226-378-7748 joe@budgetboss.ca

Monday, June 18, 2018

9 Money Talks to Have Before you get Married….or right now

The number one reason couples split up is due to arguments over money. With about 50% of marriages ending in divorce, it is apparent that there a lot of couples not on the same page when it comes to their finances. While marriage should always be about love, there is an important business aspect too. Most people I meet who struggle with money later in life, do so due to the fall out of a relationship. Getting your financial relationship on the right track isn’t hard or confusing, but it does require an absurd amount of communication. Today I am going to show you the money talks you should be having with your significant other before you get married. If you haven’t had these talks yet it isn’t too late, but don’t wait until nothing can be done about it.

 

1) Know your own financial situation

While you need to discuss your finances with each other, you should at least get them organized for yourself first. Many people don’t know where they bank, or what type of account it is, what their debts are, how much they have in savings or even what they make on a regular basis. Take some time to truly understand what is going on in your personal finances so when you get together as a team it will be easy to explain. Key points are what you earn, what you spend, what you have in the form of savings or debts and most importantly, what your financial goals are. By the way, you should do this whether or not you are in a relationship.

 

2) Share your story

Once you truly understand where you are at financially it is time to open up to your partner. This step is crucial. There can be no trust in a relationship without transparency. I have seen many couples develop resentment over time about debts and spending. It is also important to be supportive of each other’s money pasts. Judgment need not apply because you are now in it together. Each of your individual financial situations is tied to the other so you better get used to being supportive. Take some time to discuss attitudes towards money, fears, triumphs and individual goals moving forward. It will give you some insight on what to expect from each other in the future.

The Top Money Mistakes Couples Make – Budget Boss

3) If you have debt, make a plan

Many young couples are bringing individual debts into their relationships. The proliferation of student debt has made it so young couples are facing a real challenge in comingling finances. If you are bringing debt into a relationship, you have to make a plan to get out of that debt. Many people do not understand the urgency of paying off debt. As a couple, debts will prevent you from doing the things you want like having a wedding, going on trips and buying a home. Speak with a financial advisor about a debt repayment plan and most importantly be willing to sacrifice for the other partner if need be. Remember that debt will hurt you both moving forward, so supporting an indebted partner is good for both of you.

Financial Advisor

 

4) Don’t be afraid to wait

There is a natural reaction to try to have everything you want as a couple right from the get-go. The big wedding, the house, the nice car, kids and family vacations are all part of the plan, but you might not be ready for that yet. Trying to have it all at once may cause you to overextend your budget. That will hurt your overall monthly cash flow and debt is sure to follow. Do not be afraid to accomplish one goal at a time. Remember you plan on being together forever, so that leaves plenty of time to get the things you want. Ask your grandparents. I am sure they will tell you it was a struggle as a young couple and they had to sacrifice to get the things they need, let alone want. Funny how more of those marriages lasted back then…..

Are You Financially Ready to Get Engaged? – Money Under 30

 

5) Discuss comingling finances

There are many proven ways to blend finances as a couple. You can do the full blown all the money in a joint account method. There is also the separate accounts but common account for bills method. There is also the completely sperate method with one partner transferring money to the other for shared expenses. No one method is better than any other, it is all about what works best for you. Have the discussion about what method you want to use and adhere to it. Both partners have to be on board with this or it won’t work.

How to Combine Finances as a Couple: 3 Methods – Budget Boss

 

6) Make a family budget

Even if you don’t fully comingle finances, you do have to make a shared budget. You are going to have expenses that come up every month that both of you will have to help with. You will also have variable items that can eat away at your cash flow. Discuss with each other what you spend money on every month and what you would wish to spend money on. You cannot have one person staying home and reading while the other is blowing all the family money on beer and wings every night. Also, consider a ratioed budget. This means that the spouse that makes more money pays a higher percentage of the bills. The reason why this is important is that the smaller earning spouse will feel neglected and left out if they cannot participate in their own leisure activities because they make less money. Think of it as tax, the more you earn, the more you pay.

 

7) Don’t be a bum, seriously

If this wasn’t thought about during the courting phase it needs to be thought about when you decide to take the plunge. You must match the ambition of the person you are with. The reason is simple, someone will get left behind. The only time it is alright to be lazy is if that is your “thing” as a couple. You cannot have one person striving to climb the corporate ladder while the other strives to beat Legend of Zelda. Complacency kills relationships and laziness breeds resentment. It may be natural to fall into the Homer Simpson ass groove on your couch but fight that urge. Be open about your goals and help each other reach them.

12 Signs You Are Dating a Deadbeat – Budget Boss

Financial Advisor

 

8) Go easy on the spending

I already mentioned having a shared budget. You must make sure you are not spending out of control without the knowledge of the other spouse. It will eventually come to light and there will be a major problem with it. Logically, doubling your income should make your financial lives easier, right? So how is it that single people often are in better shape financially than couples? The reason is simple: Couples spend way too much on crap. You shouldn’t need to buy stuff to make the relationship work. Your time together is free, so focus on that. Constant nights out and weekend getaways will leave you broke. Being broke will lead to a divorce.

 

9) Discuss the split

Some people think it is taboo to discuss splitting up while you are in a relationship. I disagree. I think when you are in a loving relationship it is important to discuss what each of you would do if you weren’t together anymore. The reason this is important is that when you are in love, you will automatically think of the other partner’s needs. So that is, in fact, the best time to discuss what you would do if you broke up. During the split, it will be difficult to not let your emotions take over. It is important to make sure each person is not financially devastated by a separation. There is no reason that breaking up should mean lifetime financial ruin for a spouse. Take time to make sure each person has something for themselves if you were to ever break up. Knowing this will make your relationship stronger in my opinion. Times change, people change, but always remember that you did love each other at one point. Use that to make sure you both land on your feet should a break up happen.

 

We all cringe at celebrity marriages that appear to be more of a business relationship than true love. Maybe we should take a bit of that mentality into our own real-life love stories. Now I don’t mean make your marriage strictly mechanical. What I mean is treat your finances like a business and not as a proving ground for your love. Doing this will allow you to do the things you want, while also making sure your future as a couple is secure.

“Be honest, brutally honest. That is what’s going to maintain relationships.” – Lauryn Hill
Financial Advisor

The Ultimate Homebuyer’s Guide

Email – joe@budgetboss.ca 

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