Ways for Couples to talk about Money

MONEY-CONVERSATION

Ways for Couples to talk about Money

What’s one of the biggest indicators of an oncoming divorce? Talking about money. Money is the number one most contentious issue for couples and the topic fought about the most. People are even using financial indicators as to whether or not they want to marry a person. A survey conducted recently by the website Lawyers.com found that 40% of responding couples, ranging in age from 25 to 55, found honesty about finances more important than fidelity. Today lots of couples want to manage their money in a smart, healthy way.

Gone are the days when one or the other spouse took care of all the money matters. Today couples want to discuss it and manage it together like partners. But what is the best way for couples to talk about money without the conversation devolving into a squabble? Financial advice website Learnvest.com CEO and newlywed Alexa von Tobel has some ideas. She recently teamed up with Cosmopolitan magazine to conduct a “Love and Money Boot camp.” This five day seminar includes how to best combine your finances and what moves you should make to ensure a successful financial future together. Couples are talking about money early nowadays as the relationship moves on.

But why is money such a thorny topic for couples? Mrs. Von Tobel said in a statement, “Discussing finances openly with your partner is crucial because money plays into every aspect of our lives, from the jobs we take to the way we raise our children. Since it affects so many major decisions, it’s necessary to check in with your partner from time to time to make sure that you’re on the same page when it comes to your finances.” Understand that there is no set way to manage money. If you are having difficulty in planning together, why not consult a financial planner? If one person thinks the other spends too much, the planner can go line by line through the credit card statements. It takes the pressure off the concerned party and takes resentment out of the equation.

Next, consider how you will merge your assets and your debts. Perhaps figure out a percentage out of each person’s salary that is put into a joint account that then pays the bills. Decide who pays those bills too, how it is done and so on. Don’t wait until there is a problem. Discuss financial issues often. Why not even schedule a certain time once per month or every other week to revisit the issue? Decide on a discretionary spending ceiling. Keep your shared goals in your mind. It isn’t always easy to iron out the money situation. But if you can do it, you will come out stronger as a couple. For more financial advice read, Home Finances for Couples: Resolve Money Problems in Marriage and Learn Easy Steps to Manage Your Family Budget by Leo Ostapiv.

Ways to Put your Finances Together

finances

Ways to Put your Finances Together

In the old days men generally took care of the finances, though in a few households the women took the money and paid the bills. Today, as partners, we are expected to each contribute our thoughts and feelings on the matter. People have different backgrounds and outlooks on how they deal with money. Some people realize that you only live once and money is to be enjoyed. Others understand that saving for the future and being frugal is paramount to success. Both outlooks are true. But it all depends on the kind of lifestyle you lead.

If a free spirit marries a skin-flint you’d better hold onto your hats. The arguments these two will have will be explosive. But talking about finances and ways to put them together, how to manage them, compromising, coming up with innovative strategies, and remembering shared goals are all a part of becoming life partners. It can still be difficult to navigate the uncharted waters of shared finances. There are lots of traps along that journey. But instead of falling for them take a look at these ways of putting your finances together. See if you can suggest one or two to your partner, move through the roughness and on to smooth sailing straight up ahead.

There is the equality approach. This is where both partners keep separate accounts but put money in for savings and the bills into one checking account. Both parties contribute an equal amount. Realize that a joint account means both people can put money in and take money out. There should be an explicit understanding of what that money is for and trust in one’s partner that they will handle their access to that account responsibly. If you aren’t getting married but cohabitating consider getting a cohabitation agreement to cover what may happen if you two break up. Further, separate leases could cause less grief should someone want to leave whilst both of you are on the lease.

When there are unequal incomes involved, a way of alleviating this problem is to allow both parties to contribute a percentage of their income, or what they can afford. Of course, if one person is a hedge fund manager and the other a kindergarten teacher and they live in a penthouse apartment, there’s no way the teacher could afford the rent. But who would want to give up that apartment? Instead, the educator can contribute what they would pay were s/he in a regular apartment. This gives the teacher their own independence. S/he is not reliant on the significant other for support. But it is also a sign of respect, in contributing his or her fair share. For more advice read, Money and Marriage: A Complete Guide for Engaged and Newly Married Couples by Matt Bell.

