If you're a high earner, you may be interested in partnering with someone with similar education, income, and goals. Becoming a financial "power couple" can help you both achieve your goals sooner. Because money disputes are one of the leading causes of divorce, finding someone with whom you're financially compatible can smooth the path of your relationship.1 Below, we discuss a few tips to help guide your joint journey.
Open Communication
Open communication is the gold standard for any relationship. But it becomes even more important when both partners have high incomes (especially if those jobs involve high stress). It's not uncommon for one partner to feel insecure or jealous about another partner's earning capacity, especially in times of uncertainty. You can build trust with your partner by getting all your emotions—even the negative ones—out on the table.
Set Mutual Goals
You and your partner may want to set financial goals that you both aspire to, such as saving for a house, paying off debt, investing for retirement, or starting a business. First, break down these goals into smaller, actionable steps. You can then decide who is best suited to perform each step and hold each other accountable along the way.
Create a Budget
One of the biggest advantages of a dual-income household is the ability to save a significant percentage of your salary—expenses like rent or a mortgage don't double just because two people live there instead of one. This makes it easier to avoid lifestyle creep, which is discussed below.
Live Below Your Means
Living below your means allows you to free up funds for savings and investments. Prioritize spending on things that bring value and happiness, not just instant gratification. One rule of thumb when contemplating large purchases is to wait a week and see if you're still thinking about it. This can help you avoid impulse buys.
Maximize Income
You'll build an unshakable partnership by supporting your partner's career goals and aspirations and celebrating each other's successes along the way.
Manage Debt Wisely
Work together to manage and pay off any debts like student loans, credit card debt, or mortgage payments. Each dollar that goes toward servicing high-interest debt is a dollar that can't be used to support your lifestyle or save for retirement, so the quicker you knock out this debt, the better.
However, debt isn't always bad. Some types of debt can be used to leverage an entrepreneurial venture or real estate investment. In these situations, you'll want to evaluate the pros and cons with your partner carefully and perhaps run the idea by your financial professional.
Protect Your Assets
For many high earners, especially those early in their careers, their biggest asset is their earning ability. This means protecting your assets by getting enough insurance coverage is crucial. This can include life insurance, health insurance, disability insurance, and long-term care insurance. You may also want an umbrella liability policy to protect yourself against claims that exhaust your other insurance coverage options.
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
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Footnotes
1”National Debt Relief,”CNBC.com, https://www.cnbc.com/select/national-debt-relief-survey-debt-reason-for-divorce/
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