Money Mistakes Couples Make
Sometimes a crappy way of relating can really muck up the money. Whether you’re planning a walk down the aisle or you’ve already been hitched for eons, there are some common mistakes couples make that can throw a wrench into their Moneyworks.
1. Keeping secrets. I’m truly amazed 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 – because, of course, their partners are morons and won’t recognize a new outfit when they see it. One woman shoved her new purchases in the laundry hamper first thing. Another kept her new purchases in the trunk of her car until she could slide ‘em into the house. Many people lie about what they’ve paid for an item because if it’s a good enough deal they can slip it past their buddy. And then there are all the folks who hook up only to find their partner is a financial disaster.
If you can’t be open about what you’re buying, that should tell you something. If you think your partner is going to object to your spending, hey, listen up! And if you’re planning to mate and you haven’t sat down to talk about your money, you’re a fool, plain and simple.
Communication is Job One in the survival of any relationship, and if you can’t bare your financial soul to your partner, if you can’t trust that person to tell you the truth, you should not be getting married.
2. Not having a budget. It isn’t going to come as a surprise to you that I think 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, cutting a little of her golfing and his beerwiththeboys to come up with the cash to make the purchase. Working together WITH A PLAN beats the bejezus out of flying solo blind and bumping into each other.
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 hangover.
3. Putting One Guy in Charge. It’s not unusual for one person to assume the nitty-gritty of 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, negotiate with lenders, 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. It also means that one person doesn’t have to deal with all the crap, while the other merrily laughs off the stress and frustration with, “You’re managing the money, so this is your problem to deal with.” (Yes, there are dopes who say this.)
4. 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 hooked up, 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 buddy needs help pay off the debt, you can do that without putting your name on the paperwork.
“But he won’t be able to get a car if I don’t help him,” I’ve heard. Then he shouldn’t have a car. “But she’ll pay an outrageous amount of interest.” Then she shouldn’t take the loan. “We’re partners in everything.” Maybe that’s how you feel now, but how will you feel when (s)he doesn’t pull her/his weight on the debt repayment, and you’re on the hook for his or her past self-indulgence?
As for blowing your brains out on a big wedding when you’re walking around with a ton of debt, give your heads a shake! Wedding mania, exotic honeymoons, and 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 dopey.
5. Sweating the small stuff. If you’re going to spend your relationship getting your britches in a knot over every little thing, you’re going to be miserable… for a long time. Or you’re going to get divorced. You have to figure out which battles are worth fighting, and when negotiation makes more sense.
If the small stuff adds up to big problems it’s usually because you don’t have a budget and aren’t on the same page when it comes to your priorities. It’s not unusual for couples to spend $30 a month here, $25 a month there, $60 on this, $97 a month on that, and when it’s all added up, it’s a whopping amount of money. If you’re tracking your expenses, it’s easy to decide what has to go and when to stop shopping.
One of the ways some couples deal with the Money Of My Own issue is to allot each partner a weekly or monthly “allowance” that can be used for any that body desires. Since the allowance is part of the budget, the plan stays in place while the individuals have some personal freedom when it comes to how they’ll spend their personal money.
Once you have a slush fund you can each spend as you wish without questions or recriminations, you can then agree that on purchases above a certain amount you’ll consult with each other before buying.
6. Failing to plan for emergencies. While no one likes to think about bad things happening, the fact is that bad things do happen to good people. If you don’t have a stash of cash at the ready to deal with whatever life throws at you, you won’t have the means to cope. One of the big upsides of joining up 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 hefty 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. ‘Course you also need some practical money-management skills to actually pull the whole thing off.