Money Matters: A Conversation Couples Should Have
9/26/2012 11:03:00 AM
So you’re dating and enjoying yourself. Good.
Maybe you’re single not thinking about dating. Do you!
Or suddenly you find yourself finding “The One”. Congrats! Not trying to rain on your dreams of bridal dresses, venues, houses and kids but outside of spiritual issues, there is another issue that needs to be discussed. It can cause arguments, secrets, dismay and even divorce…
Money may not seem like a big deal when dating but when the two become one, money will rear its’ ugly head. Though the return of two is better than one, that doesn’t mean there won’t be financial fiascos. In fact, money secrets big and small can be harmful to relationships, and according to 23,000 survey results reported via MSNBC, 36 percent of men and 56 percent of women have them. Experts say proper communication and balanced money management systems are good ways for couples to deal with their money matters. But beyond secret shopping sprees and private accounts, money matter in many instances beyond those. For U.S. News, Kimberly Palmer wrote a piece on money conversations each couple should have. Here are the issues she brings to light that need to be discussed sooner rather than later:
Your credit histories. The average person is responsible for $16,860 of debt, excluding mortgages, according to the credit reporting agency Experian. That makes it likely that the person you're about to marry is bringing along some serious baggage. While married couples aren't directly responsible for each other's debt as long as they maintain separate credit accounts, one person's poor credit can ruin a couple's chances of jointly taking out a home or auto loan, or at least make it much more expensive than it would have been otherwise. To prevent surprises, personal finance educator Taffy Wagner suggests asking each other: "What existing debt do you have? What student loans? What car payments that parents will stop paying? Are you about to lose your car? If you have a child, do you have child support?" If the discussion generates some unexpected answers, try not to get angry, she warns. "You can't hold anything against the person prior to your getting married—you were not there. We all make mistakes," she says. That spirit of forgiveness also extends to yourself. "Forgive yourself for financial mistakes that you made. You were not taught how to manage money," says Wagner.
Whether you want separate or joint accounts. Experts don't agree on whether separate is always better, so the decision of whether to combine bank accounts or not depends on the couple. In general, older couples bringing substantial assets into the marriage—or the responsibility of children—are more likely to keep their money in individual accounts. But many personal finance advisers say that even younger couples should consider doing the same. "It's always best to have some separate accounts," says Sharon Epperson, author of The Big Payoff: 8 Steps Couples Can Take to Make the Most of Their Money—and Live Richly Ever After. "It just makes it a lot easier if [couples] can have an account that they go to for their own purchases where they don't have to tell somebody every time they're making a purchase." (Julee Sidebar: Some finance folks say when the two become one, that includes money.)
Your long-term financial goals. Some people want to go on an exotic vacation once a year; others prefer to scrimp for a down payment. Talk about it ahead of time so you're on the same page. (Julee Sidebar: where there is no vision, people perish. If your mate has no financial goals other than getting a paycheck, proceed with caution.)
Your spending styles. Don't be surprised if you're a spender and he's a saver. In fact, says Bonnie Eaker Weil, a New York-based relationship therapist and author of Financial Infidelity, that's probably why you're getting married. "People don't understand that if you pick a person who gives you the most trouble, that [it] will challenge you in the areas you need help with. It's very unusual for people to have the same money [attitude]," she says. If you discover that you and your betrothed are polar opposites when it comes to budgeting, try to turn that into a positive by using each other to find a happy medium, Weil suggests.(Julee Sidebar: I am the frugal one and tend to reel my man in while he is the one who let’s me know it’s okay for an occasional splurge. Thank God cuz I’m eyeing a Michael Kors purse as we speak…)
Who will do what? Do you like paying the bills, while she tends to lose them under a stack of paperwork? Is she the investing whiz, while you prefer to keep track of the checking account? A system of assigning tasks and making sure each spouse takes over some financial responsibilities tends to generate the best financial results, according to a study by the Hartford Financial Services Group and the MIT AgeLab. It found that couples who divide up financial tasks, where one spouse handles day-to-day bill paying and the other investment management, fare better than those who hand over the financial reins to one person while the other takes a back seat. The couples with the so-called divide-and-conquer approach were more likely to have more savings and develop a financial plan for the surviving spouse.
How will you respond to needy family members? According to Fidelity, 10 percent of Generation X-ers provide financial support to their parents or in-laws, and the average amount is about $3,500 a year. But talk in advance about whether you would feel comfortable—or not—helping out family members who find themselves in a pinch. (Julee Sidebar: Real talk. You cannot take care of multiple households without handling your business. It’s okay to “help” when you can. Also learn when to empower consistent needy family members - not enable them. For example, if you know your crazy Aunt may spend money on drugs and calls for help on a bill, ask her to give you the bill and go pay it. If they insist on cash, know you about to get got!)
While money may not make a relationship, it can break one if you don’t talk about it and plan on how you will handle it. Dating is fun, planning the wedding is great but when the bills pile up and work gets hard, you need to know you are both on one accord. Financial peace is powerful.