Love and Finances
by A. Scott White, CFP®, ChFC, CLU
In the month of February most people are talking about love and romance. But what happens when February is over? What about those of us who talk about finances every month? Can there be an intersection of love and finances every month? Yes, we think so.
Often times, money adds stress to relationships. A survey by SunTrust Bank found money is the number one cause of stress in relationships, and according to a Kansas State University study having financial arguments is a top predictor of divorce.
Here at Scott White Advisors we believe you can maintain relationship bliss if you are honest about financial health and wealth-building goals. Here are a few financial conversations to consider regardless of your relationship status.
Just Dating: It may be fun to spoil your significant other with gifts. Doing so within reason will solidify a foundation of truth and responsibility while setting your relationship up for success. Taking the time and discipline to create an entertainment budget and sticking to it may not sound romantic; however, when you reduce arguments later in life you will likely have more romance. You should also look for signs of your partner not making good money decisions during this relationship stage, as this may be predictor of future habits. A conversation in the dating stage could reduce money arguments if the relationship progresses.
Living Together: This stage of a relationship can feel like marriage. Until there is a legal union, however, it is best to keep finances separate. Some couples opt for both paying a portion of the expenses, separating who is responsible for what bills or even creating a bill-paying account that each person contributes to. The most important part is discussing as a couple what option works best and feels best to you both.
Engaged: What an exciting time in your relationship! If you haven’t spoken yet about protecting your futures, your past or your families, now is the time to discuss a prenup. We believe the earlier a couple begins to discuss the idea of a prenuptial agreement, the better. A prenuptial agreement doesn’t have to be the death knell for romance. If approached thoughtfully and with candor, it can actually lead to greater intimacy. Of course, prenuptial agreements aren’t for every couple, but they can be a wise financial plan.
It’s interesting to note that the total sum of someone’s wealth doesn’t necessarily correlate to his or her desire to protect it. Individuals can be more protective of a hard-earned $50,000 than an even larger sum inherited or acquired with relative ease. Check out our article on Understanding Prenuptial Agreements for details.
Married: Regardless of how well things have been going, you never know what is around the corner. Make sure you continue to stay connected about finances, from monthly bills to long-term investments. Even if one person tends to handle the details, the other spouse should check-in on a regular basis and account access details should be shared in a common place.
The theme in the above relationship statuses is communication – proactive communication. Talking openly and truthfully at every stage of your relationship builds trust and ensures that you are following the same financial game plan if financial turbulence arises. Including professionals in your legal, tax and financial planning can always help toward the most efficient way to reach your goals.