With the wedding season in full swing I thought it was an appropriate time to talk about marriage and money.
How you handle money is going to weigh heavily on your relationship. Just ask any divorced friends or family; it’s pretty common for money issues to be at or near the top of reasons for a breakup. What’s even more troubling are all the unhappy couples who are still together, still fighting bitterly over money.
No Wishing Allowed
When people in a relationship say that there is some sort of money issue that’s making for an unhappy partnership, it invariably means that the money problem has been an issue practically since the day the couple got together. Most of the time the person will give the same answer: “We were so in love, and I just thought (the other person) would change.”
Denial isn’t a strong tool for relationship management. Neither is simply closing your eyes to the problem and hoping your loved one will change. If you know there’s a problem now, it’s only going to become a bigger problem later on if you don’t address it.
What keeps people from talking about money is usually a fear of confrontation. Why frame it as a confrontation in the first place? If someone can’t see understand the need for having a supportive, open conversation about money habits and differences, it may be time to re-think the relationship.
To Love, Honor, and Tell the Truth
If you’re troubled by your partner’s money habits, bring understanding into the conversation. How we treat money is symptomatic of how we feel about ourselves. In a relationship with someone who doesn’t handle money properly, the challenge is to create a supportive environment where both partners can take a look at the deeper issues that are manifesting themselves as poor money choices.
If you want a lasting relationship, tell the truth. Anything less is disrespectful of you, your partner, and the relationship.
Separate Isn’t Equal
Keeping all your money separate is not going to solve your money differences. All that implies is, “I don’t trust you.”
Here’s one strategy for how to merge finances in a relationship. It needs to be a divided intothree-parts; ours, mine, and yours.
First comes “ours”:
• Ours is a joint checking account and joint credit card.
• Ours is a joint savings account for an emergency fund.
• Ours is combined investments for retirement.
Apart Together
From there, move onto “mine” and “yours.” These are the separate accounts each of you keeps, and are just as vital as the merged accounts.
Each person in a couple should always have a savings account in their own name. The idea is that once you’ve merged your finances, you each respect the right and need of the other to have some financial independence, too. It’s also a good idea to have a separate checking account so you can each pay for your personal indulgences.
The concept here is that once you fully fund all your joint commitments, it’s healthy to divide what’s left over and give your partner the freedom to spend or save that money as he or she wishes. A little separation can keep you together.
It’s essential that each person also maintain one credit card that’s solely in their own name. Without that, you have no credit record that’s yours alone; in the event that you divorce, separate, or are widowed, that’s going to leave you in a terrible financial situation. You’ll be unable to qualify for the best rates on loans, you’ll also find that you need to make hefty deposits to open basic utility accounts or get a cell phone in your name, and it can impact your car insurance rate.
Stay-at-Home-Parent Rules
It may be 21st century, but a lot of couples are still in the dark over how to handle money when one partner earns an income and the other doesn’t.
The all-too-common problem is that the uncomfortable dynamic that builds in which the stay-at-home parent thinks she (or he) has to ask for money. The “ours, mine, and yours” strategy should keep this from occurring in your family.
If money still remains an issue, it’s not the money. There’s likely a disconnect between the two of you about the value of having one of you be a stay-at-home parent. This needs to be honestly discussed. You both need to be open to the idea that what worked before may not work anymore. The financial reality may be that your family needs both of you to earn an income.
Get It in Writing
One of the most loving gestures you can ever make to your spouse is to ensure that you have all the legal documents in place to make things easier if one of you becomes ill or dies. Both partners will need an advance directive that spells out your medical care wishes if you become unable to speak for yourself. For couples who are together but not married, you should make sure you each have a power of attorney for health care, or a health care proxy, set up. This designates who “speaks” for you if you’re unable to communicate your health care wishes. Without this in place, unmarried partners can find themselves unable to take care of their loved one.
And don’t think a will is all you need. A living revocable trust that has an incapacity clause is hands-down the best way to take care of your family.
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04.25.09 at 9:09 am
Great post, very informative. Have learned a lot from your site.
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06.15.09 at 12:04 pm
Good, thanks for the guide. The future is here!