Our guest blogger today is David Bakke, a recently divorced single dad who shares his personal finance expertise on the popular blog, Money Crashers.
Believe it or not, money is one of the leading causes of divorce. Ask any of your divorced friends, and chances are that their finances were a factor in the split.
The sad part is that most financial issues can be resolved by simply addressing them before tensions get too high. Just as you should know where your partner stands on religion, children, and monogamy, you should be in sync with your partner’s views on money. This way, you aren’t blindsided – or worse, bankrupted – by irresponsible spending.
If you want your relationship to last, here are some key issues to discuss with your partner now:
1. Thoughts on Debt
Money habits are far more deeply ingrained than we realize, and because of that, they’re extremely hard to change. It’s critical that a couple approaches their financial life with a unified front. Each individual needs to identify themselves as either a spender or a saver – and be honest.
Two savers should match up perfectly. Two spenders can, too, though you’ll have your work cut out for you keeping things in check. A spender and a saver together presents the most challenge. At the extreme, you could have a compulsive shopaholic in love with a tightwad who will only spend cash – and begrudgingly so. This would make for some ugly fights and brewing hostility unless things are discussed beforehand.
To avoid such a scenario, ask yourself and your spouse the following question: How do you approach carrying balances on credit cards, and what are your savings goals? Finding out where your partner stands on debt and coming to a mutual agreement will go a long way toward ensuring your matrimonial longevity.
2. Personal Spending Choices
Do the two of you agree on your approach to major purchases? Is it okay just to throw it on the card, or should you wait until you have the money? How about little things? How do you each perceive needs versus wants?
If one person has no problem dropping $10 per day for work lunches while the other insists they brown-bag it, tensions can’t help but rise. And there will undoubtedly be times when you want to buy something but don’t have the opportunity to confer with your spouse. In such cases, you need to have guidelines in place as to what is acceptable. Or if you’re both conscientious for a period of time, can you each splurge to avoid “frugal fatigue”? Only you and your partner can decide. But putting boundaries in place is a great way to avoid future arguments.
3. Retirement Strategy
Do you have a joint strategy to plan and prepare for retirement? Most studies show Americans are woefully undersaved, and none of us are getting any younger. In other words, the time to start is now. And remember, with an election in the offing, the future of both Medicare and Social Security is uncertain at best.
Take a hard look at your current investing strategy – together. What kind of retirement do you each envision? If one wants to hunker down and not spend a cent in the house you lived all those years, and the other prefers to travel from island to island, you’ve got some discussing to do.
4. Household Budget
If you don’t currently have a budget, start by mutually creating one. Broach the subject of a budget and develop one that includes both your household income and all your monthly expenses. If you’re spending more than you make, your first goal is to get your spending under your current income. From there, jointly decide how much you can afford to put into each of the major spending categories, including savings, and then stick to it. The key here is to make the process a team effort – and if one partner is resistant, it’s better to know this sooner rather than too late.
The topic of divorce has become blasé in this country recently, especially with such a high rate of it. But when you’re in the throes of a split, the fallout is painful for everyone involved. Take the time to have several serious, respectful conversations about finances with your significant other, and you’ll increase your chances of a lifelong relationship.
What other money topics should be discussed with your partner?