5 Critical Financial Considerations Before Committing

Most couples are quick to bare their bodies than to talk about money! Money may not buy love, but it is the primary reason couples break up.

Couples may not discuss the issue of money while dating, but it is certainly something that you must talk about openly before entering a committed relationship along.

Along with infidelity and lack of communication, conflicts around the issue of money are one of the top three reasons couples separate, which is unfortunate, considering there is so much wealth around us.

Whether you want to admit it or not, money impacts most aspects of our lives — including our marriages. However, personal finance is rarely an issue couples discuss while dating or during their marriage.

David and Tess

David and Tess were on the extreme sides of the spending/saving spectrum. Both her parents were professionals and financially secure. His family worked hard to make ends meet. His humble past drove him to become ambitious and willing to take risks to achieve his goals.

He was highly leveraged. By the age of twenty, he owned four condominiums, all with large mortgages owing on them.

Tess's parents raised their children to be debt-averse. They paid for their education and did not even have student loans. Even debt on appreciating assets made her uneasy. She gave David an ultimatum: he needed to sell the condominiums before she would marry him. Unfortunately, this was at the time of the real estate market crash of 2009.

Let's Talk Money

Money is a highly emotional subject: connected with feelings of safety and security. Power and prestige. The topic of money can be a catalyst for conflict because of differing or competing goals and values, along with power and control. It's an incompatibility in their approach to money that creates the problem.

Money & Marriage.

Money touches many aspects of our lives. Bring two people, each with a different approach to personal finance, and there will be some conflict. Here is a list of things you need to consider before entering a relationship:

Your Financial Blueprint.

Each of us has a distinct financial blueprint, which comprises our beliefs around money, our experience with money, and our personality type.

The qualities you were attracted to in each other may differ from what you possess. It is not uncommon for opposites to be attracted to each other.

When Opposites Attract

Tess was attracted to David's big and bold personality: he was a risk-taker. And different from what she was familiar with. You may be attracted to a bold, risk-taking potential partner because they complement your conservative approach to life.

Or, you may find an intense person complimentary to your laid-back attitude to life. These differences can mean a different approach to personal finance.

High risk-taking ways may mean he might be more aggressive with his investments. Will you be willing to see him manage the family finances? Many women still defer major financial decisions to their husbands.

How to Manage Your Money in Your Marriage

Issues involving money within a marriage go beyond your differences in how you roll the toilet paper or squeeze the toothpaste.

1. Respect your differences

● You come from different backgrounds. Discuss what money means to you — this will shed light on your relationship with money. How did your parents manage their finances? Were they generous, cautious, prudent, or just lived for today?

● How do you feel about debt? People have different risk tolerance levels, but some are more comfortable carrying debt than others. Some are so averse to any debt that they may not want to buy a house until they have a down payment.

● Talk about your past experiences with money. Do you share similar values? How a person handles their finances says a lot about what they value.

2. Decide how you will manage your finances as a couple

● Discuss whether you want to combine your financial resources or keep things separate. Do you want joint accounts?

● How will you share the costs of running a home? Create a budget together.

● Unless you decide to keep your finances completely separate, disclosing your debts, assets, and financial obligations would be honest. It is one way to get real!

3. Be transparent

● What amount of debt will you be bringing into the marriage? Maybe one of you has a large student debt owing. How will you deal with it?

● See a financial advisor you both like. Have her prepare a written financial plan with your goals in mind.

● Discuss the control issue with your partner — how much control each person feels they need in this area. How much do you think you must tell each other before purchasing?

● Decide how you will deal with money conflicts.

● Discuss your goals — individually and as a couple. Prioritize those goals.

● Do you want children before you can afford a home?

4. Joint and separate accounts

If you enter a committed relationship, open a joint account and maintain separate individual accounts.

If you are earning an income, it is okay to keep some of it to meet your needs as long as it does not negatively impact your partner's financial situation.

5. Grow together

Your relationship is possibly one of the biggest investments you will ever make, besides the investment in yourself.

Couples who work together are able to build wealth quicker than an individual working on their own. See your partner as a partner in all aspects of your life.

Learn about personal finance together. Take an interest in your partner’s financial goals.

Bringing It All Together

Open communication, free of judgment, is essential in all aspects of your relationship, including your finances.

Is your spouse aware of how much debt you carry? Commit to getting good with money — help each other become financially savvy.

Take an interest in personal finance together.

Even if you keep your finances separate, as long as you are a couple, one person's financial decisions will invariably affect another person's life.

If you are dating someone:

• Are you able to freely broach the topic of money?
• At what point in your relationship do you think it's okay to talk about money?
• Would you enter a relationship with someone with a high level of debt?