There are many things that cause a relationship to unravel, but the one reason that’s most avoidable is money. It’s a shame that finances turn up on nearly every top 10 list of reasons for divorce because, with a few small changes, you could eliminate that source of conflict.
Perhaps the easiest way to avoid serious financial problems is to insist on full financial disclosure before your relationship gets serious. Getting involved with someone with a bankruptcy in his or her past or who has serious credit card debt is risky and, at a minimum, you should consider a prenuptial agreement that assigns responsibility for past debts and any new debt that arises if the relationship goes south.
Established Shared Priorities
The most basic oversight for most couples is not having a finance plan. It doesn’t have to be complicated and you can usually draw one up yourselves. If it helps to have an objective third party involved in those discussions; a few hours with a Certified Financial Planner is money well spent. When your shared priorities are committed to paper then it’s a constant reminder to both parties that they agreed to those terms.
Live Below Your Means
In every relationship there’s inevitably someone who pushes the boundaries of shared expenses. There’s one partner who wants the bigger house, the nicer car and lusts after the finer things in life. All the same picking the lowest priced option doesn’t always yield the best long-term value. Sometimes there are sound financial reasons to pick the nicer house or the newer car. If value is your guide then spending will fall into line.
Have An Emergency Fund
There are far too many couples who are one accident, one illness or one breakdown away from financial ruin and debt. If you can’t replace the transmission in your car or the roof on your home without going into debt, you are likely living on the financial edge anyway. The first item on your shared priorities list should always be having a small emergency fund of at least $1,000 to $3,000 dollars that doesn’t depend on a credit card.
Don’t Be The Enabler
There’s a fine line to walk between forgiveness and doormat. We’ve all made mistakes; we all need a pass once in a while. The problems begin when one partner starts doing most of the forgiving. The occasional mistake is forgivable, mistakes compounding upon one another is another matter. A state of continual forgiveness is codependence and to maintain your sanity, as well as your credit rating, everyone needs to have a bright line that means this far and no farther. Draw that line and stick to it. Many people wait too long and draw the line after it’s too late.
While many of these suggestions sound like common sense, it’s surprising how few people actually follow them. Making up a shared financial plan, having an emergency fund and having enough left over at the end of the month to save and invest are Personal Finance 101 lessons. The shared financial plan is a guide for both parties in a relationship that discloses their common financial goals and, most importantly, it’s a guide to who might be cheating on the budget if money is consistently tight. Managing money as a couple is about communication and transparency.