It’s Valentine’s Day soon, so let’s talk about love and money.
There’s nothing like money to take the shine off a romance. But then again, getting the money squared away also frees you up to enjoy your relationship.
So what do successful couples do about money? Simply, they communicate: they talk about money and assets, they listen to the other person and they make mutually beneficial plans they can stick to.
They’re self-aware and they take advice from experts. So, let’s go through the phases of love you’ll potentially experience and look at the major pitfalls when it comes to money.
1. Falling in Love
Your first love will likely be the first time you join finances. But what are the rules for this? While there’s no blanket best-practice for couples and their finances, it’s important to have open and honest conversations about money. The conversation should progress with the relationship so if you’re discussing moving in together, getting engaged or married, it’s time to have the conversation.
Not all these communications will go smoothly. If the other person is a saver and you’re a spender, or you’re a goal-setter and the other person likes status symbols, you both have to acknowledge the difference and resolve it. Start by owning your money type. Self-awareness is key.
2. Saying I Do
When first love turns into the first marriage, and there’s differences in how you handle money, consider professional help.
Some people have such opposing views of money that the solution is a pre-nuptial agreement. This is a contract that dictates the ownership of assets and what happens to the household finances upon separation.
Pre-nuptials are routine when substantial assets or debts are brought into the marriage. But also useful is a financial plan which includes a budget. A plan is a handy road map for keeping the household money on track.
3. Starting a Family
And then comes children. Just about everything to do with children has a price tag. From education, to pocket money to family holidays and what they’re left in your will.
You need a will that assigns your assets when you pass away, but you should also have life insurance policies to cover debts when you’re gone or incapacitated.
4. Losing a Loved One
Becoming widowed is another rite of love’s journey. Many distraught widows and widowers make terrible financial decisions because they’re not thinking straight. Vow now to not make a material decision about finances until your loved one has been gone at least 12 months.
5. A Second Shot at Love
Finally, try to be clear-headed about ‘second time around’ marriage. Most people who remarry bring assets or debts and a pre-nuptial agreement of some sort can be a good idea.
Reviewing your estate planning and getting it right is crucial in a second marriage, especially regarding children. You need expert advice from a solicitor because regardless of what you have in your will, some state laws already govern how much your loved ones can inherit.
Love and money don’t always mix. Start with direct communication and if that doesn’t work, seek expert advice.