Money Milestones: You live together – but can you talk about money?


MR. MICHAEL LIERSCH, HEAD OF GLOBAL HEAD OF WEALTH PLANNING AND ADVICE AT JPMORGAN CHASE:  Hey humans.  I'm Michael Liersch, and this is “My Next Move” podcast presented by JPMorgan.   I'm a behavioral scientist, which is just a fancy way of saying I help humans understand their behaviors to make better money decisions. 

Each episode, I take a look at our interactions with money and consider science-based techniques to help you move closer to your financial goals.  What we're going to talk about in this episode is why it's so difficult to talk about money with the human or human beings you're cohabitating with.

This episode is going to be one of my favorites because in preparing for it, it’s led to so many different conversations.  It was actually a request from multiple listeners and listeners wanted us to talk about why not talking about money with the person I'm living with or the people I'm living with leads to such anger and resentment.  How can I get ahead of it?  And this sounds like a pretty dark episode, but it's not going to be I promise. 

Again, in preparing for the episode we had so many fun and funny conversations.  I was remembering an old roommate of mine.  I'm going to give a shout out to Brad, hey Brad, and all of the different dynamics we had with those human beings, what created the good ones around money and what created the not so good ones with money.  So, for example, Brad, I'm really sorry about eating all your food out of the refrigerator and not paying for it ever.  I still owe you. 

So, thinking about these ideas of the person you're cohabitating with, why is it so hard to have those money conversations? Well, in talking with various human beings who requested this episode and those who even hadn't it really came up that most human beings were afraid at some level that if they talked about money, so things like sharing expenses, how much debt do we have, how much money do you make, how are we going to split the expenses, is fair equal, is fair not equal, what are the dynamics around what exactly it is we're going to pay for and share — is it going to be joint accounts, separate accounts — so many different questions they thought it really was a real downer on the process of starting to cohabitate with somebody, whether that was a partner, whether that was a spouse, whether that was a friend, whether that was a family members — so think of parents — whether that's with children.  Those conversations are tough too.

So, how do we engage in more productive money conversations at the start, either before we’re cohabitating with somebody or even when we're in that moment before we get to the point of explosion.  And in our conversations around this topic, what most people said is what actually started the conversation was the straw that broke the camel's back, so as an event or something that occurred that made one of those people or both of those people or all of the people so angry with each other they just started spewing terrible things to each other about their money behaviors.  Not a great way to have productive cohabitation money conversations because that can oftentimes lead to defriending, it can lead to — as everyone knows listening to this podcast — things like divorce, it can lead to family disputes that go unresolved.

So really, I would encourage you to listen to this episode in the spirit of getting ahead of those negative outcomes.  So even though it might be challenging and uncomfortable, perhaps we can get to a better place, a more sustainable place with the people, the human beings, we're living with.

And I'm saying this because we did global research in 2019 around the concept of who owns money decisions and what was fascinating is across the globe the majority of people, so 56% said, “Me.  I own.  I 'm the primary owner of my financial decisions.” Great.  So, we're all empowered.  But what was also fascinating, and a little honestly disconcerting, is that only 28% who had a spouse or partner said that they shared in money decision-making with that other person as a matter of practice.  So, as an example of cohabitation, that's kind of interesting. 

So, a vast minority of people are actually engaged in collaborative decision-making, so maybe there is a big opportunity there to own your own decisions but also be open to collaboration with other people you're living with, because at the end of the day you are engaged in shared money decision-making whether you see it that way or not. 

So, when you think about that process — how are you going to start that conversation — a couple things to think about in terms of setting it up.

First, really enter into that conversation with an open mind and set it up with the person ahead of time.  Really talk to them about why the money conversation can be so important or critical, and I would really start with the idea of spending.  And so, think about the expenses that you have together, shared expenses and also shared, let's call it discretionary, things like vacations or cars or whatever it is — clothes even — that you're spending on, what is more essential in terms of your expenses and what's more discretionary, what are you spending on together.  Start there and find a neutral location to talk about these things.

So, what I would say since you're cohabitating together, get out of the house, take a walk.  Someone suggested find a coffee shop, a public place so things don't escalate.  Find a place that isn't really about both of you or about one of you or the other one, so that everyone's on an equal playing field.

Make those conversations short, so they don't need to be longer than 30 minutes but make them regularly scheduled.  It's much like the family meeting conversations we've had.  So really think about it as maybe 30 minutes a week, 30 minutes a month to have this money conversation and again, start with your shared expenses and since you're living together, it's probably easiest to start with the expense around the place you're living in.  Who is paying for what, when it comes to the roof over your head, whether that means rent, a mortgage, whether that means the lawn on whether that means that roof, who is actually paying to keep that habitation up and also to make sure that you can stay in it.

