Forty one per cent of marriages end in divorce before the 30th year, according to Statistics Canada – and fighting over finances is the top cause. A recent BMO poll sheds some light: over two-thirds (68 per cent) of respondents say fighting over money would be their top reason for divorce, followed by infidelity (60 per cent) and disagreements about family (36 per cent). That’s right, fighting over money is worse than cheating on your spouse!
Here are some tips for dealing with money, so your relationship doesn’t become just another divorce statistic.
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Dealing With Your Partner’s Existing Debt
It’s important to be honest with your partner about your finances. Hiding your financial situation can lead to distrust before you’ve even tied the knot.
“Communication is key,” says Laurie Campbell, CEO of Credit Canada Debt Solutions. “Make sure that you both discuss and agree about the expenses as well as the use of any expected or unexpected windfall.”
When is the ideal time to have “the talk?” Although people are more open about their personal finances today, money is still considered taboo. While I wouldn’t advise bringing a copy of your bank statement on the first date, it doesn’t hurt to broach the topic once steadily dating. But having the conversation should be an absolute must before walking down the aisle; it’s better to find out if your spouse is in debt up to their ears before assuming responsibility for half!
“Ensure that both partners are aware of each other’s income, expenses and overall financial situation,” says Campbell. “By knowing all this information the couple can then make joint important decisions on expenditures and how to manage debt. If the debt is a surprise to one partner and there is hostility toward the indebted partner, seeking help to deal with the debt as well as a feeling of mistrust in the relationship may be necessary. Money problems are often a reason for breakup in a relationship.”
Now is not the time to play the blame game. A relationship is a partnership with give and take.
“Avoid blaming each other for financial problems,” advises Campbell. “Rigid attitudes, beliefs or expectations about how you think your spouse should act will stifle your financial happiness and progress and cause problems in other areas of your lives as well.”
When to Call In Outside Help
If you’re concerned about your family’s finances, it’s important to seek help before it’s too late.
“If one of you thinks that your own or your spouse’s spending has gotten out of control, or if one of you has constant or frequent worries about money that you can’t resolve together, seek help immediately from a non-profit credit counselling service in your community,” says Campbell.
Set the Same Goals
Do you dream of homeownership, travelling the world or an early retirement? Does your spouse support those ambitions? Problems arise when you and your spouse have different long-term goals. While some people would rather use their money for tangible stuff like real estate and furniture, others prefer spending their money on experiences like travelling.
Far too many couples fail to sit down and discuss their long-term goals. Consider writing down your top three financial goals and sharing them with your partner. If you’re not on the same page, all is not lost. You can still make different goals come true as long as you’re willing to compromise and set goals that are mutually beneficially.
“Couples should set mutual financial goals and look at ways to achieve them together,” says Campbell. By creating mutual goals, you can then create a budget and savings plan to realize them.”
“Make sure each of you has individual credit cards in your own name. Two good individual credit histories are better than one joint history.”
Dealing with Divorce
Despite time and effort, the sad reality is some marriages end in divorce. If you’re one of the four in 10 marriages that end in divorce, it’s important to protect your money.
Jim Poolman, the director of IALC, says one of your top priorities after a divorce should be to “achieve financial independence.”“First, you’ll need to determine how to divide your jointly owned assets,” writes Poolman in a blog post on the subject. “This is typically done through a divorce agreement or court order. Once the two of you agree on how to divide assets, you and your ex-spouse must complete documents required by each of your financial institutions to complete the separation of the joint accounts.”
Poolman recommends establishing new bank accounts to deposit your paycheque and cover living expenses, and protecting your individual credit – the last thing you want is for your spouse to empty your bank account or go on a shopping spree at your expense.
Sean Cooper is a Financial Journalist and Personal Finance Expert, living in Toronto, Ontario. He is a first-time homebuyer and landlord who aspires to be mortgage-free by age 31. Follow him on Twitter @SeanCooperWrite and read his blogs and request his writing services on his personal website: http://www.seancooperwriter.com/