bees than any conversation related to finances.

In a Northwestern Mutual study, money outranked other uncomfortable topics that included not only sex but also asking adult-age children to move out and discussing one’s own death.

While you can argue for a certain level of discretion when talking about money with friends and even family, the one person you need to come financially clean with is your mate. Couples who are on the same page about issues like saving, budgeting, and retirement feel more financially secure, argue less about money, and have hotter sex lives, MONEY found when we polled 500 boomers and 500 millennials on their behaviors and beliefs concerning money and relationships.

For many couples the hardest part is simply getting started. “I can guarantee that you and your partner won’t have the same views on finances. There are always variations in thinking about how much goes to what and what goal should take top priority,” says Jonathan Rich, author of The Couple’s Guide to Love and Money. “You want to work out those differences and reach compromises before there is an actual money problem.”

If you’re having trouble getting your partner to open up, follow these tips to steer the conversation in a productive direction.

THE STRATEGY: Solicit your partner’s opinion about someone else’s financial situation.

WHAT YOU CAN SAY: “My dad is thinking about retiring this year, and he wants my mom to retire with him. I’m worried about my mom retiring that soon. What do you think?”

WHY IT WORKS: “People are always more comfortable discussing others’ choices and responsibilities than they are their own,” says CPA Kitrina L. Wright. Talking about a financial decision made by a family member or close friend can be an easy way for you to get your partner to share thoughts about money without feeling like all the attention is on him. Then you can use the moment as a springboard to related topics or questions that hit at more personal issues.

Financial planner (and Kitrina’s husband) Brian Wright recommends opening by sharing a detail about a parent’s financial behavior, since most people learn their financial habits and attitudes from Mom and Dad. “Everyone has lessons they learned about money from growing up. Getting your partner to open up about those experiences, good and bad, can give you the best insight into how they view money and what their expectations are.”

Hearing about family experiences can give you added perspective on your partner’s financial choices, or insight into why they may be reluctant to talk about money, says Ed Coambs, a marriage and family therapist. “”Maybe they’re quiet because they grew up in a household that never talked about money, not because they’re hiding thousands in debt.”

THE STRATEGY: Pose a hypothetical question.

WHAT YOU CAN SAY: “If you inherited $100,000 from a relative, what would you do with it?”

WHY IT WORKS: Asking an open-ended question is a way to talk about financial priorities without being confrontational, says Paula Levy, a marriage and family therapist. “People tend to get defensive when taking about finances. The key is to focus on your future hopes and dreams more than the money itself, because after all, when we talk about money we’re really talking about it as a tool to achieve what we want,” Levy says.

Avoid launching into too much talk about your own plans; instead, Levy advises, let your reticent partner speak first. “You want to avoid interrupting as well,” she says. “If they get a strong reaction from their partner, then they’re even more hesitant to be open about that topic again.”

THE STRATEGY: Make an appointment

WHAT YOU CAN SAY: “I’ve been wanting to go over our monthly bills with you. Can we set aside some time tomorrow night to do that?”

WHY IT WORKS: If there is something in particular stressing you out about your union—maybe you don’t feel like you have a good handle on where the money is going, or you’re concerned about debt—it’s best not to blame or blindside your partner when bringing the topic up.

Rather, be intentional and make time, says Coambs. “It’s about pacing. It’s going to take time to get all the information you want, and you need to be patient.” Avoid delving into the nitty-gritty when you’re feeling heated or stressed. Your already defensive partner will feel under attack and clam up even more. By creating a time for this kind of talk, you’ll both feel prepared and can keep things free of an emotional charge.

You’ll also want to start small. Set yourself a time limit, maybe 10 to 15 minutes to talk about the issue, then go out and do something fun together, recommends Kitrina L. Wright. “Keep having these talks and work your way up to longer conversations.”

THE STRATEGY: Show your appreciation.

WHAT YOU CAN SAY: “I’m glad we’re doing this. I feel like I know so much about you except in this one area.”

WHY IT WORKS: You want your partner to know that you understand these discussions are difficult and uncomfortable—but at the same time you don’t want to let them off the hook. Stress why it’s important to you that you and your partner discuss finances together, and that this is just one piece of a much larger and ongoing conversation. You want your partner to know that you appreciate the openness and want this kind of exchange to continue.

THE STRATEGY: Engage a neutral third party

WHAT YOU CAN SAY: “I think we should meet with a financial planner to make sure we’re on the right track.”

WHY IT WORKS: If you’ve tried to start the financial conversation several times with little engagement, involving an objective third party might be the icebreaker your partner needs.

“A meeting with a financial adviser can help with this process. They’ve done this many times before and can ask the right questions and make your partner feel ok talking about money” says Alan Moore. You can also consider meeting with a therapist or counselor trained in the area of financial therapy, a new field of study that merges money and psychology.

