Financial stress is one of the leading causes of divorce or breaking off a long-term relationship. If your significant other has a lot of existing debt, or is maxing out the credit cards and you are the one that is financially responsible, it can be hard on the relationship. But, before you pack up and leave, consider these tips for finding some common ground.
1. Financial Review
Know where you stand in your own financial profile. Look at how much you earn versus how much you spend and where it is being spent. What parts of your personal finances are allocated to bills, rent/mortgage, savings/retirement and entertainment? Encourage your partner to do the same financial review. Numbers don’t lie, people do.
2. The Debt Talk
The debt talk is necessary to have when you are thinking about combining your finances, such as getting married or cohabitating. You must discuss your partner’s history and current situation to ensure that you are protected and aren’t forced to deal with any surprises down the road. If your significant other has a credit problem, that could change the next 10 years of your life. Make it your business to inquire.
3. Budget
After the debt talk, you will have an idea of your mate’s attitude towards money. The discussion may uncover that you are better at managing financial affairs and you are the best candidate for the family’s accountant. Create a budget with your other half so you both know your responsibility. Set up a weekly or daily allowance so that he/she is aware of spending. You should also consider creating a “fun fund” for traveling, visiting friends or for entertainment, rewarding yourselves periodically for being fiscally responsible.
4. Cut your Losses
After you have followed the aforementioned steps and things don’t change after several months, you may consider walking away or separating finances (if you aren’t married). Once you are married, your partner’s financial situation is now yours. Oftentimes, taking on your partner’s financial irresponsibility can damage your trust in him/her, in addition to damaging your credit report.
This was a guest post by ChicagoBankingRates.com, a site that provides daily updates on the latest Chicago mortgage rates, finance information and more.