Valentine’s Day tends to get a bad reputation. Fourth in sales behind Christmas, back to school, and Mother’s Day, this holiday, in which we’re supposed to celebrate our bonds with people we care about, has a tendency to be focused on conspicuous consumption and spending. Unfortunately, in our FOMO-driven society of social media, everyone wants to appear as though they’re keeping up with the Joneses when it comes to over-the-top displays of affection, just to prove how much their love is “worth” to their partner.
So is all of this worth it? It’s almost laughable when you sit and think about it; the need to participate in all that unnecessary pressure (on your heart and your wallet) on just one day. What if we looked at Valentine’s Day, not as a “Hallmark holiday,” in which we fall trap to overdone consumerism, but instead a chance to really invest in our relationship. Money impacts our relationships much more than we give it credit for. Having healthy, open communication with our partner about our finances and our goals is crucial to the success of our relationships.
Building a financial plan with your partner can help you get serious about how you both choose to allocate your money. Taking time to sit down and walk through your monthly expenses and combined cash flow will help you adjust the pieces of your financial puzzle. What debt payments will you both have? How do your incomes compare? How much can you save on a month to month basis? Can you find ways to combine your expenses, or even eliminate some altogether? Walking through your financial plan will help you develop the most realistic picture of your life together.
If you’re married, you should also be making important decisions regarding insurance. If both parties are working full time, and are covered by a health plan through your employer, make sure to take a look at which plan is the most beneficial. In addition to health insurance, begin the conversation of life insurance this Valentine’s Day. When you’re single and don’t have any beneficiaries, there is little need for life insurance since no one is dependent on your income but yourself. However, when you get married, even if children aren’t in the picture, life insurance can help with paying any expenses or debts you leave behind.
Once you have your health and life insurance figured out, you’ll also want to discuss retirement. Of course, both of you can still open your own individual Registered Retirement Savings Plan (RRSP), but if you’re looking for a way to lighten your tax bill as a couple, while also growing your nest egg together, spousal RRSPs can make a lot of sense. Spousal RRSPs are one of the ways that Canadian couples can split their income in retirement while allowing them to contribute money tax-free each year until the money is withdrawn. You’ll likely get the best results from a spousal RRSP if there is a large disparity in income between you and your partner. For example, a spousal RRSP can make sense if you work full-time and your partner doesn’t or just works part-time. If you and your spouse have similar incomes, the spousal RRSP might not be as effective.
Let’s use this Valentine’s Day to really open that conversation up with one another. Dim the lights, open the wine and start the discussion about your vision of your future. Dealing with finances together requires good preparation and planning. Take the time this Valentine’s Day to build a financial plan and get a head-start on being up-front with what you want from your future together.