Money issues tend to be the number one reason behind relationship problems and divorce. Many couples want to sweep the subject under the rug rather than meeting this important subject head on. There are less conflicts when it comes to budgeting, spending, and saving when couples work on understanding each other’s relationship to money.

Unfortunately, many couples think that leaving their financial baggage at the door is the answer to avoiding conflict. The reality is that couples need to be open and honest with one another regarding their financial expectations and spending habits. Putting off dealing with money issues will only create deeper wounds that lead to trust issues and ultimately break ups.

The good news is that if you discuss these issues early on, money problems don’t have to develop into a major relationship hurdle. In fact, the more you and your partner communicate about ‘difficult’ subjects like money, the closer you will become. Learning how to work together to resolve money problems and save for a promising future will only strengthen your partnership for the long haul.

Make sure to approach the subject of finances with an open mind.  Realize that both of you have different views about how money should be handled. Try this 5 step process to effectively address financial issues before they become unbearable:

Step 1: Lay it all out in the open

It’s important to show your partner just how much money you are responsible for managing.  Look at debts, loans, credit lines, investments, and accounts.  A successful relationship is one where both partners can be open with each other, so don’t be afraid to bring out your credit card and loan statements. If something happened to you, your partner would need to understand everything that you’ve been managing.  Hiding things now will only lead to bigger issues down the road.

Step 2: Determine who manages money best 

Often times, there is one person in every relationship that is better at dealing with money.  That person is often the one who regularly tracks their spending, has the best credit rating, and doesn’t hesitate to open bills and make sure things get paid on time.  This person should be designated the relationship “money manager”.

Step 3: Define spending boundaries

Decide together on an amount of money that each of you can spend without consulting the other.  Let’s say the amount is $500.  If a purchase is over $500, then you agree to make a joint decision about that item.  You may also feel more comfortable having one joint account that you both contribute to for household bills and two individual accounts for personal spending.  Decide what makes the most sense to you based on the number of accounts you want to manage and how you tend to spend money.  For example, if one of you spends down whatever is in the account each month, and the other always leaves extra, your spending and saving styles may benefit from having individual personal accounts.

Step 4: Create a backup fund

Decide how much you’ll set aside from each of your paychecks to be used as an emergency savings account.  Discuss what kind of emergencies you might expect to draw from the account for.  Determine if you would like to consult each other first before using any emergency funds.

Step 5: Discuss future financial situations

Consider the birth of a child, job changes, parents who need care, and retirement expectations.  For example, it’s important to discuss whether one partner will stay home after the birth of a child. Or what will happen should someone lose their job?  Would you consider taking in a sick parent and providing a care taking role?  What ages do you expect to retire?  Always communicate about possibilities so you are ready for whatever setback or life change may come your way.

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