When we are in a relationship, everything is supposed to be hunky-dory, and it seems unreasonable to talk about money other than the basics of dating: who pays for dinner? Who pays for the movies? Whose turn is it to pay?
It’s no surprise that one of the main reasons that couples end-up divorced is because of…money management!
My intention is to give you an idea of the fatal mistakes couples make when handling “the bills” so you don’t fall for these too.
1. Managing the finances relies on a single person
It doesn't mean that is wrong when one person works and the other doesn’t. The problem happens when only one person has ALL the financial responsibilities including generating an income, paying the bills, managing wealth, making investments and deciding on what to do with the money.
This leads to one of you knowing absolutely nothing about how your money is being managed, limited to only passing a monthly check and having no saying about how to meet your goals.
Both of you own this wealth, and it's a joint responsibility to take care of it, regardless of both working or only one of you does. The two of you should always be involved in managing and making financial decisions.
2. Not having a joint vision nor enough communication to talk about money
The lack of communication in a couple is one of the biggest reasons of divorce.
When it comes to money, not talking about it cal lead you to not achieving your financial goals, among these goals you can include: for a car, a house, making a family, or even a pet, these are big financial changes that you will have to withstand for years, and it will test your financial management skills.
3. Not sharing the same point of view regarding money
It’s normal for a couple to have different opinions about money. Everybody has had different experiences, different education and different examples set by our parents about their relationships with money.
Discuss and define your money ideas and habits as a couple, including spending and saving. Identify areas where you may differ, such as:
- Spending money on oneself
- Excessive spending
- Saving
- Keeping a budget
- Spending on your children
Understand each other and assign best suited roles for each one to manage your money.
4. Financial Cheating.
Lying about your income, expenses or debts is the worst thing you could do in a relationship. Sooner or later the truth will come out and the trust will be broken.
In the early stages of your relationship (or at least before getting married) it’s important to talk about your income, expenses, debts and goals for a future together.
The first big challenge to test the real compatibility of your goals: The Wedding. With capital letters, because usually this is the first big expense that you will have together as a couple and it will trigger a bigger expenses: the honeymoon, a house, a car, and more.
5. Not having an emergency fund.
Not being prepared for future problems that is a time bomb waiting to explode.
Having an emergency fund that covers at least 3 months of your expenses is something that will save you from a lot of stress and fights. Remember, the unexpected is sure to happen!
6. Balancing Expenses
If one earns less than the other, it’s important to reach an agreement in which each one contributes a proportional part of their income for the expenses of the household.
Why? If either lived alone they would still spend the same amount... is it fair? No.
Earning more money leads to an increased lifestyle and, when you earn less, you have lower expenses.
Don’t force your significant other to spend the same amount as you if you earn more, that is not balanced.
7. Not educating yourself in financial matters
This one is a basic one! The goal of living with a partner is to support each other and grow as individuals and as a couple. That includes financial goals as well.
Reading books, formal education, managing your finances and getting informed when obtaining a credit, a debt, or an investment will take both your relationship with your spouse and with your money to the next level.
Check out this Article to Align Your Reading Goals with Your Financial Interests, it will help you to get you started to improve your financial literacy.
