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It’s often challenging to handle financial matters on your own. It’s even more difficult when you have to do it as a couple. Dealing with finances can be a major source of stress in a relationship. In fact, arguing over money is one of the leading causes of divorce. It doesn’t have to be that way, however. Your spouse and you can navigate challenging money issues and make tough financial decisions without raising the stress level in your home. You may even be able to make your relationship stronger if your partner and you approach your finances in the right way. Here are five of the biggest money mistakes couples make, and some great tips on how to avoid them.
1. Avoiding Money Issues Altogether
One of the biggest money mistakes new and old couples alike make is never talking about their financial issues until it’s too late. Many relationships drift into one person handling the finances, with the other person passively following along. This can lead to added stress and rifts between partners; additionally, if the person handling the funds isn’t doing a great job at it, both partners’ finances could be at risk.
Right from the start, both partners in a relationship should be fully in the loop on money matters. Set some time aside each month to go over joint financial issues; you should plan to discuss bills, your budget (see below), and any goals you have. If both partners are up to speed on their joint finances, it’ll help keep stress levels at a minimum in your relationship and ensure that no gulf develops between the two of you over money.
2. Not Having a Budget
Over 30% of American households have no budget. If you’re in a relationship and you don’t have even a rudimentary budget, you’re almost certainly going to end up fighting over money issues. Budgets allow both partners to understand how much money they have coming in each month and what bills, expenses, and other financial obligations they have to deal with. If you don’t have a budget, you have no way to tell whether you’re on course to meet your financial goals, or if money is going to be tight for the month.
You can avoid this common money mistake by sitting down with your significant other and setting a budget. Determine how much money you both have coming in each month from jobs and other sources. Then, determine all your cash outlays, as well as some common financial goals you share. Once you have a clear budget you both agree upon, you can use it to guide your discussions whenever you sit down to discuss your finances. This will help lower the stress in your relationship and keep you both seeing eye to eye financially.
3. Living Apart
One common money mistake that millions of serious, committed couples make is living apart in two separate homes or apartments. If you’re both planning to stay together for the long haul and you’re living separately, you’re doubling all your expenses for things such as rent, utilities, internet or cable, and groceries. The cost of maintaining two separate homes could add stress to your relationship and keep you both from being able to achieve your financial goals.
Instead of paying for two separate homes, committed couples should consider living together. Recent studies have shown that couples that cohabitate have significantly more money on hand to save or spend than those that live separately. Pooling your financial resources together for an apartment or house may also allow you both to afford a better home and enhance your quality of life. So, talk to your partner, and think about moving in together when you’re both ready.
4. Taking on too Much Debt
New couples often begin to accumulate debt right from the start. Weddings, for example, often put newlyweds into the red before they’ve even had a chance to come back from their honeymoon. Rapidly accumulating debt as a couple can make it difficult to pay other monthly bills or achieve your long-term financial goals, since those monthly debt payments can get bigger and bigger before you know it. Additionally, a high debt burden can also start to have a negative impact on your relationship; a recent study indicated that couples who took on higher levels of debt over time were more likely to break up.
Don’t let debt come between your partner and you. Make sure you both talk about the amount of debt you’re bringing into the marriage, and how you both will use things such as credit cards to deal with small and large expenditures. If you both find yourselves with a big debt burden, take it seriously and make a plan to address it. If you think your credit card and other debts are too big to tackle alone, consider getting help; the debt settlement program offered by National Debt Relief, for example, may be just what you need to tackle out-of-control credit card bills and get on the path to being debt-free forever.
5. No Emergency Plan
Emergencies happen all the time. Eventually, your car or the HVAC system in your home will break unexpectedly, or you’ll have some other large expense that neither nor your partner was prepared for. Sadly, when it comes to preparing for a financial emergency, most are bad at it; in fact, about three out of every 10 Americans have money saved to deal with an unexpected financial expense if it comes up during the month. Therefore, if your car is broken down on the side of the road or your furnace suddenly stops working on a cold day, you can expect the stress levels in your relationship to start skyrocketing.
While most couples make this common and potentially stressful money mistake, it’s also easy to fix. Open a joint savings account with your partner and put enough money in it to cover what you think you’d need for an emergency. If you don’t have all the money you need right now to sock away for a crisis, don’t worry. Just open the account and slowly build it up over time. Once you have your emergency fund set, your partner and you will both have peace of mind that you’re ready for the unexpected.
Avoiding Money Mistakes in Your Relationship
Being in a committed relationship is challenging enough; don’t make it even tougher by being careless with your finances. Instead, take the advice offered here and avoid the big money mistakes most couples make. If you do, you’ll be on the path to sound financial footing, and you’ll keep money from becoming a source of contention in your relationship.