If both partners are in debt, you must work together to stride together towards financial freedom. It’s called financial freedom because as much as you think you are free while in debt, the reality is, you are not. I must drive this home because it is a HUGE problem that many people ignore until it’s too late. The fact is you are limited by your credit score, you won’t be able to get loans, it affects your job prospects (yes employers today are asking for your credit score!), it limits you line of credit, and it’s very stressful to be in debt. If you are in debt, you end up paying more for everything while maintaining outstanding balances on loans and credit cards. The point is….you must do everything you can to rid yourself of debt.
Money and finances are a major cause of tension and stress in relationships, in fact, I believe it’s on the top of the list for reasons for divorce from marriage.
The first thing I have to say is, relationships are two imperfect people, and in this case, when it comes to finances, a relationship is two imperfect people managing their finances together. When you make a commitment to one another, whether it be a girlfriend, boyfriend, life-partner, spouse, whatever….you MUST include your finances in the equation.
IN DEBT – some people, (many people in America) are in debt….student debt, credit card debt, mortgage, you get the idea. If this is you, try your best to get this under control, because whoever falls in love with you or is already in a relationship with you, also gets saddled with your debt burdens and credit score.
SPENDY – If you’re a spendy person, (starbucks here, dinner out there, etc) keep in mind that your spending habits affect your partner. Every dollar you spend towards that extra cute top (that you don’t need) or extra pack of cigarettes (that you REALLY don’t need) adds up and takes away from the goals and dreams (aka retirement!) that you and your partner have together. Try to curb your extra spendy habits by keeping a small reminder of your ‘together’ goals in your wallet.
GOALS – You and your partner should set some financial goals and work towards them step by step. It won’t happen overnight, but if you keep working on them, you will see financial success. If you’re in debt, make a plan to get out of debt and then work towards savings for the future. If you’re under 30, you should definitely be saving for retirement as much as possible – the financial gurus say we’ll need 2 Million per person to retire (because of inflation and other financial garbage)…so what are you waiting for? GET SAVING! (side note: To get to 2 Mil, if you’re 25 that’s $600/month that you should be stashing into your savings) If you’re not in debt, congrats! You’re a small, elite percentage of Americans! Anyway, enough patting yourself on the back, let’s get back to saving…like I was saying, you should be stashing cash for your retirement + life together. So think of what goals do you and your partner have? Do you have kids and want to send them to college? Do you want to own a summer home in Florida? Do you want to take your family to Europe for vacation? Whatever your goals, talk about them and set realistic savings goals together.
SAVING – What are the best ways to start saving? I would suggest first assessing your total financial worth; Paychecks, 401K, assets, savings, Roth IRA, stocks, etc. Once you know what you have, and set your goals, then you can plan how you want to move forward. One of the easiest ways is to use direct deposit from your paycheck to go straight into your savings. Also, ALWAYS take advantage of any 401K/403B matching that your company offers. Once I heard a co-worker mention that they didn’t have enough to put into their matching savings account and I almost flipped out….I looked them straight in the eyes and said “You don’t have enough to NOT be contributing to your matching savings account!” You MUST MUST MUST maximize your matched savings! It’s free money! A great savings account I use is ING Bank….before 2008 they had really fantastic rates on their savings accounts…around 4-5% of savings! Now since the recession, it’s around 1%, but I still recommend using them, because their site is easy, accessible and secure. Also without retail locations, their overhead is low and efficient. I love companies like this!
PROBLEM PEOPLE – these are the male or female “Gold-Digger” or “Scrub” that TLC, Beyonce and Kanye West warned you about. And there is a good reason for the warnings…some people may love your money more than you! Or some people may want to spend more than you have! Terrible I know, but hey, it’s life. This is why both parties in the relationship MUST communicate and talk about the future of finances. If you are in a position of money, make sure you and your partner are together 100% on saving and working towards your financial goals. If you are in a relationship with a wealthy partner, don’t take advantage of the wealth…instead act as a responsible partner and share in working towards building upon what you have together. Both managing relationships and finances takes communication, love, trust and working as a team toward the same goal.