Relationships are tough. Combine them with money, and all the derived stress may catalyze a meltdown. There is a reason why financial differences is a top contributor to marriages that end in divorce.
Though you see this in many marriages that have lasted years, Millennials have noticed this trend with couples who have gotten married too young and without ever having the dreaded “talk.”
The talk? Yes, the talk. It's the talk where you discuss finances, lifestyles, budgeting, saving, investing and living. It's the talk most couples don’t want to have.
"But isn’t it enough that we love each other? Can’t we figure it out along the way?"
That’s the main excuse I hear from couples who ignore the fact they have to deal with these things once they get married.
Love plus different financial tendencies equals broke. It means money broke and simply put, broken up.
Some couples ignore all financial matters until after marriage, and other couples combine bank accounts for their one-month anniversaries.
If you want to end your relationship with the person you are with as soon as possible, please do the latter.
It is the absolute perfect way to break up! I promise, there will be no tears (just a lot of yelling and screaming).
Combining finances means commingling your money with someone else’s as well as possibly taking on someone’s debt. As time passes, these things become a deadly combination.
Missing bills, overspending and easy access to more money can help destroy the relationship. On top of all of this, your significant other can see everything you are spending money on.
But, combining finances isn’t always a bad thing. It depends on where you are in the relationship, whether both sides are financially mature and if you have had the money talk.
When is it time to have the talk? I can’t answer that question for you, but I can tell you that as soon as you start thinking about taking the next step, you need to have the talk whether you are ready or not.
Tell your partner how you feel, and take out your calendar to pick a date. Yes, pick a date and time as if it were a meeting for work you could not miss.
Once you have picked a date, tell your partner to bring questions he or she may have.
Some questions to ask:
"What are your personal and financial goals?"
"Do you have any debt? How will you pay this off?"
"What are your spending habits?"
"What is your credit score?"
"How do your parents spend money? How do you feel about this?"*
"Where do you shop?"
"Would you rather buy a million-dollar mansion or a $300,000 home in a modest neighborhood which would allow us to travel the world?"
"Prestige or money?"
"Freedom or things?"
"How do you feel about combining finances?"
"How do you save and how much?"
"How do you feel about investing and retirement accounts?"
These are just some of the many questions that are important for both sides to answer. You’re probably wondering why I put a * next to the question about the parents.
Well, I consider this one of the most important questions you can ask your significant other about money. Often, kids inherit their parents' spending habits.
After you have had the chance to get a basic understanding of each other’s finances, talk about your feelings about the real fun stuff: marriage and kids. Talk about how much you want to spend on a ring and wedding.
While talking about rings, if one of your answers for how much the ring should cost is three-to-five times the amount of your salary, please raise your hand and accept the “stupid” award.
This is one of my biggest pet peeves, as you should never base financial expectations on other people’s traditions. I have seen people go into debt to buy a ring. If you need to do this, please save yourself the divorce fees.
Anyway, if after all of these talks you two decide to stay together, come up with a plan. Ask each other if it would be better to combine all finances or keep them separate.
The two main comments I will make about this subject come from my experience and research:
1. Do not combine finances unless you are 100 percent sure this is the person you want to die with. 2. Most of the time (mainly in the beginning “serious” years of your relationship), it is better to keep a majority of your finances separate while having one joint account, as well as one joint credit card with a low spending limit.
If you decide to stay together after the talk, but you aren’t sure if he or she is the person you want to marry, stop right there and don’t take any action.
Let the other person know how you feel and re-open the conversation once you know what you want. If you do end up wanting to combine everything, create a budget and savings plan before doing so.
Come up with strategies on paying bills and decide who will pay for what. Automating bills and savings are always the best way to go, especially in this situation.
I think keeping the majority of your money and financial matters separate could save a lot of time, energy, stress and, most importantly, resentment from infiltrating your relationship.
This will also help you become more financially mature, which will lead to an easy transition once you decide to combine. Opening a joint bank account with a small amount of money isn’t a bad idea.
It can be called a “fun” account or a “dream” account where you two save up for important things. You can also automate a portion of your paycheck to go directly into this account and watch it grow.
If you open a joint credit card, make sure your credit limit is low to avoid anyone overspending.
It is extremely important to have open communication about money in a relationship. If you are afraid the other person won’t be open about his or her finances, go through this list. I am sure you will have the talk immediately.