Some say financial issues are the leading cause of divorce. I don’t have any statistics on this but I can understand why after volunteering as a financial coach for several years. I’ve seen spouses set across the table from one another and belittle each other over financial decisions. It’s sad, really. Managing money as a couple doesn’t have to be that difficult. It does take work, humbling yourself and communicating well, but it is possible to succeed together. It’s easy to make mistakes that can get things off – track. What are some of those mistakes? Here are 5 financial mistakes to watch out for that can damage your relationship and impact your financial harmony.
1. Choosing to Have Separate Accounts
Separating your finances means you’re not working together as a couple to manage them. Marriage is about becoming one. My wife and I brought our own fare share of debt and past financial mistakes into our marriage. We decided our love was bigger than those past mistakes and decided to work together to deal with them. This meant our income became one too. We set up one checking account to manage all of our money and established a spending plan to help us make smart decisions.
2. Establishing a Prenup
I know a lot of people might disagree, but I think prenuptial agreements set the wrong tone for a marriage from the beginning. You’re saying that you don’t trust your future spouse 100% and the marriage might not work out. If it doesn’t work, you’re both deciding right now, vs later in court, who gets what. My decision to get married was one of the most important decisions of my life and I know that without a doubt we’ll be together forever. Figure out all the money stuff before you get married. Go to financial counseling, establish a budget, set goals, and certainly make sure everything is put on the table for discussion. Getting your finances right as a couple earlier will minimize any financial stress on the relationship and help you avoid a divorce later.
3. Not Setting Financial Goals Together
Along with creating a spending plan, it’s important to set financial goals together. Again, get on the same page before you get married and talk about things such as retirement savings, saving for kids college, vacation savings and more. Work together to prioritize these goals and commit to making them part of your monthly budget. Financial goals can help bring couples together. There’s nothing like working together to achieve a savings goal or even paying off a large amount of debt and reaching financial freedom together.
4. Not Having a Spending Plan or Household Budget
Having a spending plan is critical to staying on the same page as your spouse. If you don’t have a plan each spouse is pretty much naturally going to spend based on emotions, or what they think is in the account. This leads to arguments and misunderstandings. One spouse might decide to have a little fun and buy new electronics or clothes only to find out later that the other spouse had intended on using the money to buy Suzie’s costume for the school play. Each month it’s important to sit down and establish your budget. You can pretty much roll the same budget over from month to month and make adjustments for the irregular expenses that don’t occur each month.
5. Not Making the Time to Talk about Money
Not setting aside time each week to talk about spending decisions can be damaging to your relationship. It can also result in talking about money at the most inconvenient times, such as at the dinner table or on a date. My wife and I try to set aside a few minutes every week to discuss the budget, any overspending and plan for new expenses we didn’t think of when creating our budget for the month. This generally keeps us in check and helps make sure there are no surprises to deal with together later.
What do you think about these 5 financial mistakes couples make? Do you agree with them?