Michelle Singletary's Top Three Money Mistakes Made in RelationshipsMistake No. 1: A failure to communicate. One of the leading causes of conflicts in a relationship is a failure of couples to communicate about how they will handle their money together. To facilitate communication take a premarital counseling class before you get married. Mistake No. 2: A failure to compromise. If you're a spender and she's a saver you have to find a way to deal with those differences. In most relationships opposites attract, but if you're hooking up with your money opposite that can be disastrous if you don't learn to compromise. To deal with the differences the spender will have to cut back on his or her spendthrift ways. The saver may have to splurge every now and then. Mistake No. 3: Cosigning. Don't co-sign for anyone other than your spouse. Keep in mind when you cosign you're agreeing to pay back that total debt amount.
News & Notes continues its April Minding Your Money series with a look at relationships. Michelle Singletary, financial columnist for The Washington Post, and Sharon Epperson, personal finance correspondent for CNBC, talk to Farai Chideya about the potential dangers of mixing finance and romance.
Michelle Singletary's Relationship and Money Rules
"The following rules may seem businesslike but if you want financial peace in your household you must develop a set of rules to govern your financial behavior. Will the rules be broken? Sure they will. But having them as a baseline of how to conduct your relationship will help you quickly get back on track when the rules are broken.
Agree that neither of you will make a purchase of $200 without first consulting each other (You can decide the exact amount depending on your household income. But keep the amount low enough to require the two of you to talk about the purchase. Even if you both keep separate accounts, which I don't recommend, it's important to talk about your joint and separate expenditures.
In the case of a major purchase, both of you must vote in the affirmative. If either of you votes no, the item can't be bought. Some of the biggest arguments over money result when one partner wants to spend money on something the other doesn't approve of.
You have to agree there will be no financial secrets. No secret bank accounts. No earnings that are not disclosed. No undisclosed loans.
You must meet regularly to discuss the family's finances.
You must agree to operate under a budget and agreed to adhere to it.
Agree there will be no financial tit for tat. Countless couples try to outspend each other in the name of fairness.
You won't share the intimate details of the financial problems in your relationship with your mama, daddy, girlfriends, co-workers, or anyone else not in a position to help you resolve the issue."
Source: Adapted from Michelle Singletary's Your Money and Your Man: How You and Prince Charming Can Spend Well, Live Rich
Sharon Epperson Urges You to "Start Talking, Stop Fighting"
"Issues that get couples talking about money are usually life changing events: the birth of a child, the death of a parent, divorce of a friend, approaching retirement, a new job or loss of employment. It can also be a relatively small thing – a credit card bill arrives and you didn't realize your spouse had purchased a new iPod or expensive suit. Did he or she really need those things or just want them? Can you afford to spend that money? Or should you be saving for some other goal. You need to talk about it, not fight about. But that's not always so easy.
To get the discussion started, you both need to think about what you really need and what you want? Take a look at these five statements:
- I want to be financially independent by age 65.
- I want to set money aside for retirement.
- I want to make sure that we're financially prepared in case someone in the family becomes sick or disabled.
- I want to save money for our children's education.
- I want to have a plan for what happens to our assets if I die.
Do you agree with these statements or disagree? Does your partner agree or disagree? How would you each prioritize these goals? Compare your lists with your partner. Discuss why each statement is important to you and how you can both try to work toward that goal. You need to communicate — that's the key. Start now. It's not too late. Start talking."
Adapted from Sharon Epperson's The Big Payoff: 8 Steps Couples Can Take To Make the Most Of Their Money – And Live Richly Ever After