Time and time again we hear that finance and money are stressful. Financial conversations are uncomfortable and intimidating, and most individuals want nothing to do with them. Truthfully, not facing these conversations or taking the time to understand the financial ramifications can cause more stress than just having the conversations in the first place. Without these conversations, your risk of money mistakes increases drastically.
While facing these conversations yourself is important, it’s even more critical when adding another person, like a significant other, to the mix. Here are some common money mistakes couples make; be prepared and discuss options with your partner to lessen the risk of financial stress and problems in your relationship.
Not having the “talk,” financial talk that is, early on –
Communicate with your partner to understand each other’s financial situation and devise a plan to avoid problems in the future. Not communicating can lead to a pattern of avoidance that will cause stress and problems down the road(1).
Not communicating regularly about money issues –
This is a major problem for a lot of younger, newer couples and it’s often the downfall of many relationships. Communication is key in a successful relationship, especially when adding in financial situations.
establishing clear goals –
Not addressing financial goals or clear ways to achieve each goal can result in a loss of money. If there is nothing to work toward in the relationship, then when money is spent, it can cause increased stress levels, misunderstandings
Not setting a budget –
This is one of the more common mistakes couples make. Not building a budget for the relationship can cause problems in the long run. Having a useful budget, though, starts with clear communication and establishing proper goals.
Keeping financial secrets –
“Secrets secrets are no fun, unless you share with everyone,” might be a trivial phrase, it does hold validity when discussing financial secrets in a relationship. Money secrets can involve anything from hidden stashes of money and hidden financial plans to secret spending and incurring expenses. While the saying “what he/she doesn’t know, won’t hurt him/her” might be true for some instances, it doesn’t apply for financial secrets. Relationships thrive off of honesty and trust, but when money secrets are involved, all of that honest and trust built into the relationship will be lost.
Not planning for emergencies –
Emergencies are the last thing couples want to imagine happening, but realistically thinking unexpected curve balls, surprises and emergencies are unavoidable. Build an emergency fund into the budget and action plan you set. It’s best to prepare for these unexpected emergencies, prepare for the worst and hope it doesn’t happen. Struggling to financially resurrect the situation after it happens causes more emotional stress and monetary strain.
Impulse buying and unnecessary expenses –
Know your spending limit, identify your needs versus wants and avoid unnecessary purchases. While this may seem minute, overspending and unnecessary expenses can quickly add up. Take a cup of coffee for example. One cup of coffee at $4, bought once a day, five days a week is $20. That’s roughly $80, or more depending on your caffeine needs, per month. Instead, if you were to buy a bag of coffee from the grocery store, roughly a $4 purchase, which would last you a month or more, could save you anywhere from $76 to $96 per month.
Don’t allow finances to be the downfall of your relationships. It’s completely acceptable to reach out for help and involve a third party to educate yourselves on the financial responsibilities. Take the time to understand its implications and always communicate with each other.
Ready to have the financial conversation and avoid money mistakes?
The Financial Fitness Group, a purveyor of comprehensive online financial education programs, has the many resources you need to be a financial success. We offer unbiased online, interactive instruction in personal finance, financial planning, investing and much more. Learn more about our online resources or schedule demo today.