When you're dating someone you really like, the last thing on your mind is money. You spare no expense to find the perfect experience, whether it be a night on a town, a weekend getaway, or a great gift. After all, you figure, you'd hate to blow a good thing by being a cheapskate, and you'll only have one chance to begin your relationship with someone who might turn out to be your perfect match. If things don't work out, then it's not likely that splurging over the course of those few months will do permanent damage to your lifetime financial plan.
When your relationship becomes serious, on the other hand, you'll have to start thinking long-term. It might seem unromantic, but most couples can't afford hundred-dollar dinners every weekend or expensive vacations every few months. (Though there are plenty of ways being part of a twosome can really pay off.) At some point, reality sets in, and the discomfort of having to adjust from those heady days of romance when you first met plants the seeds of what can later become major disputes about financial matters.
To address potential problems, you should try to get an idea of the aspects of your current situation that are mostly likely to grow into more serious disagreements. This article discusses a few of the most common things that most couples have to deal with in their relationships and gives you some ideas of solutions that might work for you.
What's yours is mine, what's mine is ...
The first decision any couple needs to make is how they want to handle their joint financial obligations. As a couple, you will do many things that require both partners to play an active financial role; these range from buying a home to opening a joint credit card or opening a family checking account.
How you choose to approach family finances depends on your personal philosophy. Some couples incorporate all of their income and expenses into a single family unit, so that who earns or spends money is unimportant. Other couples choose to have each person keep track of his or her personal finances separately and then make contributions to joint expenses like mortgage payments, utilities, and groceries. Although keeping your finances separate can make tracking more complicated, it also makes it easier to identify who assumes certain financial roles in your household.
Where many couples get into trouble is in not following their philosophy on finances during times of stress. When you don't have enough money, it's easy to point the finger at the other person with accusations like "I make all the money and you just spend it," or "I'm the responsible one and scrimp and save while you go blow all our money on your friends." If you choose to manage your finances together, you must recognize that both people must take responsibility for meeting their obligations to each other. Even if you choose to keep finances separate, you still have to make sure that you aren't making any major financial mistakes that could have bad effects not only on your own finances but on your partner's as well.
Handling different money styles
Just because you've decided to spend the rest of your life with someone doesn't mean that the two of you are exactly alike. You may have strong differences of opinion about all sorts of financial issues, including how much to save, how to invest, and what you choose to buy with your money. If you prefer relatively conservative stocks while your partner likes to bat for the fences with rule-breaking companies, one of you is likely to be extremely uncomfortable with the family investment strategy unless you can find a good compromise. Similarly, if you like to max out your 401(k) contribution and add money to a Roth IRA every year, you're not going to be happy when your partner comes home with a new high-definition TV or an expensive piece of jewelry.
To find harmony on these issues, you first have to discuss them. Find out what's important to each of you. Even though some pet peeves might get under your skin, you'll probably find that the things you agree about outnumber your disagreements. Because you love each other, knowing what's important to both of you will help you find ways to make everyone happy.
Don't lose your identity
In addition to recognizing your different approaches toward money, you should also recognize that there are things you'll want to do by yourself. Whether it's spending time with friends or participating in a hobby, make sure that you leave room in the family finances for some personal expenditures. Ideally, these slush funds should represent money that you can spend freely without having to justify the purchases to your partner. The flexibility that a small slush fund adds to your family financial plan makes it easier to stay disciplined with the bulk of your income and expenses.
Similarly, if the two of you have very different investing styles, set aside a portion of your savings for each of you to invest separately. For aggressive investors, having enough money to buy a few shares of one or two promising companies may be a good outlet for your investing preferences, while leaving the bulk of the family savings in more conservative investments. On the other hand, if you feel more comfortable putting your small portion of personal money into a completely predictable investment such as an insured bank certificate of deposit, then you can increase your feeling of security while letting the rest of your family's investments remain in higher-risk investments with the expectation of higher returns.
Lastly, remember that money is a tool rather than a goal in itself. In arguing about money, couples often forget the reason why they got together in the first place. If you remain committed to being with each other for richer or for poorer, you should be able to work your way through any sort of money problems you may face.
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This article, written by Dan Caplinger, originally ran in December 2006. It has been updated. The Fool has a disclosure policy.