February 13, 2013

This Valentine’s Day, you and your beloved partner may be focused on date night and romantic gestures while putting your money troubles aside, but debt and financial conflict is one of the biggest causes of relationship breakups. Show true commitment to your partner by sorting your money conflicts, and uniting with common financial goals, before it’s too late. Follow these steps to gain financial harmony in your relationship:

Step 1:

Begin with an honest discussion of your current debt. If each of you has separate debts – reveal all the details – how much you owe and to whom, what kind of payments you are making and when you expect to actually pay it off. If you share debt, make sure you both know the true state of things. It may be difficult to reveal the truth to your partner, but remember that neither of you should show any judgement during this discussion – it is not a time to be critical it is a time to listen, be honest and open-minded.

Step 2:

Now that you know where you are financially, discuss where you want to be in one year, 3 years, 5 years, and 10 years from now. Aside from being debt free, what is your heart’s desire for your future life? Again, don’t be judgemental or start compromising on your vision, just be honest with what you truly want in your life. If both of you have similar goals and desires, great! If not, you need to decide whether your visions can be created together in a way that makes you both happy. Find compromises that you both can live with, in order to establish a common goal. Having a united financial goal brings unity to the relationship, working as a team to accomplish a mission together. You both really need to be on board with the big picture.

And if you are in a marriage or looking at a lifetime commitment, then you absolutely must discuss retirement plans and lifestyle as well. It is all well and good for both of you to want to purchase a home and raise a family, but if one wants to retire in the tropics while the other wants to maintain a busy urban lifestyle close to family, that is best addressed now than when it’s too late to work out a compromise and possibly lead to grey divorce.

Step 3:

Develop a plan to get you from point A, where you are now, to point B, where you want to be in the short term, as well as point C (long term) and point D (retirement). Your plan is a budget, one that honestly reflects your income and expenses, and one that has a focused purpose to any leftovers – debt payments, retirement savings, and specific savings goals such as vacations, vehicles, and a down payment on a home. If you have any debt from student loans, lines of credit, credit cards and the like, paying that off should be your short term goal ahead of saving for vacations or large purchases. Your common goal is what will push you both to focus on paying off the debt in order to reach that reward.

If your debt payments are overwhelming you to the point that you cannot pay the debt off or reach any of your savings goals within a reasonable time frame, speak with a credit counsellor to learn about different debt solutions, including paying off your debt within five years.

Step 4:

You know where you want to go and you have a plan to get you there together. Now you need to do the work and make it happen – but you each have different financial personalities which causes conflict. A good relationship includes compromise as well as individualism — you need to accept each others differences and to an extent, agree to disagree. The key is to set limits on your individual financial choices, not abolish them.

Maintain separate personal bank accounts apart from the “household” account, and establish “allowance” money that you may spend as you choose without judgement or permission of the other. This is your “you” money to spend on your favourite hobby, entertainment or indulgence that you don’t share as a couple but is important to you personally. Work your fun money allowances into the household budget so that it’s affordable and under control.

Another good idea is to cap your credit card limits to an agreed upon amount. If one partner is a shopaholic with a $10,000 credit card limit, the couple’s financial plan could easily be derailed. So set each of your credit card limits to $1000 or some agreed amount to safe-guard against impulsive spending.

If you feel like you and your partner have a wonderful relationship except that you just cannot agree on money even after putting in some work, don’t hesitate to seek the help of a financial counsellor or relationship counsellor. A mediator of this sort should be able to help you find compromises and make recommendations from a neutral, third party perspective.

After all, “it’s not about the money – it’s all about the money” — Margaret H. Johnson