Shelling out for the extra help, even as you tussle over money, will be well worth it in the long run when you consider the rewards—financial, emotions, and sexual—that being in sync financially can bring.

MONEY couples and money

The Surprising but Essential Thing You Don’t Know About Your Spouse

couple sitting in separate chairs
Steve Hix—Corbis

Many people don't even know how much their partner earns.

If you harbor any doubt that money remains a taboo subject around the household, consider these findings from the 2015 Fidelity Investments Couples Retirement Study:

  • 43% of couples do not know how much their spouse earns annually, and of those, 10% cannot guess within $25,000;
  • 36% of couples disagree on the amount of their household’s investable assets;
  • 60% of couples have no idea how much their Social Security benefits might be worth, including 49% of boomer couples—a group in or on the cusp of retirement.

Not talking about money around the house can have broad reaching repercussions. Without discussion, odds are there is little financial planning. Nearly half of couples say they have no idea how much they will need to retire, and a similar number disagree over the amount, Fidelity found. Those with a plan are twice as likely to expect to live comfortably in retirement. Other surveys also have found that people who have a plan are more confident about their future.

On another level, the taboo around money conversations may be passed down generationally. We do our children no favors by making the subject mysterious. Young people are coming of age in a period of diminishing social safety nets and would benefit immeasurably from discussions around the house about budgeting and saving. That such conversations do not take place in many households has given rise to a broad effort to require money management courses in schools.

Among the more confounding aspects of the money conversation is the misperception that it is actually taking place. Some 72% of couples in the Fidelity survey say they communicate exceptionally well with each other, and 90% say that starting a conversation about budgets, savings and investments, and estate planning is not difficult. Yet these are some of the same respondents who said they don’t know how much their mate earns.

Meanwhile, nearly half of parents say they strongly encourage their kids to talk to them about money, but only one in five kids strongly agree that this is the case, a T. Rowe Price survey found. Nearly three-quarters of parents say they talk regularly with their children about spending and saving, but just 61% of the kids agree. A third of kids believe their parents are leaving them in the dark about money issues.

Clearly, money is a tougher family topic than most of us realize. But it has never been more essential to talk about. This quiz might help you get started. And here are four questions that can help you and your spouse get on the same page when it comes to household finances.

  • What are the next big goals? Buy a house? Save for college? Identify what you want to achieve in the next three to five years, and make saving a habit.
  • Do you have an emergency fund? What if you get laid off? What if the car breaks down? You should have three to six months of living expenses safely tucked away, just in case.
  • Do you share a vision for retirement? Travel the globe or tend the garden? Downsize and live near the kids or move to a warmer climate? Make sure you see eye to eye.
  • Are your documents in order? Plan for the inevitable by having an estate plan, a durable general power of attorney, and a health care proxy. Designate beneficiaries for investment accounts and insurance policies. To do this as a team you will need to talk about things like inheritance, estate planning and eldercare.

Read next: How to start a money conversation with your mate

MONEY Love + Money

The Trick That Helps One Couple Overcome Spender-Saver Tension

150602_LOV_Fam_Cohen
The Cohens The Cohens

Being financial opposites can actually be good for your relationship.

Ira Cohen and his wife, Lisa, have been married for 34 years, and they are the first to admit that they are financial opposites: “She’s a ‘let’s live for the moment’ person, and I err on the side of caution,” says Ira, a mutual fund executive.

Having two different and, at times, opposing money management styles has created conflict for the Sugar Land, Texas, couple in the past. When the pair remodeled their kitchen several years ago, Lisa was insistent on a $1,500 warming drawer that Ira didn’t think was necessary. The couple bickered over it, then “I overrode him and bought it anyway,” says Lisa, a high school administrator. He wasn’t happy but finally succumbed. “If she is that passionate about this, am I really going to fight and scream over it?” he asks.

In a poll last year, MONEY found that 70% of couples argue about money, putting it ahead of conflicts over chores, sex, or snoring. In this year’s survey, we identified the No. 1 source of conflict: “spending too much on frivolous purchases.” A partner’s frugality is another major trigger, as the Cohens can attest.

“It’s easy to agree on the necessary expenses. The big thing is where you draw the line on the wants,” says Ira. “I tend not to try and debate the value of it with her, but be the voice of reason on timing and assessment of need.”

When Lisa wanted to redo the bathroom right after the kitchen, Ira pushed back; they ended up waiting five years. “I tell him what I want, and then I let him tell when the time is right,” says Lisa, who patiently advocated for 10 years before she got her husband to agree to spring for a trip to Europe. “I rarely override him,” she says, “but you have to push each other and be honest if it is important to you.”

The pair admit that even when the other’s ideas on spending frustrate them, they are grateful that they’re such opposites. “If you have two people who spend all the time, they’re going to be unhappy when an emergency comes. At the same time, there are lots of people with money in the bank who just let it sit there,” Ira says. “I like to be somewhere in between, and I think our different styles get us there.”

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