Again, fair isn't always equal.  What's come up a lot is actually fair can be unequal.  So, you have to think about the context of expenses in the following light:  Some people make more money than other people.  And so when it comes to spending and expenses, really considering if you're willing to reveal how much money each other makes can help you find the right balance between fair and equal, meaning if one  person makes 10 times the amount of money as the other person makes, then perhaps what's more fair is for the person who makes 10 times the amount of money to actually take on a larger part of those expenses and that that actually is completely fair.  Just something for you to consider.

So, once you address the idea around spending expenses, whether necessary or discretionary, then move to things like debt.  And I know this can be the most difficult conversation of all.  And in our dialogue with people.  they talked about things like embarrassment, even the word humiliation came up, fear around revealing debts, because debt not only burdens us, but I think we know intuitively that it can put a burden on other people and it also may scare them.

Are we able actually to meet those expenses that we committed to with that person or those people that were cohabitating with.  And if I reveal those debts to them will they no longer be willing to live with me or share their life with me.  Now when it comes to debt.  It's important to highlight that that debt is actually going to be there whether you reveal it or not, and when it comes to how much debt you have it's actually going to impact whether you are able to contribute to the expenses.

And so, in order to protect yourself and protect that person that presumably you really care about, really think twice about trying to hide or conceal that debt.  Instead, it actually might have the opposite effect in terms of feeling like you're burdening someone else or burdening someone else to talk about it, it might actually have the opposite effect to reveal the debts you have.  It might make you feel more free because now you revealed something that's been weighing you down and that person can become a collaborator with you to figure out how you manage through that debt to cohabitate together. 

And I know there's a lot of concern that maybe will make the cohabitation not happen.  But I also want you to consider, if your debt causes you not to be able to partner with someone or live with someone or a group of people, then maybe that is ultimately the best thing, because it might suggest that if they found out later it would happen anyway or that it truly is an unsustainable approach for you.

The third thing that I really want you to consider is this idea about sharing information when it comes to where the money is coming from.  And what I mean by that is some people have separate accounts and some people have shared accounts and some people have both.

And so, when you think about where the money is coming from, think about whether the money is going to come from you or the people you're cohabitating with, and whether there's going to be an element of transparency around where that money is coming from.  And you could call that a budget or you could call that literally setting up a resource allocation that is going to be a shared pool of money that's going to drive the available resources you have to actually accommodate your cohabitation.

So, what I mean by that is many people who decide to have separate accounts and keep things separate.  they do have some type of shared pool, whether it's theoretical, meaning it's on a spreadsheet.  They might identify a shared amount of money they're going to contribute, even if it's coming from separate accounts.  Some people actually develop a joint account where they actually populate that account, not just on a spreadsheet, but in a literal account they populate that with their money from their separate accounts

And that can create the sense of fairness because when that account is depleted and if it depletes too early, both people that are responsible for repopulating it, and then if it's also used in a way that was unintended by one member of the party or another, you can hold that person accountable for depleting that account too early and there's transparency there.  So, try to create, even when you have separate accounts, some level of joint transparency so that everyone knows what's going on with shared resources when it comes to keeping up your cohabitation experience.

So, some final thoughts before we close.  Living with someone is hard.  Living with family members, living with friends — it's not easy.  So, why not get ahead of it? Why not talk about how you're going to share in your money decisions early on in that relationship, rather than waiting until when that relationship can actually explode or become contentious because you haven't talked about money and you become resentful or angry based on someone else's behaviors.

So, what I'd like you to take away from this episode is the following:  One, it is not normal to talk about money with the person you live with.  This is a very unusual thing, so if you're doing it, congratulations.  So, empathize with yourself.  Two, that's why we're talking about it on this episode since it's so not normal, and that's why we're giving you a process to unpack your money conversations and giving you some tips around how to do that.

And finally, what I'd like you to try is at least broaching the conversation if you haven't done so before with the person that you're living, with the people you're living with to ask them, “Do you think it would improve our relationship to have a money conversation at least about our shared expenses, so that we're all on the same page and things are transparent about where the money is coming from and where it's going.

That's it for this episode of “My Next Move,” produced by JP Morgan.  If there is a topic you human beings want me to discuss, email it to my next move-dot-podcast at JPMorgan-dot-com I read all of the suggestions myself and there have been some very interesting ones so far.  Please keep them coming.

If you like “My Next Move,” please tell your friends and rate the show wherever you listen.  I'm Michael Liersch reminding you to make your next move today.


Money conversations among those cohabitating often only happen when resentments erupt. Michael Liersch has advice on avoiding that in this My Next Move episode. Have an open mind, choose a neutral location, keep conversations under 30 minutes and start by covering household expenses. And remember—fair might not mean equal if incomes differ. 

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