The role of finances in your relationship

Love and money: finding a balance

For many couples money is a flash point that can make or break their relationship. Too often it’s discussed only after something dramatic forces the issue, such as a job loss. Or it’s just not talked about at all, leaving each partner on their own, setting the stage for eventual friction that may put trust, security, and happiness in jeopardy.

Whether you choose to make financial matters a priority or not, the truth is how you deal with money impacts you at every stage of life – from buying your first home to saving for your child’s education and on to retirement. By communicating openly and planning together, you can build the kind of financial foundation that strengthens your relationship instead of putting it at risk.

Getting on the same page

Talking about money is something most of us have been raised to steer clear of when getting to know someone. Yet opening up communication early on in a relationship is the first step to getting you and your partner on the same page financially. Even if you’ve been together a while it’s never too late to start talking.

Discuss what you want out of life. What are your short and long term goals? If you’re young and just starting out, is buying a home and starting a family a priority? If you’ve been married a few years, you might be focused on saving for a vacation or kitchen remodel. What trade-offs are you willing to make? Do your financial resources align with what you want to achieve?

Work other areas like insurance and saving for retirement into the conversation. If you’re remarrying, the situation can be complicated by children, grandchildren, and ex-spouses. Talking openly about where you stand will help you prioritize and set realistic goals as a couple.

Coming into a relationship, it’s especially important to be forthright about debt and other obligations. There could be credit card debt, child support, or alimony payments that have to be managed. Your credit ratings may be individual, but they will affect your ability to borrow as a couple. It pays to know your partner’s credit history and status sooner rather than later.

Your money personality and working together

Your background and attitudes will shape your views on money. Those views can be quite different from your partner’s. Will you stick to a budget no matter what, or are you an impulsive shopper? Are you happy to take on riskier investments or do you like to play it safe? Does having debt keep you up at night?

You and your partner don’t need to be a perfect match in how you approach finances. It’s more important to recognize how your feelings and habits translate into strengths and weaknesses so you can share responsibilities in a way that benefits you both. For example, if you’re a born spender, doing the day-to-day shopping might be a natural role for you. Meanwhile your fiscally disciplined partner can spend their time setting the family budget, tax planning, and tracking investments.

Yours, mine, or ours?

In your relationship you have to balance your need for a little freedom with the benefits of working together. Finding the right combination isn’t always easy. Is it wise to keep separate accounts or should you share it all?

Research suggests that putting teamwork first pays off when arranging your money matters. A survey by UBS Wealth Management Americas found that couples who share financial decisions argue least about money and are the most satisfied with how they split financial responsibilities. On the other hand, couples who choose to keep separate accounts or investments are more likely to lie, hide information, and argue about money.

A practical choice could be a mixed approach. For example, share your primary bank account and make major spending decisions together. At the same time keep individual personal accounts for small or personal purchases. Having a bank account, investments, or a credit card in your own name can also give you peace of mind by helping you maintain some financial independence which can get lost in a relationship.

The basics on the Family Law Act

The Family Law Act takes the position that people should share the assets and debt they build together in their relationship. If you eventually separate from your partner, the Act considers property owned (and debt owed) by either or both spouses at the time of separation to be “family” property that’s eligible to be divided. But certain assets, including gifts, property brought into the relationship, and inheritances, are “excluded” from family property. Only any increase in the value of these assets can be divided unless agreed otherwise.

The Act extends property division rules to include common law spouses living together for a minimum of two years. Family law is in line with estate and income tax law which also treats common law relationships the same as married families.

Under the Family Law Act, keeping detailed financial records that establish which assets and debt each partner brings into the relationship and how those values change is a necessity to protect your interests.

Building your life together

A special relationship can enrich your life, especially when you work together to build a solid financial foundation. It starts with open communication, setting goals, and putting the right strategies in place.

At BlueShore Financial we can help you create a plan to turn your life’s vision into a reality. Take the next step. Contact your advisor to learn more.