Taking financial risks when you are single, may not be a good idea, but at least you only have yourself to answer too. Taking on financial risk with a spouse could lead to a whole different outcome.
According to Shellie Warren, a Life Coach and Writer for Marriage.com money is the second most common reason for divorce in America. A similar study by Magnify Money showed that money accounted for 21 percent of all divorces. Surprisingly, how much each individual earned didn’t necessarily matter for the couples that cited money as the reason for divorce.
Instead, financial disputes stemmed from lying, overspending, taking financial risks, and debt. Ironically, divorce imposes its own set of sprees hardships and is a dramatic conclusion of what could be salvaged with a little communication.
AVOIDING FINANCIAL RISKS
No matter what faith you are, I’m sure you are familiar with this traditional wedding vows:
I, ___, take you, ___, for my lawful wife/husband, to have and to hold from this day forward, for better, for worse, for richer, for poorer, in sickness and health, until death do us part.
Of all the things we agree to during our wedding day take some work and the relationship to be in sync to accomplish.
So to mitigate any further undue strain on your relationship, consider some of the following tips.
COMMUNICATE, COMMUNICATE, COMMUNICATE
It doesn’t feel good to be lied to about anything period. However, when it comes to money, lying is all too common. Citing the Magnify Money study mentioned earlier, 56 percent of divorces reported that their spouse hid information about their finances or lied altogether.
This is obviously not a good practice to fall into and is actually easily avoidable. Talk openly and honestly with your partner, asking questions like:
- What are our financial goals?
- How much should we save for our retirement?
- What are our spending habits?
This will grant you greater financial cohesion and unity between the two of you. You may not always agree on everything, but like with all things in marriage, you must be willing to compromise, and not exceed or neglect discussed spending rules.
KNOW THE IMPORTANCE OF A BUDGET
It is much easier to stick to financial goals and avoid financial risks when spending adheres to an agreed-upon budget. Many studies indicate that happily married couples create ground-rules to help build layers of trust that are important when tackling some of life’s more pressing issues.
Ground-rules about spending will put both partners’ minds at ease knowing the other (hopefully) won’t decide to embark on a several thousand dollar shopping sprees or gamble the two’s life savings away.
Furthermore, self-serving purchases that may have caused conflict previously (like a designer handbag or a new set of golf clubs) can be disregarded if it fits into an agreed-upon partner’s spending budget. Just keep in mind that the most essential part of creating a budget is sticking to it.
GET A JOINT CREDIT OR DEBIT CARD
When there’s an apparent lack of communication about financial goals and spending habits, it’s easy to see why 57 percent of divorces advocated toward having a separate bank account.
However, studies show that jointly tackling finances is a great way to establish feelings of support, trust, and unity between partners. Holding a joint credit or debit card will not only help you share in this role but will allow you to build credit together.
It is also more likely that both partners will abide by the agreed-upon budget, given the accessibility of the account (especially for mobile bank users). When considering opening up a new account, weigh your options carefully. In general, no-fee checking accounts are your best bet for eliminating any unforeseen expenditures and contentions you may have as a result.
DON’T FORGET TO SPLURGE
Remaining dedicated to a budget takes a lot of hard work, communication, and diligence. You obviously don’t want to be spending all willy-nilly, but it would be remiss to say that you shouldn’t enjoy yourself now and then.
Ask anyone who had a hangover from a fun night out, and most will want to avoid that dreaded feeling the next morning. It’s the same when spending money, don’t enjoy yourself on an expensive vacation, only to regret the decision afterward.
When establishing a budget, designate a portion to a savings account you can retrieve from occasionally, and use toward gifts or a night out.
You can even set up savings in your budget for larger purchases like a vacation, car, or home improvements. It all comes down to spending your money intentionally to avoid financial risks and fights in your relationship.
Studies show that saving up and subsequently rewarding yourself will not only improve your mood but will increase your motivation to save.
Thus, allowing you to have a more financially responsible and harmonious relationship.
So it is possible to avoid financial risks in a relationship, it just going to take a bit of planning, and communication to accomplish.
Previously published here and reprinted with the author’s permission.