#52 - How do you handle money in your relationship?

Money is one of the most important topics; one of the least discussed early in a relationship; and the subject that has been the cause of more breakups and divorce than any other subject. Discussing finances and having common financial goals is critical to a healthy relationship. Understanding and making plans for how money is earned, accumulated and spent are great conversations to have early on.

As your relationship progresses and you are committed to each other, do you start to combine assets such as checking accounts or do you keep them separate?  During the courtship process it is important to learn how your mate handles money.  Do they save?  Do they run out of money before the end of the month?  If you combine checking accounts, do you both have equal say about how money is spent or will one of you have more say than the other?

If you are in a relationship where one or both of you have children from previous marriages it is also important to discuss estate planning and how assets that have been accumulated both before and during the relationship will be divided.

What about debt?  Do either or both of you have significant debt?  Where did that debt come from?  Is it school debt?  Is it from spending more than you make?  Is it from medical bills or another unforeseen emergency?  Is it debt from divorce?  How is this debt being taken care of?  Do you or your mate have a plan to pay off debt as quickly as possible?  Will the debt be paid off before marriage?  If not, (assuming one person is basically debt free) will both incomes be used to pay off debt?  This may be a great time to consult an attorney to discuss potential prenuptial agreements.

As a former financial advisor, I suggest that assets and debt remain separate until you are married.  In the event that the two of you should split before marriage, it is much easier to have separate checking accounts than to try to unravel combined accounts.  Be cautious about being overly generous if you are debt free.  Paying off your mates debts is a wonderful gesture, but we have seen all to many times that after the debt is paid, the relationship changes and not necessarily for the better.

If you are in a relationship with someone that doesn’t manage money well, be careful not to be taken advantage of.  Generosity can be a wonderful thing if done correctly.  If not, it can be a great enabler of the financially irresponsible.