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Love and Money…
I’m sure you have heard the statistic before…51% of marriages end in divorce and most of those are a result of fighting about money. Which is sad really, but that doesn’t have to be you.
Even if you have argued about money in the past, it is not too late to fix it. And congrats to you for taking the steps to figure things out before you become another statistic!
Here are 6 steps to help you and your significant other start down a thriving path to dealing with money in a healthy way in your relationship.
1. Communication is Key!
This happens all too often, talking about money is taboo, or it can feel icky.
Well, get over it!
If you are in a relationship with someone you should know about their financial details. ESPECIALLY if you are getting married to that person!If you are in a relationship with someone you should know about their financial details. Click To Tweet
You should know the details of each other’s incomes, debts, assets, credit card debts, student loans, if you have borrowed larger sums of money to people that they still owe you, child support and anything else related to your finances.
Make sure you put it all out there.
Don’t be afraid.
If you trust that person enough to be in a relationship with them, then you should trust them enough to talk about your finances (and theirs).
Being able to share these details with another person helps to build a team mentality. Think of it like a relationship exercise in trust.
I’ll show you mine if you show me yours kinda thing. 😉
Also, it can really be a load off of your shoulders when you feel like you don’t have to hide anything from your partner.
2. Get on the same page.
Back to the team mentality. When you are in a relationship with someone having common goals helps to strengthen the relationship. This applies to finances, kids, living situations, and even where you want to eat out for your date night.
Obviously, you are not going to agree on the same things all the time, but having common goals in mind can help tremendously when it comes to your finances.
Make sure you are talking with one another about your goals and expectations.
How does money fit into these?
Do you plan on buying a house, having kids, traveling, when do you want to retire?
These are all big life events that revolve around money. Don’t just assume that your partner can read your mind and know what you want or that you want the same things. Be very clear with one another about these big decisions.
I’m not saying you have to plan out your entire life here down to the very last detail, that’s preposterous
But think about it.
- Want to purchase a house?
- What kind?
- Living in the city versus living in the country has some different expenses involved.
- Planning on having kids?
- Is one of you going to stay home or do you plan on both working?
- Will you have an in-home nanny or take them to a daycare?
- Will they go to public or private school?
All things that can drastically impact your financial situation.
3. Get it all out in the open
This part can be kind of painful, so make sure you are both in a good mood when you go over this! (Maybe grab a glass of wine or a beer before you dive into this part).
Make sure you know all of your expenses. Yes…ALL OF THEM!
You might be unpleasantly surprised as to where your money goes and even more surprised as to where your partner spends their money. You can check out my previous post on How to Stop Living Paycheck to Paycheck without Losing Your Sanity that goes over how to really dive in and track your expenses to find out where they are going.
Make sure you are tracking EVERYTHING! Trips to the gas station for quick lunches, Starbucks, eating out, personal care-like getting your hair and nails done, random crap your boyfriend/husband buys from Best Buy or Amazon.
When I did this I realized that my husband was spending like $20-$50 a week on lunches at work! Yeah, not cool!
This is also a great way to find areas that you can cut down on. Like that $5 a month for Pandora Premium, although I hate commercials when I am working and in the zone-it was one thing that I could live without.
Plus, my computer as a mute button 🙂
4. Strategize and Plan
So here is where the rubber meets the road…so to speak.
Talk with your partner and find out what will work best for the two of you as far as how to manage and track your money.
So often people feel like they can’t move forward with a plan because they don’t have enough money. This is really not the case for most people. It is a matter of they don’t know how to manage the money they already have.
Don’t forget about your bank accounts either. I am personally a proponent of combined accounts for everything. When my husband and I first got together, even before we were married, we put everything in joint accounts.
Our money went in, our bills came out, and we spent the rest-neither of knew really anything about personal finance back then. Live and learn, right?
However, I know this does not work for everyone’s situation.
If you do decide to keep separate accounts, just make sure that you both have access to each other’s accounts. For several reasons.
If you are in a relationship, keeping secrets about money is not healthy! Ladies, I am looking at you specifically! I have heard so many horror stories about husband and boyfriends keeping secrets accounts from their girlfriends and wives, which eventually ends the relationship. Be honest, is it really worth it?
Secondly, knowing about each other’s accounts can negate any further stress in the event of a tragic situation, such as a death or serious illness.
If you have separate accounts and your partner pays certain bills-like the mortgage-and you can’t access their money or the account to pay the mortgage, say goodbye to your house!
So make sure for security reasons you know about separate accounts and the details for each.
Also make sure you discuss other aspects of finances, such as lending or borrowing money to friends and family. I don’t really like borrowing or lending money to or from people, but I know that things happen and people get into binds.
If and when I ever borrow money to someone, I don’t expect to get it bac. So I think of it as an immediate loss. If I do get it back, bonus!
Just make sure that borrowing money to others will not cause you strain or arguments over finances.
5. All things being equal
Going back to my previous point about having access to each other’s account, make sure the money management is not one-sided. When it comes to decisions about money, plan them together and discuss any changes in previously made plans. Make sure again, you are both on the same page.
When it comes to joint assets and accounts, make sure both of your names are on there. Again as a safety net. Also, make sure that there is a record of all the accounts, assets, liabilities and all financial related things are listed in one place that you can both access.
I personally use LastPass to house passwords and vital information. You need one password to log into LastPass and all of your info is saved and you can easily access any of your accounts from one place.
Or if you are a paranoid person like my husband who thinks all of your info is going to get stolen being “online” then a good old fashioned spreadsheet works well too.
Cuz heaven forbid something should happen to either one of you, the other one will not have to worry about not being able to pay bills on time or access accounts in your absence.
6. Plan for the worst and hope for the best
Obviously, we don’t like to think about our significant other or ourselves passing away, but it is something you need to be prepared for.
Advanced financial planning for the inevitable is the responsible adult thing to do. It is highly recommended that you speak with an estate planner so that you are following any state-mandated rules and won’t have to worry about legal battles.
A few things to consider when estate planning:
- Current beneficiaries listed on retirement, insurance policies, and bank accounts
- Property deeds and leases in both your names
- Appointed power of attorneys
- Trust funds
- A will that spells everything out
More often than not, money issues within relationships aren’t all about money. There are often underlying issues at hand that manifest in the form of arguments about money.
Just remember to be understanding and communicate with one another about these issues and how you feel about them. Use “I” statements to discuss your feelings about finances and keep the lines of communication open.
Completing these steps will take time and trust in one another.
Start where you are and work your way towards building a healthy relationship with each other and your money. Don’t forget to celebrate your small wins. It really keeps the motivation going.
Want to get started paying down your debt and achieving small wins? Check out the recent post on using the Debt Snowball Method to become debt free!
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