The One Money Conversation You Need to Have Before You Get Married
Financial advisor Janice Goldman believes the number one thing standing in the way of women's equality is the ability to talk about finances. Reason number one? Women who don't negotiate their salaries lose up to $1,000,000 over the course of their careers. "Daring is the norm for men," says Goldman. "Being daring starts at 'no.'" Goldman attributes this to an ingrained desire to be liked. "We've been socialized to be agreeable. That makes it easy to get taken advantage of," she says. "Give up trying so hard to be likable at all costs." Below, Goldman spells out the seven steps to financial independence—and why talking about money is the most crucial one:
1) Stop being afraid to talk about money
According to Goldman, 80 percent of women are uncomfortable talking about money. But in order to properly utilize your money—while getting the most out of it—you must be able to openly discuss it, comfortably and with confidence. "Women are socialized to be seen but not heard," says Goldman. "It's definitely a relearning to say what you really think and negotiate."
2) Negotiate, negotiate, negotiate
When you get a job offer, don't settle for the initial salary. According to Goldman, women who don't negotiate their salaries lose approximately $1,000,000 over the course of their careers. "Be prepared: know what the salaries are like at comparable position in other countries and defend your qualifications," she says. Also, don't feel pressured to disclose your past salary to prospective employers. "The appropriate answer [to that question] is, 'It's really not relevant.'"
3) Know how to save
Take advantage of your company's 401(k) plan, especially if they'll match your contribution. "If your company matches and you don't say yes to that, it's like saying no to free money," says Goldman. If your company doesn't offer a plan, be sure you're putting money away for retirement every month.
Also, it's crucial to begin saving at the start of your career. Think of it this way, says Goldman:
Woman A puts $2,000 a year in an account from the ages of 20 to 30. Then she stops and doesn't put away another penny. Then woman B puts the same amount of money away from 30 to 60. Woman A still has more money at the end of her career, because Woman A's money sat there, kept growing and compounded 10 years earlier than Woman B's.
4) Know how to invest
Investing is the key to growing your net worth, says Goldman, because like the 401(k), your money will be matched. Choose to put it in a diversified investment portfolio, which will pay more, instead of a bank. Most importantly? Don't be afraid: "When women see the word 'risk,' they interpret it as 'loss,'" says Goldman. "True wealth is not just your income—it's the money that your money is making for you."
5) Withhold the least amount of taxes
When filling out your W-4, you may be tempted to withhold the most amount of money, to avoid paying later. Don't. "Why should the government sit with your money for that whole year?" says Goldman. "Invest it."
6) Discuss financial matters with your partner before walking down the aisle
"Do not get married to somebody until you know his [or her] financials," says Goldman. Finances become consolidated after a marriage: "His debts become your debts. If he owes the IRS some money, you owe the IRS some money," she says. Her advice? Ask him about his "STDs": his savings, taxes and debts. Be sure to get a prenup, and have a mediator present when discussing finances prior to the marriage. This takes the emotion out of this conversation and lays the facts bare.
7) Don't be afraid to get a financial planner
It will give you a complete picture of your money situation, including salary, additional sources of income, expenses and cost of living. From there, you can start planning for major milestones, like saving to buy a house or have a child.
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