Family Finance: Money Mistakes Couples Make
Whether you’re planning a walk down the aisle or you’re already married with kids, there are some common mistakes couples make that can throw a wrench into their finances. As we all know, one of the top causes of divorce in the modern day 21st century is money and finances and all of the issues surrounding it. Couples make a lot of finance mistakes, especially money mistakes. Some of them include.
- Keeping secrets. It’s amazing at the number of people who hide stuff from their partners. They go shopping, bring home a bag of stuff, and rip off the tags. Many people lie about what they’ve paid for an item because it could cause issues with their partner. If you can’t be open about what you’re buying and the amount you’ll pay for something, them don’t buy it. If you think your partner is going to object to your spending, be careful. Communication important in the survival of any relationship, and if you can’t be truthful about your finances to your partner, you should not be getting married.
- Not having a budget. It isn’t going to come as a surprise to you that every couple should have a budget. Whenever you combine two lives, two ways of looking at things, two spending profiles into one, you need to have a plan to ensure both bodies are on the same page about where the money should be going. Having come up with a budget you both agree to, it’s easy to decide what to buy and when. You simply ask each other, “Where does this fit in the budget?” If it doesn’t then you work together to make room for cutting costs.
A budget can be a relationship-saver when one of you is a spender and the other is a saver, since by having a plan you can address both your needs. It’s particularly important when you are both spenders heading to the brink of bankruptcy. Knowing where you stand financially means you can make informed decision about your spending without a huge debt hanging above your head.
- Putting One Guy in Charge. It’s not unusual for one person to assume the duty of managing the daily finances. It often falls to one partner to pay the bills, check the insurance coverage, decide on how to invest the retirement savings, figure out how much to put away for education savings, pay the taxes… the list is virtually endless. Often it’s because one partner is more inclined toward these tasks. The problem is that when one person is excluded, or totally abdicates responsibility, it means the other can mess things up with no monitoring or grow resentful at always having to do the detail. It’s important for each partner to not only to feel involved in the big financial decisions but also understand the day-to-day details. Taking turns managing the chequebook, and having regular conversations so that both of you are clear about what’s going on, means you’re both in the know and working to the same ends.
- Denying the Debt. Regardless of who has the debt, the impact on the family unit will be significant. If you can’t be debt free when you get married, the very least you should have is a plan for how you’ll get that debt paid off. Never sign for each other’s debt. When you do, you assume responsibilities that may choke you to death. If your partner needs help pay off the debt, you can do that without putting your name on the paperwork. For this reason, overspending on a big wedding is a huge no-no. Don’t get the wrong vibe here. Exotic weddings and honeymoons, a houseful of brand new furniture is wonderful, providing you have the money to pay for it. Going into debt for massive self-indulgence is down right wrong!
- Failing to plan for emergencies. While no one likes to think about bad things happening, the fact is that bad things do happen. If you don’t have money set aside to deal with whatever life throws at you, you won’t have the means to cope. One of the big upsides of saving together is that you’re able to act as a safety net for each other through life’s storms.
- But that doesn’t happen magically. And often couples over-estimate their partner’s ability to take over the entire financial burden should one partner lose a job, someone become ill, or suffer some other disaster. It takes a plan. And part of that plan includes creating a pretty huge emergency fund. Another part includes reducing your risks in whatever ways possible. Every couple should have enough money available to cover six months’ worth of living expenses. And each partner should make it a priority to get adequate insurance coverage.
Communication and negotiation are the keys to dealing with money issues when you partner. Do not be secretive about it. If you do so, you’re doing yourself more harm than good.