If you’re a fan of pop culture financial queen, Suze Orman, you would know about her signature financial advice, which is to consider “people first, then money, then things.” But she also counsels that when it comes to people, the self should take precedence over others. Selfish as it may sound, helping yourself financially first is the only way to do it if you want to help others, too.
So how does planning for the future with your partner or spouse fit into the picture? Don’t most couples treat themselves as a single entity bound together by everlasting love and friendship, such that money shouldn’t be an issue for them at all? Well, the thing is, you need to make love and money work together. If one of you has weaker financial management skills, for example, do you just accept it as it is? If you’re sailing on a rocky love boat, do you still think it’s reasonable to pool your resources? Having financial literacy is necessary if you want to be able to continue paying your bills, get out of debt, provide for your future kids, and so on.
Money mistake no. 1: Keeping money matters to yourself This is one of the worst money mistakes couples will ever make. Keeping communication lines open is very important to preserve the elements of transparency and trust in any relationship.
People who plan to move in together should talk about financial matters, like how they would share their household expenses, how they would be keeping their money (joint or separate bank accounts), how much they intend to spend on the short and long-term, and what their goals are.
Couples should also be open about big money matters that may compromise their relationship in the future. An example is having a large debt to pay off. Do you want your partner or spouse to be caught off guard by your creditors? Absolutely not. Also consider your spending habits. Are you someone who is wont to go on a spending spree, buying expensive things you don’t really need? Are you a pathological gambler? And are you likely to hide such activities from your partner? Keeping big financial secrets like these is one of the quickest ways to antagonize your partner or spouse and to ruin your relationship.
According to Bambi Holzer, author of the book Financial Bliss: A Couple's Guide to Merging Money Styles and Building a Rich Life Together, it will help if you schedule a “financial state of the union meeting” with your partner. The meeting will allow each of you to discuss your financial history and experiences, as well as your goals.
Conversely, author Linda Gough advises in her book, The Couples’ Guide to Money: How to Make the Most of Your Financial Power as a Couple, that couples should assess their financial compatibility with each other early in the relationship. “Knowing your financial personality type and what makes you and your partner tick will help in making the right financial moves and setting the sort of goals that will work for both of you,” she writes.
Getting help from a financial professional before moving in together would definitely be beneficial, too.
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Money mistake no. 2: Not knowing where your money is going
Are you and your other half on the same page about where your money is going? You should be. It is critical that you know so that you will have enough to cover for usual expenses, and still have more to build on your savings. Tracking your money is also important to avoid piling on debt.
In her book, What to Do Before ‘I Do’: The Modern Couple's Guide to Marriage, Money and Prenups, Nihara Choudhri advises couples not to pile on too much debt because it can get in the way of their personal and financial dreams. “It can chain you to a job you hate or put a wrench in your plans to buy a new home or travel the world,” she writes.
Having a budget will make it easier for you to estimate if you can or should buy particular things. It’s a great way to make the two of you learn the practice of compromise, too. Sure, each of you will want to be able to have free rein over how you spend your money, but saving for the things you really need also means agreeing on laying off on other things—expensive shoes, spa sessions, and golf games, for example.
In order to track your monthly financial standing, create a list of your expenditures. If you need to keep receipts, do so. Constantly check on your debt balances and focus on paying them off. The idea is to work together in budgeting and going over your finances.