Red Flags with Dollar Signs on Them

Young couple worrying over finances

Red Flags with Dollar Signs on Them

Your spouse’s debt can really wreck you financial future. So much so that people are avoiding certain financial behaviors in others, and with good reason. Who wants to be weighed down by another’s irresponsibility? Here are some red flags with dollar signs on them; behaviors that let you know this person is bad with money. If the one you’re dating carries along some huge credit card debt and they aren’t making any headway on it, be afraid, be very afraid.

It’s not that you shouldn’t date someone with debt. Everyone in the modern world has some kind of debt to a certain extent. What is alarming is the lack of management. Everyone needs to manage their debt. A report by the National Marriage Project in 2009 concluded that debt destroys marriages. No matter what socio-economic class, race, or ethnicity, it’s debt that wipes out marriages. So hitching yourself to someone who has a lot of debt may be a recipe for an eventual divorce.

Do you know what makes the likelihood of divorce rise 45%? Thinking your spouse is spending too much. If you notice the person you are dating has horrific spending habits, they go for expensive trips, spa treatments, shopping sprees and other luxuries they can’t afford, to no abatement, put the brakes on that relationship. You’ll find the common account cleared out before the bills are due. Sometimes couples have different outlooks when it comes to money. One person tries to save as much as they can. The other feels that you can’t take it with you when you’re dead, why not spend it now? But these two vastly different attitudes will tear you apart if you aren’t careful. You have to manage it correctly. It takes a lot of talking, rule making, negotiating, and compromising.

If your lover is frequently receiving unemployment checks, beware. If they were unlucky, that is one thing. But if they keep finding and losing jobs, that’s another. If the latter is your sweetie’s case, kick them to the curb no matter how sweet they appear, unless you don’t mind supporting them. They may be immature, have a hard time getting along with others, or have commitment issues. Whatever the case, it doesn’t sound like good qualities to have in a relationship. For advice on improving you and your partner’s financial situation read, Debt-Proof Your Marriage: How to Achieve Financial Harmony by Mary Hunt.

Financial Signs that your Date has Long Term Potential

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Financial Signs that your Date has Long Term Potential

TD Ameritrade and website Learnvest.com recently conducted a survey and found that most couples fight about money on average around five times per year. Other studies have shown that money is one of the most contentious issues for couples. It’s always the biggest issue in survey after survey that couples have to contend with. When dating someone if you happen to get to know how they handle their money and other financial issues, their dealings in these matters can exhibit character qualities that they possess. Someone who pays all of their bills on time for instance is conscientious, detail-oriented and responsible, whereas if they are irresponsible with money, or a total spendthrift, these qualities may weigh heavily on your relationship, of course depending upon who you are and what your financial situation and spending habits are. Certainly trustworthiness, chemistry, shared values and love all should inhabit a relationship. These are good qualities to have, especially for a long term romantic relationship. So what other financial signs should you look out for in your date to see if they have long term potential?

Many experts agree that it’s good for both of you to share in the financial decisions. It’s important that a couple act as a team. If you aren’t cohabitating yet, does the person you’re dating ask your opinion on things or are they more independent? The TD Ameritrade and Learnvest study found that generally with married and cohabitating couples, one person pays the bills and writes the budget. Really both people should know how to do these things on their own, particularly with how high the divorce rate is. However, if your love interest asks your opinion and is very considerate, there is a high chance they will be easy to talk to and negotiate with when financial matters come up. Of course you shouldn’t bring up personal subjects like money, savings, investments, retirement plan and so on, on the first date. Not if you want a second date. But as things start to get serious these are important issues.

How comfortable is this person talking about money? When someone is paranoid or testy about the subject, it can put a real damper on the relationship. But if your lover is comfortable discussing matters and opinions on all things financial, this person is a keeper. Is this person financially stable? What is there debt situation like? There are lots of people who are forgoing marriage due to their hesitancy in taking on their lover’s debt. Everyone must decide what is right for them. But having a life partner who has their financial situation under control, and is able to discuss financial matters with you are good signs of a strong relationship with long term possibilities. For more financial advice read, Money before Marriage: A Financial Workbook for Engaged Couples by Larry Burkett.