Throughout our lifetimes we all make mistakes. Some of them are big mistakes. There is not a single person you could talk to that has not made some sort of financial mistake. However, being prepared can help you to lessen the impact of those mistakes, and hopefully avoid them all together.
When people get married, they often think that their finances will get easier. They will have two incomes after all, and that means quite a bit of extra money coming in. While the security of two incomes is nice, it can also lead to arguments when it is not managed properly. In order to minimize those arguments, try to avoid the most common mistakes.
Keeping the Other in the Dark
In any relationship there is often one person who prefers to manage the finances. They are in charge of making sure the bills get paid, that the savings account is up to par, that the investments are on track, and anything else that has to do with finances, they are the party responsible. All too often this person does not inform the other what is going on. All it takes is five extra minutes per month to keep the other party informed, it is not worth the risk of something being overlooked.
Keeping Secrets
Sometimes you have to keep a financial secret from your partner. For example if you are stockpiling cash in order to buy him or her a gift, that is an acceptable secret. However, keeping a credit card that your spouse does not know about, or hiding a large windfall is likely to cause problems. When the secret is discovered, the idea that you are untrustworthy will be applied to other areas of life, not just finances. It is always best to be totally transparent, even if you keep the majority of your finances separate.
Keeping Everything Together
Some people are under the false assumption that when you are married you have to combine all your accounts. They think that having separate accounts shows a lack of trust, or a lack of discipline. In reality, a major reason for divorce is because of money arguments. Those arguments are often solved by maintaining separate bank accounts. This goes for co-signing a lease, putting both names on a mortgage, and anything else where both names may be on the account. Choose a method that keeps the stress to a minimum.
Not Keeping a Will
What happens after you die is important. You want your spouse to know where the accounts are, who to contact and what to do if you are suddenly no longer around. A will can be as simple as making a list of all your accounts, their numbers, the balances, and who to contact. In the event that you both perish at the same time you may want something more formal to eliminate any arguments amongst family members.
Not Keeping a Plan
Everyone has goals and dreams. When you are married, those goals and dreams must merge and mesh together. If you have plans to retire early and travel the world while your spouse has plans to work until age 75 and live a quiet retirement, there will be problems. Be sure to know what the other person’s plans are, and adjust your budget and finances accordingly.
What all these things have in common is communication. Keeping one another in the dark will only lead to confusion and resentment. Instead, make sure you are open with your finances with your partner, and be willing to compromise. There is no rule that says you have to agree on everything in order to be financially fit, but understanding where the other is coming from is the first step to financial peace.
I agree with you on all of these, especially keeping everything together. I don’t know why this is the “standard” for couples, but it is slowly going away because people realize that it isn’t necessary to store all of your money together.
One thing that we have not done as a couple is put a will together. We’ve talked about it as did my mother in law and father in law who recently had their will drawn up. I think that might be one of our 2013 goals.
We haven’t either and it’s something I really need to do, just in case.
I think keeping secrets is the worst thing you could do. A healthy relationship is based on honesty, even if it means you’ve got to tell your partner you’re in debt or are a shopaholic, it’s best to disclose everything to avoid further trouble down the road.
Its definitely not healthy to keep secrets.
Oh yeah keeping secrets would be the worst!! Luckily my hubs and I were really open about our finances when we got married – debt and all!
I agree. Being open is one of the most important things.
Being married means combining finances also. I do not understand how people can be married by have separate finance. You can have sex, but you can’t share your money? Think about that!
My wife and I have been married for almost six years and we just decided to combine. It worked out better for us to be separate until we had a daughter.
I see all these mistakes every day and they can cause significant hardship if one of them dies and to their marriage in general. It’s so important couples understand their current financial reality, even if one is the primary financial caretaker. Good, open communication can eliminate a lot of problems. Great post!
Keeping secrets, and keeping everything together are huge mistakes. I don’t think it has to be completely separate, either, but 100% combined? That’s not a good idea.
Good article. My wife and I have been married a month and are definitely on the right track. We are an excellent team. It makes me sad when I see other young couples struggling to manage their money and fighting about differences. It’s a big deal!
Congratulations on getting married.